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Rhode Island Shouldn’t Let the Manufacturing Surge Pass Us By

To some extent, a commentary essay by  David Farr and Jay Timmons is a bit of a promotional spot for their organizations and the manufacturing industry generally, but this is broadly encouraging:

At the end of 2017, the National Association of Manufacturers surveyed its membership and the results were recording-breaking. Almost 95 percent of respondents felt positive about the outlook of their businesses — an all-time high in the survey’s 20-year history.

From our perch in Rhode Island, however, it’s difficult not to gulp a little at this:

Manufacturers’ newfound confidence didn’t happen by accident. Major developments in Washington, D.C., dramatically improved the business climate in the United States, most notably regulatory relief and, at the end of the year, historic tax reform.

It all freed up time, energy and resources that would otherwise have gone toward complying with complicated federal rules and the highest tax rates in the developed world. As a result, manufacturers are investing in their people and communities. We’re seeing story after story of businesses expanding their operations, offering raises or bonuses, buying new equipment and hiring new workers.

It’s early, yet, for state-level analysis, but early indications from economic data suggest that the national surge has been weaker in Rhode Island, if it hasn’t been passing us by entirely.  We need to impress upon our elected officials that they must change the approach of state government.

(via Stephen Green)

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Clarifying the Meaning of P3

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Misconceptions About Net Neutrality and Who Wants to Control Us

Rhode Island Library Association heads Kieran Auton and Julie Holden recently published an op-ed in the Providence Journal that opens with a misleading introduction and moves into a silly argument about net neutrality.  Here’s the introduction:

These days, when we talk on the phone, send a text, or stream a movie, we expect our experience to be seamless. If we are at work, at school, at home, or in the library, being online and being connected is a way of life. Yet, our state is economically diverse, and many cannot afford internet service in their homes. Every day, thousands of Rhode Islanders go to their local library for free high-speed internet access. In fact, libraries are the main provider of internet access for many in our

Ending net neutrality is not about allowing Internet service providers to put the screws to low-income households and low-revenue non-profits.  If anything, it opens the possibility of getting the Internet into households that don’t have it, because it allows the variation of plans.  Perhaps a low-income household can’t afford the cost of a plan with streaming television and video games but could afford a plan that allows its members to do job searches and school research and other classic Internet activities.  Perhaps a library could differentiate its Internet access, with a few dedicated machines for high-powered activity, but many more for activities more typical of a library, like reading and research.

The policy that Auton and Holden prefer is akin to forcing everybody to buy the same data plan for their cell phones.  Internet providers are companies.  They need customers, and they won’t stay in business long if they don’t give customers what they want.  Differentiation helps that objective.  Really, with what other service do people insist that customers’ only options must be everything or nothing?

Typically, the answer to that question is that a preference for an all-or-nothing industry, as with health care, tends to mean that the advocates want to be able to control the “all” so they can control our lives.

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Rhode Island as the Land of Insiders and Suckers

On his still-new Web site, Russell Moore shares a conversation he had with a couple of guys at the gym:

That’s when the second gentleman spoke up.

“If you live in Rhode Island, and you’re not in a public sector retirement system, you’re a sucker,” he said. “You’re paying for lavish benefits you’re not going to get.”

I’ve been covering government and politics in Rhode Island since 2005. Never in my life had I heard the situation put so succinct–or so blunt. You can’t argue with his logic.

And there you go.  The anecdote raises two questions for those who aren’t on the winning end of that seesaw:

  1. Why are you here?
  2. What are you doing to stop being a sucker?

Too many people choose to leave.  We need everybody to speak up.  If folks (especially business owners) are worried about the consequences of doing so, get in touch with those who are active, as we’re working on ways around the obstacle of intimidation.

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The Lesson of Personal Experience with Child Labor

An apparently missed connection in Laufton Ascencao’s response to Mike Stenhouse’s call for some champions of Rhode Island business betrays what looks like a missed life lesson, and it’s one that goes directly to debates about minimum wages and other uses of government to limit the arrangements to which employers and employees can agree:

I was 12 years old when I started working full-time. I was illegally paid $2 an hour under the table. I didn’t take the job because I wanted to buy myself something nice or because I just loved working so much. I took the job because my family needed food and we needed to keep the lights on. If I didn’t work, there was a good chance we’d end up hungry or in the dark. My mother worked over 80 hours a week and still we struggled.

These are unfortunate circumstances, to be sure, and we should keep in mind that we don’t have important details about Ascencao’s childhood job.  If it was dangerous or arduous work that children shouldn’t be doing under any circumstances, then that would have been wrong on its own merits.

But if it was work suitable for a child — something safe and of mild strain and low pressure — then one could recast Ascencao’s lesson thus:  Being able to have her child work for $2 per hour allowed Ascencao’s mother to keep food on the table and power in the house.  When those are the stakes, desperate families will go outside of the law, as they did in this case, which is generally a more risky place to be.  Of course, not everybody who might be able to provide such a job is willing to go outside the law, limiting the supply, which means the restrictions can make a bad situation worse.

It would be an error (one that some readers are no doubt itching to make) to take this post as advocacy for child labor.  My preference, however, would be to reduce the circumstances that put families in the position of making these sorts of decisions, and that means developing a healthier economy, which means reducing the drag of taxes and regulations — that is, less government rather than the ever-more government that progressives seek.

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Income Inequity: the Fruit of RI’s Progressive Shift

It’s difficult not to think a lot of the talk about income inequality isn’t entirely sincere, but rather politically expedient.  Let’s stipulate that the amount of income inequality we have right now is bad; we still have to answer as a separate question what we should do about it.  Handing power to government officials is one option, but the case has to be made and is subject to reevaluation.  When people won’t make the case or reevaluate, the remaining conclusion is that they really just want the powerful government, with income inequality as a convenient excuse.

Thus, we get stories like “Studies: Income inequity in Providence third-highest in nation” in the Providence Journal, as the one-party (Democrat) rule in the state solidifies and becomes increasingly progressive:

In Providence, the poorest households earn $12,118 annually, compared with the wealthiest, which bring home $202,021 on average, according to the data. The ratio between incomes widened by 1.3 during the two-year period studied, starting at 15.4 and growing to 16.7 from 2014 to 2016, according to the data.

This is the fruit of low-growth, centrally planned progressive policy.  In order to bring up those on the lower end of the scale, we have to empower them to take money from the wealthy through voluntary transactions by offering services and competing.  High taxes create disincentive to produce things and earn money, occupational licensing and other regulations make it more difficult for people to work, and welfare programs that create government dependency reduce the incentive to do so.

This is a veritable recipe for income inequality.  However, it does create opportunity for the likes of Gina Raimondo, David Cicilline, Brett Smiley, and Aaron Regunberg, whose continued fortunes depend on convincing people that we need to funnel our society’s wealth through government.

And at the same time that government is pushing more people into government programs in Rhode Island, the very same government has been proving that it can’t be trusted to run its own programs.

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Borrowing Money to Make Housing More Expensive

One can have real debates about the wisdom of driving up housing prices.  If you’re trying to get started in the state, high housing prices are a huge burden.  On the other hand, if you own property in Rhode Island, making property more scarce should drive up its value… at least until the inability of people to move around easily strangles the economy even more and reduces the reasons for living here in the first place.

That said, it’s worth pointing out that this sort of thing certainly plays a role:

The Rhode Island Department of Environmental Management announced Friday that 17 projects will receive matching grants to protect 889 acres of open space and farmland. The funding stems from the Green Economy Bond program, which was voters passed in 2016.

The initiative aims to invest $35 million to preserve open space, improve recreational facilities and clean up land and waterways.

So, taxpayers committed to spending money (with interest) on initiatives that will reduce the amount of buildable land, leaving hundreds of acres that do little for anybody who doesn’t have a lot of free time.  Sure, it sounds like a nice thing to do, but it would be less of a concern if we could be confident that people understood the economics involved.  The value of land is mainly helpful when one makes the decision to sell (and buy in a less-inflated market elsewhere); in the meantime, it primarily means higher property tax bills and pressure for more debt and state-level taxes to subsidize housing for those who can’t afford it.

One thing we can say for Rhode Island government:  It’s great at creating tax traps that drag the economy down in ways that aren’t easily traceable back to them, while they buy votes from special interests.

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Progressives and NIMBYs Raising Energy Rates

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An Elusive Train That Might (Might) Make Sense

When I first began trying to figure out how to actually find a job without dragging my wife out of stop-by-her-parents-to-pick-up-dinner range nearly two decades ago, I didn’t understand why no direct train was available from Fall River to Boston.  As laptops, tablets, and smartphones advanced, the prospect seemed even more obvious.  In the meantime, government (broadly considered) found money for a sparsely used train station in Wickford; go figure.

However, now that the excitement of possibility is ramping up in Fall River, as Kevin O’Connor reports for the Fall River Herald, what jumps out at me are the numbers:

Commuter rail to Boston was first proposed 30 years ago. Gov. Bill Weld and Gov. Deval Patrick both promised it would happen. Patrick promised trains would carry commuters by 2016. Plans called for a $1.4 billion project to improve rail lines through Stoughton. That price has since risen to an estimated $3.4 billion

Baker instead proposed running the rail lines through Middleboro, which would cost an estimated $935 million. It could also be completed in less time, state officials say. …

Plans now call for a train that would stop at a station on Davol Street at Pearce Street next to the Boardwalk Crossings Plaza. Studies show the train would carry an estimated 1,600 passengers a day for the 90 minute ride to Boston, Fiola said.

I’ll stipulate that these are back-of-the-envelope calculations, because I’m not sure what specifically is included in that number of passengers or how neatly the expected cost matches up with serving just those passengers, as opposed to other customers elsewhere up the line.  But these costs are huge.

Even going with the lower estimate (and assuming it doesn’t grow), $935 million amounts to a $160 subsidy per ride over the course of 10 years.  For a single two-way commuter working five days a week in Boston, that’s over $80,000.  Would anybody actually pay that amount for themselves?  And sure, opening up such possibilities in the Southeast of Massachusetts would have an economic effect (although some of it will just be a shift in wealth away from closer suburbs), but that’s a tricky thing to estimate.

It’s important to remember that this subsidy has to come from somewhere else in the economy that, by virtue of the fact that it wouldn’t need a government subsidy, is likely to be more economically productive.

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Keep a Broad View of the Economy

Throughout the Obama presidency, we oddly heard of the strength of Wall Street under the progressive chief executive.  So strong was the general bias in favor of Mr. Obama that one had to look among conservative journals to find the observation that the trends of investors appeared to have become inverse to the trends of employment and the general economy.  If the economy improved and people were working, then the Fed might change its targeted interests rates, which would put pressure on investments.  Oh, no!

With that recent experience, I’ve been hesitant to join my ideological peers in proclaiming the Wall Street boom as a sign of economic health under President Trump.  In fact, I’d leave open the possibility that this recent downturn of the market as the actual evidence of economic health.  In this regard, I’ve kept in mind the opening paragraph of a Wall Street Journal article from two Fridays ago:

Just weeks after the federal government adopted the biggest tax overhaul in three decades, the effects are rippling through corner offices and boardrooms, with companies large and small dusting off once-shelved plans, re-evaluating existing projects and exploring new investment in factories and equipment.

So, companies are investing in themselves.  Employees are getting bonus checks.  Corporations are repatriating money that has been trapped overseas because of tax inequities.  This leads to economic activity, will lead to a broad spreading of the wealth around (to borrow a phrase), and produce some inflation, as demand increases based on increased wealth and as the staples in people’s budgets rise in price to match consumers’ willingness to pay.

We’ll have to wait and see where this all goes, but my suggestion is that nobody panic, because we appear to be heading in a healthier direction more broadly.  And again, as a general consideration, we want to see the investment markets growing, of course, but we want it to be because the things in which people are investing are more valuable, not because investing, as an economic activity, is more profitable than other options that might go farther to supplying families with income and improving our lives.

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Pushing for Occupational Licensing

The RI Center for Freedom & Prosperity has today released a media and information page and an initial brief supporting reform of occupational licensing laws and other regulations.  From the second link:

Rhode Islanders Dream, Too. The right to earn a living in the profession of one’s choice without government interference is fundamental to each person’s freedom to fulfill his or her individual dreams and goals. In making Rhode Island a less friendly place to call home for Americans looking to fulfill a lifelong dream, to raise a family, and to build a career, our state government restricts that right by forcing too many of its residents to seek its permission and to overcome burdensome and costly barriers before engaging in meaningful work.

In a comprehensive national analysis of occupational licensing barriers for low-to-middle-income workers and aspiring entrepreneurs, a 2017 Institute for Justice report ranked Rhode Island among the 10 most widely and onerously licensed states. Already suffering bottom 10 rankings on the Family Prosperity Index (FPI), overall business climate, and on Jobs & Opportunity Index (JOI), Rhode Islanders should be provided with every opportunity to engage in gainful work.

Unfortunately, Rhode Island is becoming less of a “home of the free” and more of a “land that requires permission.” For many, the costly fees and training mandates that are irrationally and unfairly imposed on certain occupations presents an insurmountable barrier to engaging in a new profession. As one factor in its bottom 10 FPI ranking, the lack of opportunity to engage in prosperous work has forced tens of thousands of Rhode Islanders to move out of state, bringing with them billions of dollars of income earning potential.

Rhode Island’s dismal business climate, because of excessively high levels of taxation and regulation, keeps our state uncompetitive on a regional and national basis. Especially hard hit are low-income occupations for which earning a primary or secondary income is vital to family self-sufficiency.

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