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Matt Brown’s Disastrous Platform

One can have little doubt that Matt Brown’s platform is right in line with the views of progressive Democrats.  One can also have little doubt that Matt Brown’s platform would be economically disastrous for Rhode Island:

On policy, Brown said he wants to reverse various recent state tax cuts, such as by raising the top income tax rate from 5.99% back to 9.9%, where it stood until 2010. He also said he would raise the top corporate rate from 7% back to 9%, but wants to create a graduated system that lets smaller companies pay a lower rate. He has not yet decided whether he wants to raise the estate tax, he said.

Brown pledged to increase funding for Medicaid, the state-federal health insurance program for low-income residents that has grown to about a quarter of the state budget.

So, increase dependency on government and suppress the free market dynamism that pays for government programs.  Brown’s program would push Rhode Island into the accelerated spiral that Connecticut is experiencing and the flight of the productive class.

It seems unlikely that Brown will actually have a chance to push his program as governor, but his end point is that toward which progressives are incrementally moving the state.  We need to take his succinct statements as a warning.

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Raimondo’s Major (Union) Jobs Announcement

The expansion deal that the state government of Rhode Island has just announced with Electric Boat at the quasi-public Quonset industrial park includes an understated feature:

As part of the deal with Rhode Island, Electric Boat has agreed to use union construction workers on the expansion and pay the prevailing wage.

Why would the government of the State of Rhode Island negotiate for the mandatory use of union labor?  If state officials would rather have more money go to construction workers, rather than have it available for additional investment, the prevailing wage requirement would have been sufficient.

The likely answer sheds a different light on the component of the deal requiring “$14 million in state infrastructure spending at the Quonset industrial park.”  If the state is negotiating on behalf of unions, this provision may have been requested by the state negotiators.  That is, they were happy to tie taxpayers hands with a contract requiring new government spending for labor-union work.

Note, by the way, that the vast majority of the deal offered to Electric Boat is a targeted exemption from sales tax.  Imagine how much more other companies would invest here if the state would eliminate or dramatically reduce the sales tax as a blanket measure.  Of course, if people were investing their money in economic development on their own initiative, the government officials wouldn’t so often have a seat at the negotiating table to direct funds toward their friends and political supporters.

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Big Money in (Other) Non-Profits

Former Providence Journal editorial page editor Robert Whitcomb raises an area of perpetual misperception in his latest GoLocalProv column:

The nearly $300,000 in compensation that Rhode Island gubernatorial candidate Matt Brown drew as head of a small anti-nuclear-proliferation nonprofit called Global Zero ($2 million-a-year budget) reminds me of how much many execs of many small nonprofits expect to earn these days. It used to be that most people running nonprofits expected to be paid modestly, with as much money as possible going into an organization’s direct programs. Nonprofit executives took lower pay than they could get in private business in return for the satisfactions of public service.  Indeed, we used to have “dollar-a-year men’’ – people with personal wealth who were willing to run nonprofits or some government operations basically for free.

But now many nonprofit boards – including those of schools  — feel that they must pay their executives compensation similar to that of profitable businesses. And their executives aren’t embarrassed to take it. For example, consider that many small private schools pay their heads hundreds of thousands of dollars a year, along with free housing and other perks.

I remember being shocked years back when I began to learn how lucrative working for non-profits could be.  (Unfortunately, not including my own!)  People still have this notion that non-profits are essentially charitable enterprises that compensate their employees in large part through their sense of purpose.

A number of these clichés persist, like the college professor’s being a modestly paid entry into higher society or school teachers being lamentably paid.  In those cases, the unionization of the latter half of the last century changed the reality, at least for government employees, and when it comes to non-profits those working on public policy — that is, connected indirectly to government’s activities — tend to be particularly well paid.

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Following in Connecticut’s Regressive Footsteps

As Rhode Island’s Democrat Governor Gina Raimondo attempts to squeak out victory for a second term, we would do well to keep in mind the Democrat governor of our neighboring state, Dannel Malloy, who managed to accomplish just that, and with some of the same personnel.  A recent Wall Street Journal editorial gives some such food for thought:

Governor Dannel Malloy’s eight-year experiment in public-union governance saw income grow by a meager 1.5% for the year, well below Vermont (2.1%). The state even trailed Maine (2.7%) and Rhode Island (2.4%), which are usually the New England laggards. …

Lest you think this was a one-year anomaly, we looked at the personal income figures for every year since 2011. That’s the year Mr. Malloy took office, and the state rebounded well from the recession with 4.9% income growth, the best in New England.

It has been downhill from there. In personal income growth, Connecticut was 49th out of 50 states in 2012, 37th in 2013, 39th in 2014 and 2015, and 33rd in 2016. The consistently poor performance, especially relative to its regional neighbors, suggests that the causes are bad economic policies, not the business cycle or a downturn in a specific industry.

That stinging reference to Rhode Island, as one of two typical “New England laggards” ought to be a warning sign.  For one thing, the RI Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI) shows Maine making huge progress.

More importantly, though, if the editors are correct and Connecticut’s problems are a consequence of policy, they brought not just a decrease, but a fall from grace — to almost no wage growth if dividends and government transfers are taken out of the equation. Can a state that’s already considered a typical laggard really afford a similar slide?

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Some Interesting Correlations with High Taxes

Investor’s Business Daily found striking correlations between tax burden, presidential vote, population loss/gain, and government fiscal condition.  In general, high-tax states tended to vote for the Democrat in the last election, tend to be losing domestic population to other states, and tend not to be in great fiscal condition.  As IBD suggests:

One way to look at all this is to conclude that poorly managed states are trying to force taxpayers to cover for their mistakes. But, taxpayers won’t stand for it. Which strongly suggests that high-tax states need to set a new course, toward lower taxes and less spending, if they want to stop their population losses.

Of course, that’s a big “if.”  As long as they can keep the scheme going, population is only incidental… never mind that our governments are supposedly instituted to represent the people who actually live in an area.  That isn’t any longer true in a fundamental sense.

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Some Unanswered Questions on Housing

Perhaps it’s healthy every now and then to post something without implying that one knows how to fit it into a mural of opinions.  If so, I’ve found an opportunity in this news:

Rhode Island’s median house price jumped 13 percent in March, rising to $265,000, as the inventory of houses for sale plunged by 16 percent, compared to March 2017, the Rhode Island Association of Realtors reported Thursday.

Naturally, the realtors’ association suggests the problem is that they need more properties to sell.  In general, the trend would seem to count as contrary evidence to assertions that the state is losing people.

Both economic curves that bear on price come into play, here: supply and demand.  It could be that people want to buy property in Rhode Island, and that’s driving up prices.  Or it could be that regulations are too restrictive to allow sufficient expansion of supply.  And referring to “regulations,” we have to expand the term not only to mean direct zoning restrictions and the like, but also other regulations, like licensing restrictions that drive up the cost of building.

Too many threads must be unwoven, here, for a rainy Thursday, and I don’t have a quick answer.  I continue to hold that people should have a right at the local level to determine what sort of community they live in.  (Although, I’ll generally argue against using that right to hamstring your neighbors.)  I’d also suggest that we do too much to subsidize some construction while restricting different kinds of construction (say commercial versus residential), and much too much to prevent the economy from growing quickly enough for people to be able to afford housing.

My suspicion, in other words, is that all of Rhode Island’s economic meddling is doing something to focus economic value unnaturally on housing.  I also suspect the people who benefit from that state of affairs would be much better able to explain it.

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No Secret Why Rhode Island Has a High Eviction Rate

This article by Christine Dunn in the Providence Journal takes a strange (if predictable) turn:

Providence’s 2016 eviction rate, 3.82 percent, was nearly triple that of Boston in that same year (1.3 percent), according to new data from the Eviction Lab at Princeton University. This group is led by sociologist Matthew Desmond, whose 2016 book, “Evicted: Poverty and Profit in the American City,” won the Pulitzer Prize for nonfiction in 2017. …

Why is Providence’s rate so much higher than Boston’s and New York’s when Desmond says a lack of affordable housing is a problem across the country?

According to Clement, less access to free legal assistance for Rhode Island tenants, and less state support for housing in general, are reasons Providence fares worse than Boston in the rankings.

Umm… perhaps the fact that Massachusetts — particularly the Boston area — has a much healthier economy has something to do with it?  Oddly, the article presents unemployment as an effect, not a cause, of eviction.  That presentation is especially odd because the article doesn’t allege wrongful evictions.  People just don’t have the money.  Why don’t they have the money?  Because there’s limited opportunity, here.

That being the case, giving people free legal help would merely shift the burden to landlords, who will either have to increase rents or get out of the business, thus reducing supply and, ultimately, driving up rents again.  Adding evictions to the long list of programs that Rhode Island attempts to address with public welfare programs would increase taxes and harm the economy, thus leading to reduced ability to afford rent.

Rhode Island has no other solution than facing down its insider, I-know-a-guy system and taking the chains off our economy.  None.  And that reality brings us back to the deepest, most-fundamental problem for renters as for every don’t-know-a-guy resident:  It just makes so much more sense to leave than to try to fix the joint.

Unless Rhode Island’s governing elite and information providers shift to promoting economic freedom as the solution to the various symptoms of our state’s decline, that decline will continue.

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Lifetime Employment Isn’t Ending from the Cruelty of Corporations

A recent article in the Wall Street Journal by Megumi Fujikawa may cut across the way people generally think of labor economics:

The Japanese practice of lifetime employment at larger companies survived more than two decades of economic stagnation. Now the system is confronting one of its biggest trials: a tight job market.

More people are switching jobs, often with the lure of a higher salary or fewer hours.

In America, at least, when one hears lamentations about the loss of lifetime employment, the complaint is most often directed against the supposedly greedy executives who want to save a few bucks rather than taking care of long-suffering employees.  That narrative has always seemed to me to be dehumanizing of employees.

Maybe people don’t want to be stuck in one company for their entire lives.  Maybe people like the idea of independently building the trajectory of their lives, not being cared for from cradle to grave.

As Japan may be showing, when a tight labor market puts power in the hands of workers, they use that power to seek opportunity rather than indulge notions of loyalty.  In a changing economy, old notions that took for granted that the corporation had all the leverage and therefore needed to be forced by law and custom to be like guardians of its employees must be reevaluated.

Apart from some guard rails to keep self-interest within bounds, just free people up, and they’ll come to the arrangement that best suits the needs of all involved at the moment that they make the arrangements.  And then they’ll adjust when things change.  That this is a preferable state of affairs is illustrated by the fact that “progress” has a much more positive connotation than “reactionary.”

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Licensing’s Contribution to Inequality

Occupational licensing takes rungs off the mobility ladder for those who most need them, suggests Jared Meyer, writing in the Washington Examiner:

According to estimates by the Archbridge report’s authors, the growth of licensing corresponded with up to a 6.7 percent decline in absolute mobility, depending on the state. In other words, because of occupational licensing, children who grow up in low-income families are less likely to achieve the American Dream when they are adults. …

Researchers are still discovering just how much occupational licensing harms economic mobility, but there is no question that these barriers disproportionately harm low-income individuals. The Archbridge Institute’s new report, along with a continued focus on the problem by state and federal policymakers, offers hope that more positive policy changes are coming.

According to the report, the reduction in upward mobility for Rhode Island due to its licensing regime is 3.7%, and the increase in the Gini Coefficient (a measure of income inequality) is 8.6%.  That is, occupational licensing helps those who’ve already made it keep it and serves to block those who haven’t from doing so.

Added to tax burdens and every other drag that Rhode Island puts on economic activity, licensing is one reason the “productive class.”  We don’t need more programs, government handouts, and central control.  We need more freedom and opportunity.

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Once Again with the Plain Rebuttal to “Equal Pay Day”

Well, as long as people are willing to repeat discredited and obvious nonsense like the “Equal Pay Day” rhetoric, I suppose we’ll have to continue to recite the obvious responses.  Mary Katharine Ham has apparently drawn the short straw this time around:

These differing priorities understandably impact pay. Women are more likely to take a job that pays less to gain flexibility and work-life balance. I’ve done it myself many times.

Yet, as AEI’s Mark Perry points out, there is no widespread recognition of “Equal Occupational Fatality Day” to highlight men’s overrepresentation in very dangerous fields (coal mining, line work, and law enforcement among them), which often pay more to compensate for risk. …

There is no big “Equal Commute Day,” to acknowledge the gender commute gap …

Male college graduates, on average, also entertain employment options further afield from their universities than do women, thereby opening up more and possibly higher-paying opportunities. They also work several hours more per week on average than women.

Maybe I’m just idealizing the past, but it seems like talking points used to go away when they were shown to be utterly without merit.  In today’s polarized society, the strategy seems more to keep pressing on because the risk of losing one’s base is so much more substantial than the risk of never being able to persuade after a loss of credibility.

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A Tip for the Restaurant Industry When It Gets into Politics

I’ve also got an op-ed in today’s Newport Daily News:

So here is what the Trump administration is suggesting: Employees who work for particular restaurants will be able to negotiate a tipping system that works for them. If a state finds that the balance of power favors one side or the other in those negotiations, it can regulate the matter at the state level. The only difference is that distant politicians in Washington, D.C., won’t be telling the whole country what to do.

If you find that “kind of disgusting,” I can only ask: Why do you feel so threatened by others’ freedom? Nothing in the rule change would require any change to the way restaurants handle tips. As the article illustrates with quotes from restaurant managers who support servers’ keeping their tips, the status quo – which was the status quo even before Obama’s power grab – would remain in place. Regulations could be imposed at the state level, if that’s what Rhode Island wants, and individual businesses could figure out what works for them.

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Statistics: Economic and Political

Click on over to my op-ed in today’s Providence Journal:

To be clear, these are massive and sometimes subtle trends, and a particular governor can only be saddled with so much blame or lauded with so much credit. Still, if Rhode Island had kept pace with other states — and with itself before Raimondo took the reins — around 10,000 more of us would be employed.

Anecdotally, that presentation of our economy more closely matches the experience of most Rhode Islanders than does the governor’s self-promotion. Promising four more years of “exactly [that] kind of progress” may therefore not be the pitch that the Raimondo camp believes it to be.

Perhaps that’s why 60 percent of Raimondo’s political donors were out of state in 2017. Opinions may differ as to whether that represents “progress” from her 40 percent out-of-state result in 2014.

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Regarding Non-Competes for the On-Air Talent

I’m not sure why Patrick Anderson weaves together the hoopla about Sinclair Broadcasting’s recent promotional script with the idea of banning non-compete agreements in journalists’ contracts.  That he strives to do so gives the impression of an ulterior motive to construct a narrative, as does the monolithic presentation of non-competes:

Used in a number of industries, non-compete clauses prevent employees from taking a job with a competing company for a set period of time, often one year, after they end their employment, even if it was the station that decided to part ways. …

Former WJAR investigative reporter Jim Taricani called non-competes unfair in written testimony supporting the bill.

“Prohibiting an employee from finding work to support themselves and their families is an outrageous condition of employment,” Taricani wrote. “Unlike non-compete clauses used for employees who work for companies where they may have knowledge of company ‘secrets’ or ‘confidential product research,’ ‘on-air’ talent in broadcasting have no such knowledge of any confidential information.”

The reasons for non-competes vary from industry to industry.  In some cases, knowledge of sensitive information is the thing being protected.  When I worked for a carpentry temp agency, non-competes were a way of preventing contractors from using the company as a trial service.  In the case of journalism, building up contacts and expertise is a critical part of the job, and people who appear on camera are intrinsically part of a station’s brand.

I’m not, therefore, endorsing non-competes, but these aren’t crazy points to make.  WPRI and WJAR have invested in Tim White and Parker Gavigan, respectively, to develop contacts and credibility for investigative reports; if WJAR were to hire White away, WPRI would lose one of its key faces and would have to scramble to rebuild its brand on a very important line of products.

Of course, that should encourage the company to make sure that its star employees are happy, but that balance should be subject to negotiation.  For newcomers, a non-compete agreement could be something of a box, but further along in a career, an employee may offer a non-compete as a way to get more money out of the employer.  If new employees don’t like the box, they don’t have to take the job.

The speed with which people turn to government to enforce whatever they think is in their best interest at any given time is disturbing to behold.

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The “Let Me Outta Here” State

Things are getting so hopeless in Venezuela that young go-getters trained for high-prestige jobs are going… to get low-level jobs in nearby countries:

After six years of studying and working part-time jobs, Cristian Diaga, 24, will soon graduate from medical school in Caracas, Venezuela. But instead of continuing his training in a top hospital in the country, as he had hoped, he is taking a job in a fast-food restaurant in Argentina – a situation he says is much more preferable. …

More than half of Venezuelans between 15 and 29 want to move abroad permanently, according to a poll carried out by the US firm Gallup and shared exclusively with the Guardian.

“In Venezuela, it feels like we are all just dying slowly and there’s no hope for a change. I don’t care if I’m gonna work as a doctor or not. I just want to have food, medicines, security, a house, a car, and be able to give a good life to my loved ones,” he says.

Regarding the population as a whole, a 2017 Gallup poll found that 41% of Venezuelans would like to move away permanently.

As it happens, 41% is also the result Gallup found in 2016 for the percentage of Rhode Islanders who would like to leave the state.  That was a slight improvement from the result from the same poll in 2014, although the Ocean State fell from 5th worst to 4th worst.

As I noted regarding the earlier finding, the comparison isn’t really fair.  After all, states with more opportunity are close and easy to move to and, therefore, probably more tantalizing.  Moreover, I’d wager that more than 41% of Venezuelans would jump at the chance to move to Rhode Island.

But still.  Only 22% of New Hampshire residents want out (8th best).

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A Progressive Plan to Give Workers Rights They Already Have

A couple of weeks ago, I expressed support for the notion of employees’ becoming owners of their workplaces, suggesting that the best way forward was to remove government barriers to their doing so.  As WPRI’s Ted Nesi notes on Twitter, progressive Democrat Representative Aaron Regunberg of Providence has a hearing today on his legislation to, as Nesi puts it with reference to Benny’s, give employees “the right to buy the retailer and turn it into a worker-owned co-op, rather than let it shut down.”

Reading the bill, however, I can’t see that it really does much of anything.  When employers are about to take an action that requires them to notify the federal government about a substantial layoff, the state Department of Labor and Training (DLT) would remind the employees that buying their workplace is an option.

The employees would then take a vote on whether to buy the company.  If the vote succeeds, then any employees who are interested would form an entity in order to buy it.  If the vote fails… well… I guess any employees who are interested in buying the company would do exactly the same thing.  In either case, the employer can decline to sell.  In other words, the bill does nothing but give a politician another talking point about supporting “working Rhode Islanders.”

Of course, because it is so ineffectual, one suspects that this legislation would be the foundation for an incremental change that activists think wouldn’t have chance if pushed into law all at once.  In a few years, progressives might argue that too many owners are unwilling to sell for the price that employees are able to pay and remove their ability to say “no thanks.”  Or maybe a state bank would come along, and these sorts of buy-outs would explicitly be given preferential treatment for loans.

Considering the origin of the bill, the safest bet for Rhode Island would be for the General Assembly simply to let it fade away.  In the meantime, we should reinforce a simple truth that progressives seem to want people to forget:  We already have inalienable rights that come from a higher place than the State House, and we don’t need government to step in and claim to be creating them for us, as if from nothing.

After all, if government can grant a group the right to buy a company, it can remove another group’s right to do the same.

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Farmland Subsidies and a Bad Trade in the Economic Ecology

In late summer 2016, I looked into the state government’s program, then under development, to purchase farmland and distribute it to small-time farmers (see here and here).  Well, Jennifer McDermott reports for the Associated Press that the program is now getting underway, emphasizing that the “entrepreneurial” farmers can buy the property for about one-fifth of what the state pays.

The National Farmers Union knows of no other state that buys farmland to sell to farmers at less than market price. Other states give tax credits and loans to beginning farmers.

Though some critics say this is not the role of state government, Rhode Island sees it as a way to keep young entrepreneurs from moving to other states, where land may be cheaper. It also could attract other farmers to the state, though retaining farmers who already are here is the main goal and the selection process favors Rhode Island farmers.

These points don’t make sense.  If other states don’t offer these benefits, farmers won’t find much-cheaper land for quite some distance, creating a pretty high barrier in order to up and leave.

More importantly, allocating resources to this activity — not only in the purchase price, but in the effect of preventing more-efficient usage of the land — implicitly makes somebody else’s activity more difficult.  On the hill down which excrement rolls, that “somebody” is more likely to be some other variation of entrepreneur trying to scrape resources together.

To keep the boutique farmer, in other words the state government may ultimately (although invisibly) be dismissing the office-based innovator with some hot technology of the future.  Given the geography and soil of the area, such a trade means playing to the Ocean State’s weaknesses, not its strengths.

And farmers aside, which Rhode Islanders does this policy benefit?  I’d suggest that the answer is relatively wealthy people who like the aesthetics of having nearby farms and purchasing local produce.  Those are aesthetics that I share, but our community (and economy) would be much better served by having it expressed in actual prices for produce.  Subsidizing local farms to keep the prices down creates higher prices for something we can’t see.

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The Flawed Thinking of a #10kPaysTheWay Policy

The RI Center for Freedom & Prosperity has found its Bad Bill of the Week in Pawtucket Democrat Representative Carlos Tobon’s legislation proposing to pay wealthy people $10,000 each to move to Rhode Island:

“If we have to pay families, students, and businesses to move to or remain in Rhode Island, to survive our state’s oppressive tax and regulatory climate, then something is very wrong,” said Mike Stenhouse, the Center’s CEO. “Worse than the obvious face-value inanity of the bill, the ignorant belief of how an economy and family dynamics actually work is what is most troubling. The legislation openly acknowledges the negative economy in our state, yet, as with other progressive policies, it tries to band-aid the symptom rather than cure the core illness. ”

The bill is so incandescently wrong-headed that it’s difficult to know where to begin criticizing it, but among the more objectionable aspects of Tobon’s proposal is the explicit concern of losing a seat in the House of Representatives in Washington, D.C.   That is what motivates politician’s to take action.  Decades of watching productive Rhode Islanders flow elsewhere for opportunity weren’t enough.  Political clout is the real concern.

As of the July Census projections of states’ populations, Rhode Island was just 157 people away from losing one of its congressmen.  That’s a 0.015% decrease in population, and we lose out.  The next state in line is New York, which is currently on track to lose a congressional seat.  But if the Empire State manages to add 0.015% to its population, then it will keep what it has at Rhode Island’s expense.

Numbers aside, suffice it to say that a state that has to bribe people in order to maintain its level of congressional representation — through either government welfare programs or direct hand-outs — is a state that has proven that it doesn’t deserve much clout in determining the course of the nation.

Rhode Islanders must get our own House in order.  If we could just  put into office people who don’t prioritize central planning and insider control, we could make our state a place that people aren’t as quick to leave and to which they want to move.

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Rent Seeking Pot Dealers Look to the Government Crime Boss

Could there be a more clear example of rent seeking crony capitalism than a direct payment from marijuana interests to pay off government officials to block competition?

The offer came with a condition. State regulators would have to change their plan to hike the number of state-licensed pot dispensaries from the existing three to 15.

“We’re very sensitive to the state and its challenges,” Reilly told members of the House Finance Committee. “And if there is a way to find the $5 million that you need to plug the budget hole that you need for the coming fiscal year, we’d like to be part of the solution.” …

Regulators say the plan would increase competition among dispensaries, lower prices, offer a wider array of tested marijuana strains and improve access for patients, whose numbers keep growing.

This just like occupational licensing.  Established businesses use political clout to leverage government and block competition, which makes markets more efficient and helps consumers.

Rhode Islanders should take this as a lesson in political theory, as well.  Those on the progressive side tend to think of government as “the people’s” source of leverage against powerful special interests, but it quickly becomes the opposite, as the special interests give government cash in order to come around to the idea that it’s to the people’s benefit for the special interest to benefit.

In this case, the pot dealers see upstarts moving in on their business, and they’re looking to the crime boss of the area to muscle them out through extortion and threats of violence (via fines and maybe incarceration). The picture gets clearer and clearer.

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Lack of a Scandalous Flop Isn’t “Guts and Vision”

A recent editorial in the Providence Journal lauding the Rhode Island Convention Center deserves some push-back.  The writers applaud those who “invested” in the center back in the ’90s for their “courage and imagination on the basis of eye-popping numbers:

The analysis, conducted by Conventions, Sports & Leisure International of Plano, Texas, found that the Rhode Island Convention Center, the Dunkin’ Donuts Center and the Veterans Memorial Auditorium generated $838 million in total economic impact for the State of Rhode Island from fiscal year 2013 through 2017.

That far exceeds the costs of running the facilities, including $23 million a year in state bonding costs.

This isn’t a reasonable number to proclaim for these purposes.  A quick search turns up the iteration of the report from 2015, which tells pretty much the same story, and it shows that the great majority of traffic in the three venues considered (the Convention Center, the Dunkin’ Donuts Center, and Veterans Memorial) is local.  As the report puts it, “It is appropriate to assume that much of the spending from attendees that are from the local area is “displaced”, or would have taken place somewhere in the local economy if the event had not been held.”

This is compared with the result if we switched out the venues for three holes in the ground.  The $838 million of economic impact assumes that none of the customers would have spent their money locally, that none of the employees would have had jobs, and that none of contractors would have found other clients.  The study makes no attempt to estimate how much additional impact the center has over any likely alternatives if it weren’t there.  If the land remained in private hands, the owners would have had incentive to sell it, the buyers would have had incentive to develop it, and the developers would have had incentive to figure out the most efficient things to develop.

The study also doesn’t consider that the government spending that has bolstered the center could have been used for something else, like leaving money in people’s pockets to spend and invest in the ways that they considered most important.

In short, the Convention Center hasn’t been a scandalous disaster, but proclaiming “guts and vision” for investing other people’s money seems a bit overstated.

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After the Green Charmer Moves On

Remember when Rhode Island helped get Deepwater Wind off the ground by forcing Rhode Island energy users to pay an artificially high price for its product, in the name of making the Ocean State “the Saudi Arabia of wind”?  We were supposedly taking the lead in an industry of the future and securing the “well-paying jobs” that Rhode Islanders deserved.

Well, at least we can say we kicked off a job bump in the larger region:

Deepwater Wind will assemble the wind turbine foundations for its Revolution Wind in Massachusetts, and it has identified three South Coast cities – New Bedford, Fall River and Somerset – as possible locations for this major fabrication activity, the company is announcing today. …

These commitments are in addition to Deepwater Wind’s previously announced plans to use the New BEdford Marine Commerce Terminal for significant construction and staging operations, and to pay $500,000 per year to the New Bedford Port Authority to use the facility.”

Businesses will go where it is in their immediate interest to go.  That’s just what the incentives dictate.  Rhode Island continues to attempt to use crony capitalism in order to avoid making the changes necessary to be a place that businesses find attractive without special incentives.  That will ultimately fail, because it drives away all businesses that do not receive the special deals, and it keeps those that do only as long as the subsidies keep coming… and aren’t exceeded by somebody else’s deal.

But improving Rhode Island’s business environment inherently requires reform of and risk to the insider system that has corrupted the state, so it’s not a realistic option.

(Via Ted Nesi.)

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