Dakota Beacon

The world surrounding North Dakota is in various states of economic upheaval due largely to violations of F. A. Hayek’s two basic principles from his 1944 classic, “The Road to Serfdom”. Professor Hayek revealed that as long as legislation is intended to be “permanent” and is “not used to favor or harm particular people or groups of people”, it will fall safely within the confines of the “Rule of Law” and will not likely damage an economy.
One would think that North Dakota would be paying close attention to the economic mess that surrounds us. Minnesota facing public employee layoffs of 15%. South Dakota enacting broad agency cuts of 10%. Texas, another oil producing state, with a 31.5% deficit.  But the opposite is in the works. We are acting like federal dollars will never dry up and oil is not a cyclically priced commodity and will produce revenue forever. We are like the proverbial ostrich with its head in the sand.
There are several very plausible scenarios that could plunge North Dakota into debt… the elimination of the federal farm subsidy program (other than food stamps)… a drop in world oil prices as developing and developed countries alike scale back economic development efforts due to inflated commodity prices that deplete their economic resources… or the EPA using the clean water act to end hydraulic fracturing.
We in North Dakota are about to overlook the opportunity of a lifetime to “jump-start” all elements of our state’s economy other than agriculture and oil through major individual and corporate income tax cuts. Instead, we appear to be headed towards continuing general fund spending at near 24% following increases of 23% in 2007-09 and 32% in 2009-11.
What we need to do is discard the rose-colored glasses for just a few minutes each day, view closely what is going on in the states surrounding us, and ask ourselves “Can this happen to us?” Of course, the answer to that question is yes, it can. In fact, without careful and considered retreat to the average 4% annual grow of the two decades prior to 2007 I believe that an economic downturn in North Dakota is inevitable.
With North Dakota unemployment holding under 4%, it is time we act decisively to examine the policies currently being promoted. Perhaps the future of North Dakota is better served by leaving money in the earners’ pockets than through the redistribution of tax revenues through a host of spending programs and taxation re-distribution schemes in the areas of education, commerce and local government entities.
Editorials in the Forum and Herald have recently held out the states of Ohio, North Carolina, Connecticut, Oregon, New Jersey, and Michigan as models of states that support so-called “Centers of Excellence” on North Dakota’s higher education campuses and the states of Texas and Massachusetts as models of states that support higher education as a business incubator.
Firstly, it is the professors and graduates of these institutions that have created private spinoff industries. Secondly, a closer look at these states reveals some disturbing facts. The current budget deficits of these states are listed below:

State        Shortfall as Percent of             FY 2011 State Budget

Ohio                11.0%
North Carolina        20.0%
Connecticut            20.8%
Oregon            25.0%
New Jersey            37.4%         Michigan              8.6%         Texas            31.5%         Massachusetts          5.7%

http://www.cbpp.org/cms/?fa=view&id=711

It is worth noting that Massachusetts and its Massachusetts Institute of Technology (MIT) is the state cited by the two newspapers (for excellence in education as it relates to the economy of the state) that has the smallest budget shortfall…worth taking a closer look at. First, MIT is a PRIVATE research university founded in 1861 with nine months’ tuition and fees for 2010-11 of $39,212, undergraduate room and board of $11,234, and books and personal expenses of $2,764. So it cost a student $53,210 to attend MIT during the current school year.

http://web.mit.edu/facts/tuition.html

So if our entire university system is to emulate a successful private university in a state that is the least close to bankruptcy of the examples cited, and if we are to assume that our university system is anywhere near the quality of an MIT, then we had better increase five to tenfold the tuition for out of state students to pay for such excellence. Of course that will not happen since it may reveal the dirty little secret…yes, the out-of-state students will come…but only if their tuition costs are subsidized by the state of North Dakota.
Michigan, the only other state held out as a “model” by the two newspapers that suffers under a double digit deficit, has been in recession for over eight years…hardly a “model” to emulate.

http://www.thefreelibrary.com/chigan’s+long+fiscal+misery:+as+the+automobile+industry+struggles+...-a0195266812

The myth of “government sponsored economic development” is nothing new but like any myth, the believers seem to be undeterred by facts and logic.
The North Dakota House of Representatives has it right in this session. Each of us must now call our legislators in the Senate and our friends in the Dalrymple administration and let them know how we feel about the “equality of poverty” that is socialism… and to defund the “Centers of Mediocrity”.


Mr. Bergman was born and raised in Grand Forks, receiving his Civil Engineering degree from UND. He worked as a municipal engineer in four cities (Grand Forks, Bismarck, Yuma, Arizona, and Colorado Springs, Colorado) over a period of almost 20 years. He then worked for a mining company in North Dakota for another 15 years, retiring in 1998. Development and demonstration of Portland-pozzolan cement and optimally durable concrete has been one of his life’s passions. Political activism is another interest and he is a Director of “Citizens for Responsible Government”, an organization devoted to fiscal responsibility in government. He is President of DuraCement, LLC.

© 2010 Lynn A. Bergman