Huge Employment Growth in a Slowing Economy?

It’s no secret that I’m extremely skeptical about the government’s employment for Rhode Island, and I do periodically hope to be proven wrong.  But I just don’t see how one can reconcile the state’s employment surge in the past six months with this, in the Providence Business News:

Rhode Island’s economic growth failed to meet expectations in the first quarter, posting a gain of 1.5 percent, according to the Rhode Island Current Economic Indicator briefing released Monday by the Center for Global and Regional Economic Studies and the Rhode Island Public Expenditure Council.

While the briefing said the economy experienced growth, it is showing continued signs of weakness, as its rate of growth slowed from the fourth quarter, when it grew 1.7 percent.

It also failed to meet previous projections of 2 percent growth for the first quarter.

It’s possible Rhode Islanders are finding jobs in neighboring states, but when I investigated that possibility last year to dig into another inexplicably good first-half for Rhode Island, the evidence didn’t seem there.


U.S.A. Now the U.S.S.A.

The United States of America is no more.  Our experiment with representative democracy in a constitutional and federalist republic is finished, and it failed.  We are now the United States of Social Acceptance.

You are not free.  Everything you do must be explicitly or implicitly be approved by the government.  We’ve gone from the idea that the laws of the land draw narrow boundaries for government to the reality that laws and regulations draw the increasingly restrictive boundaries of what you are permitted to do.

The examples are everywhere proving that those who dominate our government see themselves as an authority over every personal interaction in the country.  One I spotted over the weekend while reading legislation from the General Assembly’s last week, and that was featured in the Providence Journal on Sunday, gives the government authority to judge whether employers are making reasonable accommodations for pregnant employees (and those who recently gave birth).  In the Senate, the bill is S0276 from Hannah Gallo (D, Cranston); in the House, it’s H5674 from Shelby Maldonado (D, Central Falls).

As it happens, I agree — as I’m sure most of us do — that an employer should make accommodations for such employees unless doing so causes “undue hardship.”  In such decisions, I agree that some of the relevant factors are “the nature and cost of the accommodation,” “the overall financial resources of the employer,” “the overall size of the business,” and “the effect on expenses and resources or the impact otherwise of such accommodation upon the operation of the employer.”

But in most cases, both the employee and the employer are adults.  It shouldn’t be up to me to decide whether the inconveniences to the employee outweigh the business needs of the employer, and it shouldn’t be up to the government, whether legislators, judges, or bureaucrats.

In the progressive mindset that dominates in Rhode Island and, increasingly, at the federal level, we are not adults.  We’re children who need some superauthority over our lives to whom we can run when we’re not happy with each other.  Whining ten-year-olds run to their parents when they think their peers have done something that isn’t “fair.”  Adults shouldn’t require the same condescension.


An Electorate That Will Not Learn?

Thomas Sowell’s musings about the implications of electoral support for Hillary Clinton has Rhode Island application:

The fact that many people are still prepared to vote for Hillary Clinton to be President of the United States, in times made incredibly dangerous by the foreign policy disasters on her watch as Secretary of State, raises painful questions about this country.

A President of the United States — any president — has the lives of more than 300 million Americans in his or her hands, and the future of Western civilization. If the debacles and disasters of the Obama administration have still not demonstrated the irresponsibility of choosing a president on the basis of demographic characteristics, it is hard to imagine what could.

With our enemies around the world arming while we are disarming, such self-indulgent choices for president can leave our children and grandchildren a future that will be grim, if not catastrophic.

Electoral decisions are being made for all sorts of reasons that have little or nothing to do with running a government.  The biggest factor, I’d say, is simply the self-satisfaction that comes with voting according to a false narrative.  This weekend, I heard from yet another person whom I’d just met that the Democrats are, or used to be, the “party of the little guy.”  Even if that was true by some measure in some place at some point in history, voting for that reason is a bit like saying you vote for the party that Superman would have voted for.  It’s a narrative created as part of the entertainment media.

Other reasons are in play, of course, like the expectation that a particular party will directly transfer taxpayer dollars to one’s business or family.  But I suspect the makeup of our government at the state and federal levels would be very different if people voted according to results rather than rhetoric (and not necessarily in a purely partisan way).


Google as Big Brother or KGB

This is a bit out of our usual subject matter, around here, but it’s nearly a civic duty to pass the word around:

Yesterday, news broke that Google has been stealth downloading audio listeners onto every computer that runs Chrome, and transmits audio data back to Google. Effectively, this means that Google had taken itself the right to listen to every conversation in every room that runs Chrome somewhere, without any kind of consent from the people eavesdropped on. In official statements, Google shrugged off the practice with what amounts to “we can do that”. …

Early last decade, privacy activists practically yelled and screamed that the NSA’s taps of various points of the Internet and telecom networks had the technical potential for enormous abuse against privacy. Everybody else dismissed those points as basically tinfoilhattery – until the Snowden files came out, and it was revealed that precisely everybody involved had abused their technical capability for invasion of privacy as far as was possible.

Perhaps it would be wise to not repeat that exact mistake. Nobody, and I really mean nobody, is to be trusted with a technical capability to listen to every room in the world, with listening profiles customizable at the identified-individual level, on the mere basis of “trust us”.

I keep a piece of paper over the camera on my laptop, but sound waves are a bit more cumbersome to block than light waves.  All computers, cell phones, tablets, and other such devices should have a mechanical switch that breaks the electrical connection allowing the collection of video and audio.  Short of that, we’re essentially ensuring that we will soon live in a world that’s totally bugged, if we don’t already.

Despite his imaginative powers, George Orwell didn’t come up with this turn of events, and the U.S.S.R. didn’t have the technology.

(Via Instapundit.)


Another Objective Journalist Signs on as Staffer for Democrat Politician

It’s a small thing, perhaps, but since I’ve taken to noting when this happens, it’s worth adding this to the series:

State Treasurer Seth Magaziner has hired Tatiana Pina, a much respected former Providence Journal reporter, to work in his communications office. 

Pina started work on June 8 as a $62,918 “assistant communications director for the retirement system,’’ according to the lead spokeswoman for the treasurer’s office, Shana Autiello.

It’s funny.  When I finally managed the leap from carpenter to full-time policy and politics writer, I met with a bunch of folks in the local field, and journalists would scrupulously decline my offer to pick up the tab for a $6 sandwich, or whatever.  The concern, I guess, is that it might look like an attempt to sway their reportage, or something.

It is now regular practice for Rhode Island journalists to step up to jobs in the offices of local officials, who are almost always Democrats, around here.  How could it not affect the reportage of journalists to know that they may want to leave open the option to work for the people on whom they’ve been reporting?  If you’re reporting on — say — the statewide Tea Party or — for example — the activities of a small GOP caucus, the odds of ever getting a job with either group are very small, but the odds of getting a job with the people whom they’re criticizing are pretty big.

One could argue that communications jobs aren’t explicitly political, but they are geared toward making the office holder and his or her policies and actions look good.  There’s not necessarily anything wrong with that, but readers should approach the news with full awareness of the incentives for the people producing it.


The New Toll Plan Will Still Be Challenged in Federal Court

If getting bond investors their interest payments construction underway as quickly as possible is of the utmost importance, Rhode Island’s political leaders will need to consider how much of a risk of a lawsuit they are willing to take in order to get the local carve-out; a case like this would take years to work it’s way through the Federal courts and the whole tolling-plan might possibly be enjoined during the litigation process. Of course, an injunction against the toll-plan would mean no money for bond payments road-repairs right away.

On this issue, Rhode Island’s legislators would be wise to keep in mind the lesson of Gordon Fox: Because Rhode Island’s Democratic leadership can play fast-and-loose with interpretations of rules and laws while inside the statehouse (e.g. nullification, revolving door judgeships) does not mean they can extend that power very far outside and forgetting about this can lead to unfortunate consequences.

The legal analysis that leads to this conclusion is in the main post.


Charters in Public-Private Limbo

I’m in the minority among my ideological peers, on this, but my thinking on charter schools has changed quite a bit in recent years.

Many conservatives, I believe, see them as a sly way to insert wedges into public education’s cracks in order to bring about wider-scale reform of the system.  If we create this alternate system of schools, literally entered with the luck of the draw, that is free of the restrictions that (for some reason) we continue to tolerate in district schools, then parents will demand that district schools be made free of the restrictions, too.

To advance this stratagem, we’ve been willing to overlook basic descriptive facts about charters that would normally concern us a great deal.  In order to work around the damage that the democratic nature of our government has wrought in education (thanks, largely, to the self-interested activism of teacher unions), we’re creating institutions over which the public has less control.  On the one hand, charter advocates insist that they are “public schools of choice,” so they should fall within the range of inside-government benefits, but on the other hand, they are demanding that the people paying the bills should not have immediate, democratic control over them.

In any other context, conservatives would recoil against that just as surely as they ought to recoil against crony capitalist deals giving connected insiders taxpayer cash for their private business dealings.  Principle should not be something to be weighed against practicality.  Rather, we should hold to our principles because they produce the outcome that we desire; it is in determining our goals that we should weigh morality and practicality.

My concern, in treading off our principled path, is that we’re more likely to get lost than to return to our firm ground.  Instead of breaking the rigid grip of special interests on public schools, charters will kill off private schools — at least all of them that are accessible to anybody who’s less than rich.  Then special interests will successfully tighten the vice, making government education a true monopoly rather than the near-monopoly that it currently is.


More on Reporting Providence Pension Fund Shuffling

Dan McGowan, of WPRI, emailed to point out that he wrote about the subject of my earlier post back in May.  The article does prove that at least one mainstream journalist has brought the topic up, but the content illustrates much of my point.  Consider this from McGowan’s article:

[Kathleen Riley, a senior vice president and actuary for Segal Consulting,] told the committee the change in calculation “in many ways is not too meaningful,” but explained that is why the city’s unfunded pension liability grew from $831.5 million at the end of the 2013 fiscal year to $894.3 million in 2014.

“Historically very little attention was paid to funded ratio so it didn’t really matter how you reflected that contribution receivable,” Riley said. “But we think this is a cleaner approach to presenting your numbers, [and] a more accurate reflection of your assets in your fund and your funded ratio on the valuation date.”

What is this but a rolling scandal for which no politicians are ever held accountable?  Nobody used to care whether the pensions were funded, so the accounting didn’t really matter?  That’s scandalous.  Then, when people started to pay attention, it benefited the city to lag its contribution to the pension fund (which looks like about 25% of its declared assets) by a full calendar quarter.

If somebody were really relying on that money (rather than just expecting taxpayers to come up with any shortfalls when bill comes due), that would make a difference.  Somebody looking at an audit at the end of June would expect that $63 million to be in the account gathering investment returns for three months.  Using the city’s (absurdly high) projected return on investments of 8.25%, that’s around $1.3 million lost to the pension fund for the year.

If the city does this every year, by the end of a decade, it would be short around $20 million.  At the 30-year horizon often used for pension calculations, it would be out over $150 million.  (This all ignores the possibility that doing this accounting helps the city avoid thresholds like a designation of “critical.”)

But it’s complicated, and it’s all just numbers on a page until the city has to take more money away from some resident in order to give it to some retiree.

I should note, by the way, that this is more an attack on our general assumptions about government than on journalists.  If you look at the note at the end of this April 2012 post of mine, you’ll see that WPRI’s Ted Nesi and I were discussing Providence’s delayed payments back then.  Those of us who write about these things can’t be expected to trace every curious detail, or to know off the tops of our heads what normal practice is.  Back then, I was concentrating on explaining how the entirety of pension accounting is a scam.

Today, I’m mostly pointing out how pension accounting illustrates the flaws in our civic system, which I’d suggest should advise us to severely limit the activities of government.


Making Pension Controversy a Surreal Non-Issue

Reading Michael Riley’s latest article on the financial condition of pension funds at the state level and in Providence, one gets the sense of two realities.  Riley’s an investment professional and knows this game, so when he writes things like this, people should listen:

Unless the Providence pension Plan receives $62 million in cash or investments from the City by June 30, 2015 the city will once again default on a current liability loan. …

The countdown for Providence Bankruptcy and default is on and its 14 days. Raimondo and Magaziner have also been oblivious to the struggles of cities and towns, preferring instead to campaign for green spaces and a green infrastructure bank etc.  Meanwhile, the state’s pension performance for fiscal year 2015 is horrible and will certainly push Rhode Island and its funding ratio farther down into critical Status. …

I estimate that with just 2 weeks left in Fiscal Year 2015 the State Pension Fund has earned just over 3% compared to their own projection of 7.5%. That is a shortfall of approximately $360 million dollars.

One would think this sort of assessment from a credible expert would be slipped into the news cycle somewhere, but it’s not.  Why is that?

Part of the problem, I think, is that changing models for the news business have broadened the responsibilities of journalists.  This is complicated subject matter, and the same reporters who would take it on are also covering a wide variety of complicated subjects.  Obviously, there’s a massive state budget in the works, and then there are flashier, edgier topics that the state’s politicians keep tossing into the mix, like truck tolls, for example.

Another part of the problem is that there’s so much fluff and flop in government budgets that it’s relatively easy for officials to cover things up.  With a magician spell over the complexity, money can just appear, and policies can just change with some ostensibly disconnected rationale.  Lo’ the state slips $62 million somewhere into its aid to Providence, and the same amount materializes in the pension fund, or the projected discount rate or some other assumption changes that makes the problem vanish.

That’s if anybody acknowledges that there’s a problem.  There’s no rule of law anymore, it seems, and government is not a very good watchdog over itself.  According to Riley, Providence has gotten away with this for years; if those who must enforce the rules do not do so, then no rules appear to have been broken, and when the repercussions play out over years, politicians needn’t be caught.

So why should journalists spend all the time to dig into these topics, only to be given the runaround by government sources (whose good will they need for other stories) and made to look like alarmists when the consequences outlast the public’s attention span?


New Childcare Union Info (More Money than Stated)

Childcare subsidy data from the state Executive Office of Health and Human Services (EOHHS) suggests that the numbers from the House Speaker’s office that I posted were too low.  The difference is that the legislative source included only childcare subsidies paid through the Department of Human Services (DHS), but the total should also include subsidies paid through the Dept. of Children, Youth, and Families (DCYF).

Including both departments, the baseline number for the upcoming fiscal year (FY16) is actually $63.2 million, making the $2.15 increase in the rates paid to private providers an overall 3.4% increase.  The FY15 total was $54.5 million, making the total increase from one year to the next $10.85 million, or 19.9%, raise included.

No agents of the state government will share details of the contract negotiated with the SEIU, but if the range of possible dues is 1.5% to 2.0%, then the total that the state will pay to the labor union in the upcoming fiscal year will be between $980,250 and $1.32 million.


Post Script on House Budget Night

Ted Nesi has consulted with the State House librarian and learned that there were unanimous budget votes in 2008 and 1999.  As a first impression, that means the House wasn’t due for another one for a couple of years, but it also suggests that shock at the unanimity might have been a little overblown.  As somebody who tweeted that the vote was “an outrageous indicator of a very sick representative democracy,” I’d make two points.

First, I wouldn’t be at all shy about suggesting that Rhode Island’s representative democracy has been very sick for much longer than the period back to 1999.

Second, the final unanimous vote was mainly significant as the sharp edge of the entire evening.  Looking at the journal from the House budget night in 2008 for contrast, a few things stand out.  For one, the House didn’t wrap up until almost midnight, so it wasn’t the same quick session.

More importantly, there was some contentious drama.  On a quick skim, it looks like two floor amendments actually passed by surprise, leading to reconsideration votes to change the outcome.  That isn’t exactly the festival of harmony we witnessed last night.  From the perspective of the electorate, at least it seemed like the system was working… somewhat.

So what about the tax cuts?  Surely around $45 million in FY16 cuts, largely for businesses and Social Security recipients, is a positive development in line with what small-government conservatives have long recommended?

Yes, but expenditures from general revenue (i.e., local money) are expected to go up by $108 million versus last year’s enacted budget.  From an economic standpoint, the question is whether the revenue sources that are making up for the tax cuts provide a bigger boost than the drag created by taking money out elsewhere.  The governor’s budget schedule, for example, shows a $125 million increase in each of the personal income tax and the state sales tax; that’s money out of the economy, some of which will be going to hand-picked segments.

To put specifics on the argument, during FY16, the Social Security tax cut is expected to cost the state $9.3 million in revenue, which we could say is largely paid for with a new $6.9 million in taxes on small tourism businesses.  Maybe this is an economically productive and morally sound transfer of wealth, but we never hear that argument.

On their own, each change might be positive, but at the end of the day, they fit into the mix in the same way special-interest handouts do.  The lack of real contention in the budget debate is an indication that all of the interests that have a voice are now bought off.

What should the rest of us do?


Follow-Up on Childcare Subsidy Increase

Last week, Rhode Islanders learned of a $2.15 million increase in state childcare subsidy rates for providers.  Although details of the first-ever agreement with the Service Employees International Union (SEIU), which now represents the private, independent providers, have still not been released, the House Speaker’s office has provided The Current a few additional budgetary numbers.

The $2.15 million is being added to base spending of $58.9 million, or a 3.65% increase, overall, bringing the total to $61.1 million.  If these provisions of the budget pass as currently written, it will represent a $7.45 million bump in spending for these payments over the current fiscal year, or a 13.90% increase.

Despite requests to multiple government agencies, the state has still not released any details of the agreement, including dues.  Child Care Union Info, with which the RI Center for Freedom & Prosperity has worked in the past, reports a wide variety of dues from other states, although some of the contracts have been terminated.  At the higher end are states in which the union’s dues are calculated as a percentage of subsidies, sometimes with a maximum.

In Michigan and Massachusetts (which is SEIU), the rate is 1.5%.  In Washington (also SEIU), it’s 2%.  Either rate would put the SEIU’s take in Rhode Island around $1 million, or about half of the total raise that the budget would grant.  (Given Rhode Island’s small size, the union would be likely to seek dues at the higher end.)

As I stated in a release just put out by the Center, the governor and General Assembly could have increased payment rates without the involvement of a union, if needy families are having difficult finding childcare providers.  As yet, there has been no claim of such difficulty.  In 2013, the law was changed (in a way that is likely unconstitutional) to give independent childcare providers more leverage, and now the Speaker of the House tells Providence Journal reporter Katherine Gregg that he believes they “deserve to be paid a fair and equitable wage.”

Clearly, these providers have advocates at the State House, and those advocates could have provided the same raises at a lower cost to taxpayers by cutting out the SEIU.  However, between 2004 and 2014, the SEIU gave $30,333 to Rhode Island politicians, according to the Board of Election’s campaign finance Web site.  This makes the interaction win-win-win for everybody except those who have to pay the bills.

UPDATE (2:57 p.m., 6/17/15):

See here for updated numbers.


Indications of Government Homogeny

The two stories at the top of today’s Providence Journal give a sense of the problems when government is characterized by a homogeneity of party and governing philosophy.  For example, the House plans to waive rules that put the governor’s raises for upper staff squarely in the middle of the budget process:

Current law gives the governor a small window of time, in March of each year, to propose and then justify at a public hearing any proposed raises for cabinet members.  

The Department of Administration then has until the last day in April to refer the proposed new salaries to the General Assembly. The raises go into effect 30 days later unless rejected by the House and Senate.  

Raimondo asked lawmakers to do away with that provision in the budget that she proposed to lawmakers in March. The General Assembly’s Democratic leaders didn’t go that far.

Instead, the budget will give leadership a deadline of late August to drag everybody back to the State House to undo the raises.  We can gather that the governor would have to be pretty unreasonable to spark that level of reaction.

The second story has to do with the House Republicans’ alternative approach to funding roads and bridges.  Obviously, the GOP’s proposed amendment to the budget is political theater, but that’s indicative of the problem.  Both the governor and the Speaker of the House can be utterly dismissive of the plan because there is no chance of its happening.

Rhode Island’s governing system leaves little opportunity for surprises (other than revelations of corruption, naturally), so the participants can come to consensus in back rooms among partisan friends without any real need to negotiate a minimization of risk.  If there’s a chance, even a small one, that the minority party can orchestrate a surprise, it isn’t as obviously political theater, which would be a healthier state of affairs for both sides, not to mention the people of Rhode Island.


America’s Autoimmune Disorder

In keeping with my earlier post about curing Rhode Island’s political ills, Jonah Goldberg’s metaphor that America has an ideological autoimmune disorder is spot on:

I loved David Brooks’s BoBos In Paradise, but its biggest flaw was in underestimating how much of the so-called bohemian-bourgeois lifestyle came pre-loaded with very political features. In 1997 Brooks wrote in The Weekly Standard that “one of the striking things about Burlington [Vermont] is that it is relatively apolitical.” I really don’t think that was true. More likely: Burlington was — and is — so uniformly liberal that even an astute observer might confuse stultifying political conformity for apoliticalness (not a word, I know, but like they said in Fast and Furious 3, you get my drift).

It’s telling that when Phil Griffin predicted MSNBC would overtake Fox News by 2014 (Stop laughing!). He said he wanted to do it by turning MSNBC into a “lifestyle” network. “It’s a mistake for us to limit ourselves to news,” he told The New Republic. Instead, he wanted to build up something he dubbed, “the MSNBC lifestyle.” This is the sort of thinking you fall into when you can’t see where politics ends and “lifestyle” — i.e., life — begins.

I’m not a big fan of generational stereotyping, but it’s fair to say that a large number of Millennials constitute the first big cohort of kids to be fully raised within this lifestyle-ized politics.

I’d add to this is that the Boomers and GenXers who taught this way of thinking to the Millennials have spouted it for so long they’ve come to believe it’s true just as fully as if they’d been raised on it themselves.  As Goldberg suggests, we’ve allowed too many of our co-culturalists to develop allergies to the sort of debate and critical thinking that is indispensable to a self-governing population.  But I’d say it’s worse than that:  Malignant progressivism attacks the very principles and preferences that allow a society to remain healthy and protect itself — from strong families to notions of property rights to freedom of speech.

From my perch in Rhode Island, where this autoimmune disorder has been coupled with the flight of any voters who figure out the problem, I don’t know if there’s a cure.  How do you turn things around when nobody with social power wants to, when those who might gain social power and grab the wheel decide it’s just more practical to leave, and when everybody else finds change impossible and keeps their heads down, hoping for a civic miracle that will allow them to keep making a living while not having to think about it all too much?

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