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The Undeserved Confidence of the New Upper Class

One common suggestion for those who wish to be aware of current events and engage in civil dialogue is that they should seek out alternate opinions and actually listen to the other side.  This practice does create a deeper understanding, but deeper understanding doesn’t necessarily bring a softening of reactions.  That was my thought while listening to former long-time PR guy for Democrat Governor Gina Raimondo, Michael Raia, on the Bartholomewtown Podcast.

Listening to Raia talk about opportunities for our state and region, I couldn’t help but feel my impressions of the Raimondo administration affirmed and my concern about its type of thinking amplified.  The listener can hear how confident Raia is that he’s got the region all figured out, as if a society is just a puzzle for which placement of the correct pieces provides the solution.

Whether it’s the operation of businesses and the economy, the development and modification of the infrastructure, the operations of the healthcare system, or the quality of life of particular demographic groups, like senior citizens, one gets the impression that Raia has a firm belief that he and other go-getter experts can think it all through, plan it all out, wind it all up, and set the great society in motion.  Unfortunately, the human community doesn’t work like that.

Intelligent as they may be, the Raias and Raimondos aren’t smart enough to plan a society even if everybody wanted to live in neighborhoods like the ones they prefer and spend their senior years playing pickleball. Such an accomplishment would require infinite expertise and a God-like perspective.

The fact of the matter, though, is that most other people do not share the tastes of what Charles Murray called “the new upper class” in his book Coming Apart, and those people have a right not to have their societal preferences bulldozed aside by a powerful government.  Moreover, as Murray explains, the ethos of that new upper class is destructive of society in the long run.

Even in the immediate, direct trends of the economy, we can observe the economic sluggishness since Governor Raimondo took office, which suggests that her approach does not work.  In February, Rhode Island was the only state in the country that had fewer jobs than it did a year before.  Yet, one hears no trace of doubt in Raia’s voice that maybe (just maybe) crafting a society isn’t so easy.

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Who Is Working For You? New Major Report Coming Soon From The Center

Who does the Rhode Island General Assembly really work for? Too often, the people of our state are left voiceless as special interest dominate the conversation. Recently, the Ocean State Current broke a major story that ignited media coverage across the state. In H5662 and Whom Rhode Island Representatives Represent, Research Director Justin Katz, uncovers a key admission from the political class.

During the March 11th Tiverton Town Council meeting, a member of the General Assembly admitted that he put forward the bill at the request of Speaker of the House, without regard to the cost to the town he represents for the state firefighters union.

Don’t wait, you can catch the video on the Current by clicking the link here. You can also find the followup here.

In the coming weeks, the Center will be releasing a major report on the cost of collective bargaining in the Ocean State. This will be the longest and most in-depth research project the Center has ever undertaken on any topic. We invite you to be on the lookout for this critical report.

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Admissions Scandal Is So Very Rhode Island

I’ve got an op-ed in today’s Washington Times, about Rhode Island’s own connection with the college-entrance bribery scandal:

When Rhode Islanders heard that the women’s tennis coach of the state’s public university had been arrested in connection with the national bribery for admission scandal, many must have said, “Wait, what?” Students can get an excellent education at the University of Rhode Island, and it’s certainly an affordable option, but it isn’t exactly an institution for which the nation’s rich and famous would have to pay the sort of premium that might attract the FBI’s attention.

When they learned the details, locals’ reaction was probably something more like, “How very Rhode Island.”

This paragraph is probably the key takeaway for Rhode Islanders:

Rhode Island’s leaders are like the parents who’ve bribed their children’s way into institutions of higher education that were well beyond their merit. Both cases exhibit an implicit insecurity and a desire for people under their care or authority to be something they’re not. In contrast, the initial questions that political leaders and parents ask should be: Who are you really, and how can you achieve your full potential, being who you are? With that more-human perspective as the starting point, parents might not set their children up for embarrassing failure (or criminal prosecution).

Read the whole thing, as they say.

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Rhode Island Legislators Should Support The 6.5% Sales Tax Promise

The state of the State of Rhode Island is not competitive. Even as the rising national economic tide has lifted ships in all states, when compared with the rest of the nation, our Ocean State is severely lagging, and is in danger of sinking further behind if progressive policies continue to be implemented.

However, things do not have to be this way.

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The Premium to Live in Rhode Island

Jeff Rose has an interesting article on Forbes.com calculating the take-home value of a $200,000 income in all 50 states.  Such a review requires assumptions and broad strokes, but the attempt is interesting.

Naturally, Rhode Island is in the bottom 8, with the theoretical person taking home $140,500 after taxes, or a 30% effective tax rate.  That ties the Ocean State with New Jersey and is worse only than Connecticut, Minnesota, Maine, Vermont, Hawaii, and (at the bottom of the list) New York.  At the other end of the ranking is Delaware, with $149,500, or an effective 25% rate.

Therein lies the key point.  Sure, folks will have a hard time feeling bad for those with such high incomes, but when they can give themselves up to a 6% raise simply by relocating, we should expect that many of them will try to do so.

That likelihood raises a related topic.  These rankings are purely tax burdens.  Different states have different costs of living, too.  If you’re living in Providence, your cost of living is 22% higher than the national average, according to Payscale.com.  Dover, Delaware, by contrast, is 3% lower than the national average.  That’s a 25% swing.

Readers can play around with the tools to look at the states that Rhode Islanders often mention when they daydream about leaving.  Raleigh, North Carolina, is 6% below the national average for cost of living.  Nashville, Tennessee, is 4% below.  Here’s the table that Payscale.com generates for comparisons:

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Rhode Island doesn’t need new gimmicks or more corporate cronyism to turn itself around.  We need to recognize and respond to this core problem of making it too expensive to live here, with too little opportunity to show for it.  More and more, it seems that we pay a tax premium merely to enable government employees and other insiders to make up for our high cost of living.

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The Effects of the Minimum Wage

Written testimony from the RI Center for Freedom & Prosperity’s CEO, Mike Stenhouse, opposing an increase in the minimum wage emphasizes that such legislation kills jobs:

After Seattle passed a rapid minimum wage hike, a study by the Univ. of WA found the cost to low-wage workers outweighed the benefits by a 3-1 ratio, and found that on average overall, low-wage workers, lost $125 per month – because of lost work hours, lost employment, or lost job opportunities because of the hike.

In Boston, high minimum wages have been publicly cited as a primary reason for many restaurant closings.

Writing on PJ Media, Stephen Green notes that the contagion has hit New York City:

Which brings us back to the NY Post, where an industry group was quoted saying that “full-service restaurants recorded a 1.6 percent job loss [in 2018], which is the first recorded annual loss in two decades.” The new minimum wage hadn’t kicked in yet, but fast-food and fast-casual restaurants were already rushing to automate in anticipation, and this year looks to be even worse

Green also shares this helpfully explanatory cartoon:

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Social Isolation for Elders and the Cause of Freedom

It’s been out for a few months, so readers who frequent this sort of Web site may have already come across WalletHub’s ranking of the “Best States to Retire,” which places Rhode Island 49th, better only than Kentucky.  What does the Ocean State in is the combination of low affordability and low quality of life for seniors.

That latter point is what caught my eye this week in Adriana Belmonte’s summary of the ranking for Yahoo Finance:

Colorado and New Hampshire’s spots jumped out to [WalletHub analyst Jill Gonzalez], as well. New Hampshire has the lowest property crime rate, and is the fourth-best state overall.

“While they aren’t exactly the most affordable, these states ranked among the best to retire to,” Gonzalez said, noting both states’ high-quality health care and physicians per capita. “This is because they both have a low risk of social isolation, as well as a low share of the population aged 65+ in poverty.”

New Hampshire is 3rd for “quality of life,” which includes a variety of entertainment and leisure items (like “scenic byways” and “museums per capita”), as well as crime rates.  The subcategory also includes “risk of social isolation,” measured as follows:

This metric considers the following six risk factors of social isolation in population aged 65 years and older: a) Divorced, separated or widowed; b) Never married; c) Poverty; d) Disability; e) Independent Living Difficulty and f) Living alone.

That’s a cultural thing, and it points to a traditional view of life.  If you divorce or never get married, you have a higher risk of being alone.  Likewise (although it doesn’t appear that WalletHub measured this) if you never had children or if your children had to move somewhere else in order to find work, your risk of isolation goes up.

We most certainly shouldn’t compound the tragic events in people’s lives with unnecessary ridicule and stigma, but we’ve tended to forget an important point:  Traditional values are traditional for a reason.  They were learned over the course of centuries, not (as the ideological scions of Marx would have it) because they served some patriarchy or ruling elite, but because they made people’s lives better.  They also provided the foundation for freedom and for social advancement, which means losing our traditional values will actually bring us back toward rule by others.

In that regard, it is a telling coincidence that New Hampshire’s motto is “Live Free or Die.”

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Truck Tolls: Plaintiffs Appeal Ruling to Dismiss; Do Not Accede to Moving the Fight to State Court

On March 19, the federal district court in Providence dismissed the American Trucking Associations’ lawsuit against Rhode Island’s truck-only tolls, heeding the State of Rhode Island’s legal argument that their truck-only tolls are not a federal but a state matter and within the state’s purview to assess because they are actually taxes. (Wait, what?? Since when? From the beginning and all through the toll battle, Governor Gina Raimondo and state leaders repeatedly told us that tolls are a “fee”, a “user fee“, an apple – anything but a tax.)

At that point, the ATA had two choices: file the suit in state court or move to keep the suit at the federal level by appealing the decision. They just issued a statement indicating that they have chosen the latter course, stating, in part

Yesterday, the American Trucking Associations, along with three motor carriers representing the industry, appealed last week’s decision by the federal district court in Rhode Island to dismiss their challenge to Rhode Island’s RhodeWorks truck-only toll scheme, on procedural grounds.

In its challenge, ATA contends that Rhode Island’s truck-only toll scheme is unconstitutional because it discriminates against interstate trucking companies and impedes the flow of interstate commerce. In its March 19, 2019 decision dismissing the case, the district court did not address the merits of that constitutional claim. Instead, it held only that ATA’s challenge could not proceed in federal court.

ATA President and CEO Chris Spear went on to underscore, “…we look forward to establishing the unconstitutionality of Rhode Island’s discriminatory tolls on the merits.”

[Monique has been a contributor to the Ocean State Current and Anchor Rising for over ten years, was volunteer spokesperson for the citizens advocacy anti-toll group StopTollsRI.com for three+ years and began working for the Rhode Island Trucking Association as a staff member in September of 2017.]

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.

Another Reckless Shackle on Businesses’ Backs

On Monday, I pointed out that Rhode Island’s elected leaders should at least be concerned about the possibility that progressive impositions on Rhode Island businesses — like the paid-time-off mandate — might be hurting our jobs and employment market.  Well, now there’s this:

Rhode Island business groups are asking state lawmakers not to emulate Massachusetts’ tax on companies whose workers receive public health insurance, saying it has had “devastating” and “nightmarish” economic consequences there.

Grocers, home-care providers, restaurant chains and some hospitals are among the business interests fighting the plan in Gov. Gina Raimondo’s budget to charge companies with at least 300 employees a 10-percent fee on the wages of Medicaid-enrolled workers. The budget expects to collect $15.6 million next year and $19.5 million each year after that from the charge.

“Some of our members in Massachusetts are hearing horror stories,” Lenette Forry, lobbying for the Northern Rhode Island Chamber of Commerce and Rhode Island Hospital Association, told Rhode Island lawmakers Tuesday night.

Raimondo’s contrary argument is not persuasive.  She says that the state’s provision of Medicaid helps the businesses, so they should pick up some of the tab.  More than anything, this is an indication of the rolling consequences of bad policy.

Progressive officials pushed the policies making taxpayers liable for the health care of able-bodied people with lower incomes.  Progressive officials spent all kinds of money on an online health insurance system that shuffles people automatically into free-to-them Medicaid, even when they were willing to pay for individual plans.  Progressive officials spent and millions advertising and drawing people toward it.   Progressive officials overestimated how many paying customers they’d have and underestimated how many people would be added to Medicaid.  So now progressive officials are looking for a villain whom they can stick with the bill.

The thing is, businesses exist to make money for the people who own and operate them.  The more expense government layers on the balance sheet, the harder it is to accomplish that goal.  When it stops making sense to run the business, or at least to run it in Rhode Island, businesses will just stop doing it.

That’s where we’re going, and it’s going to be a disaster.

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Paid Leave and Rhode Island’s Employment Freeze

A couple of weeks ago, the Wall Street Journal published a letter by a Rhode Islander who stated that “seven of 10 members of my small-business study group are moving their businesses to Massachusetts as a result of a seriously flawed paid-leave bill the governor signed last year.”  Over the weekend, somebody from out of state asked me about the policy, which the Dept. of Labor an Training explains in a fact sheet on its Web site.

Thinking about the matter, the most recent jobs and employment report came to mind, wherein a painful downward revision of past numbers joined with foreboding downward trends for January.  That trend continued in February, and we’ll give further detail on that shortly.

The key point for the moment is that Rhode Island’s economy didn’t do as well as analysts had thought during the latter half of 2018, and we’re now bucking national trends and backsliding.  What if the paid-sick-leave bill is as damaging across the state as the letter writer described in that one small-business group?

The following chart shows the changes in employment and RI-based jobs through 2018 and up to February’s release.

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This cursory presentation is insufficient to prove that progressive policies like mandated paid sick leave have an immediate and detrimental effect on Rhode Islanders’ ability to find work.  The chart is striking enough, though, that we ought to at least pause before layering on more such policies — enacted by people who do not understand economics and who impose their whims on Rhode Islanders without even basic consideration of what their emotion-driven governance might do to people when the fantasy becomes reality.

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Governor Seeks to Punish Employers Via Proposed Medicaid Tax

Businesses should be applauded for hiring those most in need of work…not punished with more taxes, and certainly not made out to be the bad guy. It is misguided to think that if employees are not covered by their employer’s insurance plan, full or part time, and instead are enrolled in Medicaid, then the business should be punished.

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Overcoming the Green Religion

The Center of the American Experiment has done a comprehensive study finding that a 50% renewable goal is simply not a feasible goal for Minnesota, and the center’s president, John Hinderaker, summarizes some of the findings on PowerLine.  Basically, the technology isn’t there, and the costs aren’t reasonable, considering that:

Greenies will tell us, of course, that $80.2 billion, a declining economy and tens of thousands of jobs lost are a small price to pay to save the planet. But in fact, the reduction in CO2 emissions would be infinitesimal. Using the Obama administration’s highly questionable assumptions, achieving the 50% renewable target would reduce the Earth’s average temperature by 0.0006 degree Centigrade by 2100–an amount that is far too small to detect with even the most sophisticated equipment.

Liberals don’t actually believe that global warming caused by human CO2 emissions is an “existential threat” to mankind, as they like to say. If they really believed it, they would be campaigning to invade China and India, or to bomb their hundreds (if not thousands) of coal-fired power plants from the air. But I think that we can all agree that reducing global temperatures by 0.0006 of one degree isn’t saving anything.

Of course, if climate change really were the target of these policies — rather than less existential considerations like virtue signalling, socialism, and crony capitalism — advocates would be advocating to get the West over its fear of nuclear power.  (Although, we should make some allowance, on this count, because even if it would solve the problem, cult-like environmentalists tend to see nuclear technology as a Dark Power in opposition to the Light Power of wind and sun and trees and furry animals.)

Be that as it may, readers would do well to read through Hinderaker’s list of findings, if only for the reminder that these adventures in green virtue really do have harmful effects on economies and families.

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The 6.5% Sales Tax Promise: Money In Your Pocket

Existing state law (General Law 44-18-18) specifies a “trigger” for a sales tax rate reduction to 6.5% (from its current level of 7.0%!) if certain internet sales tax collection criteria are met. The rationale for this law was to relieve Rhode Islanders of the additional burden of imposing a sales tax on a broader range of purchased goods, by easing the tax.

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A National Tide of Small Business Job Creation and RI’s Low Entrepreneurship

Well, this looks like good news:

Job creation among small businesses broke the 45-year record in February with a net addition of 0.52 workers per firm, according to NFIB’s monthly jobs report, released today. The previous record was in May 1998 at 0.51 workers per firm. The percent of owners citing labor costs as their most important problem also hit an all-time high, with 10 percent of owners reporting labor costs as their biggest problem. …

“With the government shutdown behind us, the labor markets will get back to normal,” said NFIB Chief Economist Bill Dunkelberg. “However, it appears that the shortage of workers will continue to restrain Main Street growth. If businesses were fully staffed, more could be produced and sold. Owners are reporting increasing employment at their firms at the highest rates in survey history, now they just need workers to fill them.”

Unfortunately, the NFIB’s data doesn’t expand into state-level detail, but one suspects Rhode Island isn’t doing quite so well.  This suspicion isn’t only because Rhode Island is doing so poorly in the employment and jobs market generally.

Available information has long laid bare Rhode Island’s difficulty with small businesses.  One indicator is that the Ocean State tends to have much lower rates of entrepreneurial activity than one would expect in an economy that is worse off than the average.  Similarly, evidence suggests that Rhode Islanders who start new establishments have difficulty keeping them going.

Newer data from the Kauffman Foundation reinforce my speculation in those other links.  Overall, Rhode Island has the worst entrepreneurial activity in the country — and it isn’t even close.  Notably, given my earlier theorizing, the Ocean State is also worst in the nation when it comes to entrepreneurs who start businesses because they have to do so in order to work, versus those who do so because they see opportunity.

Our bad economy forces Rhode Islanders to make their own work.  Then, when self-starters begin having to really follow the government’s rules because they’re expanding and hiring, the state causes them to flounder.  We can reasonably speculate, therefore, that the tides of record small-business job creation are thinner in the Ocean State.

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When Will State Government Stop Hoping?

A letter to the editor from Rhode Islander Kris Gregory appearing this week in the Wall Street Journal is another item of which state officials should take note, but probably won’t (emphasis added):

Bad legislation, as much as stealth taxes, also contributes to the state’s deteriorating business climate. Seven of 10 members of my small-business study group are moving their businesses to Massachusetts as a result of a seriously flawed paid-leave bill the governor signed last year over the opposition of the business community. Even former Rhode Island governor and 2016 presidential candidate Lincoln Chafee appears to be relocating to tax-friendly Wyoming. With the coming 2020 census, Rhode Island cannot afford the departures. The state is perilously close to losing the second of its two congressional seats, and with its relative population decline, getting less federal funding which supports more than a third of the state’s nearly $10 billion budget.

Rhode Island keeps squeezing its productive citizens because they are less concentrated than special interests.  But the thing about a group that tends to make decisions as individuals is that a critical mass will have decided to take an action that could be catastrophic before politicians are slapped with the reality.

In a sane state, the most recent jobs and employment report would be just such a slap.  Unfortunately, this is Rhode Island, where government officials seem to interpret the state’s motto, “Hope,” as a strategy.

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A Top-Down Minimum Wage Is Reducing Hours at Whole Foods

It looks like employees of Whole Foods are learning a straightforward lesson:

In response to public pressure and increasing scrutiny over the pay of its warehouse workers, Amazon enacted a $15 minimum wage for all its employees on 1 November, including workers at grocery chain Whole Foods, which it purchased in 2017.

All Whole Foods employees paid less than $15 an hour saw their wages increase to at least that, while all other team members received a $1 an hour wage increase and team leaders received a $2 an hour increase.

But since the wage increase, Whole Food employees have told the Guardian that they have experienced widespread cuts that have reduced schedule shifts across many stores, often negating wage gains for employees.

The lesson is this:  Money has to come from somewhere, and to believe it will inevitably come from the most powerful is delusional.  Wages and business models are settled within a marketplace, and forcing one part of that marketplace to be more costly doesn’t increase its value to the company.

A more social-justicy way to approach the same principle is to note that the problems that create inequity are structural.  You can’t just dictate a change in the symptom to cure the disease.  Progressives prefer a treatment involving consolidation of power in government, which can then be used to “level the playing field,” but this is subject to the same problem:  The powerful begin with an edge.

The only structural change that will achieve fairness and more-equitable outcomes is to expand our freedom so nobody is free of competitive pressures.

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Rhode Island Needs A Freedom Agenda. (And It’s Coming This Week.)

The Ocean State is doomed to lose a US Congressional seat because of its hostile tax, educational, and business environment. The state’s current thinking chases away the wealth, families, and businesses that are needed for all of us to be truly prosperous. The far-left big government policies that have reigned in our state for far too long will continue to only make matters far worse. Instead, we need a change of direction.

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Being Socialist Just Like Sweden

As another generation is misled into believing that socialism would be worth a try in the United States, one often hears how well the economic system works in Sweden and other Scandinavian countries.  But as John Stossel notes Sweden is not socialist.

With a prioritization of free markets, school choice, a less-progressive tax system, and privatized social safety nets, it’s arguably less socialist than the United States.  In fact, when the country tried something closer to actual socialism a few decades ago, it was disastrous.  Unfortunately, like the many examples of socialism’s failure, the memory of true believers tends to fixate on the dream of what they hoped would be, rather than the reality.

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Everything We Thought About 2018 Employment Was Wrong

Every year, the federal Bureau of Labor Statistics (BLS) revises its numbers for states’ employment statistics.  Those results will be released tomorrow, but Rhode Island’s Department of Labor and Training (DLT) typically releases a limited press release the day before.  As of this writing, the DLT’s Web site does not include the press release that went out to journalists and other interested subscribers.

In a word, the results are not good.  The BLS revised data back to 2014, and the DLT only released round numbers back to December 2017, but in the name of informing people at Internet speed, here’s a preliminary chart comparing the revision to the originally reported numbers.

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Some things to note:

  • 5,300 employed Rhode Islanders disappeared.
  • The workforce dropped by 4,800.
  • That notched unemployment to 4%.
  • The better part of all the gains we’d thought we’d made during 2018 evaporated.

For political context, I’ve marked the month that Democrat Governor Gina Raimondo’s first budget went into effect.  Throughout most of 2018, the reported numbers were sufficiently good to open up the possibility that the governor’s policies simply had a lag in their effectiveness.  Now, that seems to be less plausible.

From the time she took office, employment in the state has grown at a slower pace than it had been previously — by half.  From December 2014 through December 2018, Rhode Island employment increased 0.77% per year.  From the time the state hit bottom, around December 2011, through December 2014, the growth rate was 1.42% per year.

Perhaps relying on incorrect numbers, Rhode Islanders didn’t change direction with the last election.  One test for the governor — and a sign of her intentions — will be whether she makes some adjustments or doubles down on her top-down, progressive, crony-capitalist approach.

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Chris Maxwell: National Academic Board Finds No Data to Support Raimondo & RIDOT’s Claims of Truck Damage to Highways & Bridges

The National Academy of Sciences’ Transportation Research Board (TRB) recently met to assess whether changes to truck size and weight (TS & W) should be implemented. The nation’s scholars, engineers and infrastructure “wonks” came away from the conference with a consensual determination that there was not enough data to support changes and that further studies were needed before any revisions were made to either decrease or increase the allowable dimensions and weight on America’s highways and bridges. In fact, the group spent significant time developing a plan for future research on the TS & Weight issue because there are information gaps and inconsistencies in studies.

So why are DOT leaders around the country yelling “fire in the theater” as they pin the trucking industry with the ills of our infrastructure?

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Loss of US Congressional Seat Underscores Need for Reform Agenda

The state of the State of Rhode Island is not good. Even as the rising national economic tide has lifted ships in all states, when compared with the rest of the nation, our Ocean State is severely lagging, and is in danger of sinking further behind if progressive policies continue to be implemented.

Perhaps no indicator more appropriately demonstrates the failure of the leftist status quo, than does the near-certainty that Rhode Island will lose one of its precious House seats in the U.S. Congress. The persistent jokes of family and friends “moving out of state” have now tragically manifested themselves into the harsh reality that our state is not competitive enough to see population growth on par with the rest of the country.

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Unnecessary “Fair Housing” Bill is Unfair to Landlords!

House bill 5137, deceptively named the Fair Housing Practices bill, which mirrors leftist-inspired legislation introduced in other states, is completely unfair to landlords.

The legislation claims it seeks to end discriminatory housing practices because in the progressives’ land of social-equity, making a legitimate business decision should be a crime. Under the proposed law, any Section-8 lessee applicant (those whose rents are subsidized by the federal government) who are not accepted as a tenant, must have been discriminated against, and the landlord must be punished.

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The Irrational and Rational in Real Estate and Climate Change

If this is correct, it would seem that — whatever they may tell politicians and pollsters — many Rhode Islanders don’t actually believe in global warming when it comes to putting their own skin in the game:

“The price of any asset, be it commodities, gold, stocks, depends fundamentally on people’s beliefs,” said Lint Barrage, assistant professor of economics and environmental studies at Brown University. “If people are excessively optimistic about the future value of an asset, there is potential for mispricing, and bubbles and overinvestment.”

Speaking Friday at a one-day conference at Brown on the political and economic consequences of climate change, Barrage described her research on the coastal property market, which included going door-to-door in Rhode Island and interviewing homeowners about flood risk. People with homes in federally designated flood zones tended to underestimate the risk of flooding when compared with people who lived further inland, she found.

“The reason all this matters is that markets cannot price risks efficiently if people don’t believe in them,” she said.

And if the risks of climate change aren’t being accurately factored into prices now, then it could mean a steep drop in values somewhere down the line.

Of course, people’s beliefs and the decisions they make based on them are complicated.  If a waterfront property is highly desirable and brings prestige right now, people may tend to discount the risk of owning it in the long term even if they fully believe that climate alarmists are not actually alarmists.

But then, on the other side of the ledger, one has to consider that — consciously or not — people assess risk to some extent on what they observe, rather than what they are told to expect.  Thus, they may pick up on the fact that warnings about sea-level increases tend not to match our experience.  They may also pick up on the fact that, when the alarmists try to present scary scenarios, they have to go way back in the past or project way out into the future.

In short, one can’t rule out the possibility that people are right to place these bets as they do.

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More Regulations During a Housing Shortage Is a Bad Idea

One always has to wonder something after reading an article like the one Madeleine List wrote about legislation to force landlords to take government housing vouchers and to block their ability to find out if potential tenants have appeared in housing court before.  Was the reporter absolutely unable to find anybody to offer a contrary view?

The first argument one hears as an opposing view is that tenants who aren’t paying their own rent might not feel as inclined to keep it up or stay on good terms with their landlords.  Although this might be a reasonable concern, in some cases, it may be more of a strawman, because it isn’t the best of the three most-obvious answers.

The most practical of the other two answers is that Section 8 isn’t simply a source of income.  Accepting Section 8 vouchers requires the landlord to accept regular government inspections and other impositions.  Even if we take as a given that the government will never make inspections more burdensome than the most basic health and safety concerns that all landlords should cover voluntarily, many may simply not want to deal with that extra layer of bureaucracy.

The third obvious answer is that accepting low-income tenants comes with some risk, whether the risk is that they won’t treat the property well, that they’re on the bordeline of being able to afford the rent at all, or that the government might decide that its vouchers give it more authority over your property than was initially the case.  And risk comes with a cost.

This gets to a point about unintended consequences that legislators really should keep in mind at all times.  Imposing risk effectively raises the cost of being a landlord, either by imposing an cost in stress or by forcing them to raise rates or lower profits in order to compensate when the risk goes bad.

Raise the cost of rentals, and we’ll have fewer.  Have fewer rentals, and the natural price of the market will go up.  Raise that price, and we’ll have fewer rentals.  Rinse.  Repeat.  Housing crisis.

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