L. Neil Smith's
THE LIBERTARIAN ENTERPRISE
Number 343, October 30, 2005
Tenth Anniversary Edition, Part 5
Turning New Hampshire into a 21st Century Powerhouse
Special to TLE
While economic freedom is a necessary pre-condition for New Hampshire to become a 21st Century Powerhouse, it is not sufficient. To become the Estonia, Hong Kong, or Switzerland of North America, the Free State of New Hampshire will require a great deal of other factors: capital, brainpower, entrepreneurial spirit and risk taking, and cultural tolerance.
Capital can be indigenous (within the state), or attracted from outside the state (i.e. raiding parties on other states). N.H. has better prospects for raiding New England than it does, say, in raiding Austin or Alabama. Austin, Texas provides an excellent example of what to do. It has concertedly raided Silicon Valley, Boston's Route 128, and the mid-Hudson Valley for decades, and as a result has grown dramatically in the last 20 years. Now known as Silicon Hills, Austin is the benchmark by which other raiding parties are measured and the city most feared by Silicon Valley (other than Shanghai). The Austin Chamber of Commerce and various civic-business groups have really coordinated well, and Texas in general is known as a state that goes after the pork (although, per capita, it actually gives more to Washington DC than it gets back).
Unfortunately, Austin has also grown using tax abatements to large corporations, which has lead, finally, to a public school funding crises in Texas (other large cities in Texas, such as Dallas, Ft. Worth, and San Antonio have used the same tactics, with Dallas now known as Telecommunications Corridor). Austin's model should have been combined with reducing government school bureaucracy, but instead Austin Independent School District has grown liberal, lazy, and unresponsive to parents and taxpayers.
When Forbes magazine had picture of a marijuana leaf on its front cover, it let the worst kept secret of the Pacific Northwest out of the bag: British Columbia, and indeed Canada, derives more income from growing pot than from nearly anything else, rivaling timber, fish, and hockey! In case anyone hasn't noticed, Vancouver has become a world-class city by embracing two different policies: largely ignoring the marijuana cash crop trade (and tolerating with amusement the local pot smokers), fueling a vibrant economy, and offering economic and political freedom to Hong Kong capital. Vancouver is rainy, cloudy, and there is nothing special about British Colombia's ecosystem that would suggest it is ideal for hemp cultivation. New Hampshire could, and should, learn the lessons of Vancouver, and quickly.
New Hampshire had a chance to improve this situation with the entrepreneurial and neolibertarian former Governor Craig Benson, but instead chose to focus on short-term anger, returning a Democratic administration to Concord. While Benson was no friend to any hemp industry, he at least understood business and competing on the world stage.
A more successful New Hampshire strategy would consist of free-market raiding parties comprised of business and civic leaders, combined with a reduction in local property taxes brought about by privatization of the school system, home schooling, and University-sponsored charter schools. Silicon Valley is investing heavily in nanotechnology, San Francisco and San Diego in biotechnology, Austin (University of Texas) in nanotechnology and even Lubbock (Texas Tech University) in wind power generation. New Hampshire must find energy, materials sciences, and biosciences as a place in which to invest its future, and one way to do this is to refuse to tax any company that is working in those fields. Rather than burden all other industries, concurrent reductions in state expenditures should be enacted, and capital allowed to flow into productive, profitable industries that have world-wide markets without buying into the Federal Government's outrageous and tiresome lies about marijuana. Protection of capital formation is paramount; if the state seeks to tax and spend those that risk capital, the situation quickly deteriorates into Yet Another New England State (YANES). Fortuately, New Hamphire does not have a state income tax nor sales tax, but taxes on businesses must be addressed.
Brainpower is tied directly to a major university. Silicon Valley grew up around Stanford (a private institution) as well as the University of California at Berkeley, and both became leading research and teaching universities in semiconductors, computer engineering, and software engineering. Stanford actively recruits its alumni to contribute profits from its successful progeny, the companies formed using its students, and they plow money back into the institution to keep it all going. In contrast, the University of New Hampshire is not considered a major intellectual university, suffering in comparison to not only Boston-area schools such as M.I.T. and Harvard, but also the universities in Pennsylvania. Dartmouth is well known for its undergraduate (very) liberal arts and its business school, but Dartmouth is quite out of the way, and no economic ecosystem has grown up in the Lebanon/Hanover area worth mentioningyet.
Of the two major schools in N.H., Dartmouth is best placed to turn around its socialist attitudes and become the Stanford of Northern New England. It can start with importing the Economics Department from George Mason University, and buying plane tickets to San Jose to study a success model. Too often brainpower leaves New Hampshire, as its charms are geared more for older people. The Free State Project is a counterweight to this flow of young minds out of the state, but in order to flourish New Hampshire must consider other success factors, such as....
Entrepreneurial spirit can be taught in schools, but it is breathed at home, in the community, and in government. Benson's unfortunate defeat has set back New Hampshire, leaving it Yet Another Complacent New England State (albeit one with a significant respect for property rights). Libertarians and liberty-minded individuals must do more than simply talk free-market: they must start businesses, grow businesses, take over as corporate leaders, and make themselves and their companies successful.
New Hampshire can get a leg up on the rest of New England by strongly guaranteeing private property rights, completely rejecting all eminent domain, and by reducing corporate taxes (which, truth be told, are merely passed on to consumers and customers anyway in the form of higher prices). All middle schools and high schools should teach free-market economics, price theory, and entrepreneurship (which will also provide better leadership training than any Government or Civics class!). New Hampshire's 400 strong, largely unpaid legislature is filled with small business owners, and if each one could see fit to hire a worthy young entrepreneur in training, a new class of Young Turks might arise (assuming they'd sign non-compete contracts!). No state program is implied here, merely the spreading around of the idea (or "meme") to get discussions focused on entrepreneurship.
One excellent area for entrepreneurship is the providing of services once provided for by Government. Rather than government granting a franchise to a single, annointed private company for a contract, services (as much as possible) should be opened up to private industry. Young entrepreneurs should be encouraged to explore these markets.
Cultural tolerance, according to a number of recent studies, is one of the key factors in economic vitality. But you don't have to be a genius to figure this out. Look around you. Those places that tolerate or embrace diversity as "interesting" rather than "scary" outpace others in economic performance, and since these areas are also correlated with relatively high taxation, it can be said that cultural tolerance is more important than taxation in encouraging the flourishment of business. Berkeley/San Francisco, Austin, Boston, Atlanta, Dallas (yes, surprisingly, Dallas)the list goes on and on of high-tax, successful places that show social tolerance for diversity in race, sexuality, gender, and so on.
The key benchmark of these areas is toleration of lesbian/gay/bisexual/transgendered individuals, but it also includes embracement of a vivid live music scene, social nudism/naturism, and other "countercultural" practices. This doesn't mean the citizenry turns gay. It does mean that gays are not discriminated against, can live without fear for their lives or their livelihoods, and are integrated into the productive environment. Other hallmarks of cultural tolerance include cuisine diversity (having a single decent Mexican or Chinese restaurant in Manchester doesn't quite cut it), festivals, and large, or at least important, Jewish populations. This is not a matter of giving special treatment to anyonejust human treatment to all, and it is a cultural, not a governmental, phenomena.
Have you ever noticed that, often enough, places that have large Catholic minorities or majorities are the most fun, and often support sexual, gender, and artistic minorities better? Montreal, Los Angeles, New Orleans, Austin, Boston, Silicon Valley all have sizable Catholic populations, large dioceses, and yet also have the most economic dynamics. While it is completely untrue to assert that, say, San Jose or Austin are Catholic cities (they're extremely heterogeneous, which is rather the point), they also have a zest and a zen for life that goes beyond dry, stuffy monocultures. Montreal suffers from oppressive government taxation and economic ruin brought on by the 1976 Olympics and a nationalistic, almost atavistic expulsion of Anglophones. New Orleans is too hot and too poor to be a powerhouse, except in shipping. Los Angeles is an economic dynamo that has slowed down due to massive poverty infusions from Mexico and extreme socialism draining away the productive individuals to healthier economic climes, mostly Arizona and Texas.
New Hampshire must grow out of its conservative-Republican and "you're an unwelcome stranger even if you've lived here 5 (or 20!) years" mindsets. Even Barry Goldwater realized, albeit late in life, that gays were no threat to society. But rather than turning to tired old liberal tax and spend special interest politics ("let's build a $10 million Gay and Lesbian Cultural Arts Center using taxpayer dollars"), it should embrace Austin and Silicon Valley's libertarian attitudes. Scared of Indians? Go meet the CEO's of Northern California's companies that originally came from India; you couldn't tell by talk or by attitudes that they're anything but Silicon Valley magnates, fully enmeshed in the high technology culture, world citizens and yet completely American success stories. Chinese? Better rack up those frequent flyer miles to Shanghai and Shenzhen. Instead of legalizing gay marriage, it should end all governmental intrusion into marriage whatsoever.
Taking advantage of its natural geography and historical ethnic groups, New Hampshire could work together with the Quebecois to forge a new Great Northern Trade Zone, and with Ireland, the fastest growing western European country! And oh yesdid I mention learning the lessons of Vancouver, British Columbia?
The Free State of New Hampshire, lead by the Free State Project, the Libertarian Party of New Hampshire, the Republican Liberty Caucus of New Hampshire, the New Hampshire Liberty Alliance, and the New Hampshire Underground has achieved a foothold beach-head in the creation of a more libertarian political and economic environment, though much work remains to be done to turn New Hampshire away from the palsy that is the rest of socialist New England and Eastern America in general. However, liberty by itself is not sufficient in the 21st Century to compete against the best the world has to offer, and to create an enormous dynamo of wealth, prosperity, and freedom requires capital, brainpower, entrepreneurial spirit, and sophisticated cultural attitudes. This paper identifies what other leading centers for growth have achieved, grazes on how they achieved it, and challenges the Free State to live up to its motto and propel itself to the vanguard of this new century by adopting successful models pioneered by others. New Hampshire's greatest natural resource is actually the proto-libertarian attitudes of its people. Now is the time to turn that into gold.