You Can’t Have Stability And Growth

By John Hood

RALEIGH — On a single day of catching up on the latest business news, I happened across five stories with a direct bearing on a key sector of North Carolina’s economy. The Wall Street Journal, for example, reported on a severe downturn in the pulpwood market, including the closure of mills, potential delays in the replanting of commercial forests, and shifts in business practices and consumer preferences that don’t auger well for the industry. The Journal also noted the pending expiration of intellectual-property protections for key pharmaceuticals, calling it “the biggest patent cliff in decades.”

Closer to home, Triangle Business Journal covered surging interest in banking mergers and acquisitions, due in part to federal regulations, and reported that North Carolina hospitals have some of the longest emergency-department visit times in the country, due in part to capacity constraints. Meanwhile, sister publication Triad Business Journal described public opposition to new data centers and its potential to crimp new investment and growth in tech companies in the region and beyond.

I wouldn’t describe this day’s collection of business stories as unique — or uniquely troubling. On the same day, these and other media outlets also reported on business expansions, new commercial and residential development, and innovative new technologies that hold great promise for customers, workers, investors, and suppliers. Modern economies are dynamic, not static. If we want the many benefits of free enterprise, we can’t also have perfectly stable markets for good, services, and labor. It’s simply not possible.

North Carolinians should understand the tradeoff better than anyone in the country. Since the founding of what became our state more than three centuries ago, our economy has undergone a series of radical transformations.

In its early decades, North Carolina was almost entirely agrarian. Plantations dependent on slavery and indentured servitude produced tobacco in the northeast and rice in the southeast, while subsistence farmers and Indian communities reliant on corn, squash, bean, fish, and game inhabited much of the backcountry. By the time of the American Revolution, wood products had become a major industry, generating hardwood timber for homebuilding and barrel-making as well as pine tar, pitch, and turpentine for the construction of commercial and military ships.

Cotton came later, as did the damming of North Carolina’s numerous but not easily navigated rivers, which laid the foundation for furniture, textile, and apparel manufacturing. Early gold rushes in the Carolina backcountry combined with the state’s traditionally light regulation of branch banking laid the foundation of another signature sector of our future economy: financial services.

As economist Michael Walden explained in two essential books — North Carolina in the Connected Age (2008) and North Carolina Beyond the Connected Age (2017) — a strategic triad of tobacco, textiles, and furniture emerged in the early 20th century and by the 1960s represented most of our industrial output and a quarter of the state’s total employment. By the entire of the century, however, this Big Three had been eclipsed by a Big Five: technology, pharmaceuticals, financial services, food processing, and vehicle parts.

Now, quarter-way through the 21st century, all these industries continue to evolve while others emerge, often powered by artificial intelligence. If “experts” tell you they know for sure how it will all turn out, treat their prognostications the same way you do sports commentators: for entertainment purposes, if that’s your thing, but not for investment purposes.

What I think we can forecast with great confidence is that, if markets are left free to discover and spread new information, allowing producers and consumers to adjust in real time, our economy will keep growing and North Carolinians will keep reaping its benefits. Remember that, contrary to popular belief, our state is not deindustrializing. North Carolina’s total manufacturing output was higher in inflation-adjusted terms in 2025 that it was in 1997. Manufacturing of non-durable goods (such as socks) went down 15%, yes, but durables manufacturing (such as trucks) nearly doubled.

The more things change, the more the laws of economics remain the same.

John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).