You wouldn’t call somebody who just won the lottery “prosperous.” They may be rich and they are certainly lucky, but they are not prosperous. Prosperity has to be earned.
On Thursday, Gov. Gary Herbert hosted his annual Utah Economic Summit. Unlike his first year in office when unemployment hovered around 8 percent, Utah’s unemployment rate now stands below 4 percent, a level many economists would call near-full employment.
The Utah economy created 32,200 jobs during the past 12 months and nearly every major industry is growing. Utah’s level of income equality is among the highest in the nation. The governor’s vision of having the state become one of the strongest economies in the nation and a global business destination has largely been met. It may just be time for the governor to claim victory and set an even higher bar.
I made up a new word that characterizes what’s happening in Utah: I like to think of Utahns as Prospertarians. Taken from the root word prosperity, Prospertarians are people who experience remarkable economic success because of the choices they make.
Economics teaches us that large differences in economic performance can be explained. There are reasons some countries and states do well and others do poorly. Usually, places that motivate investment and spur productivity outperform those that don’t.
Consider North and South Korea. At the end of the Korean War the countries shared similar situations. They were both devastated by war, possessed similar natural endowments and tallied similar income and education levels. The Korean War ended in 1953. Today gross domestic product per capita in South Korea exceeds that of North Korea by a factor of 17!
We can learn similar lessons by looking at East and West Germany, or even today's China, as it has been more accepting of market forces.
So what are the lessons learned? First, markets work. We know of no better way to organize economic activity than through the rules of free enterprise. Thanks to reasonable regulations and tax policies, Utah’s market is performing better than most and we are reaping the rewards in terms of increased economic opportunity.
The corollary is that even in a market economy, governments play a vital role. Governments set the rules of the game in motivating investment and in fueling productivity growth. Nothing kills an economy faster than a misbehaving government. Just watch and see how Russia’s macroeconomic indicators plunge over the next several months because of the actions of President Vladimir Putin.
But there’s more.
To be a true Prospertarian you have to be willing to help those in need, a trait we possess in abundance as Utahns. The Community Foundation of Utah recently celebrated raising $1 million during the 24-hour Love Utah, Give Utah campaign. That’s success.
Primary Children’s Hospital just raised $521,619 during the KSL Radiothon. That’s success.
Catholic Community Services is an amazing force for good in this state. It administers compassionate service to the poor, the hungry and the homeless. It admirably serves immigrants in this state. That’s success.
Then there’s the well-known story about the aid provided by the LDS Church after Hurricane Katrina. A man was asked about the service rendered to the people of New Orleans. He said two different churches really stood out — The Church of Jesus Christ of Latter-day Saints and the Mormons! That’s success.7 comments on this story
All this is not to say we don’t have problems in Utah. An estimated 57,100 people remain unemployed. Approximately 12 percent of Utahns live in poverty. Far too many Utahns are without health insurance. We really need to expand Medicaid in this state. And we must invest more in public and higher education if we wish to remain prosperous.
But we are Prospertarians because of the choices we’ve made. We’ve made smart investments in human and physical capital. We’ve provided the right incentives for innovation that spur productivity. And, importantly, we hold out a helping hand to those in need. Taken together smart decisions, hard work and compassionate service create a winning combination. Join me in celebrating Utah’s current economic success and commit to an even better future.
Natalie Gochnour is an associate dean in the David Eccles School of Business at the University of Utah and chief economist for the Salt Lake Chamber.