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Putting Government in Charge of Everything, Consumer Financial Division

We hear complaints when government is slow and inefficient, with Congress receiving the greatest volume of such complaints, but that’s a key point.  When an organization is empowered to confiscate people’s property, change the rules of the economy and society, put people in jail, and even kill them, we should want it to be structured such that it is difficult to abuse and that it doesn’t make sense to use it to undertake too many activities within our society.

This morning’s post on HealthSource fits into this category, as does Iain Murray’s observations of the federal Consumer Financial Protection Bureau (CFPB):

Last week, the U.S. Court of Appeals for the D.C. Circuit ruled in the case, PHH Corp. v. CFPB, that the Bureau’s structure was unconstitutional and ordered that Cordray should report to the President. Under the Dodd-Frank Act of 2010, which created the CFPB, the President has no power to remove the CFPB Director except for malfeasance, and Congress has no power to restrict the Bureau’s operations through the appropriations process, as the Bureau draws its budget from the Federal Reserve, itself an independent agency. The Court deems the CFPB’s unaccountable structure unconstitutional, saying that it posed a “risk of arbitrary decisionmaking [sic] and abuse of power” and “a threat to individual liberty.”

Sounds momentous. But you will find no mention of the judgment on the CFPB’s website, and so far the Bureau’s only action has been to file a brief in an unrelated case saying that the ruling “has no basis in the text of the Constitution or in Supreme Court case law,” and that, “The panel decision was wrongly decided and is not likely to withstand further review.”

Read the rest if you haven’t been following the antics of the CFPB.  The lawless agency has been imposing fees retroactively in what can only be described as extortion.

Next, move such boards — including all quasi-publics, government-aligned non-profits, and corporation-like entities like HealthSource — up on your list of things about which to be concerned and by which to judge the people whom you elect.


You Mean People Make Money by Selling Drugs?

Sometimes following the news makes one feel as if everybody else is willfully living in some sort of fantasy.  Today’s Providence Journal article on the profits of medical marijuana in the state, by Jennifer Bogdan and Tom Mooney, gives me that sensation:

Medical marijuana is big business in Rhode Island. It wasn’t intended to be.

Advocates wanted dispensaries to provide a safe, ample supply of medicine for those who needed it. But the program has proliferated virtually unchecked, offering yes, relief for the ill, but also opportunity for investors who can operate behind the opaque screen surrounding Rhode Island’s three dispensaries. …

There were so many questions that they couldn’t answer at the time [legislation was crafted]. “I mean who knew?” How should the dispensaries operate? How much marijuana should they be allowed to grow? Would the legislature be more receptive if dispensaries weren’t influenced by shareholders?

“We said they were supposed to be nonprofits. Why? Well, first of all, we didn’t want them to be in it for the money.”

Oh, come on.  Are people really that unable to break down issues to their core components and categorize them properly in order to predict outcomes?  With medical marijuana, our (famously corrupt) state gave oligopoly authorization to three entities to sell an otherwise illegal product.  As I put it in 2011, the state was estimating that each dispensary would be “an instant $20 million business facilitated by the Department of Health.”  According to today’s article, the profits appear to be smaller and not quite so instant, and yet, the article presents 78% growth over a year, to $17 million for all three dispensaries, as if it’s unexpected and suspicious.

To the extent that the organizations aren’t making big returns on their investments, the article expresses suspicion about other ways in which participants are trying to make money.  It never fails to surprise that people really believe that those who work for non-profits can’t be “in it for the money” and that government power tends to breed corruption.

Look, there’s nothing wrong with making a profit.  Money is just an indication of value, and our economic system is supposed to determine what people value and provide it — whether that means innovating to create new products or building new capacity to produce and supply existing products.  People value drugs, but it takes an investment to get the industry over a start-up hump, and then it takes the flow of money to prove the consumer interest.  (As a society, we love to harvest the fruits of investment, but we never want to pay the reward.)

The way in which Rhode Island legalized marijuana was almost expressly designed to ensure that the government maintained pent-up demand in order to drive up prices and increase the tax take.  That’s been obvious along; people who are surprised really need to go back and review the assumptions that they have about the way things work and reevaluate how they believe government should behave.


Enough Of The Insider Machine

It is a result of the failed status quo of increased government intervention in our personal and business lives that the Ocean State ranks so poorly on so many national indexes. It is not acceptable that we rank 50th with the worst business climate in the nation, 48th on the national Family Prosperity Index, and 48th on the Center’s Jobs & Opportunity Index. It is up to voters to review all the data, and decide whether or not to hold lawmakers accountable for their voting records this November.

This week, the Center released a new voter guide for the upcoming ballot questions. In heaping over $321,000,000 of additional debt burden on Rhode Island families, as well as on future generations, we are recommending to voters that they “reject” bond Questions #4-7. Just like families who must tighten their credit card debt and avoid luxuries they cannot afford, voters should reject the exorbitant spending proposed by the state, much of which is earmarked to benefit special interest insiders. Only Question #2 – to amend the state constitution restore Ethics Commission authority – received an “Approve” recommendation from the Center.

Haven’t you had enough of the broken status quo here in the Ocean State? We have seen over and over again that the special interest thinking is failing the people of Rhode Island, while enriching the elites. You and your family deserve more. The headlines are full of examples of regular people being kept out of the process and silenced. It is time to stand up to the same old way of doing things here in our state. It will be up to voters to decide this November if they want to continue down the path our state is on or to change things here in Rhode Island.

I think Rhode Islanders have had enough of the insider machine. It is time to make a complete turnaround from the poor scores and last place rankings. We must adopt the free market reforms that can make our state a place where our families can be prosperous. You are powerful. You do not have to tolerate the cronyism and elitist attitude any longer. Don’t be on the sidelines. The rigged system in the Ocean State has kept too many people out of the process. Now is the time for you to speak out and make sure your legislator does more to make Rhode Island a place where our families can achieve their hopes and dreams.


Funding Cronies in the Company State

Aw, well, isn’t this a nice “things we choose to do together” government report?

Gov. Gina Raimondo and other state officials unveiled Skills for Rhode Island’s Future at a Bank of America call center in East Providence, which is hiring some new workers through the program.

That’s what people will take away, but what they should focus on is the background story that’s somewhat visible in the details:

  • The federal government gave Rhode Island $1.25 million to hire the private non-profit Skills for America’s Future.
  • This is the corporation’s second location, expanding from Skills for Chicagoland’s Future.
  • The founder of the organization, Penny Pritzker, went on to become Obama’s secretary of commerce.

The group’s IRS filings fill in the picture a bit. Between 2012 and 2014, its total revenue ranged from $3,316,498 to $3,943,121, with the better part coming from government.  If the linked article above is correct that it has “found jobs for more than 3,100 people in Chicago,” the per-job cost is over $4,000.

I’ve written frequently about the idea of a “company state” model under which government becomes the central industry for an area (like the State of Rhode Island) and strives to expand the services that it can provide in order to justify confiscating money from disfavored groups in the area or in other states.  Skills for Rhode Island’s Future is a great example.

With the federal government as its anchor client, the organization is expanding across the country like a franchise, spending copious amounts of money to make people feel dependent on government, acting as a recruiting contractor for connected companies and acting as an entry point for people’s reliance on government.

According to the office of Governor Raimondo, Skills for Rhode Island’s Future will not be interacting with state welfare offices or be plugged into the Unified Health Infrastructure Project (UHIP) system, which would direct clients to any and all other government services for which they might qualify.  That would be a relatively short step, though, once the organization is established.

As this system becomes entrenched and integrated, companies will have increasing incentive to play ball and get in on the scheme, while workers will have incentive to become the sorts of people whom the government and the corporations want them to be. Thus will more people be drawn through the dependency portal, leaving fewer who aren’t under the direct influence of and subject to reliance on government.


Take-Aways from the Blockbuster Curt Schilling Interview?

Rhode Islanders for the first time this morning started getting some straight answers about the 38 Studios debacle that put us all on the hook for $89,000,000 as 38 Studios founder and CEO Curt Schilling broke his silence for three riveting hours on the John Depetro Show on WPRO.

So many interesting items came out of the interview. Two of the bigger ones – but by no means the only big ones – for me are:

1.) Gordon Fox crony Michael Corso played a huge role in putting the deal together and acted as traffic cop for the lucrative contracts that arose from the company coming to Rhode Island. Were all of his actions legal? And were the Rhode Island State Police permitted to conduct an adequate investigation of this question? Or was it … um, shepherded by the Attorney General so as to narrow its scope?

2.) Rhode Island and Providence have some of the most onerous building and fire code requirements in the country. Yet the newly built-out 38 Studios headquarters NEVER OBTAINED A CERTIFICATE OF OCCUPANCY because at least in part, Schilling said, he signed autographs for people. (Editorial comment: We pass highly intrusive laws and they don’t get enforced??? ARGH!!!)

Ahem. What were your take-aways?


Anti-Tolling Rally Tomorrow!

At the truck stop in West Greenwich off Route 95: 849 Victory Highway, West Greenwich, RI 02817. Tuesday, October 18, at 11:00 am. (No question, a bit of a tough time of day for a lot of us working folks.)

The Rhode Island Trucking Association and NATSO, the national association representing travel plazas and truckstops, announced today that they will host an informational rally and press conference Oct. 18 to discuss the devastating effects that “RhodeWorks” — the Rhode Island Department of Transportation’s truck-only tolling plan — will have on local businesses and commercial truck drivers that operate within the state of Rhode Island.

The small group of state officials advocating for truck tolls say that they are necessary because the money to repair our bridges cannot be found within the budget. Like most of the data and talking points that accompanied the passage of truck-only tolls, this is a flat-out lie. This money can be found in the budget. Remember also that, under Governor Gina Raimondo’s highly destructive RhodeWorks toll plan, shepherded through the General Assembly by a flip-flopping Speaker Nicholas Mattiello, hundreds of millions of dollars would be completely squandered on items other than bridge repairs: gantries, toll fees, interest – meaning that hundreds of millions of dollars would be coming out of the pockets of truckers and all Rhode Islanders and going down a rat hole rather than into infrastructure repair.

Adding urgency and danger to the situation, a recent federal court ruling in New York has brought tolls on cars in Rhode Island one giant step closer. As WPRO’s John Loughlin correctly pointed out on air Saturday morning, this is almost certainly why the start of work on the 6/10 Connector was rushed. Governor Raimondo and her organized labor supporters want to be sure to sink their toll claws into the state as quickly as possible by getting projects hooked on this destructive new revenue source ahead of a court ruling. (“Oh darn. The courts ruled that we can’t toll just trucks. We have no choice but to toll cars because look at all of the borrowing and construction that we rushed through … er, that is now underway.”)

In addition to the big red flag of the federal court ruling in New York, it is important to note that no other state tolls only trucks. From the beginning, this posed an enormous constitutional flaw in the RhodeWorks toll law. (For more on this, check out Rep Blake Filippi’s excellent op-ed in Thursday’s Providence Journal.) Accordingly, any state leader or legislator who voted for truck tolls in February took the unnecessary and very dangerous step of inviting the toll vampire into all of our homes. If state leaders don’t wise up and rescind truck tolls, it is now just about impossible to envision a scenario by which the toll vampire doesn’t turn to feast on the blood … er, wallets of car owners. It is critical, therefore, that state legislators who voted for tolls be held accountable. Please go here to see how General Assembly incumbents voted on tolls, where their challengers stand on the matter and vote for the candidate who did NOT invite the toll vampire to Rhode Island.

And if you’re able to get away from work for an hour tomorrow, please also stop by this rally. Garlic is optional. But your presence at the rally and, especially, your anti-toll vote on November 8, would send an important message against the toll vampire.


The Real Cure for “Climate Change”: Technological Advancement

Here’s the sort of news (via Instapundit) that keeps a lot of us skeptical of efforts to use warnings about “global warming,” “global cooling,” or “climate change” as justification for radical changes to our economy and society:

In a new twist to waste-to-fuel technology, scientists at the Department of Energy’s Oak Ridge National Laboratory have developed an electrochemical process that uses tiny spikes of carbon and copper to turn carbon dioxide, a greenhouse gas, into ethanol. Their finding, which involves nanofabrication and catalysis science, was serendipitous.

Sure, this is a long way from techniques for capturing atmospheric carbon; the only application mentioned in the article is the conversion of excess energy from periodic energy sources (like solar and wind) for storage.  But in a world in which alarmists declare that it’s already too late to avoid the harmful effects of human activity in the past, any action taken that slows the economy in the name of the environment will inevitably restrict research and development that may — serendipitously — solve the very problems about which we’re being warned.


Raimondo and Corporate Cronyism

Leave aside the paperwork of campaign finance. This, from GoLocalProv, seems like an important, telling detail:

A GoLocal investigation has found that Governor Gina Raimondo’s gubernatorial campaign in 2014 failed to properly report at least one campaign gift from California developer Lance Robbins.

Raimondo held a major campaign event at Robbins’ property — her gubernatorial campaign kick-off event — and did not report the in-kind donation. When first asked, her campaign claimed that the amount of the gift did not require reporting.

Robbins’s organization, Urban Smart Growth, has recently been awarded $3.6 million from the quasi-public Commerce Corp., an organization that has long been a political arm for Raimondo, with questionable due diligence.

Rhode Islanders should take the lesson to heart. With Raimondo’s brand of progressive, government-driven economic development, not only do politicians and bureaucrats get to play Monopoly with other people’s money, but they manage to flip the public’s perspective. Raimondo has been promoting the fact that she’s using her contacts to bring companies to Rhode Island for special deals.

A prerequisite for selling that as a positive action, rather than a possible indication of corruption, is making Rhode Islanders feel as if they don’t have anything to offer without the lure. Of course the governor has to use government to pay her friends and associates off, in this view, because her friends and associates have more to offer Rhode Island than the state has to offer them.

The first step of this turnabout was progressives’ making the state a less attractive place to live and do business, owing to regulations, taxes, and other factors, like abysmal public education. But that still doesn’t mean Rhode Islanders don’t have value or rights to self determination, for that matter. If this process sounds familiar, it may be because labor unions and progressives have accomplished something similar with workers, making government involvement a necessity because, we’re led to believe, employees have no inherent value that they bring to the negotiating table. It benefits those offering worker-strengthening services when workers see themselves as weak.

In Raimondo’s case, the strategy may not be deliberate, but it’s certainly predictable and convenient for the powerful. If companies were battling each other to establish in Rhode Island, rather than to escape, government wouldn’t have an excuse to hand out millions of dollars to political friends. As a simple matter of incentives, which economic condition better serves the Gina Raimondos?


Ignorance of Ourselves: The Lesson Never Learned

Reading Richard Ebeling’s brief summary of the economic misadventures of the Roman Emperor Diocletian (244-312 AD), the striking lesson is how stunningly we fail to learn the lessons of history, with Venezuela’s being a recent example:

Michael Ivanovich Rostovtzeff, a leading historian on the ancient Roman economy, offered this summary in his Social and Economic History of the Roman Empire(1926):

“The same expedient [a system of price and wage controls] have often been tried before him [Diocletian] and was often tried after him. As a temporary measure in a critical time, it might be of some use. As a general measure intended to last, it was certain to do great harm and to cause terrible bloodshed, without bringing any relief. Diocletian shared the pernicious belief of the ancient world in the omnipotence of the state, a belief which many modern theorists continue to share with him and with it.”

Finally, as, again, Ludwig von Mises concluded, the Roman Empire began to weaken and decay because it lacked the ideas and ideology that are necessary to build upon and safeguard a free and prosperous society: a philosophy of individual rights and free markets.

Ebeling details that there is much more to the error than simple price controls.  One underlying theme, however, of which we can’t lose sight is the hubris of the central planner.  As with quantitative easing, the planners don’t see themselves as flailing around looking for some solution.  They really think they’ve got a workable idea.  They aren’t entirely dismissive of the risks; they just think the risks are minimal.

And for the most part, the piece they’re missing is the likely response of the people.  Ebeling peppers his essay with descriptions of people’s reactions to Diocletian’s heavy-handed economic policies, and they all seem obvious.  We can guess, though, that they weren’t obvious to Diocletian.  If only he’d been able to imagine what he would do if he were in the position of his subjects.  If our own elites could do the same.


Due Diligence with Other People’s Money

The specific controversies of a particular corporate welfare applicant are of little significance compared with the disturbing details about the Commerce RI process revealed in a GoLocal article, today: has learned from multiple sources that Rhode Island Commerce Corporation board members — and Board Chair, Governor Gina Raimondo — were not fully briefed on the past track record of California developer Lance Robbins, when they were asked to vote on $3.6 million in tax credits at the Board meeting on September 26.

In fact, only two documents [] were handed out to the Board prior to the vote, according to Commerce — a article, and what was presented as an “internal review” — which proved to be from the grant recipient, Urban Smart Growth. …

GoLocal has received confirmation that besides the initial article by GoLocal about the House race and the memo from the member of Gazdacko’s team, no independent review was conducted by Early or his team.

Early is Darin Early, the $170,000 president and COO of the quasi-governmental Commerce Corporation.  The article does not list the names or salaries of his “team,” but its total cost is surely much greater.  Note, too, that Early “oversaw the selection of the vendors for the failed RI tourism campaign.”

The clear and predictable lesson, here, is that when bureaucrats are handing out massive amounts of other people’s money in an environment of limited accountability (i.e., the state government of Rhode Island), due diligence is apt to consist of not much more than a quick Google search and a phone call, maybe with a conversation over lunch.  Moreover, an organization called “Urban Smart Growth” is like a taste morsel to serve up on a list of grant recipients for the sorts of people whom Commerce RI functionaries are seeking to please, perhaps worth a relatively small portion of a massive program on that basis alone.

This is not the way to pull our state out of its death spiral.  We need huge reforms in taxation and regulation that leave people more free to invest their own money, willing to take the risks associated with such investments, and able to devote their own energy to economic development.  Otherwise, we’re just spinning wheels and wasting money while politicians and bureaucrats hope for economic winds to blow some chance improvement our way for which they can take credit.

For example, the $80 million that the state is spending on Commerce RI every year is actually 60% larger than the $50 million that the RI Center for Freedom & Prosperity estimated it would wind up costing the state to reduce the sales tax to 3%.  Such a reform would produce real and lasting economic development, as compared with the Raimondo, Commerce RI, Brookings, RI Foundation approach of picking winners and giving out money.  Even if the latter produces some benefit, it’ll be only empty calories that leave us all less nourished in the long run.


Health Care Farther Along Our Path

This every-parent’s-nightmare story out of Venezuela brings to mind my fears when the forces of big government make a gain in the United States, as they did with ObamaCare:

Two surgical residents sterilized a used needle and injected Ashley with anesthetic. It took them half an hour to clean and drain her knee. They had become experts in the procedure over the summer, as more children come in with complications from simple injuries. The only thing unique about Ashley was how well-fed she seemed; healthy enough to fight to save.

The family celebrated a week later as Ashley was able to breathe without her oxygen mask. Her fever was running below 100 degrees (37.8 degrees Celsius). With any luck, she would soon be back to dancing on her bed to music videos.

But the next day, the fever was inexplicably worse again, 102 degrees. By the end of the week, she was quaking under her Dora the Explorer sheets, drenched in sweat, with a fever of 106 (41 Celsius).

Ashley is three years old, and her months’ long ordeal resulted from the infection of a scraped knee and would have ended very differently without the effort of parents and an extended family scouring the region for hospitals and clinics with the ability and the remaining resources to help.  A basic medical machine that costs $100 in the United States meant hours of calls and searching.  Inadequate supplies of drugs turn into new complications, like the rare heart infection with the symptoms in the above quotation.

The United States is a long way from Venezuela, in its condition… or at least we can still reasonably believe that it is… but as we make decisions, we have to look farther down the slippery hill.  The shortages threatening children like Ashley are not the result of some natural disaster or disappearance of natural resources; they result from a lack of freedom and rule of law, preventing people from figuring out ways to produce or import products and services.  They are unnatural, and for the most part they result from a too-heavy reliance on government.

Add in the damage that Americans have done to family and community structures, and we may not have to fall as far as Venezuela before we find ourselves in our own nightmare stories.


Another Indication of Job Stagnation

As I’ve been noting in my monthly employment posts (most recent here), apart from an uptick in recent months, employment growth has been almost non-existent in Rhode Island for the past year, and jobs based in Rhode Island have been increasing at a glacial pace, if at all.  Ted Nesi points to a related indication of an unhealthy job market in the Ocean State:

The Pew Charitable Trusts said the employment rate for Rhode Islanders ages 25 to 54 has fallen from 83% in 2007 to 78% in 2016, a statistically significant drop of 5 percentage points. While that’s an improvement from the low of 75% reached in mid-2012, the positive trend has reversed this year after a period of rising employment.

The strategy that our governor and legislature are pursuing is one of giving direct incentives to selected companies while spending taxpayer resources to change the character and skills of our people to match what an even narrower group of employers say they want in employees.  That strategy may produce some helpful PR hooks with a nice story in the newspaper from time to time (although it may also produce stories of incompetence and scandal).

It’ll be less likely, though, to move the overall numbers significantly, inasmuch as it simply shuffles Rhode Islanders’ efforts and resources from what we’d do with them on our own to what a domineering government prefers.


Markets Judging Central Plan, Not Economy; Fed Stuck

I wonder if analysts of the future will look to our era and find one of the most telling dynamics to be that the investment markets don’t seem to be reacting positively or negatively to good or bad economic news in the way one would expect.  Instead of making decisions based on the likelihood that the economy will expand, investors seem most intent on watching the Federal Reserve and federal government for signs that the forced inflation of their assets will come to an end.

Even those who aren’t directly tapped into the government-corporate money flow take comfort in the idea that smart people with access to data and power can ensure that the economy hums along… sometimes slowing, sometimes bucking, but going forward as smoothly as reality will allow.  As comforting as it may be, that’s a fool’s belief.  Ultimately, the economy depends on your actions and mine and those of your neighbors and those of people around the world whom you will never even know exist.  People who could accurately predict the course of all of those decisions wouldn’t be government functionaries or even central bankers. They’d be quadrillionaires.

Take a moment to ponder this Washington Post article, as it appeared in the Providence Journal:

Two years ago, top officials at the Federal Reserve mapped out a strategy for withdrawing the central bank’s unprecedented support for the American economy.  

The official communiqué was titled “Policy Normalization Principles and Plans,” and it was supposed to serve as a rough outline for the tenure of newly installed Fed Chair Janet L. Yellen. Essentially, it consisted of two basic parts: Raise interest rates and shrink the central bank’s massive balance sheet.  

But now, both of those steps are being called into question as Fed officials grapple with an economy that appears to be stuck in first gear. Instead of executing its exit strategy, the Fed is confronting the possibility that the dramatic measures it took to safeguard the recovery will remain in place indefinitely.

When your plan consists entirely of backstopping and saturating the fortunes of financially powerful interests, you shouldn’t be surprised when those interests use their leverage to make it extremely difficult to turn off the spigot.  Once such a policy has been implemented, in the absence of a courageous will that central planners inevitably lack, it cannot be stopped, and it will not be stopped until the whole scheme collapses.

That collapse will take a huge amount of the wealth from these powerful interests, but it will most hurt everybody else, living much closer to the margin of survival.  Then, those in government and central banks will have another opportunity to decide whether to allow us to work out the economy’s problems through our individual decisions or to protect their wealthy friends again, as after the last crash.

I know which way I’ll continue to bet until America decides to decrease the power of the federal government and cut the strings that are pulling us toward central plans.


In Rhode Island, Nothing’s Certain but Death and Taxes

Well, the policies of the State of Rhode Island aren’t getting you to shop, earn, or do business as much as the government expected, but at least you’re dying!

According to an Office of Revenue Analysis report, sales and use taxes came in 0.9% lower than expected, personal income taxes came in 0.6% short, and business corporations taxes missed their estimate by a whopping 12.1%.  That’s $35 million you didn’t produce for your lords in Providence.

The good news is that you’re drinking, dying, and letting the state keep your unclaimed property more than expected, which more than made up the difference ($47 million).  But if that doesn’t sound like a healthy or sustainable way for a government to pay its bills, well, it isn’t.

Comparing the 2016 fiscal year to the year before, of the three sources of tax revenue that would indicate real economic health, only the sales tax went up.  (Patrick Anderson has the income tax wrong in today’s Providence Journal.)  Income taxes were down $10 million (0.8%); business corporation taxes were down $13 million (8.8%); and sales and use taxes were up only $8 million (0.9%).  The net change of all three was a decrease of $15 million.

If it weren’t for dying Rhode Islanders, the state government would have seen its revenue go down from one year to the next, and more than analysts had expected.  That doesn’t bode well for the deficits that the state estimates growing into the future.  The Providence Journal headline, “Rhode Island ends fiscal year with more money than expected,” does us a civic disservice.  We need to acknowledge that the current strategy of our state is not working so that we can change it.


“Customers” and the Government Business Model

Somehow, it always seems erroneous for articles discussing government services to use the term “customers” for the recipients.  Granted, the line has blurred, so as a purely semantic matter, it’s probably correct when it comes to HealthSource RI, as in Katherine Gregg’s article in today’s Providence Journal.  Subsidized or not, Rhode Islanders use to Web site to exchange money for a product.  Still, if we’re going to talk about government as if it were a business, we have to be very particular in acknowledging its business model.

That need came to mind the other day, when Mark Reynolds wrote in the same paper about the “success” of the Rhode Island Department of Transportation’s (RIDOT’s) Newport-Providence ferry service.  Consider:

The service’s operating costs were 100-percent federally funded. The service spent $500,000 in transit funds that are earmarked for specific types of projects such as the ferry service.

Thanks to this subsidization, a one-way ticket on the ferry was $10, or $5 for children, seniors, and the disabled.  Contrast that with a $25.50 fee for ferrying from Newport to Block Island, or $13.00 for children.  Granted, the rides are a bit different, but divided up evenly among the 33,221 passenger trips that RIDOT’s ferry made, the federal subsidy of $500,000 counts as $15 per ticket — more than doubling the adult price and quadrupling the lower-priced tickets.

How can we possibly characterize the ferry’s experience as a “success” without noting this fact?  Any given business might have a successful season if it offered every customer a 60-75% discount on every purchase, but it would only be a success to the extent the objective is to give stuff away.  In government’s case, of course, what it’s giving away is other people’s money.


The 2016 Rhode Island General Assembly Freedom Index

It is a result of the failed status quo of increased government intervention in our personal and business lives that the Ocean State ranks so poorly on so many national indexes. It is not acceptable that we rank 50th with the worst business climate in the nation, 48th on the national Family Prosperity Index, and 47th on the Center’s Jobs & Opportunity Index. It is up to voters to review all the data, and decide whether or not to hold lawmakers accountable for their voting records this November. This trend is exemplified by continued deeply negative overall General Assembly scores on our 2016 Freedom Index.

Loaded with information that will be useful to voters this fall, the Freedom Index is part of our larger transparency initiative. The index examines legislators’ votes in terms of their likely effect on the freedom in the Ocean State.


Assessing and Curing Poverty and Housing in Rhode Island

Here’s another article in today’s Providence Journal that proves nothing so convincingly as the reality of profound differences of perspective.  File this one under “advocacy for $50 million in new debt for affordable housing.”

Rhode Island Housing brought down from Boston Harvard sociologist Matthew Desmond, who wants us to know that “America is the richest country with the most poverty in the world.”  That accusation contains a number of grammatical loopholes that would merit a closer look, but suffice for the moment to consider Robert Rector’s “15 Facts About US Poverty the Government Hides,” such as “the average poor American lives in a house or apartment that is in good repair and has more living space than the average nonpoor person in France, Germany, or England” and “eighty-five percent of poor households have air conditioning.”

But let’s accept Desmond’s premise that poverty and housing are a dire problem in the United States.  Stating that as a fact does not mean progressives’ preferred solutions are the obvious answer.  Consider:

Desmond noted that while many discussions of low-income housing center on publicly-assisted housing, only 1 in 4 households eligible for housing assistance actually get it, so most poor families are dealing with the private housing market. In Washington, D.C., for instance, there is a 20-year waiting list for public housing, he said. …

“We have the money,” to help struggling families, Desmond said, adding that the housing crisis is a much worse problem today than it was a decade ago. About 40 people are evicted in Milwaukee every day, he said, and most evicted tenants are mothers with children. Many of these mothers pay so much for rent and utilities that their children often go hungry, he said. One mother Desmond met, after enduring several evictions, “was having a nervous breakdown.”

Frankly, it seems obvious to me that the compassionate advocate would suggest that, if it looks likely that you’ll have to spend two decades waiting for housing you can afford in Washington, D.C., then Washington, D.C., is not a place you should be.  Moreover, as Mike Stenhouse recently had cause to explain related to state purchasing of farmland, government interventions in real estate markets tends to have undesirable consequences.  Decreeing that more people be given money to afford housing will increase demand without increasing supply, driving up prices for everybody.  Partitioning housing such that some segment is “affordable” leaves less housing not in the system, reducing the supply and (again) drive up prices for everybody.

As for the second paragraph quoted above, let’s not fail to make the obvious observation that “mothers with children” implies “fathers of children,” and in and out of government, society should work to ensure that affording housing, utilities, and food is the responsibility of two parents working together.  Unfortunately, such talk makes progressives uncomfortable, because it raises questions about their beliefs on social issues.  And let’s be honest: they kinda want the $50 million in bonded revenue whether or not it makes them feel good about loose sex, divorce, and abortion.


Social Services & Negotiating How Much to Take from Others

Sometimes it’s helpful to put stories in chronological order, rather than news-report order, as with this one, from today’s Providence Journal, concerning panhandling and homelessness in Providence:

Complaints about vagrancy, open drug-dealing and drinking exploded after Mayor Jorge O. Elorza decided months ago to stop enforcing ordinances against aggressive panhandling and loitering.

And now the news is that we’ve got Democrat Joseph Paolino getting the heartless 1% treatment because he’s only looking to get $100,000 from the Downtown Improvement District for social workers, along with jobs for two panhandlers, a free apartment for use of a homeless shelter, and up to $5 million in state taxpayer money, in combination with a whole new ordinance that would be even broader than the ones the mayor isn’t enforcing (stopping all transactions through a car window).  The activists protesting Paolino’s PR event have a more comprehensive list:

Less enforcement of minor criminal offenses against people who are poor; more jobs for panhandlers; funding for 150 housing vouchers; drug and alcohol treatment; and amenities such as a day center, public bathrooms and free food distribution. They want the Rhode Island Public Transportation Authority bus terminal to remain.

The core of this proposal is to double down on the policy approach that created the controversy (non-enforcement) and to add into the mix amenities that will draw even more vagrants, dealers, and loiterers to the area.  The protesters chanted, “Whose city? Our city!,” and they sure want it to be evident in the public square each and every day.

In short, the only solutions on the table, apparently, involve a negotiation over how much taxpayers have to pay for how much additional imposition.  Both parts of the plan are sure to exacerbate the underlying problem: namely, a domineering government that strangles the private sector and creates incentives not to work or bring behavior within a tolerable range.

We need another approach that doesn’t treat people as categories or as social-workers’ statistics, but as free individuals (from independent families) who can determine their own destinies in a community of mutual respect and charity.  The longer we deny this necessary change of perspective, the more the government plaque will build up in society’s arteries, making it more and more difficult to clear them.


And Now on to the General Election and More Debt

With the general election now the next big event (if the primaries in Rhode Island can even be said to be a big event), I took a look at the bonds that will be on the November ballot.  In total, we’ve got $227.5 million (nearly a quarter-billion dollars) in new debt that Rhode Islanders will likely approve, not including the tens of millions more that municipalities are surely seeking.

That’s crazy.  Government bonds are one area of democratic action that make me mildly sympathetic to progressive inclinations to limit the franchise to those with some basic knowledge.  They’re also a reason I wonder if progressives might be incorrect to assume a more-educated electorate would tend in their direction.  What might voters do differently if they understood that debt isn’t just free money to spend on feel-good projects?

Making matters worse, these bonds aren’t just desperate attempts to gain money to build things for which the state should have budgeted with regular revenue; some of them are clearly policy issues.  How many voters, I wonder, would really want to supply the state government with borrowed money to buy up even more property in the state?

Would voters really fall for these schemes if they took the time to consider just how much of it will (or at least can) become subsidies for private businesses — from the URI “innovation campuses” to help private businesses use public-university research to come up with new products and services for a profit to the government purchase and discounted resale of farmland to improvement of ports that benefit a limited number of businesses at public expense?  All of these things benefit narrow groups at the expense of everybody else.

Even more concerning is that, when you add them all together, the picture becomes one not of a few included groups siphoning off public resources, but a comprehensive system that ultimately excludes those who don’t receive some sort of public aid.  If you’re an ordinary Rhode Islander who wants to know who those excluded parties are, take a look at your latest selfie.

Apparently every hyper-informed person in every ideological group believes that the public would agree with his or her beliefs if only people were better educated, but I can’t help but think that my ideological group is correct in that belief.  As the saying goes, everybody’s conservative when it comes to the things he or she knows best.  I simply don’t believe that people who’d been shown the corrupt, incestuous connections building into a web that ensnares our freedom and opportunity would continue to support such things… or the politicians and organizations who work so hard to make them a reality.


Testimony: DEM Must Consider Economics Before Buying Farmland

In this video, I speak out against a new scheme by the Rhode Island Dept. of Environmental Management to acquire farmland at a public comment forum held at the URI Graduate School of Oceanography on September 7, 2016.

With government increasingly influencing and controlling the means of production through myriad tax-credit, loan, and direct-subsidy schemes in a multitude of industries, the DEM farmland acquisition scheme, which will actually acquire and resell private property, is not based on any legitimate economic analysis — or any economic consideration at all.

Despite the fact that the state’s own Commerce Corporation demanded a RhodeMap RI–related mandate be inserted into the DEM plan, no economic justification was provided. The Rhode Island Center for Freedom & Prosperity warned you about the dangers of RhodeMap RI; here is one place where the planners’ vision seems to be marching forward.


Rhode Island, Making Mediocrity Look Good

Some curious language from a brief Kate Bramson article in today’s Providence Journal.  Bryant’s Center for Global and Regional Economic Studies revised its first-quarter year-over-year economic growth estimate for Rhode Island down to 1.6%, from 3.0% and projects that the second quarter will actually show a drop of 1.2%.  By comparison, New England’s average was 1.5% for the first quarter and 0.4% for the second.  But here’s where the curious phrasing comes in:

Nationally, the economic outlook is brighter, with the U.S. Gross Domestic Product increasing at an annualized rate of 1.2 percent in the second quarter, compared with 0.8 percent in the first quarter.

How strange for 1.2% growth, following 0.8% growth, to be a “brighter outlook.”  Sure, compared with a shrinking economy, even no growth at all would be preferable, but it’s a testament to the “new normal” under Democrat President Barack Obama and the all-too-precedented normal of Rhode Island that 1.2% seems like it ought to put a spring in people’s step.


A Note on Growth in RI Farming

Without offering it as rhetorical leverage for my policy preference on the question of the state government’s purchase and resale of farmland (a sort of reverse flipping, because the state enters the deal planning to sell at a loss to taxpayers), the trends of farming in Rhode Island piqued my interest earlier today.  In a Twitter exchange with Matt Tracy, yesterday, he’d noted “unprecedented 10+ yrs of growth in RI’s ag sector,” and this morning somebody else pointed out the following paragraph (emphasis added) in Alex Kuffner’s front page Providence Journal article (which I mentioned here):

Rhode Island farms have cultural value as part of the state’s vibrant food scene, but they also generate a lot of money. In 2015, agriculture accounted for 2,563 jobs in the state and contributed $239 million to the economy, according to the Rhode Island Nursery and Landscape Association. Both figures increased 40 percent from 2012.

The obvious meaning that readers would take from that paragraph and its closing sentence is that farming has grown hugely over just a few recent years, but that’s not what Kuffner’s source says.  The study that he appears to be citing doesn’t present a new round of data; rather, URI Natural Resource Economics Professor Thomas Sproul’s intent is to provide more-accurate data for 2012.  The 40% increase to “2012 Agricultural Census figures” is also for 2012 data, not 2015 or 2016 data, as one would infer from Kuffner’s report.  That is, the statement should be that “both figures are 40% bigger than they were once reported,” which means something different altogether.

Even with a quick glance at the related chart and text highlighted in the document, the Projo reporter should have caught this error, but he’s also wrong that it applies to both jobs and money.  The dollar output was revised to be four times the original amount (and it’s not for “economic impact,” by the way, but straight sales).  If he’d noticed that, he might have questioned whether the data really showed that farming revenue had grown by a factor of four over just a few years.

Even a quick Internet search would have turned up reason to question the finding, anyway.  Writing in ecoRI in 2014, Tim Faulkner reported that the number of farms increased by 24 (2%) from 2007 to 2012, which was more than the national drop of 4%, but less than the New England increase of 5%.  However, RI’s increase was largely in small farms of 9 acres or less, and the state Dept. of Environmental Management’s chief of agriculture wasn’t “certain yet if the shift is due to an economic slowdown or greater food production,” causing a change from “nurseries, turf and flower farming” to “fruit, vegetable, livestock and aquaculture farming.”

A nursery sold as two vegetable farms would double the number counted, so it’s not clear whether the number of farms is a helpful metric. More relevant to the present discussion is this:

Total market value of sales declined 9 percent from 2007. Crop sales declined 12 percent, and livestock sales increased 4 percent.

That doesn’t look like “unprecedented growth” to me.


Warwick and RI Can’t Be Generous While Shrinking

The Warwick school department is considering closing up to three schools, and predictably, people aren’t happy about it:

So far, the city has fielded complaints of traffic jams, unfinished construction projects and overcrowding at Warwick’s high schools.

And in an excellent civics lesson, democracy is producing candidates implying they’ll make all the problems go away if elected:

School committee candidate Dean Johnson said he lives nearby and sees the problems every day.

“Nothing but traffic,” he said. “It was 15 minutes from Benny’s to Pilgrim – it was absolutely ridiculous.”

Fellow school committee candidate Nathan Cornell is just 18 years old and said he still has friends in high school.

“At the first day, I called them and say, ‘how was school for you,’” he said. “And they told me it was crowded, especially the lunchrooms.”

Rhode Islanders want to run things as if the state is economically healthy and growing.  It’s not.  When I looked at Warwick’s population in 2012, it had dropped nearly 4% from the 2000 Census to the 2010 Census.  This May, I wondered how the school department could be considering any raises at all (let alone the 10% per year the teachers union reportedly wanted) with a smaller, less-working population with shrunken house values, and what justification there could be when the under-performing district had seen its enrollment drop 34% since the 2000-2001 school year.

Look, if you want neighborhood schools, you need the population and the enrollment to support them.  If you want small class sizes, you need to control the costs of teachers.  Rhode Islanders can’t keep up the economy-strangling approach to government and the union-gorging approach to employees and expect to maintain the quality of life they’ve enjoyed.  It is not paradoxical to observe that when you let government take more money from you and your neighbors and to limit your freedoms, you wind up getting less from government.

What will it take to make Rhode Islanders realize this?  Or more precisely, what will it take to make Rhode Islanders realize this and then change things rather than simply move away?


“Affordable” Farmland Means You Pay for Government Grabs

Naturally — no doubt in harmony with the philosophies of its core reader base — a Providence Journal article about the state government’s new program to buy farmland and sell it to beginner farmers at “a steep discount” is celebratory.  What’s not to love about a program that takes money away from people in order to heavily subsidize a space-intensive occupation to support businesses that may simply not make sense in this state while giving the government a new pretense for buying up land and even leasing it out as if to sharecroppers?

As I wrote a couple of weeks ago on this issue, I love the idea of nearby farms and local produce, but subsidizing them benefits the aesthetics and consumer choices of relatively wealthy people.  The way to preserve farmland would be to allow Rhode Islanders to keep more of their money and to lighten regulations so the economy could boom, thus leaving more room in household budgets for the experiential and quality benefits of buying local.

The cost isn’t the only red flag about such programs, though.  Department of Environmental Management Director Janet Coit insists that this program will be voluntary both for the farmer looking to sell his land and the farmer wishing to buy or lease it, but a “for now” is implied.  The 2010 document I cite at the link above, which further research has shown to be a starting point for much of this conversation, includes proposals for making “affordability permanent.”

The document doesn’t explain what that means, although a reader can reasonably infer the drafters were contemplating possibilities should state and federal budgets become too tight for tax-money handouts.  The first suggestion is to put language in “conservation easements” that would “give conservation organizations the right of first refusal to purchase the land at agricultural value.”  An FAQ from the state Agricultural Lands Preservation Commission defines “agricultural value” as the value of land after it has been reduced to account for the restriction that owners can only use it for farming.

As the Providence Journal article points out, that could be an 80% discount off the fair market value.  So, before a farmer could sell his land, a non-profit, a land trust, or even the state government would have to be given the option of buying it for 20% of its value.  As for the ultimate buyers, they’ll surely be restricted in what they can do, probably with requirements to follow government preferences, with allowance for bureaucrats to change the deal with the political winds.

Whether such additions to the program are currently on somebody’s secret to-do list or not, the example should remind us of the danger of taking such steps for feel-good government programs.  Once government is entrenched in the process of buying, selling, and operating farmland, government effectively controls the industry, and once we’ve decided this is a legitimate activity, we can be sure government will look to apply it to other industries, as well.

After all, what’s not to love?


Inching Progress on JOI (Jobs & Opportunity Index) Is Not Enough

There has only been one way of doing things in Rhode Island for far too long. We have seen the results in our state’s failed rankings. Yet, the insiders and elitists love to point to the rising employment figure to justify their status quo ideas. For this reason the Center has developed the Jobs & Opportunity Index (JOI). If our elected leaders are to craft and advance legislation that removes barriers to the creation of meaningful work and that provides broader economic opportunities for all Rhode Island families, it is important that lawmakers are provided with a deeper measure of economic well-being.

While on the July Jobs & Opportunity Index Rhode Island edged past New York to claim the rank of 47th out of 50 states in the nation, this slow progress is not enough. Rhode Island families deserve more than these bottom results.