Income Inequality and the Middle Class in RI Cities and Towns

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Stephen Beale has a story on GoLocalProv, this morning, on “The RI Communities with the Biggest Wealth Gaps.”  The progressives whom Beale quotes all handle the question as one of “income inequality,” but the subject really has more to do with a certain way of looking at the middle class, as on the interactive map from Pew that I’ve mentioned here and on WatchDog.org.

That’s the thrust of the comments that I gave Beale for the article.  Progressive policies create this gap between rich and poor, because they dismantle the structure that families can use to bridge the gap.  As I put it in the article, they “make it difficult to improvise economically.”  Then, they explicitly attempt to redistribute money based on the political demands of government, rather than leave it in the economy, where people can redistribute it themselves through commerce.  The first method benefits political interests, which helps insiders; the second method benefits the economy, which helps everybody.

An example of a progressive policy suggested by Kate Brewster of the Economic Progress Institute (formerly the Poverty Institute) is a fine illustration:

… “Cities may be able to provide some opportunities for residents to improve their economic circumstances through policies that require businesses that receive benefits from the city to hire city residents,” Brewster said.

The most prominent example of such a policy in Rhode Island is the First Source ordinance in Providence, which mandates that businesses receiving any form of aid from the city first attempt to hire local residents before going outside of the city to recruit. However, a GoLocalProv report last year found that the city had largely failed to enforce the ordinance, prompting a lawsuit from the activist group, Direct Action for Rights and Equality.

As Rhode Islanders are learning with every new high-profile development that’s proposed, our state has structured itself such that businesses find it difficult to operate without seeking some sort of benefit from the cities, towns, and state, whether tax deals, grants, or some other relief.  That puts them at the mercy of such policies as Brewster suggests.  Then, those policies place additional burdens.  To the extent that a business can’t simply hire the best candidate for a job, it represents an implicit drag on its operations.

The end result is that entrepreneurs (and less highfalutin small-business owners) can’t or don’t bother to enter the economic game.  That leaves more space for the established players who are able to work the system.  They get richer than they otherwise would be, while the folks at the bottom of the ladder have no rungs to climb up.



  • ShannonEntropy

    As Rhode Islanders are learning with every new high-profile development that’s proposed, our state has structured itself such that businesses find it difficult to operate without seeking some sort of benefit from the cities, towns, and state, whether tax deals, grants, or some other relief.

    To be fair, this isn’t only true here in Li’l Rhody … and the business entities themselves have turned this rent-seeking behavior into a high-stakes game that benefits themselves over the citizen taxpayers

    The latest example here is Skeffington’s threat to pull the PawSox out of the State if we don’t give him $millions$ in free land and other tax money goodies

    Here is an article on the subject that ironically even mentions “chas[ing] stadiums” =►

    http://www.msnbc.com/now-alex-wagner/corporate-tax-breaks-race-the-bottom

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