Rand Paul 2010 | U.S. Senate

Robert Byrd’s Highways to Nowhere - Wall Street Journal

By BRIAN BOLDUC

‘His heart belonged to you,” President Obama told the hundreds of West Virginians who attended Robert Byrd’s funeral last week. “Making life better here was his only agenda.” Maybe so. But despite the $4 billion in pork that Byrd served his constituents over the past 19 years alone—not to mention the untold billions before observers started keeping tabs—West Virginia remains the third poorest state in the country. Government spending does not prosperity make.

When Byrd became senator in 1959, West Virginia ranked No. 39 in median family income, and No. 42 in per capita income. Today, it’s No. 48 in both categories.

True, Byrd was never a governor of the state even if he was its political patron. Also true is that mining companies developed more efficient techniques for extracting coal and natural gas, which eliminated the need for many blue collar jobs. Laid-off workers lacked the skills to attract other types of businesses and college students couldn’t find jobs after graduation, so they left. Such dramatic changes would be serious obstacles
for any politician.

But other states learned to cope with similar economic change. Take North Carolina, a state West Virginia beat in the rankings in 1959. Back then, the Tar Heel state lacked a skilled work force. But it kept taxes low and regulations light, allowing private actors to harness the state’s resources.

Perhaps the crowning achievements of such policies is the Research Triangle Park in Durham, N.C. In the 1950s, a committee of businessmen, academics and government officials raised money through private donations to buy a plot of land near the state’s universities where they could match graduates looking for jobs with companies looking for skilled workers. The state government did offer some incentives like tax credits for research and development, but it never funded the park. Today, the park is thriving, with 170 companies employing over 40,000 people.

By contrast, Byrd’s solution was to steer federal largess to his state. “What I’m doing is spreading good seed that will bear fruit a hundredfold,” he told a crowd of West Virginians in 1994. “Prosperity flows along concrete rivers.” Unfortunately, many of those rivers are running dry.

Take Route 50. Thirty years ago, the federal government extended the route from two lanes to four with the hopes of spurring development. But hit the open road today and you’ll notice it’s just that—open. “You won’t see another car for two hours,” says Russell Sobel, a professor of economics at West Virginia University. “You can’t just build roads and expect that things will happen. People who want to transport goods and services need to be there.”

Byrd’s supporters point to Interstate 68. In 2003, the federal government built a penitentiary in Hazleton, W.Va., precisely because the highway made it an ideal spot—sparsely populated yet accessible. But in both cases, the government made the development, not private investors. In fact, 51.3% of the state’s economy relies on spending by the local, state and federal government—the highest level of any state. “We’ve created this culture of dependency,” warns Mr. Sobel, “Our human capital is not good at competing in the marketplace; it’s good at securing federal grants.”

Federal funding is a shaky foundation for an economy because no one can replace Big Daddy. In their recently released paper “Do Powerful Politicians Cause Corporate Downsizing?” Harvard professors Lauren Cohen, Joshua Coval and Christopher Malloy found that states that lose chairmanships on important congressional committees lose 20% to 30% in earmarks.

Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state’s workers and real estate, jacking up prices. Often, companies can’t compete, so they flee.

“Take a random government helicopter and drop $10 billion into a state,” says Mr. Cohen. “Many people will think it’s $10 billion in income for the state. We’re saying, ‘No, you have to think about how the private sector pulls back. It’s really about six or
seven billion dollars of income.’”

Though that $7 billion might be a nice one-time boost, a state needs long-term investments to grow. But the West Virginia government scares away those investments with laws and taxes that smother private initiatives. One example is a tax on machinery, which shoos businesses away.

Along its border with Maryland and Kentucky, West Virginia offers identical resources, but this tax is onerous enough that it keeps two Fortune 500 companies, Marathon Oil and NewPage Corporation, just outside state limits. Unsurprisingly, West Virginia ranked dead last among the 50 states in the Fraser Institute’s Index of Economic Freedom of North America.

Sen. Byrd may have loved West Virginia. But a hearty economy would have been a greater legacy than the 30 taxpayer-funded projects that bear his name.

Mr. Bolduc is a Robert L. Bartley fellow at the Journal this summer.

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