An Optimistic Economic Story for Rhode Island

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Last night, I was one of four “presenters” at an event titled “Cocktails & Conversation: Celebrating Strategies for Our Local Economy,” which was organized by Main Street Resources and ecoRI. The following is a transcript of my comments.

My instructions were to spark conversation among you in a way that is forward looking and positive, so I’m not going to tell my own story.  I’m going to tell an optimistic story.

Two months in the future, this May, the stock market’s going to crash.  All of the artificial mechanisms of the grand masters of the economy will fall apart and plunge the United States into a recession at least as deep as the last one.

Rhode Island will be very hard hit.  We’re in the bottom four when it comes to recovering employment after the last recession, and our slow improvement came to a complete halt early last summer.

The pension fund is already underperforming, so after the crash, it will lead the way opening a giant hole in state and local budgets.  This hole will force the governor to abandon many of her economic development schemes and put the brakes on the state’s K-12 funding formula.  Expanding charter schools?  Fuhgedaboutit.

Forward looking and positive.

June 2017.  A boy who lives in a low-income development in Providence will celebrate his fourth birthday with his single mother and her single mother.  The family is black, so according to Brookings, he has less than a 50% chance of getting out of the lowest 20% income category.  By the time of his birthday, the boy’s mother has been out of work for almost a year, and she’s pregnant with another child from a different father.

As they get the birthday cake, his mother and grandmother discuss the failing school to which he’ll go the next year.  During the prior decade, Rhode Island students’ scores on the Nation’s Report Card tests had been steadily improving, especially among minorities, but when Governor Chafee and the legislature started thwarting and reversing accountability reforms, improvement stopped.

But the boy blows out the candles.  It takes him two tries.  And the next day, two miracles happen.

First, his mother stumbles on a prayer group in a common area of their development.  This group leads her toward a new way of thinking about life, and she marries the father of her second child. The couple will stay married, which just about doubles the boy’s chances of reaching at least the middle income group.

The second miracle is that the General Assembly passes legislation creating education savings accounts.  So, the following year, the boy doesn’t enter the failing school, but a Catholic school that his mother picks because she believes that a faith-based moral environment is important for her son’s future.

Unfortunately, federal and state subsidies for higher education have been inflating a giant bubble for decades, and it bursts just as he graduates high school. His family can’t make the numbers work for college.

However, the continuing recession has forced the State of Rhode Island to roll back some requirements on businesses, notably the minimum wage.  So, a small construction company is able to hire an additional laborer, and with the young man’s positive outlook and strong work ethic, he quickly works his way up to carpenter’s helper and then carpenter.

Meanwhile, he meets a wonderful young woman.  They get married before they’ve had any children, and they buy a small house outside of the city.  His wife works an entry-level job with a caterer, and being part of a married team gives them a little room for risk.  Because the state has also lightened up on licensing, the young man’s next step is to try working for himself.

ObamaCare has been rescinded and other reforms have made it easier for him to find motivated people who are willing to work for what he is able to pay, so he hires employees who grow with the company.

His wife is able to stay home with their first child, doing some administrative tasks for his business.  But she still has enough extra time to start playing with a very small pastry and catering operation, mostly online.  Here again, they are fortunate that the state government has been repealing regulations.

Almost as important, the state’s RhodeMap Rhode Island plan was never implemented, so there isn’t a bright line between subsidized, high-density housing and expensive unsubsidized housing. The couple is able to find a house nearby that’s just right for their growing family and businesses.

One evening at the dinner table, while talking about their work challenges, the couple comes up with an entirely unique business model for the woman’s company.  Because the state has stopped trying to define and control innovation, and because they’ve been able to save up money after cuts in taxes, licensing, fees, renewable energy surcharges, and all the rest, they take a chance and invest in their new idea.  It takes off.

At this point, Rhode Island is no longer one of the worst places in the country to set up a business, so they are able to stay local despite their success, and their company becomes a homegrown jewel of the Rhode Island economy.  The Commerce Corporation never saw them coming.

Here’s the most hopeful part: The state doesn’t have to suffer a calamity to set this story in motion.  We just have to have the courage to let Rhode Islanders build their own lives without having insiders act like some sort of all-powerful corporate board designing the lives of everybody who lives here.



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