Like a smug frat boy lecturing a sharp-headed nerd, Pat McCrory likes to flaunt his thriftiness. On Twitter over the weekend, McCrory “explained” that whenever fed funds flow into a state’s economy, the money in question is debt, and “an economics 101 course” proves that. such an influx of borrowed money will inevitably cause inflation. Ol’ Pat’s financial soliloquy followed years of confused, uninformed but utterly confident lecturers about how the economy works. Unfortunately for the only North Carolina governor to lose re-election, Pat McCrory’s knowledge of his signature subject is as worn as his ability to run a state.
Early in his rambling single term as North Carolina’s chief executive, McCrory devised a strategy to redevelop the struggling state’s economy. Tar Heels, he intoned, should “go back to their roots,” reconsider farming and manufacturing as the mainstays of their economy. They should look for this regression because “doing things” and “growing things” are “sustainable”. I’m not sure what “sustainable” means in an economic context – it surely wouldn’t appear in any mainstream textbook – but stipulating that McCrory meant that the industries in question will survive the cycle of creative destruction, McCrory was completely wrong. . Since the 1930s, agriculture has fallen from 18% of the American labor force to less than 1%. Likewise, the manufacturing sector has fallen as a share of the labor force. In both cases, productivity gains (i.e. technological innovation to produce more with less labor) depressed employment in sectors where McCrory seemed to have some obsession.
Real economists would tell you that states and countries are dooming themselves to stagnation if they try to hang on to industries where the future of employment is bleak. Instead, they should move up the value chain. With less-developed competitors eliminating low-skilled jobs, more advanced economies, like those of a US state, should cultivate industries that require more sophistication and intelligence. Then they can continue to grow despite increased competition for their old industries while increasing productivity and, with it, the standard of living of workers.
Our armchair Jim Cramer was back on his teaching ways in an interview over the weekend. McCrory informed us that every time a state experiences an influx of federal money, “it’s debt,” and debt automatically drives up inflation. No and no. Some of the federal money is paid for by tax revenue, like the infrastructure bill that McCrory had pledged to oppose. Moreover, debt does not inevitably cause inflation. If so, inflation would have been rampant under the George W. Bush and pre-COVID Donald Trump administrations, both of which greedily increased the national debt to pay for unnecessary tax cuts. Instead, inflation has remained subdued in what economists call the “Great Moderation”.
I seriously doubt that McCrory has heard of the Great Moderation.
But there is one area of economics in which Pat McCrory undoubtedly excels: getting rich. A longtime middleman (and middleman) at Duke Energy’s utility monopoly, this rather unwise man turned into a millionaire. Shortly after his humiliating loss to Roy Cooper, McCrory bought a $600,000 vacation home on Lake James in western North Carolina. Like fellow Republican opportunists Richard Burr and Tim Moore, the Charlotte man – who was originally from Ohio but complains that New Yorkers are moving to his state – has turned a few mediocre years as a mediocre politician into a fortune that will last for generations. I wonder if they teach this in the “101 economics lessons”.
Alexander Jones is an original PoliticsNC contributor.