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Our Decline Is Now Our Choice

The frustrating thing about assessments like this from Joel Kotkin is that Rhode Island’s decline is entirely its own decision:

Today, the often-disdained red states have the wind at their back, while in blue America, the economy seems to be slowing, as industries and people move to lower-cost, lower-regulation states. Seven of the top 10 states in terms of population growth last year were deep red; overall, the South has become home to the better part of economic dynamism in the country, with Texas and Florida alone accounting for one-third of all U.S. growth since 2010. Some analysts suggest that the new tax law, which works against high-income earners in high-tax states, will accelerate these trends further.

We could easily construct our economic policy — mainly taxes and regulations — in a way that would make Rhode Island the beacon of the North.  Just give people a place in which to conduct their lives and their business, and they’ll come here to do it.

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The Government Plantation Dragging Down California

Trying to understand why wealthy California would have the highest Supplemental Poverty Measure, which includes cost of living, Kerry Jackson describes what I’ve been calling the “government plantation“:

Self-interest in the social-services community may be at fault. As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort and security. To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its “customer” base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.

The change, since 1971, is that this tendency of social welfare bureaucracies has metastasized to the entire government.  The leverage isn’t just one agency as opposed to others, but government itself, as a sector in society.  Whether elected or appointed, government officials’ incentive is to create new services to provide and to increase the number of people receiving them.  This expands their base of support while ratcheting up the amount of money they can extract from others.

The well-advertised benefits available attract people interested in collecting them, even as the increased costs and restrictions on private-sector life drive away the people whose work is supposed to grow the economy that pays for it all.  California started from an enviable position, which put in place some massive wealth centers, but even so, a growing tumor will eventually kill even the healthiest animal.

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Politically Correct Anti-Tobacco Regs: How Many People Might Die Because They Were Denied a Less Harmful Choice?

Better something that is less harmful than more harmful. But to some, innovative new products that reduce health risks – should be banned. In the tobacco and nicotine industry, the politically-correct anti-tobacco movement is advocating for the suppression of individual rights and elimination of less harmful choices, via restrictions and outright bans on products that could improve public health.

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Corporate Decisions in Two Different Worlds

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Pluses and a Minus to Interstate Licensure Compact

My first reaction to this information in a Wall Street Journal editorial is that Rhode Island should rush to get on board:

This week South Dakota will introduce legislation to establish a Compact for the Temporary Licensure of Professionals—a multistate agreement that would change the presumption of occupational licensing from a roadblock to an open door. The compact would allow individuals who have been licensed in any profession or occupation in other participating states to receive, upon request within 30 days, an in-state temporary license. That would allow professionals from compacting states to start working immediately.

In fact, I’d go one step farther:  If the rationale for occupational licensing is to ensure the safety of consumers, there’s no reason state government couldn’t review the requirements of other states and simply affirm that their requirements are adequate.  Then Rhode Island could simply accept out-of-state licenses as a matter of course.  We want it to be as easy as possible for people to work, for their own sake and for the sake of consumers.

The downside of the compact idea — particularly with states that actually have jobs on offer — is that it will make it easier for Rhode Island’s professionals to leave.  The key to an open door policy is giving people reasons to come into your space.  That’s the area in which Rhode Island needs the most work.

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Regunberg’s Drug Innovation Disincentive Act

Barely out of the gate in the new legislative session, progressive Democrat Representative Aaron Regunberg of Providence is proving exactly how dangerous he is to the health and well-being of Rhode Islanders:

The bill (2018-H 7042), which Representative Regunberg introduced Jan. 3, would establish a board of pharmacy to examine how prescription drug manufactures set the price for certain prescriptions, and give it the authority to set a maximum allowable price to protect the Rhode Island consumers.

The price-fixing scheme would give nine unelected board members, most of them pharmacists with a financial interest in the industry, deep access to the private information of drug companies and the power to set prices for drugs — particularly those that are among the most innovative and life changing — below the level that companies believe necessary to make it worthwhile to develop more.

There is no reason to expect pharmacists to understand every aspect of drugs’ production and sale generally, let alone the internal operations of a particular company.  If companies are forced to justify pricing decisions to Rhode Island’s socialist-nine board members and beg their indulgence, the potential for corruption is immense.  If the members are cycled out every three-year term, then they’ll lack a long-term perspective, but if they’re kept on the board for much longer, they’ll become less accountable.

The minimum price for a drug in the state will always be zero… in the sense of being unavailable.

Given the critical nature of its products, our health care market does need controls against price gouging, but we should go the route of reform and competition, not the philosophy that has brought Venezuelans into the gutter.  Reform patent laws, giving generic drug manufacturers more opportunity.  Take the thumb off of insurance companies so they’ll have more leverage against drug companies.  Take the restrictions off of health care providers and consumers so they’ll have leverage to shop around for drugs, insurers, and types of treatments.

Above all, Regunberg’s bill illustrates how close we are to the end game of government control, and that’s an extremely unhealthy place to be.

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Utilities Reducing Rates Around the Country Due to Tax Cut

Paul Bedard reports in the Washington Examiner that National Grid won’t be alone if it reduces rates to reflect its lower tax burden, owing to the GOP-Trump tax cut that has just gone into effect:

On the heels of companies dishing bonuses of up to $3,000 to over one million workers due to the anticipated benefit of President Trump’s tax reform victory, several major utilities have announced plans to cut rates in a consumer payback related to the lower taxes.

Energy suppliers like Washington’s Pepco, Baltimore Gas and Light, Pacific Power, Rocky Mountain Power and Commonwealth Edison said they plan to give hundreds of thousands of customers a rate cut due to the tax reform.

Again, lowering the cost of doing business lowers the prices that companies have to charge to cover operating expenses and achieve whatever profits they need, which contrary to popular progressive delusion, they can’t just arbitrarily collect.

On the same topic, I asked Lt. Governor Dan McKee’s office whether his call for lower utility rates means he supports the tax reduction.  Here’s the response:

Lt. Governor McKee has publicly voiced his concern with the tax bill. One of his major issues with the bill is that it gave the overwhelming amount of tax relief to a very small and select percentage of the population and particularly large corporations. Lt. Governor McKee will use the new law in any way possible to help Rhode Islanders. In that vein, he will continue to pursue the rollback of previously approved and pending National Grid rate increases and encourage others to do the same.

Political rhetoric notwithstanding, one suspects that the former mayor of Cumberland understands that tax cuts in a system in which a relatively small percentage of the population pays the majority of taxes will lead to disproportionate reductions for those who pay the most.  One also hopes that the lieutenant governor is cognizant of the fact that his latest initiative plans to take advantage of the relief given to a “large corporation.”

We can only shake our heads, though, that a politician who actually seeks to draw advantage from the effects of legislation from the opposite party seems so moderate.

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Linking Poverty and Licensing in a Comprehensive Philosophy

An editorial in the Orange County Register makes the important connection between poverty, welfare, and occupational licensing:

Following the critical passage of tax reform, congressional Republicans and President Trump might now turn their attention to reforming at least some of the nation’s vast, too often ineffective social safety net. …

Ultimately, of course, the best way to combat poverty is to ensure America’s economy continues to grow and jobs remain accessible to as many Americans as possible. Tax reform and Trump’s halt on excessive new regulations are important steps toward that. But the White House and Congress shouldn’t be content with that. Other areas are ripe for improvement as well, like occupational licensing reform to remove artificial barriers to work.

For a while, it seems, the political right lost sight of the need for competing visions.  People’s political views tend to result from some sort of balance between freedom and security (not only for themselves, but as organizing principles for the benefit of others).  It isn’t sufficient, therefore, to combat the statist vision of tasking government with everybody’s well-being and simply (simplistically) making it so with simply cutting taxes and taking all limits off of the wealthy.

Of course, very few people really hold that second view, but the actual philosophy that it caricatures has to be better articulated.  Part of removing limits, for one, means removing them from the poor and working class, as well, which should place a market-driven pressure on the wealthy that is greater than the supposed pressure that government manages.  (I’m always mystified that the same people who warn that the rich control government think they can use government to limit the rich.)

Similarly, the case has to be made that the outcomes that the pro-license advocates claim to be protecting us against aren’t really a danger or don’t justify the heavy hand pushing down on individuals’ opportunity and our economic health.

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Another RI Icon Setting Sail; Act Now!

Well isn’t this enough to remind one of that scene in The Lorax when all the animals leave the barren landscape:

Rhode Island’s official tall ship is set to become a tourist attraction in Virginia.

A foundation in the waterfront city of Alexandria has purchased the 110-foot sloop-of-war Providence, a full-scale replica of the first warship in America’s Continental Navy, and is busy making repairs so it can be used for maritime educational programs.

Quick!  Surely we can put together an incentive packaged (backed by a moral obligation bond) to subsidize this ship’s continued use in Rhode Island.  The tourism will be so huge that it’ll never cost taxpayers a dime.  And we can put it in the Loughlin Marina.

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Jobs Lost to Regulation

Katie Wendell’s article on occupational licensing in Ohio brings to mind questions about Rhode Island:

Ohio lawmakers are considering changes to some requirements amid concerns that over-regulation is keeping some people — including many from the generation most apt to leave the state — from gaining employment.

“Ohio’s licensing requirements have prevented more than 7,000 people between the ages of 25-45 from pursuing licensed occupations in the state,” says a new study by the Buckeye Institute, a conservative think tank.

I don’t think it’s so much a generation that might leave as a class, which I’ve called the “productive class.”  (Again, that description is meant to distinguish from, say, an “investor class” or “student class,” not a “lazy class” or something.)

I do wonder what the Buckeye Institute’s model would find Rhode Island’s job prevention number would be.  According to the Institute for Justice, Rhode Island has the 10th most burdensome licensing laws for low-to-middle-income occupations, compared with Ohio’s 38th.

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Locking People Out with an Explosion of Regulation

The topic of occupational licensing has been trending, lately, and Nila Bala adds this on The Hill:

Nearly one out of three Americans has a record in the criminal justice system and, as a result, faces a difficult road to becoming employed. Adding to their woes is the fact that many jobs — including interior designer, barber, pest control applicator and fire alarm installer — require some kind of occupational license.

Unfortunately, many states still deny licenses for individuals with criminal convictions, even when those convictions are decades old or relatively minor. The good news? Several states and cities across the country are poised to become leaders in reforming the law.

The number of jobs requiring occupational licenses has ballooned in the last 50 years. Occupational licensing has expanded from covering five percent of the workforce in the 1950s to 30 percent today. In recent years, occupational licenses have come under fire for creating unnecessary barriers to work without any measurable gains in safety or quality of services provided to the public.

Of course, one could argue that the mix of jobs has changed in the last half-century, but somehow people got along without government oversight of a big chunk of the economy in the past.  It isn’t clear that the benefits of all this regulation outweigh the costs, or even have substantial benefits looking only at that side of the ledger.

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Challenging The Progressive-Left

At the Center, we know that the high levels of taxation and over-regulation forced upon the people by an ever-growing state government is the main culprit in causing Rhode Island’s weak and stagnant performance. Look at it this way, heavy handed action by a state government that primarily seeks to perpetuate itself, actually works against the best-interests of the very people it is supposed to be serving.

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Letting the Private Sector Go Where It Needs to Go

Those of us here in the corner of Rhode Island that’s like a beachhead into Massachusetts are watching the south end of Fall River reverse its seemingly inevitable decline and revive.  A Herald News editorial spots a lesson:

If this rapid movement teaches us anything, it’s that the free market is stubborn. It goes where it wants to go, not where it is told to go.

For decades, Fall River has been trying to “revitalize” downtown. Results have been mixed, but we certainly haven’t seen the rapid movement downtown that we’re seeing in the South End, despite repeated promises from mayor after mayor and a snow drift of studies paid for by the taxpayer.

We’ve seen this in Tiverton, with the town’s would-be planners longing for an active downtown in the north end of town while blocking any kind of development elsewhere.  And we see it in the entire economic development philosophy of Rhode Island.  Rather than announcing that the state is changing its control-your-life ways and letting the economy flourish where there is opportunity, officials announce that there is taxpayer money on offer for anybody who is willing to play ball with insiders.

On the local level, one can understand (even while disagreeing) why folks who live in a relatively small town would work to preserve the scenery, even if their only benefit is driving by it from time to time.  Rhode Island goes well beyond that sort of preservation, however, to the point of insisting that only a future that meets with the central planners’ approval is worth having. The end result is more likely to be that they don’t get what they want (because it’s fantasy), while those who know how to game the system thrive.

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The Benefits of Letting People Figure Out How to Live

What strikes me most about Jonathan Tobin’s thoughts on the benefits of the recent change in federal economic policy is how easily Rhode Island could take the same approach:

What’s even more astonishing is that as the story’s headline concedes, this impending boom is being directly caused by “The Trump Effect.” American businesses aren’t, as The Times points out, merely happily anticipating the cut in corporate tax rates provided by the reform bill passed last month by Congress. What’s really fueling the upturn, according to The Times, is “the Trump administration’s regulatory pullback.”

Despite the widespread consensus in the mainstream media that the administration has been a disaster on all fronts, Republicans have often singled out regulatory reform as a highlight of Trump’s first months in office. Liberal economists have dismissed this assertion as nothing more than a talking point to reassure Republicans that Trump was, despite his populist tone, trying to govern like a conservative. But, as The Times report points out, the impact of his orders to cut back on regulations that hamstring businesses is real.

Since business leaders are reassured that not only will many Obama-era regulations be cut back, but also that no new arcane rules will be implemented in the next few years, they’re able to plan with confidence. That means more investment, more jobs, and ultimately higher wages for workers in a trifecta that appeals to both big business and also to the needs of the working class voters who were responsible for electing Trump last year.

Government promises security and (somebody’s vision of) fairness as it takes control of the economy.  But when it comes to regulations, its incentive is always to do more than is necessary for a stated policy goal, and the restrictions and uncertainty it places on people who operate businesses do real harm.

In life, we do things like eat healthy, exercise, and visit doctors regularly in order to allow us to live.  When it comes to government regulation, we tend too much to allowing officials to tell us how to live for our own good — or rather, how to live for the good of whomever the government prioritizes.

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The Magic of a Free Market Policy

Instapundit Glenn Reynolds makes a telling connection.  He leads with a quotation from former President Obama during the presidential campaign season while responding to Donald Trump’s promise to increase job creation and manufacturing within the United States:

“Well, how exactly are you going to do that? What exactly are you going to do? There’s no answer to it,” Obama said.

“He just says, ‘Well, I’m going to negotiate a better deal.’ Well, what, how exactly are you going to negotiate that? What magic wand do you have? And usually the answer is, he doesn’t have an answer.”

The news to which Reynolds links the reminder is this, from Bloomberg:

U.S. manufacturing expanded in December at the fastest pace in three months, as gains in orders and production capped the strongest year for factories since 2004, the Institute for Supply Management said Wednesday. …

The figures suggest manufacturing strength will persist into early 2018, even after the ISM’s semi-annual survey of purchasing managers published last month showed factories anticipate growth in capital spending to slow this year. The December monthly poll was taken before President Donald Trump signed the tax legislation, which provides companies with incentives to invest more, Fiore said in an interview.

The most telling part of Obama’s rhetoric is the mention of a magic wand.  Progressives think that government does things, and the world responds.  Central planners inject resources here or there, and that produces a predictable reaction in the market.  Look at Rhode Island’s Democrat Governor Gina Raimondo.  How are we going to improve the economy?  Well, we’ll find companies that the government experts believe will benefit the local market, and we’ll cut them special deals to move here.  It is a magic wand, with the progressive wizards wielding the wand.

The free-market conservative approach isn’t so presumptuous.  We assume that people want to be productive, create things, and make money, and so if we broadly make it cheaper and easier for them to do so, we expect that they will.  We can’t really predict where in the market the slack will go, but we trust that freedom and individual initiative will put the resources where they will be most effective, given the actual conditions and interests of the area.

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Licensing Puts Us at the Mercy of Legislators and Bureaucrats

Eric Dexheimer, staff writer for the Austin American-Statesman, relates the story of Shayne Gatlin, who made the dumb decision as a teenager to agree to drive the getaway car for his friends after they broke into a house.  Some years later, he took up the trade of locksmith, and over 30 years, he has built up a solid reputation and stellar Better Business Bureau rating.

In 2004, however, his home state of Texas began licensing locksmiths, which presented him no problem, beyond the embarrassment of disclosing his record, until he recently had to supply a digital fingerprint under a new rule:

That appears to have set into motion a mandatory new review of his background, said Steve Thornton, Gatlin’s attorney. But rather than acknowledging Gatlin’s long and clean track record, court records show, the Private Security Program instead treated him as a new locksmith applicant. That meant applying an inflexible rule it had adopted in 2014 stating that any applicant with a house burglary conviction, no matter how long ago it occurred, was to be rejected.

The public can disagree about the appropriate rigidity of the law for professionals working in home security, but Gatlin’s story illustrates an important point:  When you need the government’s permission to work, you’re constantly at their mercy.  The rules can change arbitrarily and a single decision — made by legislators or bureaucrats who are too confident in their ability to foresee every consequence — can wipe out your entire life’s work.

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