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A Far-Reaching Conversation on State of the State

State of the State co-host Richard August invited me on for a full hour of the show to cover a broad range of topics, from Tiverton’s recall election to broad political philosophy.

12-9-19 A Different View of Matters from John Carlevale on Vimeo.

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Rhode Island motorists could find new gasoline taxes in their stockings

This Christmas season, Gov. Gina Raimondo could be the Grinch who stole affordable gasoline. If the Raimondo administration gets its way and bypasses the General Assembly to sign on to a new regional carbon-tax scheme, called the Transportation and Climate Initiative (TCI), Rhode Island motorists will find a plan to increase gasoline taxes in their stockings this year.

TCI is a cap-and-trade tax on gasoline proposed by environmental extremists who purposely want gasoline to become so expensive — estimated at an extra 24 cents per gallon — that you will be financially forced to walk or bike to work and around town.

Like all far-left contrivances to reduce carbon emissions, TCI, a green-new-deal-type gas tax, will harm economic growth and will take money out of your pocket. Rhode Island already suffers from an Ocean State Exodus, where far too many of our children and loved ones, business investors, and neighbors are leaving for lower-cost living in other states. The TCI tax would be one more piece of coal that will drive people out of state (pun intended).

Most Rhode Islanders want a balanced approach, where there are multiple choices for abundant and affordable energy. But green-Grinches in government want to limit your options, and will force you to pay expensive new taxes if you make the wrong choice.

Only the General Assembly can raise taxes. Fortunately, the governor cannot unilaterally impose a new tax on gasoline without legislative approval. But the governor has purposely tried to keep this TCI tax under the radar. Her team has been working stealthily with unelected bureaucrats at TCI to advance the imposition of gas taxes among 12 Northeast states.

Did you know that the really high electricity prices we pay, among the highest in the country, are partly because of a different regional cap-and-trade program, the Regional Greenhouse Gas Initiative (RGGI)? RGGI imposes tax-like fees on electricity power plants, which, of course, get passed on to you. Unfortunately, RGGI has been a complete failure; it has significantly increased the cost of electricity but has resulted in no added emissions reductions!

And now they want to try the same failed idea on gasoline with a TCI gas tax. Like RGGI, TCI is designed to increase the cost of fossil-based fuel so much, that families like yours — and businesses where you work — will be forced to use less of it.

Part of the RGGI and TCI schemes is that the extra money you pay at the gas pumps and on your electric bill is supposed to be spent by participating states on energy projects that are favored by greenie Grinches. Rhode Islanders understand that it is patently unfair for government subsidies to be handed-out to benefit a specific industry or company … at the expense of everyone else.

History has proven that too many government regulations and taxes on energy mean that the beneficial use of America’s rich natural resources might be put out of reach for many. Worse, such government imposed taxes as the RGGI tax and the TCI tax are regressive; they disproportionately harm low-income families who already struggle to pay heating bills and gasoline costs.

Also, many businesses, similarly burdened with higher energy costs, will be forced to reduce employee work hours, cut jobs, or even shut down and move to another state.

The secrecy must end now. The governor should have been more transparent about an issue that will cause economic hardship for many. I call on Ms. Raimondo to reject the TCI tax plan, expected out on Dec. 17; and I call on Senate and House leadership to ensure there is a robust public debate about whether you and I should pay higher gasoline taxes.

RGGI has failed miserably … and TCI is also doomed for failure. Why should any Grinch force any of us to pay unnecessarily higher gasoline taxes if it will not result in any environmental benefit?

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Governor’s Back Door TCI Tax Would Cost You At The Pump

The prices for gasoline could soon rise dramatically for your family if the Raimondo administration undercuts the authority of the General Assembly, and moves forward with its plan to sign-on to a new stealth carbon-tax scheme – the TCI Tax… a move that would necessarily increase costs on families and business at the pump, and that also could lead to Constitutional legal challenges.

This tax – a green-new-deal type government mandate – is also a regressive fuel tax that will disproportionately harm low-income families, who will struggle much more than the wealthy to pay the higher gasoline prices.

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The Tragedy of a Halted Development in Providence

There may be no better illustration of Rhode Island’s central problem than the foolish people celebrating the halt of a redevelopment project in Providence:

[Jim] Abdo’s request for a tax stabilization agreement, or TSA, was met with opposition from labor unions and progressive groups. Members of the groups applauded when the plan was tabled Tuesday night.

“I know Mr. Abdo is going to make out tremendously from his investment, with or without the TSA,” Nancy Iadeluca, the Rhode Island director for UniteHERE Local 26, said at a hearing about the TSA earlier this month. “What are we getting back?”

Mr. Abdo is looking to develop the former Providence Journal building and another next door, but he says he can’t secure financing for the project, pegged at $39 million, unless there’s a $2.7 million tax break.  According to the developer (who has reason to present his case in the best light, of course), property taxes resulting from the project would have been $5.7 million, anyway, in addition to more than $20 million in various state taxes.  All that comes with jobs and economic activity.

The article does not say, but one wonders, given labor’s involvement, if Mr. Abdo declined to promise to use union shops for his project.  Be that as it may, he says he’s going to hold on to the asset, undeveloped, whether or not it takes 20 years for him to do something with it.

Many Rhode Islanders oppose these special deals that make an inhospitable economic climate tolerable for hand-picked investors, but even we might see this outcome as tragic — if only as an indicator of things we don’t see.  Imagine how many deals are not being done in the Ocean State because of the environment progressive policies have created!

This is more than just tragic, though; it’s frightening, because under the progressives’ glee is the expectation that this is a step toward their “progress,” not an obstacle.  Note this comment from the Providence Preservation Society’s director, who supported the deal:  “These two buildings are eyesores in the core of downtown. They drive down the sense of positivity.”

Abdo says he’s patient, but his patience might be misplaced.  What the progressives may understand is that an “eyesore” is “blight,” and our society has given the government authority to confiscate properties on which they can pin that tag.  As Providence’s economy gets worse and worse, it may be that progressives are counting on being able to take Abdo’s property away from him, using public dollars to redevelop it into some delusional hipster dream (with expensive union labor), and taking the money to do it from the rest of us suckers who haven’t fled the state.

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Out-Progressiving Raimondo’s Progressives

The Providence Journal has an op-ed from me today, about progressive Democrat state Senator Samuel Bell’s freedom to use irresponsible rhetoric as leverage against the progressives in the administration of progressive Democrat Governor Gina Raimondo:

At the end of the day, Bell is just objecting to Raimondo’s efforts to buy off companies so that they’ll tolerate our horrible business climate, which he is free to do because his economic ideas are fantasy.

Gina Raimondo, Stefan Pryor and Bruce Katz are progressives who are responsible for implementing the central planning policies that progressives demand. Samuel Bell is a progressive with no real responsibility who is therefore free to be more irresponsible in his demands.

If it weren’t so harmful to our state, this would all be a laugh riot.

By capitulating to progressive-union pressure, and despite disingenuous claims that no broad-based taxes were imposed, Ocean Staters will once again bear increased burdens to pay for new taxes and regulations, more spending, and more union giveaways. Lawmakers chose to appease, rather than resist, the progressives’ job-killing, big-spending agenda.

Expanding Big-Government Programs Increases Taxes

Well, this news isn’t exactly surprising:

On New Year’s Day, the state Temporary Disability Insurance tax rate will rise from 1.1% to 1.3% of pay, according to the state Department of Labor and Training. That means someone making $50,000 per year should expect to pay $650 in TDI tax next year compared with $550 this year.

The biggest reason is that Rhode Islanders are beginning to take advantage of a 2013 change in the law that allows them to use the disability program to take time off in order to take care of other people who are injured or sick, or to “bond with a new child.” The sponsor of that legislation insists it’s a small price to pay, and she works diligently every year to make it a little less small:

Sen. Gayle Goldin, sponsor of the 2013 bill that created caregiver insurance, said Tuesday that more people taking advantage of the program is a sign that it’s working and that taxpayers are getting good value.

“It’s a very small [tax] increase to pay for a benefit that helps people when they need it the most,” said Goldin, a Providence Democrat.

Going from 1.1% of pay to 1.3% is actually an 18% increase.  What should families forgo in order to cover a benefit that people in 46 other states somehow manage to live without?

Naturally, the state’s army of spokespeople spins it as a positive:

“It is not surprising that improved income conditions would increase claims; more employed workers result in more individuals eligible, therefore, more potential users,” Angelika Pellegrino, spokeswoman for the Department of Labor and Training, wrote in an email.

That comment has two layers of deceit.  First, the program is funded by a percentage of total payroll.  More people working means more people paying into the system, which shouldn’t have to be adjusted if it’s designed well.  Of course, if Rhode Island is only creating low-paying jobs, then new tax contributions would be less likely to cover the cost of coverage.

Second, the increase in employed Rhode Islanders cannot possibly account for an 18% increase in the rate.  The number of people employed has barely budged year over year, and the number of jobs based in the state is up only 1.5%.

We should also remember that these policies pile up, including, for example, more-recently-mandated paid leave for employees.  That policy arguably froze and reverse employment increases in the state.

This 18% increase in the TDI tax is a visible warning sign for what we can’t see.  We can’t know all the jobs that would have been created or the raises that would have been given in the absence of these progressive policies. And we can’t forget that employers (and potential employers) can’t only adjust for the policies that have been passed; they have to plan for all of the new burdens their betters in the General Assembly are likely to impose every year.

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The Way to Address Workplace Injustice

Here’s a great story out of Rhode Island, oddly first spotted, at least that I’ve seen, by a news station in Minnesota:

A new business in North Smithfield, Rhode Island is spreading awareness of hiring people with disabilities.

Michael Coyne opened his coffee shop, Red, White & Brew, after struggling to find a job, which he believed was due to his disability.

He has autism, and when he couldn’t find anyone who would hire him, he decided to take matters into his own hands.

When a business underpays its staff or discriminates, that is an opportunity for others to compete and take advantage of those destructive decisions.  Yet, every time the state of Rhode Island imposes new taxes, licenses, and regulations, it makes it more difficult for people like Mr. Coyne to rise up and do so.

We shouldn’t have the attitude that there are workers and there are owners, or that businesses have a paternalistic duty to take care of their employees.  Instead, we should understand that we’re all human beings, equal in the eyes of God, who make agreements to work together.  When individuals are taken advantage of, we ought to help them, but not with blanket pronouncements that assume everybody in one class (the evil business owners) is always trying to take advantage of everybody else (the vulnerable employees).

If the proponents of “diversity” and “inclusion” really believed that they helped businesses, they wouldn’t try to regulate them as mandates, because they would expect the marketplace to reward businesses who followed those principles.  Instead, they try to be exclusive of people who hold different views, not only within a single business but across the entire economy.

Congratulations to Mr. Coyne for living an important principle that too many of his fellow Rhode Islanders seem unwilling to learn.

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Rhode Island’s Very Own Green New Deal

How much more money can Rhode Island’s political class take from your pocket using green energy as an excuse?

The Ocean State has already signed on to the Transport and Climate Initiative, a cabal of Northeastern and Mid-Atlantic states designed to foster a radical change (for the worse) to our economic well-being through costly green energy policies.

Indeed, this very well could be Rhode Island own version of the “Green New Deal,” driving costs higher and higher.

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Not Quite as Unequal as Advertised

TaxProf Blog’s Paul Caron highlights an important point from a Wall Street Journal op-ed by Phil Gramm and John Early:

The published census data for 2017 portray the top quintile of households as having almost 17 times as much income as the bottom quintile. But this picture is false. The measure fails to account for the one-third of all household income paid in federal, state and local taxes. Since households in the top income quintile pay almost two-thirds of all taxes, ignoring the earned income lost to taxes substantially overstates inequality.

The Census Bureau also fails to count $1.9 trillion in annual public transfer payments to American households. The bureau ignores transfer payments from some 95 federal programs such as Medicare, Medicaid and food stamps, which make up more than 40% of federal spending, along with dozens of state and local programs. Government transfers provide 89% of all resources available to the bottom income quintile of households and more than half of the total resources available to the second quintile.

Teasing the direct wealth redistribution our government imposes on the economy out of the equation changes the picture dramatically.  Click over and look at the included chart.  Adding wealth transfers to those in the lowest quintile moves their average income from nearly zero to over $50,000, while removing taxation from the top quintile drops their average income from nearly $300,000 per year to less than $200,000.

This is a nifty trick from progressives that might just slip past folks’ notice or might be deliberately obscured.  Government takes action to correct a presumed problem but then doesn’t account for the correction in future years, so it looks as if the problem never changes.

In fact, it might appear to get worse!  In this case, for example, it wouldn’t be surprising to find that progressive taxation actually leads to a bigger difference between earned income (not including transfers).  After all, the higher taxes are, the more companies have to pay at the high end in order to produce the same take-home-pay, and the more progressive the tax structure is, the less incentive workers have to take higher paying jobs that carry more responsibility or require more investment in credentials and such, so the more pressure there will be to maintain or increase take-home pay.

If reducing the gap in earned income is really the goal (which I think it should be), then a redistributive tax structure is exactly the wrong way to go about it.

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Generations of Sam Bells

Based on the commentary of progressive Democrat state Senator Samuel Bell (Providence) at a local economic development event featuring central planning guru Bruce Katz, you really have to wonder how little he thinks of the intelligence of his supporters:

“The reason I wanted to go back to that slide [showing RI’s unemployment rate from 2010 to 2018] is you can see the results,” said Bell. “Because before we implemented these corporate policies our unemployment rate was plummeting, relative to the national average. And once we implemented these policies, once they start to bite – implemented largely at the beginning of 2015, we see it stall. And that means people in my district suffering because of the economic damage.”

Here’s the slide he’s talking about, as reproduced on Uprise RI:

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Now, I think the unemployment rate in Rhode Island is pretty much a bogus statistic that misrepresents the state’s economy, but still: Bell must be relying on slavish agreement from his listeners, because nobody should be surprised that a bad statistic would slow down its improvement as it reached the national average.

Indeed, digging into how the rate is calculated, one could even make the opposite argument to Bells. One important reason the rate of improvement of RI unemployment slowed down in 2015 was that people stopped quitting the labor force, and that number, which is the denominator for the unemployment rate, actually started going up during the period in question:

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In other words, if Rhode Islanders were more optimistic about their prospect of finding jobs, they would keep looking, which would slow the reduction of the unemployment rate. This could be said to prove that Bell has things backwards.

The irony, here, is that I actually agree with Bell’s observation. Rhode Island’s employment scene has indeed been doing worse under Democrat Governor Gina Raimondo than it had been doing. However, the reason is that her policies are too progressive — too centrally planned — which points to a problem with progressives’ assumption that government can run the economy.

To implement centrally planned policies, the decision makers rely on the continued buy-in of their fellow progressives. Yet, there will always be some truer believer who benefits by being more extreme and more pure. There will always be a Sam Bell with incentive to use misleading statistics and hints of corruption among his predecessors to advance his own career.

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Rhode Island Became A Less Hospitable Place To Raise A Family In 2019

Recently, our Center released our 2019 Freedom Index and Legislator Scorecard for the Rhode Island General Assembly.

Sadly, with only 12 of 113 lawmakers scoring above zero, the members of the political class failed to fulfill their promises to help everyday citizens. Worse, the 2019 legislative session was an unadulterated assault on individual and economic rights, the totality of which I have not seen before.

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Is Government Over-Reacting With Vape Bans?

Are the decisions by the governors of Rhode Island and Massachusetts to halt the sale of vaping products (which will destroy jobs and small businesses) fueled by solid research or inspired by politically-correct activism?

While we recognize that this may be a sensitive topic to some people, there are many pro-liberty arguments that can be made on why these vape bans are wrong. It is deeply concerning that Governor Raimondo used her office to unilaterally ban a class of products.

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Freedom… From the Progressive Point of View

Perhaps the most clarifying statement in Rhode Island politics, recently, came from one of the candidates now involved with Matt Brown’s Political Cooperative (which, despite the name, is not an alt-country band):

“Thought I may be the epitome of the American dream I cannot sit around and watch while many of my brothers and sisters are denied a shot at that very dream,″ said Jonathan Acosta, tracing his own story from “first generation American born to undocumented migrants from Colombia″ to the Ivy League.

“I believe that we are not free until we have dismantled structural inequality, developed sustainable clean energy, enacted a $15 minimum wage that pays equal pay for equal work, extended healthcare for all, provide[d] affordable housing, ensured quality public education starting at Pre-K, undergone campaign finance reform, criminal justice reform, and implemented sensible gun control,″ said Acosta, running for the Senate seat currently held by Elizabeth Crowley, D-Central Falls.

So, to Mr. Acosta, we’re not free until we’ve taken from some categories of people to give to others, limited people’s energy options to benefit fashionable technologies, forbidden employers and employees from setting a mutually agreeable value on work to be done, taken money from some people in order to pay for others’ health care (as defined by a vote-buying government) and/or put price controls on what providers can charge, placed restrictions on who can live where and what they can build, tightened the regulation of politics with limits on the donations and privacy of those who become politically active, and reduced the rights guaranteed under the Second Amendment of the United States Constitution.

If that doesn’t match your understanding of “freedom,” you’re not alone.  Indeed, by its mission, this “cooperative” is cooperating against anybody whose understanding of freedom differs, because it cannot possibly cooperate with anybody who disagrees.  You simply can’t hold a definition of freedom that doesn’t have satisfactory outcomes for the interest groups that progressives have targeted.

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Ocean State Exodus: We Are Losing Productive People

No single indicator should be of more importance to lawmakers and civic leaders than whether or not our state is retaining and attracting talented and productive people.

The opportunity for prosperity is a primary factor in the migration of families from state to state. In this regard, our Ocean State is more than just losing the race. Far too many Rhode Islanders are fleeing our state, leaving a swath of empty chairs at our family dinner tables.

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Global Climate Strike: An Inconvenient Data Point; Your Global Warming Confessions

Today, children around the world are participating in a Global Climate Strike. I won’t criticize them for this highly misguided activity but rather the adults – including, notably and disturbingly, educators – who have foisted on them a hysteria that is almost entirely free of facts and reasoning. For example, one important data point these children are almost certainly not learning in school or anywhere: the actual extent of the greenhouse gases generated by humans and, thereby, what we can conclude about our (very limited) culpability in global warming.

It is less than 6%. ALL of man’s fossil fueled activity – all factories, all power plants, all manufacturing, all cars, all countries, all 7.5 billion people – contributes less than 6% of greenhouse gases generated on the planet. The balance is generated naturally by Earth itself.

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Hasbro Toying with Tariffs

Let’s stipulate that, as a general proposition, tariffs are bad.  Of course, such stipulations don’t provide quick and clean answers to every particular question.  As a general proposition, cutting people open is bad, too, as is punching them, but if you’re performing surgery or defending yourself, the general proposition doesn’t apply.  Losing your job isn’t great, either, but it doesn’t end your life, and you can adjust and even wind up better off than you were.

None of this is meant to offer support for any specific policy or trade war, but only as an encouragement toward a more comprehensive view.  Just so, the CEO of Hasbro is taking tariffs on China as an opportunity:

Hasbro shifting its business out of China has been positive for the company, according to its CEO. «It’s gone very well for us,» Brian Goldner told CNBC on Tuesday.

The toy company has been focused on diversifying its manufacturing operations since 2012 due to «enterprise risk reasons,» he said.

«We’re seeing great opportunities in Vietnam, India and other territories like Mexico. We’re doing even more in the U.S. We brought Play-Doh back to the U.S. last year,» Goldner said on «Squawk on the Street.»

Of course, that one industry giant is happy to adjust to this reality isn’t definitive proof that the tariffs are a net gain.  Market leaders often don’t mind restrictions, provided they create roadblocks for smaller competitors, too, because big players can better overcome artificial hurdles.

Moreover, the fact that the cost is artificial means that it is drawing resources away from something else altogether.  Writ large, the world is now paying more for toys, and those resources have to come from somewhere.

The question is: Are these costs worth the gains?  Such questions will always be subject to opinion, and it’s too early to tell, anyway.  Still, it’s worth remembering to ask them.

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The Elusive Lesson for the Angry Progressive

Sometimes a reader can’t help but feel like a professor watching a student come so close to an epiphany only to talk right past it.  One such moment can be found in this paragraph from an essay on UpRise RI by Missak Melkonian, about the JUMP bike gang that roved Providence for a day (emphasis added):

Maybe the youths terrorizing the yuppies have a point. I would be, and hell, I AM pissed that hotels and lofts can go up in the blink of an eye but repairing public schools is tantamount to rewriting the Constitution! If those in power wanted to fix the conditions that create these “issues” amongst the youth, they could do it, but they won’t and never will because their bottom line will always be money and power. I grew up in Providence schools. I didn’t need a report from Johns Hopkins to tell me the schools are awful. Anyone with common sense could tell you that – racist teachers, dilapidated facilities, extremely punitive disciplinary policies, do-gooder white savior NGO’s – not to mention the status of the recreation centers in Providence or the various boys and girls clubs. These all make for a ripe combination of anger, resentment, and antipathy in the youth. It’s hard to care about the well-being of something like a JUMP bike when it’s so evident the world doesn’t give a sh*t about you, or even consider you a human being.

Hmmm… what quality applies to hotels and lofts that does not apply to public school?  Ceding a little ideological ground, one could note that the for-profit incentives of the private sector align the drive for “money and power” with the good being sought.  Moreover, the need to draw resources through the consensual commerce of customers translates into incentive to treat them as human beings, without bias or unduly “punitive disciplinary policies.”

A failure to spot this lesson will lead to one place only:  a tacit desire to squash the productive private sector so that it does not outshine the under-performing public sector, thus increasing the amount of resentment in the world.

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The Best Way to Ensure a Long-Term Morality

My post this morning, about the incentive for those who rely on Minnesota trees to ensure the long-term health of Minnesota forests, came right up to the edge of a much bigger topic.  The most-important factor guarding humanity against the tragedy of the commons — wherein individuals use up natural resources because the incentive to preserve never outweighs the incentive to profit for any one person — is that the human beings involved think forward to the future beyond their own personal needs and desires.

As I wrote earlier, we can expect people not to poison their own well, so to speak, by destroying the resources on which they rely, but only within a certain range.  If the activity (like cutting down trees) is relatively difficult and the people able or willing to do it are relatively few, it is more likely they’ll collectively recognize their long-term incentives.  If something is easy to do and many people are doing it, then it is less likely that they’ll delay immediate profit for longer-term stability, because somebody else can come along and edge in.

Obviously, it also matters how far into the future the players are looking.  If people are desperate to have a meal today, they’ll be more careless about the resources.  The selfish, childless businessman of progressive fantasy need only preserve the resource to the extent that he can capitalize on it.

This is where the topic expands.  A business owner who sees him or her self as building a multi-generational source of income will worry about critical resources indefinitely into the future.

That principle extrapolates beyond businesses, too.  People who are thinking about their own children and their children’s children have a living, breathing reason to figure the future into everything they do.  That is, making families and children central to personal and cultural meaning has philosophical benefits for the entire society.

This realization points an interesting light at secular progressivism, which is fundamentally anti-family in its philosophy.  When progressives find it necessary to appeal to a long-term perspective for their political advocacy, as with the environment, they have to resort either to abstractions (the good of humankind) or to a religious elevation of something else (like the planet) as an object of concern in its own right.

Neither alternative can compete with the incentives that come from love of one’s children.

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