As we prepare for another election across the country, the economic news, particularly for the poor, working class, and minorities is the best that it has been in an extremely long time. North Carolinians, according to a Meredith University poll, are even happier with this state than they are with the nation, for good reason. North Carolina’s state-level policies in the past decade have been far better than most states, resulting in North Carolina becoming one of the top destinations for people from other states such as New York, Illinois, Connecticut, and New Jersey, which have the largest rates of out-migration.
As a nation, for the first time since 2008, we are the most competitive country in the world. Most years, the United States economy grows at about the same rate as England, France, and other developed nations, but in the last couple of years we have prospered at a rate much better than theirs. The tax cuts have worked their magic, putting far more poor people to work than countries such as France. Even with tax cuts, federal tax revenue grew by $14 billion in the fiscal year just ended. Incidentally, I have never written a word in this column about the level of the stock market. That’s because you should mostly ignore it. It doesn’t signal much about the overall economy. Expect that it will go through some rough times as the Federal Reserve Bank allows interest rates to rise to a natural level.
Fewer households than ever now have an income below $35,000 per year when adjusted for inflation and smaller household size. Income inequality is being reduced as more manufacturing and other traditionally blue-collar positions are added to the economy. Bloomberg recently reported that the wealthiest 1,409 taxpayers pay more income tax than the lowest 70 million taxpayers combined. The wealthiest 1 percent paid more in individual income tax than the lowest 90 percent. Reread that sentence. The federal tax burden in this country is paid almost entirely by the wealthy.
One of the current administration’s deregulations recently allowed more cost-effective health insurance policies to be sold, resulting in about 2 million more people having coverage, that they are voluntarily willing to pay. Now that the current administration has implemented some important fixes, premiums will decrease for the first time, and only 39 percent of counties and five states will have just one insurer, down from 56 percent and 10 in 2018.
Deregulation still offers tremendous opportunities for helping our economy. I invite you to keep track of time or money spent on ineffective government regulation. Just recently, as a business school researcher, I had to pass tests to conduct research that required me to be knowledgeable about administering drugs to pregnant women and the proper handling of bodily fluids, neither of which is remotely related to my position. The amount of paperwork, and the process, to hire a work-study — a program subsidized by federal funds — student on campus is extremely high.
One of the major problems with government regulations is that they absolutely nip in the bud the starting of new businesses. There is simply too much bureaucracy for entrepreneurs to undertake. More than 600,000 new businesses started in 2006. We would expect that number to be smaller during a recession, but only 414,000 companies were started in 2015, well into the economic growth cycle. This drop has resulted in about 1.8 million fewer jobs created. So, there is still hope in cutting the bureaucracy for starting a business to give us an impetus for continuing economic growth.
My consistent message will be to realize how great these economic times are and get your personal finances in as positive a situation as possible. Pay down any debt, because the next recession will start without us noticing it.