A few national reporters are looking curiously at North Dakota these days, wondering how this obscure, little state is avoiding the economic devastation that’s occurring from sea to shining sea.
“Maybe we could learn something from North Dakota?” they have asked.
As a matter of fact, they probably could.
While most states are trying to patch up their bleeding bodies with band aids of stimulus dollars, North Dakotans are debating ways to responsibly use or even save the millions in federal money that, frankly, we don’t need.
It’s easy to dismiss North Dakota’s success in one word: oil. But it isn’t that simple. If oil was the core of our success, our economy would have plummeted right along with oil prices in the last six months.
It hasn’t. So what’s going on here? High demand for energy, strong commodity prices, and a construction boom has certainly bolstered our economy. But two other major factors, fully within our control, are stabilizing North Dakota’s economy and they offer some timeless lessons for the rest of the nation.
First, North Dakota banks and financial institutions didn’t partake in the lending schemes that have destroyed housing markets and financial systems in nearly every other state. As one Bismarck car dealer told the New York Times in December, “We don’t do those goofy loans here.”
Our banks and consumers largely bypassed the tempting new products on the market, following instead traditional, proven lending methods. This has made an enormous difference in North Dakota.
By avoiding the mortgage disaster, our financial sector remains healthy and able to provide the stabile financial foundation that fuels our businesses and shoulders our economy.
The lesson is a simple one: If it seems too good to be true, it is. Home ownership is an awesome goal, but it can’t be achieved by simply lowering lending standards. Three cheers for North Dakota’s sensible, conservative bankers and home buyers.
Another key factor that is largely going unnoticed is the stability of our government. This isn’t just an accident or dumb luck. It’s the result of diligent elected leaders who have set priorities and made tough choices.
For years, we have elected people who have been good stewards of our resources, using economic growth to fuel government growth not the opposite.
Most importantly, our leaders have paid careful attention to funding government that is affordable not just in good times, but bad. In 2007, legislators rejected $550 million in new spending programs that would have further increased the baseline cost of government and devoured a bulk of today’s budget surplus.
They also returned millions back to taxpayers and saved millions more in a state “rainy day” fund.
This too is a simple lesson: live within your means. It’s a rule our elected leaders have followed that’s paying big dividends for all of us.
North Dakota citizens reflect this same principle every day. It’s why most people here don’t lease fancy cars they can’t afford just to make themselves look good. It’s why I’ve never seen a “foreclosed” sign on a house in my city.
It’s why twice in the last two weeks I’ve learned of friends who secured a second job to pay for a vacation or home improvements rather than going into debt.
North Dakota isn’t completely immune from the economic crisis, but the strength of our financial system, the stability of our government and the sensibility of our citizens give us a fighting chance to escape the worst of it.
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