Economy RSS feed for this section
justin-katz-avatar-smiling

Legislation “Mutually Acceptable” to Whom?

I’ve long objected to the Rhode Island General Assembly’s seeing itself as a sort of corporate board for the lives of all Rhode Islanders.  In a related way, I’ve argued that groups like chambers of commerce are no longer acting as advocacy groups for the interests of private people or organizations, but rather are satellites of government that maintain their relevance to the extent that they can act as government’s liaisons to businesses.

Something in Patrick Anderson’s Providence Journal article about legislation to forbid all Rhode Island businesses from automatically reducing employee pay for just about any reason — from in-company fines to compensation for broken merchandise — sets off alarm bells.  The legislation is objectionable enough; it isn’t government’s role to set narrow, specific terms under which people can interact for business purposes.  (Labor unions back the bill, naturally, because it makes it harder for non-union organizations to compete.)

But meddling in Rhode Islanders’ lives is simply par for the course for our politicians.  This is the part that really caught my attention:

Gov. Gina Raimondo’s state Department of Labor and Training supports the bill and worked to find language acceptable to workers, the Rhode Island Hospital Association and Northern Rhode Island Chamber of Commerce, according to a letter from DLT Assistant Director Matthew Weldon.

Weldon said the current bill language, tweaked from prior year versions, was “mutually acceptable and delivers what we believe to be a clear and enforceable amendment.”

“Mutually acceptable” to whom?  Are we now to behave as if the Rhode Island Hospital Association and Northern Rhode Island Chamber of Commerce are satisfactory stand-ins for every business in the state?  And are we supposed to believe that the fact that nobody showed up to testify for the legislation proves that there’s no opposition?  Think of the implications of that.  

Taxes and regulations already make Rhode Island a difficult place in which to operate a company or make a living (unless you’re tied in with government, somehow).  Does every business owner, of companies large and small, have to devote resources to constant vigilance and influence-buying lest our supposed political representatives “negotiate” their rights away?

justin-katz-avatar-smiling

In Large Part, the Deep State Self Dug

Glenn Reynolds’s weekly USA Today column for this week is worth some consideration:

[Columbia Law Professor Philip] Hamburger explains that the prerogative powers once exercised by English kings, until they were circumscribed after a resulting civil war, have now been reinvented and lodged in administrative agencies, even though the United States Constitution was drafted specifically to prevent just such abuses. But today, the laws that actually affect people and businesses are seldom written by Congress; instead they are created by administrative agencies through a process of “informal rulemaking,” a process whose chief virtue is that it’s easy for the rulers to engage in, and hard for the ruled to observe or influence. Non-judicial administrative courts decide cases, and impose penalties, without a jury or an actual judge. And the protections in the Constitution and Bill of Rights (like the requirement for a judge-issued search warrant before a search) are often inapplicable.

At some point, “consent of the governed” becomes more like a veneer that gives the governing class license to do whatever they want. L’état c’est nous.

Combine this Deep State with the budding feudalism in California, as described by Joel Kotkin:

Unlike its failed predecessor, this new, greener socialism seeks not to weaken, but rather to preserve, the emerging class structure. Brown and his acolytes have slowed upward mobility by environment restrictions that have cramped home production of all kinds, particularly the building of moderate-cost single-family homes on the periphery. All of this, at a time when millennials nationwide, contrary to the assertion of Brown’s “smart growth” allies, are beginning to buy cars, homes and move to the suburbs.

People whose policy preferences conveniently protect their own wealth seek to use government set basic policy preferences that are conveniently in line with bureaucrats who seek to protect their power.  One way or another, this alliance will be broken; the question is whether it happens through reform or revolution.

Think carefully, progressives — and even more-reasonable liberals.  As much as you hate him (perhaps because of how much you hate him), President Trump may be your last chance to allow the reform path.

mike-stenhouse-avatar

Rhode Islanders Are Voting With Their Feet

Perhaps nothing is more telling about whether Americans see a state as providing sufficient opportunities for prosperity and a better quality of life than whether or not they are flocking to or fleeing from its borders. No other measure paints a more realistic picture of whether or not a particular state is an ideal place to raise a family or build a career than how people “vote with their feet.”

At the Center, we know that that the high levels of taxation and over-regulation imposed in the ever-growing state budget is the main culprit in causing Rhode Island’s stagnant performance.

justin-katz-avatar-smiling

Enter the Era of Vampires

You could interpret my lethargy, this afternoon, in one of two ways.  I’ve had a busy and productive week, so perhaps it’s the waning stamina of an older man that keeps me from wanting to write much of anything.  Or maybe it’s that I’m still young enough not to have lost that student’s sense that a June Friday ought to draw your eyes out the window in a search for summer.

Whatever the case, I’ve been holding on to this link, looking for an opening:

It might sound like science fiction, or a recent episode of “Silicon Valley,” but a start-up called Ambrosia is charging $8,000 for blood transfusions from young people.

About 100 people have signed up to receive an infusion, founder Dr. Jesse Karmazin said Wednesday at the Code Conference.

And here we go.  On the one hand, my libertarian leanings lead me to ask, “So what?”  The kids have blood, and people are willing to pay for it.  On the other hand… well… this is wealthy people buying the blood of less-wealthy people for speculative rejuvenating purposes.  You don’t have to be a novelist to see how this could go wrong.

On first consideration, too, there’s no good way to go about this.  The nightmare scenario involves rich people creating a market for the blood of the poor, which creates either opportunity for blood theft or a likelihood of exploitation.  As it is at the moment, the donors don’t know their blood is being used for this purpose, which means they may be undervaluing it on the false expectation that they’re helping people in emergency situations.

Oh, yeah, and what about all those people who need blood for immediate reasons?  Market forces will devalue their use, or drive their price up.

By its extremity, this matter brings us back to first principles.  I’d be disinclined to interfere with the market and people’s liberty, in general, but that would require a stronger culture — one capable of shaming those who might exploit this particular freedom like vampires.

justin-katz-avatar-smiling

As for Farms, So For Everything

Rhode Island Senator Susan Sosnowski (D, New Shoreham, South Kingstown) is trying to take the edge off of federal regulation of the farming industry, but she (and all of us) should take it as another lesson:

Two problematic regulations, explained by Sosnowski:

  • If an animal walks through a field, or defecates on the land, farmers must document the instance and keep a record of the area for up to two years — to ensure there is no contamination.
  • If someone with a cold, or any illness, comes to pick fruit or vegetables, the farmer is to turn them away, for risk of contamination.

If farms do not comply with the new standards they face hefty fines from $2,500 to $18,500 depending on the violation.

Take these examples and imagine similarly intrusive regulations on every industry in our economy.  As I often ask, why do we accept the assertion of government power to this level of involvement in our lives?

justin-katz-avatar-smiling

The Other Side in Battling Climates

RI Center for Freedom & Prosperity CEO Mike Stenhouse appeared on Dan Yorke State of Mind this week to talk about the Center’s Family Prosperity Index (FPI) release, but inasmuch as he followed a segment criticizing President Trump’s decision to withdraw from the Paris climate change accords, he tied the two together thus:

The one thing that’s missing from all [your previous guests’] discussions you heard was how this impacts real people and real families.  There’s this mythical — I don’t think the professor can prove that there’s “catastrophic” climate change coming — there’s this mythical problem we’ve created of this catastrophe.  Maybe the temperatures are rising, but is it a catastrophe?

What we do know is that it drives all these crazy energy policies, like the carbon tax, like energy mandates, that are driving up energy rates on families and businesses, that are driving people out of this state.  Do you know that in those 12-year periods, we’ve lost the equivalent of 11 cities and towns worth of people to net migration loss.

The costs of energy and other taxes and regulations are so high on businesses and families that they’re fleeing our state.  Eighty thousand people.  That’s 11 of our smaller cities and towns gone.

justin-katz-avatar-smiling

The Pretense of Legislative Knowledge

So, progressive legislators in the Rhode Island General Assembly are looking to “compromise” on a policy forcing Rhode Island businesses to give a minimum sick-leave benefit.  The notion of this as “compromise” is a complete perversion of the very notion of compromising, which requires all parties to have some direct investment in the result.  The indirect benefit of being able to collect votes that you’ve bought from one party to the “negotiation” by forcing the other party to do something doesn’t count.

Pay particular attention to this quotation from Katherine Gregg’s “Political Scene” article in the Providence Journal:

Last week, [Progressive Democrat Representative from Providence Aaron] Regunberg and Senate Majority Whip Maryellen Goodwin — the sponsor of a matching Senate bill — acknowledged the need for compromise.

In a commentary piece targeted for publication, they wrote: “We feel confident that it’s possible to strike the right balance between employers and employees.”

Psst, folks.  That isn’t your role.  “The right balance” depends on the job, on the employer, and on the employee.  It’s for them to figure out in full, specific consideration of the pay, the nature of the job, the availability of other opportunities, and so on.  It’s their role, their right, and their responsibility as fully autonomous adults.

The arrogance of these politicians to think that they can figure out among themselves what must work for every two Rhode Islanders in an employee-employer relationship throughout all of Rhode Island from now unto forever is astonishing.

census-migration-2004-2015-map-final-featured

Maybe We Should Worry More About the Effects of Family-Climate Change

The other day, I posted a chart showing how net domestic migration loss — that is, the number of people leaving Rhode Island for other states beyond those who moved the other way — equated with a loss of the full populations of 11 towns.  RI Center for Freedom & Prosperity CEO Mike Stenhouse wanted another way to visualize the loss, and we came up with this:

census-migration-2004-2015-map-final2

We hear all sorts of fears about how climate change will affect the lives of Rhode Islanders at some unspecified point in the future.  Yet, clearly, the change in the state’s climate for business and for families is already having a detrimental effect.  Why do our elected leaders seem more concerned about speculative harm in the future than the observable change in our social landscape occurring right now?

monique-chartier-avatar

One Hundred New State Jobs Would Only Perpetuate Failures & Failed Approach

Both the proven failure of a budget-centric approach and Governor Raimondo’s dismal public policy track record should give the General Assembly real pause when considering her reported request for one hundred new state hires – and other initiatives, past and prospective.

justin-katz-avatar-smiling

A Lesson in the Limits of Employee Costs

Always on the lookout for the practical lessons of economics, I have to highlight an article by Marcia Pobzeznik from Friday’s Newport Daily News even though it’s not online.

The Tiverton Town Council is deciding what to do about trash pickup because the costs are rising, and there are two basic options:

  1. Continue with a system using workers to pick up the trash.
  2. Switch to an automated system that uses machines.

If I’m reading the article correctly, at first, option 2 will be more expensive because the town would buy every household the totes in which the machine requires garbage to be placed, but apart from that initial charge, the price is essentially the same.  The lure of the machines, though, is the expectation for the future of workers:

“I’d like to see us go automated,” said [Director of Public Works Bill] Anderson. That would happen in October if Waste Management wins the bid.

Companies are transitioning to automated pickup because of safety issues for workers and the high cost of Worker’s Compensation insurance, Anderson said.

Like many other rackets in Rhode Island, workers compensation is a private operation but is largely a creature of state law, which is heavily weighted to drive up costs.  On top of every other regulation that lawmakers have decided Rhode Islanders can’t live without, it makes employing people increasingly expensive, which in turn makes automation look increasingly attractive, even with an initial cost for the transition.

That puts people out of work, shifting leverage from all workers in the state to all employers, which suppresses salaries and benefits.  This change in the balance creates incentive for politicians to meddle, which produces new ways in which hiring people becomes more expensive.  And repeat.

mike-stenhouse-avatar

Government That Primarily Seeks To Grow Itself

We know that that the high levels of taxation and over-regulation imposed for the sake of the state budget are the primary culprit in causing the Ocean State’s stagnant performance. Put another way, overspending by a government that primarily seeks to perpetuate and grow itself, actually works against the best-interests of the very people it is supposed to be serving. Instead of seeking to grow prosperity, government seeks to grow itself.

justin-katz-avatar-smiling

A Market Rhode Island Government Has Left as a Last Resort

I’ve tried to get some follow-up information from Felicia Delgado, of the Parent Support Network of Rhode Island, regarding her testimony before the Rhode Island House Oversight Committee about the harm that a non-functional Unified Health Infrastructure Project (UHIP), otherwise known as RI Bridges, has done to Rhode Islanders’ lives:

Others have lost their jobs because of these lost benefits and UHIP-delayed payments from the state to long-term health-care facilities.

At least 20 people — she emphasized they didn’t prostitute previously and don’t have substance-abuse problems — have turned to prostitution to pay for rent, childcare and food and fend off homelessness. Delgado declined to identify the people.

Mostly, I’m interested to know if she’s seen any progress, but I also wanted to ask if she had information about how this happens as a functional matter.  Did the people just know what street corners to hang out on?  Did they use Craig’s List?  Did they slip into an existing network, involving pimps?  Or do they start with people whom they already know?

What’s striking is that prostitution would be a fall-back occupation for people who hadn’t done it before.  Granted, it probably pays better than most other transactions for which people will pay unskilled entrants, but it comes with a high degree of risk and an appropriate social squeamishness.

UHIP is a problem and a blight all on its own, but a thriving economy without such a pervasive regime of regulations and licensing requirements would not only keep people from needing the services in the first place, but also give them other options when government messes up.  Instead, Rhode Islanders suffer through this process of government micromanagement of our economy’s creating a lack of opportunity, which government attempts to fix with welfare programs.  And when that doesn’t work… prostitution.

justin-katz-avatar-smiling

Missing the Point of the Higher Education Problem

The American Interest attempts to split the political difference in addressing why bureaucratic bloat and costs in higher education constitute a very difficult problem to address:

One reason this problem is hard to tackle is that the Left and Right disagree on the ultimate cause of the bloat. Many progressives see it as a product of the free market: If students and parents select colleges based on the quality of student spas and diversity centers and other amenities, then of course colleges will tailor their offerings to meet that demand. The real question is how to make access to college even more universal. Conservatives, meanwhile, are more likely to point to overweening government, including unnecessary regulations, which require more staff to implement, and to federal student loan programs, which pay the salaries of well-organized bureaucrats and end up funding superfluous services that colleges might otherwise forego.

To the extent that the post accurately characterizes two perspectives on the problem, both of them and the writer’s additional proposal (to expand the variety of institutions) miss the fundamental economic point.  If we let the actual price of college be correctly valued with respect to its benefits, then nobody would be willing to pay for a four-year spa or, for that matter, tolerate a budget-busting regulatory regime.

Allowing accurate pricing means reducing the broad-based subsidies (both direct and indirect, through subsidized loans) and thereby forcing colleges and universities to sell to people who can afford what’s on offer.  That certainly doesn’t preclude scholarships or even some sort of government assistance for specific people for specific reasons, but it does mean an end to this feel-good campaign slogan that nobody should miss out on college for financial reasons.

Financial reasons are for families to decide.  When families are deciding based on an artificially low price, of course they’ll opt for amenities and accept a lot of bureaucratic foolishness.

justin-katz-avatar-smiling

A Market for Flight Could Be a Market for Everything

Here’s an interesting tidbit from a Providence Journal article in which Carol Kozma attempts to answer the question, “Why are airlines growing more interested in T.F. Green?”:

Location, location, location. It’s not only good for real estate, but also for airlines.

T.F. Green is “an access point for a huge part of the Northeastern U.S.,” said Boyd, an industry analyst based in Colorado.

Sixty-four percent of New Englanders live within 75 miles of Green, according to the Rhode Island Airport Corporation.

Roughly speaking, a circle around Warwick with a radius of 75 miles catches Boston, Worcester, the beginnings of the cape, and much of Connecticut, nearly to Hartford.

Naturally, what this brings first to my mind is how big of a market is within a short drive of Rhode Island if the state were to dramatically reduce or eliminate its sales tax.  More than half of all New Englanders probably live within an hour’s drive of the Ocean State.  Extending a low (or no) sales tax to that customer base, especially with ready access (and expanding) to every form of transportation, from sea to sky to road to rail, would create huge incentive for businesses to consider Rhode Island — even without taxpayer subsidies.

justin-katz-avatar-smiling

RI Drives Out a Town’s Worth of People Per Year

The RI Center for Freedom & Prosperity has released the 2017 iteration of the Family Prosperity Index (FPI) for Rhode Island.  The Ocean State moved up a little, from 48th in the country to 45th.  Woohoo!

To bring the study to a point, the Center put together a chart showing that, starting in 2004, Rhode Island nearly lost a town’s worth of people every year through 2015 (the latest available at the time it was compiled) every year.  Imagine everybody in your town… gone.

census-migration-2004-2015

 

(Note that the finding is essentially confirmed with an alternative data set from the IRS, showing taxpayers and their exemptions, except that one would have to switch out one of the larger towns on this chart for New Shoreham.)

justin-katz-avatar-smiling

The New England-Based Energy Supply Shrinks

From an aesthetic and health point of view, Michael Holtzman’s Fall River Herald report certainly doesn’t bother me:

“The decision is irreversible,” a spokesman for Brayton Point Power Station, along 300 acres fronting Mount Hope Bay, told The Herald News in an hour-long phone interview.

It’s “the permanent retirement” of coal-powered Brayton Point, not “mothballing” the 1,488-megawatt plant, said David Onufer, external communications and media relations manager for Houston-based Dynegy Inc.

Still, we need energy.  Right now, thanks largely to fracking, we’re enjoying a period of relatively cheap energy, but that could change.  If it does, the effect will be analogous to the increase of interest rates after a household has put itself into a great deal of debt during a time of cheap credit.

As a society, we’ve let environmental concerns rise up on the scale relative to the production of energy and all of the uses to which we put it.  Some crisis may or may not shock us to the realization that we went too far, but clearing the landscape of existing energy sources while blocking anything that isn’t a fashionable, subsidized, “green” alternative seems reckless on its face.

justin-katz-avatar-smiling

Free Tuition as a Welfare Program

Note the substantive difference between this plan and what Rhode Island’s Democrat Governor Gina Raimondo is proposing:

Gov. Charlie Baker and Mayor Martin J. Walsh have announced a tuition-free college program.

The Republican governor and the Democratic mayor on Monday launched the new college affordability program for Boston high school graduates, enabling low-income students to complete four-year degrees without paying tuition or mandatory fees.

Students first go to public community college, and then if they finish that degree in a timely manner, they can continue on to finish a four-year degree at a public four-year institution.  At least this program is more or less honest about being a public welfare program, and no doubt some students who otherwise wouldn’t have the opportunities will take advantage of the program to good effect.

That said, Governor Baker’s lamentation that the price of college sometimes “serves as a barrier” is poorly considered.  A price should server as a barrier, to ensure that potential students have consciously decided whether it’s worth the effort of surmounting it.

Our problem is that we’ve been hiding the size of the barrier while overstating the value of getting to the other side.  Taxpayer subsidies add bricks to the wall, and easy loans hide the real cost to students.  This has flooded the employment market with people who have degrees, devaluing them to the point of being little more than a cheap method for employers to screen applicants for jobs that don’t require anything like a bachelor’s degree.

We should address that problem, first, before providing related welfare programs.

justin-katz-avatar-smiling

Mediating Communions and Institutions Must Correct Our Course

In an excellent weekend interview by Sohrab Ahmari, Pierre Manent hones in on the problem of un-assimilationist Islam in the West, but this part is obviously more broadly applicable:

… the liberal West has grown tired of the older forms of “communion” that used to define it. Liberals in Europe, and to a lesser extent the U.S., wish to dispense with both the modern nation-state, the political communion that once gave concrete shape to the open society, and Judeo-Christianity, the sacred communion that used to provide the moral and spiritual frame.

For the West’s professional classes, Mr. Manent contends, the only acceptable sources of political communion are the autonomous individual, on the one hand, and humanity as a whole, on the other. He understands the jet-setters’ impulse: “We can go anywhere on the planet, work anywhere on the planet—these new liberties are inebriating.” Better, then, “to be a citizen of the world.”

But Mr. Manent, a Catholic and classical liberal in the tradition of Alexis de Tocqueville, thinks this attitude breeds resentments and anxieties that are only beginning to surface across the developed world.

One can see how this globalized view, bolstered by technology and wealth, removes incentive for those at the top of the socio-economic scale to concern themselves with those around them.  They don’t have to interact with their mid-distance neighbors, and they’re largely insulated from problems that arise through the economic and legal regimes that they favor (and that protect them, specifically).

Whereas once they would necessarily have come into contact with those of lower classes at church, the market, and other local establishments, they can now set themselves apart geographically, ideologically, and with respect to their activities.  This is not only culturally divisive, but also disruptive of social mobility.

At the same time, the overall wealth of the West has kept the real dissatisfaction and economic consequences from bubbling up in a revolutionary way.  That may be changing, and the change will certainly accelerate if the global elite makes it clear that it will not allow mediating institutions (like nations and churches) to correct course.

mike-stenhouse-avatar

The Budget: The Progressive Approach

Despite the false hopes expressed by lawmakers based solely on a reduced unemployment rate, Rhode Island families are hurting. The Ocean State suffers under the worst business climate, and 48th rank on our Center’s Job’s & Opportunity Index. Furthermore, Rhode Island was the only state in New England to see its labor force decline in size in recent years, as hundreds of thousands of people have chosen to leave our state since 2004. This is not a recovery.

monique-chartier-avatar

General Assembly Must Step In – Tolls Have Taken A Dangerous Turn

Below is a statement that StopTollsRI.com (for which I am spokesperson) placed on its Facebook page last night. The R.I. Trucking Association and the American Trucking Association have announced that they would wait until all 30+ toll gantries were installed before they would challenge the legality of truck tolls in court. This alarming development first came to light Thursday night in testimony before House Finance. See Mike Collins’ testimony starting at approximately minute 1:52:40.

Tolls have taken a dangerous turn for Rhode Island residents and taxpayers. It is now imperative that state legislators and General Assembly leadership step in for the good of the state and end the truck toll program.

Quantcast