Has South Carolina lost its way on job creation?
STANDARD & Poor’s dramatically highlighted just how bad off our state is economically when it downgraded our bond rating (see editorial above).
On Wednesday, new House Speaker Bobby Harrell publicly opined that South Carolina has dropped the ball on job creation and economic development.
Former Gov. Carroll Campbell “set the standard for economic development (results) and created the model that David Beasley followed, and by following that, our unemployment rate became the third best in the country. Today, we’re third or fourth worst,” the speaker told The Greenville News.
“My frustration,” he told The Associated Press, “is that I don’t think we’ve been focused on that 
since Carroll Campbell and David Beasley were governors. I don’t mean to pick on Mark, and I don’t mean to pick on Jim Hodges.”
On Friday, he expressed frustration that anyone would think he was trying to pick a fight with his fellow Republican in the governor’s office. “I think it is a total waste of time to talk about blame and who is at fault,” he said. “I think we need to recognize where we are and prepare a road map for where we want to be, and then do it.”
When I noted that it was inevitable that many would see his remarks as a challenge to the governor, he said: “I’m not interested in challenging anybody. I’m interested in lowering the unemployment rate and raising incomes.”
Gov. Mark Sanford’s official reaction to the loss of the AAA credit rating was to issue a press release asserting his promise “to continue his efforts to grow South Carolina’s economy, not South Carolina’s government.” It’s tempting to dismiss that as standard libertarian/populist boilerplate, intended to win votes without saying anything.
But it actually goes to the heart of what Mr. Sanford really believes about how he and other state leaders should go about their jobs. And that’s a problem.
Am I saying it’s a problem that he doesn’t want to “grow government”? No. I’m saying it’s a problem that the governor fixates too much on the size and shape of government, and too little on what government needs to do and how well it does it.
That may sound odd coming from someone as passionate about government restructuring as I am. The governor’s proposals in that regard happen to be the ones I had been pushing for more than a decade before he embraced them. But our motives are different: I want government to be more efficient and accountable because it has a huge job to do helping this state catch up with the rest of the country, and it can’t afford waste and lack of direction.
The governor wants government to be smaller as an end in itself. He essentially doesn’t believe there’s all that much that government needs to do — just get government out of the way, and the market will take care of all.
But the market has little interest in South Carolina, in large part because our fragmented and visionless government has neglected our roads, our health, public safety and especially the schools that strive to educate our labor force. Other states have done a far better job of keeping up the neighborhood, which encourages capital to want to move in there and not here.
The governor’s answer is to replenish trust accounts (fine), cut income taxes (again, see above editorial) and implement an arbitrary spending cap keyed to inflation that sounds good: “(Y)ou shouldn’t grow government faster than the taxpayers’ ability to pay for it,” he says reasonably. But what he says is divorced from reality. To him, restoring funding to prior levels after years of (in some cases) double-digit cuts is “growing government.” Never mind that some of these agencies weren’t adequately funded to do their jobs before the cuts.
(Note that I say “some.” We have praised Mr. Sanford for trying to trim or eliminate overfunded or unnecessary programs. But when lawmakers fail to go along with his targeted cuts, he wants across-the-board caps, which would further undercut the essential agencies.)
“I don’t want to grow government, either,” Speaker Harrell said Friday. Nor is he necessarily talking about spending more money when he complains that we’re not doing enough to promote job growth. “The conversation ought to be, what is it we need to do? And then talk about what it costs to do that.” (Which is precisely how we ought to approach all government spending.)
He suspects there’s one area where more is needed: “I think Commerce could use a little help. We’ve made Commerce a lot smaller…. We don’t want to waste any money, but we ought to look at our current level of activity and see if it’s being effective. And the results suggest it’s not.” He’d like to get past blaming and discuss this with the Sanford folks.
Interestingly, the governor had earlier defended his administration’s efforts by boasting about how Commerce Secretary Bob Faith has restructured, streamlined and redirected the Commerce Department. In other words, he takes particular pride in Commerce being smaller. It’s one part of government he’s managed to restructure to his liking.
As for results, “It is not just the number” of jobs, “but the quality.” Gov. Sanford said the new jobs that have been created pay 30 percent more than the state average. That’s great, if there are enough of them to pull up the state overall. But that’s not the case, which is what makes Mr. Harrell’s observations ring true.
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I think it is clear that South Carolina has to change the way we approach economic development. Reliance on recruiting advanced manufacturing with incentives and a lower cost of doing business is not producing the number of jobs we need. We need to keep our advanced manufacturing strategy (it clearly has produced good jobs such as Siemens here in the Columbia region) but add a better defined strategy to recruit in the “new economy” of technology, innovation, and knowledge. Columbia and South Carolina has tremendous assests with USC, Clemson, and MUSC. The USC Research Campus funding of nearly $140 million was approved by the Budget and Control Board on June 14th. The SC Next Energy Initiative has been funded by the City of Columbia and USC will be formally presented at EngenuitySC ’05 in the fall. We must change our economic development strategy as a region and a state to recruit the people and companies that will come to the USC Research Campus, ICAR in Clemson/Grennville, and MUSC in Charleston. We have to add incentives for investment in research and technology not just for jobs and investment. Our Chamber of Commerce has taken trips to see how this strategy has been succesful in Austin with the Univ. of Texas and in Raleigh with NC State as well as the Research Triangle. Columbia and South Carolina can raise our per capita incomes over time with a new strategy and hard work.
Correction: “Columbia and South Carolina have…”
Bob Coble knows nothing about technology businesses, but he is all in favor of spending taxpayer money to create jobs for recruiters, academics and real estate developers.