By Dr. Bob McClure, President & CEO of The James Madison Institute
Originally Posted on WCTV6-CBS Editorial Blog on June 27, 2011
It’s important to note two welcome trends regarding Florida’s economic climate. First, the Associated Press reports that Florida led the nation in job creation in May. Our 28,000 new non-farm jobs were nearly twice the number created in second-place Ohio. The other trend worthy of note: In May, Florida’s unemployment rate fell for the fifth month in a row. Although the rate is still too high and still above the national average, the trend is nonetheless extremely encouraging.Even so, analyzing Governor Scott’s first six months in terms of Florida’s long-term jobs outlook is somewhat akin to saying that your favorite football team is a cinch to win the game because it’s ahead 3-0 at the end of the first quarter.For Governor Rick Scott, it’s still quite early in the game. Indeed, barely a month has passed since the conclusion of his first legislative session, and this week he was still reviewing bills, including several addressing economic development, business recruitment, and job growth.Inevitably there is always a lag before the economic initiatives of any governor (or President) can take effect and have a measurable impact. Even so, the decline in Florida’s unemployment rate at a time when the national unemployment rate has been inching upward suggests that something positive is happening in the Sunshine State.What might be the source of this positive trend? One non-policy factor to consider is the effect of governmental posture and leadership on the psychology of investors, entrepreneurs, consumers, and other key players in the economy. Psychology’s impact is often evident in Wall Street’s reactions to those monthly surveys of “consumer confidence.” It can also be argued that Ronald Reagan’s positive impact on the economy in the early 1980s resulted at least as much from the increased confidence that he inspired as it did from his policies, which took several years to have a direct impact. Similarly, one could argue that after last November’s election results, Florida’s employers felt the freedom to begin hiring again in anticipation of what the new Governor and the Legislature would do — and would not do — thus contributing to the restoration of confidence in Florida’s economy after the always-unpredictable Crist years.It is important to remember that the effect of government policy on market-driven, sustained job growth is generally indirect, not direct. Politicians and governments don’t create jobs–at least not durable private-sector jobs; rather, they create the conditions in which private sector job growth can occur – or be stymied. They do this through their policies with regard to regulations, taxes, lawsuits, and other practices influencing those conditions.Governor Scott’s job is not to create 700,000 new jobs single-handedly; it is to foster the economic conditions for private enterprise to create at least 700,000 new jobs. This may seem like a small semantic point, but many of our nation’s current economic problems (and many of those here in Tallahassee) stem from the fact that Americans too often look to government to do things that it can’t do rather than looking to government to create the conditions for private enterprise to flourish.