Comparisons of capitalism and collectivism are tedious when they assume that they are equal in purporting to provide meaning for people’s lives.
Perhaps it’s healthy every now and then to post something without implying that one knows how to fit it into a mural of opinions. If so, I’ve found an opportunity in this news:
Rhode Island’s median house price jumped 13 percent in March, rising to $265,000, as the inventory of houses for sale plunged by 16 percent, compared to March 2017, the Rhode Island Association of Realtors reported Thursday.
Naturally, the realtors’ association suggests the problem is that they need more properties to sell. In general, the trend would seem to count as contrary evidence to assertions that the state is losing people.
Both economic curves that bear on price come into play, here: supply and demand. It could be that people want to buy property in Rhode Island, and that’s driving up prices. Or it could be that regulations are too restrictive to allow sufficient expansion of supply. And referring to “regulations,” we have to expand the term not only to mean direct zoning restrictions and the like, but also other regulations, like licensing restrictions that drive up the cost of building.
Too many threads must be unwoven, here, for a rainy Thursday, and I don’t have a quick answer. I continue to hold that people should have a right at the local level to determine what sort of community they live in. (Although, I’ll generally argue against using that right to hamstring your neighbors.) I’d also suggest that we do too much to subsidize some construction while restricting different kinds of construction (say commercial versus residential), and much too much to prevent the economy from growing quickly enough for people to be able to afford housing.
My suspicion, in other words, is that all of Rhode Island’s economic meddling is doing something to focus economic value unnaturally on housing. I also suspect the people who benefit from that state of affairs would be much better able to explain it.
This article by Christine Dunn in the Providence Journal takes a strange (if predictable) turn:
Providence’s 2016 eviction rate, 3.82 percent, was nearly triple that of Boston in that same year (1.3 percent), according to new data from the Eviction Lab at Princeton University. This group is led by sociologist Matthew Desmond, whose 2016 book, “Evicted: Poverty and Profit in the American City,” won the Pulitzer Prize for nonfiction in 2017. …
Why is Providence’s rate so much higher than Boston’s and New York’s when Desmond says a lack of affordable housing is a problem across the country?
According to Clement, less access to free legal assistance for Rhode Island tenants, and less state support for housing in general, are reasons Providence fares worse than Boston in the rankings.
Umm… perhaps the fact that Massachusetts — particularly the Boston area — has a much healthier economy has something to do with it? Oddly, the article presents unemployment as an effect, not a cause, of eviction. That presentation is especially odd because the article doesn’t allege wrongful evictions. People just don’t have the money. Why don’t they have the money? Because there’s limited opportunity, here.
That being the case, giving people free legal help would merely shift the burden to landlords, who will either have to increase rents or get out of the business, thus reducing supply and, ultimately, driving up rents again. Adding evictions to the long list of programs that Rhode Island attempts to address with public welfare programs would increase taxes and harm the economy, thus leading to reduced ability to afford rent.
Rhode Island has no other solution than facing down its insider, I-know-a-guy system and taking the chains off our economy. None. And that reality brings us back to the deepest, most-fundamental problem for renters as for every don’t-know-a-guy resident: It just makes so much more sense to leave than to try to fix the joint.
Unless Rhode Island’s governing elite and information providers shift to promoting economic freedom as the solution to the various symptoms of our state’s decline, that decline will continue.
A recent article in the Wall Street Journal by Megumi Fujikawa may cut across the way people generally think of labor economics:
The Japanese practice of lifetime employment at larger companies survived more than two decades of economic stagnation. Now the system is confronting one of its biggest trials: a tight job market.
More people are switching jobs, often with the lure of a higher salary or fewer hours.
In America, at least, when one hears lamentations about the loss of lifetime employment, the complaint is most often directed against the supposedly greedy executives who want to save a few bucks rather than taking care of long-suffering employees. That narrative has always seemed to me to be dehumanizing of employees.
Maybe people don’t want to be stuck in one company for their entire lives. Maybe people like the idea of independently building the trajectory of their lives, not being cared for from cradle to grave.
As Japan may be showing, when a tight labor market puts power in the hands of workers, they use that power to seek opportunity rather than indulge notions of loyalty. In a changing economy, old notions that took for granted that the corporation had all the leverage and therefore needed to be forced by law and custom to be like guardians of its employees must be reevaluated.
Apart from some guard rails to keep self-interest within bounds, just free people up, and they’ll come to the arrangement that best suits the needs of all involved at the moment that they make the arrangements. And then they’ll adjust when things change. That this is a preferable state of affairs is illustrated by the fact that “progress” has a much more positive connotation than “reactionary.”
Occupational licensing takes rungs off the mobility ladder for those who most need them, suggests Jared Meyer, writing in the Washington Examiner:
According to estimates by the Archbridge report’s authors, the growth of licensing corresponded with up to a 6.7 percent decline in absolute mobility, depending on the state. In other words, because of occupational licensing, children who grow up in low-income families are less likely to achieve the American Dream when they are adults. …
Researchers are still discovering just how much occupational licensing harms economic mobility, but there is no question that these barriers disproportionately harm low-income individuals. The Archbridge Institute’s new report, along with a continued focus on the problem by state and federal policymakers, offers hope that more positive policy changes are coming.
According to the report, the reduction in upward mobility for Rhode Island due to its licensing regime is 3.7%, and the increase in the Gini Coefficient (a measure of income inequality) is 8.6%. That is, occupational licensing helps those who’ve already made it keep it and serves to block those who haven’t from doing so.
Added to tax burdens and every other drag that Rhode Island puts on economic activity, licensing is one reason the “productive class.” We don’t need more programs, government handouts, and central control. We need more freedom and opportunity.
Whether it’s removing market signals with a value-added tax or creating incentive to block new children through zoning, public policy shouldn’t remove its red flags and should seek to address original problems, not symptoms.
Well, as long as people are willing to repeat discredited and obvious nonsense like the “Equal Pay Day” rhetoric, I suppose we’ll have to continue to recite the obvious responses. Mary Katharine Ham has apparently drawn the short straw this time around:
These differing priorities understandably impact pay. Women are more likely to take a job that pays less to gain flexibility and work-life balance. I’ve done it myself many times.
Yet, as AEI’s Mark Perry points out, there is no widespread recognition of “Equal Occupational Fatality Day” to highlight men’s overrepresentation in very dangerous fields (coal mining, line work, and law enforcement among them), which often pay more to compensate for risk. …
There is no big “Equal Commute Day,” to acknowledge the gender commute gap …
Male college graduates, on average, also entertain employment options further afield from their universities than do women, thereby opening up more and possibly higher-paying opportunities. They also work several hours more per week on average than women.
Maybe I’m just idealizing the past, but it seems like talking points used to go away when they were shown to be utterly without merit. In today’s polarized society, the strategy seems more to keep pressing on because the risk of losing one’s base is so much more substantial than the risk of never being able to persuade after a loss of credibility.
As Baby Boomers set their eyes on Millennials and their efficiency toys, we’ll miss something important if we let GenX indulge in its loner inclinations.
I’ve also got an op-ed in today’s Newport Daily News:
So here is what the Trump administration is suggesting: Employees who work for particular restaurants will be able to negotiate a tipping system that works for them. If a state finds that the balance of power favors one side or the other in those negotiations, it can regulate the matter at the state level. The only difference is that distant politicians in Washington, D.C., won’t be telling the whole country what to do.
If you find that “kind of disgusting,” I can only ask: Why do you feel so threatened by others’ freedom? Nothing in the rule change would require any change to the way restaurants handle tips. As the article illustrates with quotes from restaurant managers who support servers’ keeping their tips, the status quo – which was the status quo even before Obama’s power grab – would remain in place. Regulations could be imposed at the state level, if that’s what Rhode Island wants, and individual businesses could figure out what works for them.
Click on over to my op-ed in today’s Providence Journal:
To be clear, these are massive and sometimes subtle trends, and a particular governor can only be saddled with so much blame or lauded with so much credit. Still, if Rhode Island had kept pace with other states — and with itself before Raimondo took the reins — around 10,000 more of us would be employed.
Anecdotally, that presentation of our economy more closely matches the experience of most Rhode Islanders than does the governor’s self-promotion. Promising four more years of “exactly [that] kind of progress” may therefore not be the pitch that the Raimondo camp believes it to be.
Perhaps that’s why 60 percent of Raimondo’s political donors were out of state in 2017. Opinions may differ as to whether that represents “progress” from her 40 percent out-of-state result in 2014.
For my weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, this week, the topics were the state’s Amazon HQ pitch, insinuations about Channel 10, and the PawSox opening day.
I’m not sure why Patrick Anderson weaves together the hoopla about Sinclair Broadcasting’s recent promotional script with the idea of banning non-compete agreements in journalists’ contracts. That he strives to do so gives the impression of an ulterior motive to construct a narrative, as does the monolithic presentation of non-competes:
Used in a number of industries, non-compete clauses prevent employees from taking a job with a competing company for a set period of time, often one year, after they end their employment, even if it was the station that decided to part ways. …
Former WJAR investigative reporter Jim Taricani called non-competes unfair in written testimony supporting the bill.
“Prohibiting an employee from finding work to support themselves and their families is an outrageous condition of employment,” Taricani wrote. “Unlike non-compete clauses used for employees who work for companies where they may have knowledge of company ‘secrets’ or ‘confidential product research,’ ‘on-air’ talent in broadcasting have no such knowledge of any confidential information.”
The reasons for non-competes vary from industry to industry. In some cases, knowledge of sensitive information is the thing being protected. When I worked for a carpentry temp agency, non-competes were a way of preventing contractors from using the company as a trial service. In the case of journalism, building up contacts and expertise is a critical part of the job, and people who appear on camera are intrinsically part of a station’s brand.
I’m not, therefore, endorsing non-competes, but these aren’t crazy points to make. WPRI and WJAR have invested in Tim White and Parker Gavigan, respectively, to develop contacts and credibility for investigative reports; if WJAR were to hire White away, WPRI would lose one of its key faces and would have to scramble to rebuild its brand on a very important line of products.
Of course, that should encourage the company to make sure that its star employees are happy, but that balance should be subject to negotiation. For newcomers, a non-compete agreement could be something of a box, but further along in a career, an employee may offer a non-compete as a way to get more money out of the employer. If new employees don’t like the box, they don’t have to take the job.
The speed with which people turn to government to enforce whatever they think is in their best interest at any given time is disturbing to behold.
Things are getting so hopeless in Venezuela that young go-getters trained for high-prestige jobs are going… to get low-level jobs in nearby countries:
After six years of studying and working part-time jobs, Cristian Diaga, 24, will soon graduate from medical school in Caracas, Venezuela. But instead of continuing his training in a top hospital in the country, as he had hoped, he is taking a job in a fast-food restaurant in Argentina – a situation he says is much more preferable. …
More than half of Venezuelans between 15 and 29 want to move abroad permanently, according to a poll carried out by the US firm Gallup and shared exclusively with the Guardian.
“In Venezuela, it feels like we are all just dying slowly and there’s no hope for a change. I don’t care if I’m gonna work as a doctor or not. I just want to have food, medicines, security, a house, a car, and be able to give a good life to my loved ones,” he says.
Regarding the population as a whole, a 2017 Gallup poll found that 41% of Venezuelans would like to move away permanently.
As it happens, 41% is also the result Gallup found in 2016 for the percentage of Rhode Islanders who would like to leave the state. That was a slight improvement from the result from the same poll in 2014, although the Ocean State fell from 5th worst to 4th worst.
As I noted regarding the earlier finding, the comparison isn’t really fair. After all, states with more opportunity are close and easy to move to and, therefore, probably more tantalizing. Moreover, I’d wager that more than 41% of Venezuelans would jump at the chance to move to Rhode Island.
But still. Only 22% of New Hampshire residents want out (8th best).
A couple of weeks ago, I expressed support for the notion of employees’ becoming owners of their workplaces, suggesting that the best way forward was to remove government barriers to their doing so. As WPRI’s Ted Nesi notes on Twitter, progressive Democrat Representative Aaron Regunberg of Providence has a hearing today on his legislation to, as Nesi puts it with reference to Benny’s, give employees “the right to buy the retailer and turn it into a worker-owned co-op, rather than let it shut down.”
Reading the bill, however, I can’t see that it really does much of anything. When employers are about to take an action that requires them to notify the federal government about a substantial layoff, the state Department of Labor and Training (DLT) would remind the employees that buying their workplace is an option.
The employees would then take a vote on whether to buy the company. If the vote succeeds, then any employees who are interested would form an entity in order to buy it. If the vote fails… well… I guess any employees who are interested in buying the company would do exactly the same thing. In either case, the employer can decline to sell. In other words, the bill does nothing but give a politician another talking point about supporting “working Rhode Islanders.”
Of course, because it is so ineffectual, one suspects that this legislation would be the foundation for an incremental change that activists think wouldn’t have chance if pushed into law all at once. In a few years, progressives might argue that too many owners are unwilling to sell for the price that employees are able to pay and remove their ability to say “no thanks.” Or maybe a state bank would come along, and these sorts of buy-outs would explicitly be given preferential treatment for loans.
Considering the origin of the bill, the safest bet for Rhode Island would be for the General Assembly simply to let it fade away. In the meantime, we should reinforce a simple truth that progressives seem to want people to forget: We already have inalienable rights that come from a higher place than the State House, and we don’t need government to step in and claim to be creating them for us, as if from nothing.
After all, if government can grant a group the right to buy a company, it can remove another group’s right to do the same.
In late summer 2016, I looked into the state government’s program, then under development, to purchase farmland and distribute it to small-time farmers (see here and here). Well, Jennifer McDermott reports for the Associated Press that the program is now getting underway, emphasizing that the “entrepreneurial” farmers can buy the property for about one-fifth of what the state pays.
The National Farmers Union knows of no other state that buys farmland to sell to farmers at less than market price. Other states give tax credits and loans to beginning farmers.
Though some critics say this is not the role of state government, Rhode Island sees it as a way to keep young entrepreneurs from moving to other states, where land may be cheaper. It also could attract other farmers to the state, though retaining farmers who already are here is the main goal and the selection process favors Rhode Island farmers.
These points don’t make sense. If other states don’t offer these benefits, farmers won’t find much-cheaper land for quite some distance, creating a pretty high barrier in order to up and leave.
More importantly, allocating resources to this activity — not only in the purchase price, but in the effect of preventing more-efficient usage of the land — implicitly makes somebody else’s activity more difficult. On the hill down which excrement rolls, that “somebody” is more likely to be some other variation of entrepreneur trying to scrape resources together.
To keep the boutique farmer, in other words the state government may ultimately (although invisibly) be dismissing the office-based innovator with some hot technology of the future. Given the geography and soil of the area, such a trade means playing to the Ocean State’s weaknesses, not its strengths.
And farmers aside, which Rhode Islanders does this policy benefit? I’d suggest that the answer is relatively wealthy people who like the aesthetics of having nearby farms and purchasing local produce. Those are aesthetics that I share, but our community (and economy) would be much better served by having it expressed in actual prices for produce. Subsidizing local farms to keep the prices down creates higher prices for something we can’t see.
For my weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, this week, the topic was a Census immigration question and a quiet gubernatorial debate.
The RI Center for Freedom & Prosperity has found its Bad Bill of the Week in Pawtucket Democrat Representative Carlos Tobon’s legislation proposing to pay wealthy people $10,000 each to move to Rhode Island:
“If we have to pay families, students, and businesses to move to or remain in Rhode Island, to survive our state’s oppressive tax and regulatory climate, then something is very wrong,” said Mike Stenhouse, the Center’s CEO. “Worse than the obvious face-value inanity of the bill, the ignorant belief of how an economy and family dynamics actually work is what is most troubling. The legislation openly acknowledges the negative economy in our state, yet, as with other progressive policies, it tries to band-aid the symptom rather than cure the core illness. ”
The bill is so incandescently wrong-headed that it’s difficult to know where to begin criticizing it, but among the more objectionable aspects of Tobon’s proposal is the explicit concern of losing a seat in the House of Representatives in Washington, D.C. That is what motivates politician’s to take action. Decades of watching productive Rhode Islanders flow elsewhere for opportunity weren’t enough. Political clout is the real concern.
As of the July Census projections of states’ populations, Rhode Island was just 157 people away from losing one of its congressmen. That’s a 0.015% decrease in population, and we lose out. The next state in line is New York, which is currently on track to lose a congressional seat. But if the Empire State manages to add 0.015% to its population, then it will keep what it has at Rhode Island’s expense.
Numbers aside, suffice it to say that a state that has to bribe people in order to maintain its level of congressional representation — through either government welfare programs or direct hand-outs — is a state that has proven that it doesn’t deserve much clout in determining the course of the nation.
Rhode Islanders must get our own House in order. If we could just put into office people who don’t prioritize central planning and insider control, we could make our state a place that people aren’t as quick to leave and to which they want to move.
Could there be a more clear example of rent seeking crony capitalism than a direct payment from marijuana interests to pay off government officials to block competition?
The offer came with a condition. State regulators would have to change their plan to hike the number of state-licensed pot dispensaries from the existing three to 15.
“We’re very sensitive to the state and its challenges,” Reilly told members of the House Finance Committee. “And if there is a way to find the $5 million that you need to plug the budget hole that you need for the coming fiscal year, we’d like to be part of the solution.” …
Regulators say the plan would increase competition among dispensaries, lower prices, offer a wider array of tested marijuana strains and improve access for patients, whose numbers keep growing.
This just like occupational licensing. Established businesses use political clout to leverage government and block competition, which makes markets more efficient and helps consumers.
Rhode Islanders should take this as a lesson in political theory, as well. Those on the progressive side tend to think of government as “the people’s” source of leverage against powerful special interests, but it quickly becomes the opposite, as the special interests give government cash in order to come around to the idea that it’s to the people’s benefit for the special interest to benefit.
In this case, the pot dealers see upstarts moving in on their business, and they’re looking to the crime boss of the area to muscle them out through extortion and threats of violence (via fines and maybe incarceration). The picture gets clearer and clearer.
A recent editorial in the Providence Journal lauding the Rhode Island Convention Center deserves some push-back. The writers applaud those who “invested” in the center back in the ’90s for their “courage and imagination on the basis of eye-popping numbers:
The analysis, conducted by Conventions, Sports & Leisure International of Plano, Texas, found that the Rhode Island Convention Center, the Dunkin’ Donuts Center and the Veterans Memorial Auditorium generated $838 million in total economic impact for the State of Rhode Island from fiscal year 2013 through 2017.
That far exceeds the costs of running the facilities, including $23 million a year in state bonding costs.
This isn’t a reasonable number to proclaim for these purposes. A quick search turns up the iteration of the report from 2015, which tells pretty much the same story, and it shows that the great majority of traffic in the three venues considered (the Convention Center, the Dunkin’ Donuts Center, and Veterans Memorial) is local. As the report puts it, “It is appropriate to assume that much of the spending from attendees that are from the local area is “displaced”, or would have taken place somewhere in the local economy if the event had not been held.”
This is compared with the result if we switched out the venues for three holes in the ground. The $838 million of economic impact assumes that none of the customers would have spent their money locally, that none of the employees would have had jobs, and that none of contractors would have found other clients. The study makes no attempt to estimate how much additional impact the center has over any likely alternatives if it weren’t there. If the land remained in private hands, the owners would have had incentive to sell it, the buyers would have had incentive to develop it, and the developers would have had incentive to figure out the most efficient things to develop.
The study also doesn’t consider that the government spending that has bolstered the center could have been used for something else, like leaving money in people’s pockets to spend and invest in the ways that they considered most important.
In short, the Convention Center hasn’t been a scandalous disaster, but proclaiming “guts and vision” for investing other people’s money seems a bit overstated.
Remember when Rhode Island helped get Deepwater Wind off the ground by forcing Rhode Island energy users to pay an artificially high price for its product, in the name of making the Ocean State “the Saudi Arabia of wind”? We were supposedly taking the lead in an industry of the future and securing the “well-paying jobs” that Rhode Islanders deserved.
Well, at least we can say we kicked off a job bump in the larger region:
Deepwater Wind will assemble the wind turbine foundations for its Revolution Wind in Massachusetts, and it has identified three South Coast cities – New Bedford, Fall River and Somerset – as possible locations for this major fabrication activity, the company is announcing today. …
These commitments are in addition to Deepwater Wind’s previously announced plans to use the New BEdford Marine Commerce Terminal for significant construction and staging operations, and to pay $500,000 per year to the New Bedford Port Authority to use the facility.”
Businesses will go where it is in their immediate interest to go. That’s just what the incentives dictate. Rhode Island continues to attempt to use crony capitalism in order to avoid making the changes necessary to be a place that businesses find attractive without special incentives. That will ultimately fail, because it drives away all businesses that do not receive the special deals, and it keeps those that do only as long as the subsidies keep coming… and aren’t exceeded by somebody else’s deal.
But improving Rhode Island’s business environment inherently requires reform of and risk to the insider system that has corrupted the state, so it’s not a realistic option.
(Via Ted Nesi.)
Rhode Island’s employment numbers for February look okay, until they’re put in a broader context, raising concerns that the Ocean State may miss the better part of the current economic wave.
I recently came across this story on regulation in Ohio, and the statement the Republican Senate president, Larry Obhof seems broadly applicable and worth sharing:
Ohio has nearly 250,000 regulatory restrictions in its code, according to research from George Mason University. The study’s authors say this holds back economic growth for industries like manufacturing and health care.
Republican Senate president Larry Obhof says he wants to take a broad look at Ohio’s code to see what they can do to scale back these regulations. He adds that a mindset change is needed for people in the legislature and state agencies.
“Who start the day looking for problems to solve and trying to solve those, and what I’d like to see is a reset where they start the day and some significant number of them are saying can I find a burden that we don’t need that we can get rid of,” said Obhof.
This gets right to the subtle (and detrimental) shift in Americans’ attitude and, perhaps, a chief dividing line between ideologies. One view is that government exists to solve people’s problems; another is that government exists to remove a limited number of problems from people’s path.
When the goal is to remove problems (like foreign invasion, inadequate basic infrastructure, and so on), the emphasis is much more securely on avoiding causing additional problems in the process. When we make government a more active participant in the solving of problems, unintended consequences can be written off on account of good intentions — “nobody can solve everything, but at least we tried.”
And when government is a problem solver, there is no boundary. It should try to solve every problem it can. When government is just a mechanism to take a few big problems off the table for the public at large, the debate becomes whether something is a problem or an area in which freedom makes it a challenge for the people to resolve among themselves.
Oppressive Regulations Harm Low Income Families. Hair braiding is a generational and practical African-style art-form for Jocelyn DoCouto and her family, which hail from Senegal and Cape Verde. Yet, unable to afford the burdensome levels of fees and training required to receive permission from the government to legally work in a field that presents no safety risks, Jocelyn, as well as other would-be entrepreneurs, are not able to operate a business that would provide them hope to achieve financial independence.
A couple of years ago, I wrote a parody song to the tune of Randy Newman’s “Short People,” titled “Pale People.” No matter what the challenges of your actual experience might be, one verse suggested, “All a’ that ain’t nothin’ to the color of your skin.”
Well this is an interesting finding, from the left-leaning Brookings Institution:
… Poor minorities (defined here as blacks and Hispanics) face similar—and often worse—poverty-related challenges than do non-Hispanic poor whites. Yet they are more resilient in the face of negative shocks, less likely to report depression or commit suicide, and significantly more optimistic about the future. Part of the explanation is their higher levels of community and family support. Aspirations also matter. Poor blacks and Hispanics tend to report they are better off than their parents were, while many blue-collar whites are facing a reality of downward mobility. Many of their primary occupations are close to extinction, and family structures have weakened significantly (a trend that is associated with the drop in labor force participation).
That’s not surprising. In the popular culture, which has been taken over by progressive ideology, minorities are to be celebrated. They’re the future. They can accomplish anything, and society should give them special advantages to make it so. Meanwhile, white people, especially white men, are everywhere the villains. They have to “check their privilege.” Anything they accomplish is tainted because they are the beneficiaries of oppression. Government-funded reports insist that the future has darker skin, and we should start changing the communities that government serves now, in preparation.
Based on the interactive graphic on the Brookings page, “poor non-Hispanic whites” in Rhode Island have low optimism relative to the country, high worry, and high pain. Unfortunately, the statistics for minorities are too small for Brookings to rank them in Rhode Island, but Massachusetts is telling. Poor minorities in our northern neighbor have among the lowest rates of worry in the country, while their white peers have among the highest rates of worry.
This shouldn’t be a contest; we should be concerned about all of our neighbors. Unfortunately, progressive identity politics rely on dividing us so we’ll keep handing over power to the truly privileged and powerful.
Everybody from pointy-headed think tankers to my father talks about the social upheaval on the horizon when technology makes work obsolete. In a recent American Interest essay on the topic, Diane Francis quotes the late Stephen Hawking voicing one angle:
The late physicist Stephen Hawking warned that this would result in income disparity and chaos. “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality,” he wrote.
Francis goes on to convey the similar views of others. Lots of smart people think like this, so I shudder to admit that my opinion is: Why is this so difficult? I’d humbly suggest that in the excitement of prognostication, they’re missing a central economic principle — namely, that the free market is the greatest form of wealth redistribution.
Consider a simplified scenario: In some way or another, a company makes the screens on which we all receive our content. Technology and AI revolutionize the factory so that it hardly needs any human workers to accomplish that task. The cost of production goes down. Now, the first urge of the company owners will be to keep the price the same, but all that takes is for some other company to come along and take advantage of the available technology to undercut its price.
The power of competition will only get stronger as automation reduces the amount of available work and people have less money, on average. Companies have to sell their products to make money, and as the jobs evaporate, the incentive to produce increases. As production becomes cheaper, the value of mass production could decrease, relatively. Theoretically, technology could become such that we return to something like an artisan-driven economy, with a lot of self-employed people providing goods and services to each other. I don’t know if things will play out that way, but somewhere is an equilibrium.
Looked at in this way, it is clear that the better path forward is to reduce central planning and the ability of powerful interests to leverage government for their benefit. Reform patents. Don’t dread deflation. The more control we try to grab out of fear, the more ability powerful people will have to direct the economy in a way that primarily benefits them.
When the governor proclaims that Rhode Island has the most jobs ever, she means people who work for other people; taking a broader view of people who would say they’re “employed,” the Ocean State still has a ways to go.
One subject that seems to intrigue progressives is that of employee-owned business. Paul Edward Parker recently reported on a panel discussion of the topic in Newport that presents them as almost a no-brainer:
Five panelists at a breakfast gathering organized by Leadership Rhode Island made that argument Friday morning.
The leading arguments:
Employee-owned companies are fairer to workers.
They are more successful.
They are more productive.
In part because employees have a personal stake in the success of the company, employee ownership gives companies an “incredible competitive advantage,” said Paul O’Reilly, president and chief executive of Newport Harbor Group. “The company doesn’t have to be philosophically driven to the redistribution of wealth.”
That all strikes harmonious chords, from my perspective, but it does make me wonder why legislators occasionally submit legislation that would favor this particular arrangement. If they’re so superior to more traditional business models, they’ll come to dominate the marketplace.
The best thing that government can do is get out of the way. As I frequently argue, barriers to business creation hurt workers. If a group of employees want to break off and compete with a boss who isn’t running things the way they’d like, let them do so. And if low-end workers think it’d be a good investment to work for a company that pays below some arbitrary minimum wage, let them do so. Contrary to the belief of people who manage to get a few thousand people to put a mark next to their names on a piece of paper every couple years, adults can make their own decisions about these things.
If employees are part owners of their workplaces, perhaps they won’t tolerate as much government interference as they do when demagogues are able to stoke us-versus-them flames in the workplace. Workers with a more-substantial investment in their workplaces will also be less able to up and move, so they’ll have to buckle down and fix Rhode Island’s problems, rather than skip to a more-friendly state… unless they just bring the whole company with them.
So what happened with the disruptive snow and wind we were supposed to get yesterday? That’s the question of the morning. Something seems to have changed in the Rhode Island psyche after the “December Debacle” in 2007. That year, the timing and handling of a snow storm, particularly in Providence, under Democrat then-mayor-now-congressman David Cicilline caused a nightmare for commuters and children. Suddenly, hesitation to disrupt our entire community gave way to being “better safe than sorry.”
Once that old New England toughness lost its dominion, the ordinary incentives of government and politics took over. If the governor or mayor closes down government and implements parking bans, not only do they give some key constituencies a day off, but they mitigate the risk of something going wrong. Relatively few Rhode Islanders will even think to wonder about considerations like this, as expressed in a GoLocalProv article appearing this morning:
“Let’s go macro,” said [Providence restaurant owner Bob] Burke. “On any given day the state has $150 million in economic activity. What did we produce [on Wednesday] — $10 million? Are we a state that can afford to give up $100 to $125 million in economic activity without a really tough fight? On Wednesday, they went down in the first round!”
Similar views were expressed by Mike Stenhouse, CEO of the RI Center for Freedom and Prosperity. “The lack of concern for small businesses by bureaucrats and elected officials looking to make themselves look good – when they prematurely issue parking bans, large truck bans, or shutting down government operations – directly leads to a loss of business and productivity in the private sector,” said Stenhouse.
Whatever it is that’s changed in the Rhode Island psyche has freed government officials from the need to actually make decisions. Either business people have given up trying to assert their influence in an often-hostile government or those who take the needs of businesses lightly have increased.
Perhaps the change has to do with the “government plantation” that effectively replaces Rhode Islanders who are driven to turn their time into money with others who are more likely to seek government services. Those who work for government get paid no matter what, and those who are the recipients of its beneficence are a step removed from caring about where the money comes from.
Instapundit Glenn Reynolds is embarrassed to report this, from his home state of Tennessee:
“I never did any other job but hair braiding my whole life,” she said. “I cannot recall a time when I did not know how.”
But in recent years, Tennessee has forced Fatou to pay a staggering $16,000 in fines, simply because she employed workers who did not have a government license to braid hair. Nor is she alone. After examining meeting minutes and disciplinary actions for the Tennessee Board of Cosmetology and Barber Examiners, the Institute for Justice has identified nearly $100,000 in fines levied against dozens of braiders and more than 30 different natural hair shops and salons since 2009. All of those violations were for unlicensed braiding; none were triggered by any health or sanitation violation.
It’d be interesting to tally up all such fines in Rhode Island, not only for hair braiding but for every other egregious occupational license.