Imagine Rhode Island as place where all of our state’s families could achieve their hopes and dreams. Sadly, there are many obstacles in the way of making this a reality. Here is a big one– the sales tax is a tax on business.
Readers may already have come across Fayetteville State University Accounting Professor Robert McGee’s new ranking of states for business friendliness:
This study is the first annual McGee Report on the best and worst states for business. The fifty states are ranked based on the extent to which they facilitate business creation and expansion. This study incorporated the data collected from five other studies, which included the examination of hundreds of variables. Utah was found to be the most business friendly state; California was least business friendly. States that voted Republican in the 2016 presidential election tended to be more business friendly than states that voted Democratic.
Rhode Island, if you couldn’t guess, is in the bottom five — 46th, to be specific.
Pepperdine University School of Law Tax Professor Paul Caron emphasizes just how much voting habits tend to correlate with business friendliness:
The Best And Worst States For Business: 90% Of The Top 10 Voted For Trump; 80% Of The Bottom 10 Voted For Clinton
Of course, how one looks at these results will depend a great deal on how one looks at the world. Some would (correctly) note that business friendliness is not the only important measure of a region and point out the advantages of California and the Northeast, where most of the bottom states are located. Others would (even more correctly) argue that the biggest advantages of those regions have nothing to do with their style of governance and that business unfriendliness correlates with general suppression of people and, especially, their ability to improve their plight.
The epithet I used to hear a lot about Rhode Island was that it’s a playground for the rich. Business unfriendliness tends to indicate that that’s still the case.
A recent article in the The Providence American, a publication serving the black community in Providence, shows how conservative policies can find resonance among people who have been told to see Republicans and conservatives as the opposition:
Anti Free-Market, Protectionist Policies? It is a common scheme for advocates of certain industries to lobby government to impose strict licensing requirements in order to create barriers to competition. According to a 2012 report by the [RI Center for Freedom & Prosperity], many such occupational licensing mandates have a disproportionate and negative impact on low-income workers, who often can’t afford the time or money to meet the sometimes onerous and unnecessary requirements. …
Now is the time to push for a critical reform that can transform the lives of low-income families in Rhode Island. Our state should encourage work; NOT make it harder to earn money! Legislation has been submitted, and time is running out to advance this important reform.
The Right is for the American Dream, and the American Dream is good. That’s a point that ought to be made again and again.
Missing the kiss (and the point), teacher union fantasy, charity for them, and stuff for you
Open post for podcast.
The entitlement mentality in this state will be palpable as the federal government rolls back the Obama Administration’s give-aways. Lynn Arditi writes about the potential cost to Rhode Island if it refuses to change its Medicaid program to reflect federal spending under the Republican health care plan:
Predicting how much it might cost the state to cover the roughly 70,000 adults in the Medicaid expansion population under the Republican plan is especially difficult, health experts say, because people move on and off the rolls. If, for example, the job market weakened and people who had left the Medicaid rolls return, the lower federal cost-sharing rate means they’d be much more expensive to re-enroll.
“While certainly we’d support the state continuing to fund the Medicaid expansion population,” [Linda] Katz [of the Economic Progress Institute (no relation)] said, “the reality is … it would be very difficult to replace with state dollars the federal dollars and keep people insured.”
Rhode Island never should have signed on to the Medicaid expansion if this was possible, and the likes of the RI Center for Freedom & Prosperity were ignored when we warned that it was most definitely possible. What everybody can see clearly now is that insiders and bureaucrats padded their budgets at great cost and risk to others.
And it’s not just Medicaid. Dan McGowan reports from Providence for WPRI:
President Donald Trump’s proposal to eliminate the $3-billion Community Development Block Grant (CDBG) program would be a “devastating” blow to Rhode Island’s capital city, Mayor Jorge Elorza said Friday.
Trump’s proposed budget would do away with the 42-year-old CDBG program, which provides local governments across the country with funding for community centers, housing programs and neighborhood improvements.
None of these programs should ever be built into state government budgets or the local economy. They should be treated as gravy on a healthy, independent economy. Instead, we’ve allowed our elected officials to suffocate real industry and substitute a government plantation model premised on being able to bill the federal government and local taxpayers for government services for others.
Eventually, when you turn toward an obvious dead end, you reach it.
Ronald Bailey notes in Reason that human ingenuity, more than draconian restrictions on our freedom, is advancing U.S. environmental health:
The International Energy Agency is reporting data showing that economic growth is being increasingly decoupled from carbon dioxide emissions. Basically, human beings are using less carbon dioxide intensive fuels to produce more goods and services. The IEA attributes the relatively steep drop in U.S. emissions largely to the ongoing switch by electric generating companies from coal to cheap natural gas produced using fracking from shale deposits. Renewals also contributed a bit to the decline.
Yes, you could argue that the pressure from environmentalists and regulators pushed the energy industry to make the investment in alternatives, although I’d be skeptical and also argue that radical environmentalism has been a net negative even then. Even without that argument, though, we must acknowledge that, if safeguarding the planet really is our goal, allowing humanity to advance is a critical part of the strategy. And it keeps our lives improving, too. Win-win.
Elected officials in Rhode Island move forward without considering the possible effects, perhaps doing more harm than good as they take more and more of Rhode Islanders’ income away.
The Providence Journal and Rhode Island progressives are doing a disservice to the people of our state by advancing a biased and non-realistic perspective on the federal healthcare reform debate.
There are few issues that are more personal or important than planning for the care that can preserve the health of ourselves and our families. But what governmental approach best helps us accomplish this?
Currently, our state is following the federal Obamacare approach of seeking to insure more people with government-run Medicaid or with a one-size-fits-all government-mandated private insurance plan. This approach is in a death-spiral.
Continue reading at Rhode Island Center for Freedom and Prosperity.
In June, I noted how familiar and predictable Venezuela’s deterioration has been, citing Manzoni’s classic novel The Betrothed. Seventeenth Century government meddling in the Italian economy created starvation-level problems, and naturally, the government looked for scapegoats.
Venezuela has continued along this predictable path. As Jim Wyss reports in the Miami Herald:
Facing a bread shortage that is spawning massive lines and souring the national mood, the Venezuelan government is responding this week by detaining bakers and seizing establishments.
In a press release, the National Superintendent for the Defense of Socioeconomic Rights said it had charged four people and temporarily seized two bakeries as the socialist administration accused bakers of being part of a broad “economic war” aimed at destabilizing the country.
Yeah… detain bakers and seize their establishments. That’ll fix the bread shortage!
Watch this short Ami Horowitz report from Venezuela for more Manzoni parallel’s, particularly the part about how the powerful insiders continue to do just fine. Please, please, folks, could we start learning from history and ignoring those whose main purpose is to deceive us into giving them more money?
Watching Rhode Island decision-leaders continue to make decisions based on a mix of selfish interest and ideological delusion is frustratingly like watching Idiocracy
As is typical, Kevin Williamson is worth reading on the practical economics of government policy:
We are a very, very rich country. We can afford all sorts of things: food for the hungry, health care for the indigent, education for children, and hearing aids for families that for whatever reason cannot manage to scrape together $1,000 a year to invest in the well-being of their own children. (Those $5,000 hearing aids last for about five years, meaning that their real cost over time is less than the $1,200 a year typical American family spends on cable television.) I myself am all for doing many of those things, though I do not think that government very often is the best instrument for getting them done. But if we are going to use government, then, by all means, let’s use government in the most honest, transparent, and straightforward way we can. Forget the insurance mandate and just write the check.
In that regard, Democrat Governor Gina Raimondo’s free tuition would be preferable to some other policy that tried to force somebody else to pay for it — homeowners insurance or something like that. Of course, other basic economic lessons come into play, which struck me when WPRI’s Dan McGowan tweeted:
“Affordability” is a measure of price against value. Following Williamson’s price estimate for hearing aids, in-state tuition at the Community College of Rhode Island (CCRI) is less than the average family cable bill. Rhode Island College (RIC) and the University of Rhode Island (URI) are substantially more, but both saving and borrowing spread out the payments.
Considering that the average monthly student loan payment for all years of all colleges is somewhere around $280, two years of in-state tuition in Rhode Island would be much less. That means young adults are valuing a large number of other things — cable, cell phones, video games, weekly dinners out, and so on — more than they’re valuing education.
Pushing the price down for them doesn’t make them value the education any more. What it will do, though, drive up tuition and hurt taxpayers.
Scared of the flakes, right to work, against smarts, and parenting through adventure
Open post for podcast.
It seems that the special interests who rely on federal money for their income in Rhode Island (in and out of state and local government) have been working to keep stories like this in the news every week:
Potential cuts to the National Oceanic and Atmospheric Administration put forward by the Trump administration could have devastating effects in Rhode Island.
The Coastal Resources Management Council, the state agency that oversees development along the state’s 400 miles of coastline, would lose nearly 60 percent of its funding.
This is the problem with the government plantation/company state model. When you’ve built your economy around the government’s ability to make other people pay for services that the government insists on providing, local taxpayers will move away and people in other states may decide to cut funding. It’s a risky dead end of an economic development approach.
Our goal as a state (similar to our goal in our cities and towns) should be to react to news of changes at the federal level by expressing relief that we don’t rely on the federal government for much of anything. That would be a state of both freedom and stability.
The governor’s spin (as reprinted in the New York Times) notwithstanding, Rhode Island’s employment picture is bleak.
Crossing over the state line, I came across a curious essay by often-acerbic Fall River Herald columnist Marc Munroe Dion. To some extent, I’m sure, his iconoclasm is just keeping him from fitting into standard political categories, but I can’t help but think that he’s a little confused.
Dion complains about the growing disparity between the plush deals of government workers and the hardships of those paying the bill. He even asks a question that’s been on my conservative, small-government mind lately when he ends his column, “When can we call this looting?” But Dion also insists:
It isn’t so much that city employees are getting too much, as it is that the rest of us are getting too little.
I don’t want to see police officers NOT have a union. I want to see YOU have a union, too.
I want the average working person to have health care and a pension. I want you to retire at 55. It’s too late for me. I’m 59, and still showing up every day.
A city can’t prosper if the financial gap between citizens and city employees keeps widening.
You’ve got government employees’ continuing to get privileged status — such as retiring at age 55 — and Dion recognizes it isn’t affordable and that the cost is creating a dead end for economic advancement. So, to whom, I wonder, does he think private-sector unions would be able to pass a similar bill? The mystical, mythical Rich? To the extent that they exist as an identifiable class in a city’s economy, they’ll just move their operations elsewhere or close up shop and go to work for somebody else.
The bottom line is that unions function for government employees because government can force people to pay. The private businesses with which private-sector unions must work can’t do that.
The only solution is to back government up so it’s affordable and not obtrusive with regulations in order to give the private sector as long as it needs to find a local angle. The ensuing growth will increase the leverage of private-sector workers and the margin for public-sector workers, too.
With the help of selective statistics and mainstream media spin-amplification, Governor Raimondo is convincing the country her slowdown is momentum.
The snow coming down, leaving us inside with our heating systems and, for many, the comfort of generators should things get that heavy, creates an excellent atmosphere in which to read Stephen Moore’s thoughts on why “Europe’s Lesson Teaches Us: Don’t Go Green.” Moore also touches on the impetus to make the United States green, too:
So very quietly, Europe and other nations aren’t going so green anymore. The EU spent an estimated $750 billion on green energy handouts over the past decade and what it has bought for that is a doubling of its power costs.
This has given American steel, auto, light manufacturing, agriculture, and technology firms a big competitive edge in world markets. This is why European nations and Australia are understandably desperate for the U.S. to move to the same green energy policies that they adopted years ago.
Just as it’s in Russia’s interests to bankroll an American anti-fracking movement, the elites of Europe, who have pushed their countries too far toward fashionable energy programs, have reason to pressure the United States to hobble its own economy. If Europeans were to demand that their leaders put the well-being of workers and families first and loosen their regulations, many in the United States would cheer them on, but our own elites shouldn’t expect us to sacrifice our workers and our families to make us fair in foolishness.
It is time to change the status quo in Rhode Island. What if lawmakers were to realize the policy culture of considering only material needs has been harmful to our families? Instead, lawmakers should work to empower more families with the soul-fulfilling power of work by removing the obstacles that stand in their way. Rhode Island needs bold, broad-based reform ideas; ideas that will help existing and would-be businesses and families. One big idea is removing the heavy-hand of government occupational licensing restrictions on small businesses.
Honestly, I find this sort of spin outrageous:
The state Department of Labor and Training said Thursday that unemployment dipped to 4.7 percent in January, one-tenth of a percentage point lower than the national rate of 4.8 percent.
The last time unemployment was below the U.S. rate was May 2005.
Democratic Gov. Gina Raimondo says efforts to strengthen the state’s economy are paying off.
Want an image of this “strengthening” of the state’s economy?
Hooray! Rhode Island’s unemployment rate is overcoming the U.S. average despite still being down because the number of people looking for work in the United States grew more than the number of people employed.
The American Interest offers what might be termed a labor thought for today if it hadn’t been sitting in my bookmarks for a week:
It’s significant that ground zero for public sector union reform is the upper-Midwest, once the capital of organized labor. Democrats try to cast such reforms as a betrayal of workers, but in a post-industrial age when half of union members are public employees whose demands for fatter benefits packages come at direct expense of the taxpayers, many voters don’t see it that way. As James Sherk noted in our pages last year, “A movement formed to defend blue-collar laborers now fights primarily to help white-collar workers expand government.”
That point cannot be sufficiently emphasized: labor unions, overall, are now dominated by the public-sector subsegment, which has a very different model.
In the private sector, the union negotiates with management for the share of profits from sales to customers that goes to the workers. In the public sector, the union helps elect management with whom it can conspire to take more money from taxpayers, who must either leave the area or pay up once the unions achieve political dominance, as they have in Rhode Island. That is, in the public sector, it’s a process more resembling theft than negotiation.
Of course, one should note that the strength of unions in the private sector, such as it is, often comes with their ability to manipulate the law to force clients — mainly governments — to use union labor or to box competitors out of big markets — like government projects. In that regard, even more of organized labor should properly be seen as existing in the public sector.
The status quo in Rhode Island needs a reality check with regard to the now epic UHIP computer systems disaster. With reports of Rhode Islanders being driven to extreme measures to make up for the loss of social safety net, the insiders must realize that once again they have headed down the wrong path. Big government is incompetent to run our lives.
Here’s an interesting find from Justin LaHart in the Wall Street Journal, in a brief article titled “Why the Stock Market Doesn’t Like Republicans“:
The two economists created a model where people have a choice between being entrepreneurs and working for the government, and of voting for a political party that favors lower taxes or higher taxes. When risk aversion is low, more people want to be entrepreneurs and to vote for the low-tax party. When risk aversion is high, the opposite is true.
It is a highly simplified version of U.S. politics and economics. But the implications for stock prices are interesting. The low-tax party gets elected when risk aversion is low, and then if risk aversion merely returns to the mean, stocks suffer. For the high-tax party, the opposite is true.
The next question, obviously, is what causes these changes in sentiment, because the variables seem more to correlate than to cause one another.
Of course, they may have a causative relationship indirectly. The high-tax party, for example, is likely to sense this dynamic (whether consciously recognizing it or not) and change policy in a way that makes people more risk-averse (such as regulations to make independent activity more difficulty while acclimating people to dependence on government’s socialization of risk). Indeed, even when they promote entrepreneurialism, they strive to make it seem like something that cannot be done without the safety net of government subsidies. (“You didn’t build that.“)
The insight has implications for advocacy, too. Conservatives who make a theme of imminent doom under progressive rule — however accurate that theme is — may be making the public more inclined to fall for progressive promises of security. The key, perhaps, is to make people feel secure in their families and their own ability to transcend
Along with most of the country, Rhode Island saw its employment condition slip with this year’s annual employment revision.
This New American Economy study of immigration has been going around:
Though it is our nation’s smallest state, Rhode Island is home to almost 140,000 immigrants. The state’s immigrants are mostly of working age and play a valuable role in both the manufacturing and software industries. They are also bolstering the housing market by buying the wave of homes coming on the market as baby boomers retire; all of these positive contributions are critical to the success of Rhode Island’s economy.
For the most part, this has been deployed as part of the mainstream effort to blur lines on immigration, proclaiming the value of immigrants generally. That has always been a distortion of the debate; I don’t know anybody who objects to controlled immigration that takes account of the national interest and emphasizes assimilation. The first objection people have is to illegal immigration, and the (distant) second objection is to indiscriminate legal immigration that bolsters welfare roles and puts downward pressure on low-end wages.
With respect to illegal immigrants, note that, overall, immigrants in Rhode Island pay $886.1 million in state and federal taxes, based on income of $3,500 million. That’s 25.3%. By contrast, illegal immigrants pay $43.7 million on income of $365.2 million, which is 12.0% — less than half the rate for all immigrants. (The proportion for state taxes is roughly the same as taxes overall.) Note that the numbers for legal immigrants would be substantially more positive than the presented numbers, because illegal immigrants account for 20% of them and bring the numbers down.
Those on the political Left might say that this proves that illegal immigrants should be normalized so they’ll pay more taxes, but the type of work they do is different, as is their propensity to need financial assistance. The New American Economy study (surprise, surprise) doesn’t give information on welfare programs and other public expenditures (such as for education), but that’d probably be higher for the illegals, too.
Rhode Island should refocus immigration policy on those who contribute the most, certainly until our employment situation is no longer stagnant.
The Rhode Island Department of Labor and Training (DLT) has released the state’s revised employment and labor force numbers in advance of the federal Bureau of Labor Statistics (BLS) revision for all states. Naturally, the DLT is emphasizing that Rhode Island’s unemployment rate has improved.
But as we’ve been predicting in this space for most of the year, the real story is that all revisions were downward, meaning that labor force and employment were both lower than previously estimated, by 2,714 and 2,129, respectively. As the following chart shows, the result was a gradual, but very slight, increase over the last year and a half, with a startling inflection point after June 2015 (when Democrat Governor Gina Raimondo’s first budget and legislative priorities would have gone into effect).
Most of the interest for the work of this site and the RI Center for Freedom & Prosperity will come with the nationwide data showing how the revision affected Rhode Island relative to other states. One needn’t go too far out on a limb to project that it’ll be more bad news.
The only way to incentivize enough start-up activity to make a difference in our state is to create a business climate that is attractive enough to make thousands of entrepreneurs want to invest here. Crony deals for a few dozen companies will not get it done.
News, reported recently by the Providence Journal’s Patrick Anderson, that Rhode Island’s highways are getting less usage seems like it could be another bad indicator:
The total miles driven in 2016 was the second lowest in the last six years, only behind the 7.677 billion miles traveled in 2014. Rhode Island driving, which includes trips by both commercial and passenger vehicles, topped 7.9 billion miles in 2011.
Two thoughts come to mind in a negative direction. First, movement tends to indicate productive activity, which would seem to indicate that Rhode Island is losing ground, economically, and which is certainly in keeping with the stagnation of our employment situation. Second, to the extent that the reduction in miles driven derives from commercial trucks, that could signal problems for the RhodeWorks scheme, increasing the likelihood of tolls on cars.
One thought that could potentially be positive is that I’d be interested to see how Rhode Island has fared, compared with other states, on the number of people telecommuting. If, more than the national average, Rhode Islanders are working from home, that could account for some of the disparity in a way that doesn’t portend gloom and doom.
Brad Smith recently took up an important point in the Providence Journal, responding to Democrat U.S. Senator Sheldon Whitehouse, who is seeking to “strip rights from corporate entities,” in Smith’s words. He cites the 1819 Supreme Court case, Trustees of Dartmouth College v. Woodward:
A corporation, the court noted, “is an artificial being, invisible, intangible, and existing only in contemplation of law.” But that didn’t mean that people gave up their rights when they formed a corporation. Rather, the decision emphasized that when people join together to accomplish things, they usually need some form of organization, and shouldn’t have to sacrifice their rights just because they organize.
This is one of those recurring discussions that are frustrating because they’re mainly semantic, and one feels as if normal people sitting down to fairly explain to each other what they mean will agree and move on. The danger is that the semantics could allow radicals like Whitehouse to push the law a few steps to totalitarian control.
Step 1 is to force people to organize for any sort of public activity by offering either competitive enticements (from tax benefits to liability protections) or regulations restricting activities if people do not organize. We’re already pretty far along this path.
Step 2 is declare that those organizations that people have formed don’t have rights. Another way of putting that, as Smith explains, is to say that people lose their individual rights when they organize as corporations… which they were more or less forced to do in order to accomplish their goals.
Step 3 will be to force people to do what government insiders want by imposing requirements on the rights-less corporations.
Scarlett Johansson… slut, government inadequacy, and true love.
Open post for podcast.
The odds are pretty obvious and challenging, if you think about it: Government at all levels employs millions of people; many of them have access to information the public does not; many of them make decisions that affect their own compensation and that of their peers; and (at least for now) their continued wealth and opportunity depends on getting people to allow government to take their money away.
Since the years of Obama stimulus spending — let’s say Rhode Island’s fiscal years 2009 through 2011 — I’ve been convinced that the administration’s goal was to ensure that government agencies were insulated from the recession. (Another goal was to launder money to left-wing activists, but that’s not my subject with this post.) As time moves along and data becomes more available, it’ll just take some work to trace the dollars.
But it is a lot of work. The general public, occupied during working hours in their own private-sector occupations, can’t hope to keep up. This fund blends into that fund from the other source through technical accounting categories, with repositories here and there that must remain shielded from public view for privacy or other reasons. The opportunity to mislead is structural.
In a small way, though, I think I’ve got a handle on how the Tiverton School Department transformed temporary stimulus money into a permanent increase in local funding and have written about it on Tiverton Fact Check:
In summary, when the state money shifted from regular aid to “restricted,” the school department built the excess into its budget. But when the funds shifted back, the increase was buried in this “restatement,” so local taxpayers would remain forever responsible for the supposedly temporary increase. As a matter of fact, the “restricted” aid didn’t actually decrease much; the accounts just changed.
Thus, the Tiverton schools maintained healthy budget growth even as the Great Recession wore on and housing values plummeted.
I’d be surprised if something similar wasn’t accomplished by school districts throughout Rhode Island and across the United States. Actual stimulus would have been a government reduction in taxes, but that wasn’t Obama’s goal.