Florida's case of economic 'termites'

Homeland security policies gnaw at the economy, argues Charlie Ranson of the Center for a Competitive Florida.

Published January 14, 2006

Charlie Ranson has uncovered what he calls "termites" in Florida's basement and he's trying to quantify how much damage they've done to the state's economic foundation.

Ranson, a lawyer and graduate of the Kennedy School of Government at Harvard University, is one year into his position as executive director of the Center for a Competitive Florida, the research arm of Florida TaxWatch in Tallahassee.

He recently authored a report that begins to assess the negative effect of homeland security policies implemented in the wake of Sept. 11, 2001. Drawing on largely anecdotal evidence from the state's tourism, education, health care and financial services executives, Ranson, 58, describes what he calls "the unintended consequences of well-meaning security policies."

Ranson spoke recently about growing public concern over security policies and the need to quantify their economic effect in order to force change.

Why is Florida being particularly hard-hit by homeland security provisions?

We are a globally dependent state and we've made a commitment in terms of Florida's economic future to be leader in global commerce. If security policies as designed and implemented constrict that business opportunity, then we're going to pay.

What parts of the state's economy are affected?

You can look at separate sectors of the economy - tourism, higher education and research - but you quickly realize that very few sectors are not being impacted by the implementing of these policies. I found out everyone was feeling the pinch.

I thought of it as a visa issue initially - of people being able to enter and leave the country. That's particularly important in terms of international tourism, because one in seven dollars spent in the U.S. by foreign travelers is spent in Florida. So if international visitors are having trouble getting into the U.S., it's going to have a very significant impact on Florida's economy.

And if sick people have to wait four or five months to get an interview for a visa to get medical treatment in the U.S., they're going to go elsewhere. And hospitals geared up to serve that population, which pays cash, will have lots of empty beds.

Did the extent of the problem surprise you?

I did not fully understand at the outset the impact of the Patriot Act on international financial transactions, a big marketplace particularly in South Florida. The big U.S. banks all have huge transactional bases of foreign clients and the obligation on bankers (under the Patriot Act) to become law enforcement officials is very costly. It's hard to pass those costs along to customers and those customers are going to go elsewhere.

Florida has lost its lead as the place where companies want to establish their business relationships throughout the Americas because of the Patriot Act and visa policies. The U.S. now ranks as one of the three most difficult places in the world to conduct business, behind China and Japan.

How do you quantify the damage?

Anecdotal evidence will only take you so far and our report is not a definitive study. What we were trying to do is say here are the problems, here's how they relate to the economy and here's how they're going to affect the future of Florida. If we can find funding, we can put the numbers together. Everyone agrees they are serious issues and agrees on the need for research. But no one wants to pay for it. And we're talking a project that would cost $500,000 to $600,000.

Are you encouraged that the public is showing some skepticism about homeland security measures?

People are beginning to think about the consequences of these policies in a broader context. Eavesdropping is definitely a hot issue.

And the U.S. Department of Commerce reportedly got more than 1,000 comments on proposed regulations on restricting foreign nationals' participation in research deemed "sensitive."

People pointed out that if Edward Teller, a Hungarian, and Enrico Fermi, an Italian, had not been allowed to participate in U.S. research, we may have lost World War II.

Don't you risk being called soft on terrorism by criticizing these policies?

No one wants to be responsible for allowing the next Mohammed Atta in the country. But are we dealing with an infection in a finger by cutting off an arm? Can we be more precise in targeting what we do? If in protecting our physical security we undermine our economic base, can you make the case the terrorists have won?

What's the next step?

We need to know the cost/benefit of these policies. And we don't have a handle on the costs. We want to provide the empirical data so our congressional delegation and national interest groups have a tool they're now missing. The answers to this are going to come out of Washington.