The conversations on the radio lately deal with a very particular issue with ramifications for Grand Forks and North Dakota in general. Last week the question asked was, “Are we out of money in North Dakota?” By itself I cannot do much with that question, so I choose to rephrase it. I think it better to ask, “Are we hitting up against constraints in North Dakota?”
This is potentially the question we should be asking about North Dakota’s economic performance right now. The issue was somewhat laid bare in the labor shortages precipitated by the oil boom, but it likely existed before and continues now that the oil boom is over.
If we want to talk about wage disparities, wage constraints, incentives for innovation, and the like (which are all important to deeper discussions about economic development) we need to understand the relative position of the economy compared to its constraints. Another way of saying this is, how much slack do we have in the system?
We need to think about this carefully because it should really guide policy; it helps define the set of feasible alternatives we can hope policy can achieve.