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The Irrational and Rational in Real Estate and Climate Change

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

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

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

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

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

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

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

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

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More Regulations During a Housing Shortage Is a Bad Idea

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

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

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

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

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

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

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Rhode Island’s Job Growth Gap; U.S. Growth Rate 50% Higher

Regional and national coverage of Rhode Island’s Democrat Governor Gina Raimondo has continued to promote her talking points about employment growth.  The Ocean State Current has already put up the warning flag about an apparent downturn in employment, but what about jobs based in the state?

As the following chart shows, going by job counts each December, the gap between Rhode Island’s rate of growth and that of the United States is substantial.  If the Ocean State had tracked with the country, our state would have 23,429 jobs (just under 5% more).

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Since the low point in 2009, the U.S. rate has been 45% faster than Rhode Island’s.  Since Governor Raimondo took office, that job-growth-rate gap has increased to 52%.

Most of that increase comes from the flat year Rhode Island experienced under Raimondo’s first budget.  Meanwhile, policies at the national level corresponded with an inflection point in the national line, with job growth increasing more in 2018 than in 2017.  In the Ocean State, by contrast, job growth slowed.

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Yet More Bad Toll Numbers from Raimondo & RIDOT

Surprise surprise surprise! WPRI’s Ted Nesi reports that

Gov. Gina Raimondo has sharply lowered her forecast of how much money truck tolls will generate this year because they are getting and running more slowly than initially expected.

The budget proposal Raimondo released earlier this month projects that tolls will generate $7 million in the current 2018-19 budget year, which is $34 million less than was expected when the budget passed last June.

If you’ve watched the toll discussion and rollout even casually, you will know that this development is actually not at all a surprise.

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

An Employer’s View of the Governor’s Regressive Budget

Sometimes, a perspective directly from the front lines says it better than we can ever do. Below is a response from one of our Center’s email subscribers, who is a large employer in our state, commenting about my recent “Raimondo’s Rhode to Serfdom” oped in the Providence Journal and about a related email from this past weekend.

The frustration that this government does not seem to understand, or care about, the increasingly onerous plight that it continually and unilaterally imposes on job producers comes through very strongly, as does the critique of how leftist polices have negatively impacted the work ethic of young adults.

From an actual employer in RI:

I am so disappointed that [the governor] is definitely [living] on another planet. She should be in a business and [try to] find employees. Free education and early pre-K does absolutely nothing when we are graduating high school seniors that can barely read. I need employees that can be trained in a blue collar industry, but the current generation doesn’t want to work. They have no communication skills since they are glued to phones. Most can’t pass drug testing, and she wants to legalize pot. We have spent millions on smoking cessation, and now we want to legalize drug that most users smoke. Pot is an entry level to drug abuse but she wants to spend millions on opioid addiction.

She claims she isn’t raising taxes, but her budget shows increases in taxes on almost everything the average working person uses. No cuts in her overpaid staff or in the excessive number of State Workers. Online gambling is another bad idea; gambling is an addiction, and we all know people that have lost everything because of gambling. My question is why the citizens never get to vote on anything?

Mattiello stated the defeat of Pawtucket Red Sox was the will of the people; how would he know if the people never had a say or a vote? Our [Congressional] Rep made a special trip to the border to investigate the death of an illegal child but didn’t make any comment about the death of a Rhode Island child who died in DCYF care.

Help wanted adds everywhere, but we have a generation that doesn’t want to work because they have gotten everything for free and have absolutely no work ethic.

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Another Lesson to Learn, Rhode Island: Minimum Wage

Sometimes state government makes bad policy decisions because it is improvising without any example to follow for its actions, and sometimes state government makes bad policy decisions because it ignores the evidence that other states have generated.  Passing progressive Democrat Gina Raimondo’s proposed new Medicaid tax on employers and her proposed minimum wage increase would be in the second category.

Writing for the Foundation for Economic Education, Jon Miltimore notes one New York City restauranteur who is cutting hours, cutting staff, and increasing prices, all to address a massive increase in the city’s minimum wage:

Bloostein is just one restaurant owner, you might say. But he is not alone. A New York City Hospitality Alliance survey shows that 75 percent of restaurants said they planned to cut employees hours in response to the wage hike. Nearly half (47 percent) said they’d cut jobs.

The outcome is hardly a surprise. These are the signature responses to steep wage hikes forced onto businesses (those that manage to bear the costs and stay open, anyway).

However pure the intentions of New York politicians might be, the minimum wage will have a dire impact on those who can least afford it: young, poor workers who will not be afforded important job experience. It’s a terrible way to fight poverty …

Of course, as Miltimore goes on to suggest, New York politicians’ intentions cannot be assumed to be pure.  Their incentives are different from the people’s needs, and that most definitely applies to Governor Raimondo.

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Governor’s Regressive Budget – The Wrong Direction?

Is the Governor’s budget pointing our state in the right direction? On Monday, I attended the Martin Luther King Jr. Day breakfast hosted by the RI Ministers’ Alliance. At the breakfast, the Governor said that the country is moving backward, and that she is committed to moving RI ‘forward’ and in the opposite direction. What planet is the Governor living on?

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Governor’s Budget: The “Rhode To Serfdom”

Instead of seeking to shape Rhode Island’s future with the proven ideals of a free-society, Governor Raimondo’s proposed 2019-2020 budget is a stunning departure from America’s core values and, instead, would put our state on a “Rhode to Serfdom.”

The Governor’s regressive budget points us 180 degrees in the opposite direction of where we need to head, and would stifle any opportunity for growth.

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When Public Policy Squeezes Out Providers

The aptly named Stanley Bleecker foresees a problem for Rhode Islanders needing health care in the future:

Can you imagine a time when sick people will not have access to a doctor when they are in need of treatment and medical advice? I can. Recently, because of my primary doctor’s retirement, I had to find an internist and also a specialist. It was not easy. After some effort, I did secure an appointment for an annual physical with a new internist, but the earliest appointment I could get was scheduled for 12 months down the road. Subsequently, I learned my new doctor (whom I still have not yet met) has closed his practice to new patients.

The shortage is a result of many Rhode Island doctors taking early retirement or leaving to practice in other states where insurance payments are higher. Practicing doctors tell me that young doctors are not interested in practicing in Rhode Island because of low insurance payments.

Mr. Bleecker might be somewhat encouraged to learn that Rhode Island has legalized the provision of telemedicine, whereby patients don’t have to be physically present in the office to receive care.  Of course, this being Rhode Island, there’s a catch:

Rhode Island providers, however, may not use telemedicine to deliver health care services across state borders. This limitation is subject to change if Rhode Island lawmakers choose to enter the Interstate Medical Licensure Compact (“IMLC”).

In some respects, Rhode Island is moving in the wrong direction:

Similarly, Rhode Island nurses may not deliver health care services via telemedicine to patients across state borders. This was not always the case. For nearly a decade, Rhode Island was a member of the Nurse Licensure Compact (“NLC”), which permitted Rhode Island registered nurses and licensed/practical vocational nurses to use telemedicine to provide health care in 24 other states across the country.

Attentive readers might recall that Donna Cook pointed this out back in September, as a problem for professional nurses.

This shouldn’t be such a hard lesson.  When government makes it more difficult to pursue a profession or creates artificial markets with near monopolies for insurers, people will stop finding it worthwhile to go into that line of work, here.  Too often, those who craft our laws imagine that the targets of their impositions will not react.

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

A Minimum Wage Means Different Things to Different People

There’s something worth noting in a Patch article by Mike Carraggi:

A minimum wage bump will see more than $12.4 million in additional pay for Rhode Island workers in 2019. That’s according to an analysis by the left-leaning Economic Policy Institute, which studied all the minimum wage boosts 20 states are seeing this year.

The article notes that 40-cents per hour is “not exactly monumental,” but what it doesn’t mention is that $12.4 million in additional pay is also $12.4 in new costs for Rhode Island businesses.  That cost isn’t distributed as widely as the benefits and will hit a much smaller number of businesses, many of which are operating with slender margins as it is.

If our society really thinks the best way to provide welfare is by putting a regulator gun to the metaphoric heads of businesses, so be it, but let’s not pretend the money comes out of nowhere.

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Happy New Year from the Center! How to Start Winning Conservative Victories in 2019.

Happy New Year from everyone at the Center! Do you want to start winning conservative victories in 2019? It is my view that conservatives in our state MUST boldly and relentlessly stand for the core values that have always bonded Americans together, and translate those values into kitchen-table issues that benefit families.

Our vision is based upon the core values of love of country, freedom of religion, self-sufficiency, and preservation of the individual rights granted by God to every American, as defined in our constitution.

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Merry Christmas From The Center!

Merry Christmas! Imagine Rhode Island as a more attractive home and destination of choice for families. We could be a state that offers financial security now and opportunity for prosperity in the future. We could have a policy culture where individuals and business are successful in increasing the overall wealth of our state’s economy, and enhancing the quality of life for every Rhode Islander.

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Balance of Toll Gantries Going Up at Top Speed; Serious Implications of Raimondo Breaking Her Word

As we jump into the latest unsavory development in the state’s shady, deliberately ignorant roll-out of truck tolls, this preamble is the most important take-away: tolls on any vehicles in Rhode Island are completely unnecessary. The spending to repair Rhode Island’s bridges can be found within the annual budget – and without throwing 30% of the revenue away on gantry construction and toll fees.

RIDOT has announced today that they received federal approval for the balance of the gantries and that the contractor has been issued notice to proceed with construction, with the first new gantry expected to go live in May of 2019.

This flies in the face of Governor Gina Raimondo’s repeated statements that any more gantries would wait until the lawsuit and the legality of truck-only tolls is decided. Just one instance was on Dan Yorke State of Mind earlier this year (starting at Minute 06:00):

Yorke: You said, “If we lose the litigation, we don’t put the tolls up”.

Governor: “Correct”.

Governor: “We’re going to start with one in February. We assume there will be litigation which we will then have to defend and then we’ll see.”

Governor: “We gotta do one, we gotta see how it goes and then we’ll move to the next one.”

To not proceed with the construction of the balance of the gantries until their legality had been threshed out was a significant undertaking and also the prudent course on behalf of taxpayers and residents.

The implications for Rhode Island residents of her breaking her word and doing a highly irresponsible one eighty are significant. We have received repeated assurances that these gantries will be used only to toll trucks. But what happens if the court rules truck-only tolls illegal? The most innocuous – and actually not that innocuous – implication of her action in erecting gantries for a use that may be legally vacated is that she has very irresponsibly opened state taxpayers to a significant, unnecessary expense; i.e., putting us all on the hook for the cost of these gantries.

A far more ominous implication is that, by proceeding with the construction of all gantries before a court ruling, she is actively positioning the state for all-vehicle tolling. In a recent interview with WTNH, Governor Ned Lamont said that Governor Raimondo told him she is “highly confident” that the lawsuit will be found in the state’s favor – and “later this spring”, no less. (This attitude strikes me not only as baseless, extreme legal optimism but also quite disrespectful of the judge presiding over the case.).

The governor’s highly quizzical legal prognosticating to one side, it is impossible to predict the lawsuit’s outcome. A ruling against truck-only tolling doesn’t mean that tolls themselves have to go away, only their discriminatory assessment. By going back on her word on gantry construction, Governor Raimondo may be telescoping the time it takes to spread the – remember, completely unnecessary – toll cancer to all vehicles.

[Monique has been a contributor to the Ocean State Current for over ten years, has been a volunteer for StopTollsRI.com, a grassroots citizens group opposed to all tolls, for four years, and began working for the Rhode Island Trucking Association as a staff member in September of last year.]

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Waning Success, Waning Congressional Influence

Well, the good news, with Rhode Island’s looming loss of a Congressional seat, is that we can’t go any lower than the minimum:

Rhode Island last had a single seat in the House in the original Congress in 1789, when the number of seats was set directly by the U.S. Constitution. Since then, under a mandate in the Constitution, the number of House seats has been determined under a complex formula approved by Congress and based on state populations. Since the 1790 census, Rhode Island has always had two seats in the House, except for two decades in the early 20th century, when a booming immigrant population earned the state three seats.

The complex formula ranks potential House seats for each state. The top 385 are awarded seats in the House. That’s in addition to the minimum of one seat that every state is guaranteed by the Constitution.

I’ll admit that my thinking has changed a little on this over the years, at least to the extent of acknowledging some complications.  Yes, Rhode Island is set to lose a Congressional seat after the next census because our local society doesn’t offer the opportunity that it should for families to grow.

Our failures have mainly been an accelerant, however.  In the long run, we simply don’t have the space to keep up with other states’ expanding populations.  My changing perspective is the understanding that it isn’t irrational for Rhode Islanders to resist a NYC-tri-state-area level of population density.

Still, losing a Congressional seat because your successful state doesn’t have room to fit more people looks very different than our current case of losing it because the state isn’t successful.  We’d all be much wealthier in the former case and have disproportionate national influence for that reason.

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Hasbro and the Definition of Cronyism

Following Rhode Island’s mainstream news media gives one the impression that everybody’s falling all over each other to express concern about the possibility that toy company Hasbro might move its headquarters out of the state.  The three most-powerful politicians in the state pledge to work toward a solution.  The mayors of Pawtucket and Central Falls are on the case.  The Providence Journal editorial page is stressing the importance of retention.

I say we’re looking at this all the wrong way.

If Hasbro’s changing business model just doesn’t work in Rhode Island, then the company should move.  To avoid that outcome, the state should eliminate the insider system of its governance and ease the burden of regulations and taxes so that the company’s business model works here — not because state leaders are cutting special deals to help one company overcome the burden, but because the state is more friendly to all economic activity.

Instead, Hasbro may actually affirm the state’s unhealthy political system if it stays.  A quick look at Rhode Island’s campaign finance database shows that Hasbro’s CEO, Brian Goldner and (presumably) his wife have each given Democrat Governor Gina Raimondo the maximum contribution of $1,000 every year since she took office.  This year, another Goldner at the same address threw in an additional thousand, and Brian added $11,000 in donations to the Democratic State Committee.  Additionally, 18 Hasbro employees contributed the maximum to Raimondo over the past year.

This unusual wave of money clouds the direction of the influence, but it is suggestive of the insider nature of the transaction.  Hasbro employees are especially supportive of a particular politician, and that politician is going to strive to keep their company in the state.  At the end of the day, it isn’t clear whether anybody with power has an interest in improving the state if it means reducing the power of a mutually supportive elite.

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Confirming a Conservative Response to Poverty

Writing about public policy day in and day out, one can forget that not everybody follows every argument with close attention.  Broad philosophical points of view and underlying intentions can therefore be lost.

Just so, I almost didn’t bother reading a brief essay in which Michael Tanner promotes and summarizes his forthcoming book offering a broad explanation of a conservative policy response to poverty.  It’s worth reading, though, because he summarizes some conservative policies specifically in terms of their human objectives:

  • Keeping people out of jail can promote work and stable families.
  • Breaking up “the government education monopoly and limit[ing] the power of teachers’ unions” is rightly seen as an “anti-poverty program.”
  • Preventing government from driving up the cost of living, especially housing, will give poorer families a chance to get their feet on the ground.
  • Policies that discourage savings also discourage healthy financial habits.
  • A heavy hand in regulating the economy tends to target economic growth toward the rich and powerful.

As he concludes:

An anti-poverty agenda built on empowering poor people and allowing them to take greater control of their own lives offers the chance for a new bipartisan consensus that rejects the current paternalism of both Left and Right. More important, it is an agenda that will do far more than our current failed welfare state to actually lift millions of Americans out of poverty.

My only objection is that I’m not sure that the “paternalism of the Right” is a view that conservatives actually hold rather than a caricature that the Left spreads about us.  Of course, the fault is arguably ours, if we don’t often enough express our real intentions.

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Food Stamp Arrests Before the Holidays

Somehow the weekend of Thanksgiving and Black Friday seems an appropriate time to turn our attention to Jessica Botelho’s Turn to 10 report on arrests for food-stamp fraud:

Twenty-four people have been accused of fraudulently obtaining a combined total of nearly $50,000 in public assistance and food stamps, Rhode Island State Police announced Tuesday.

… anyone convicted of fraudulently obtaining public assistance may be sentenced to up to five years behind bars and/or fined $1,000 if the value of public assistance was more than $500.

Anyone convicted of fraudulent use of food stamps, will be ineligible to participate in the food stamp program for no less than six months and no more than 24 months.

In the scheme of things, this is pretty small-scale stuff, with an average theft of $2,040, and looking at the mug shots doesn’t give the impression of a well-off crime ring.  Probably, these folks saw an opportunity for some extra money and acted on the not-uncommon principle that a little bit of “I got mine” wouldn’t actually harm anybody.

This holiday weekend, we express our gratitude for the good things in our lives and (some of us) take part in ritualistic exercises in excess, whether at the Thanksgiving Day table or in an effort to give our children (or ourselves) a materially exciting Christmas at a discounted price.  These holidays are supposed to direct our attention to those whom we love and those whom we should help, but they often highlight our weaknesses and tendency to measure well-being by things.

These contrasting aspects of the holidays apply to those of us who need help, too.  There is no shame in doing what one can to help one’s family, and food stamp fraud might be easily forgiven for that purpose, but is that really what’s going on?  Stealing in order to fund some habit, like smoking, or to keep up on the season’s materialism carries a bit more culpability, and a drive toward taking control of one’s financial well-being should always be central.

We do our disadvantaged neighbors no favors by instilling an opportunity for fraud or temptation toward dependence, so our welfare programs should be modest and well controlled.  At the same time, we lose perspective if we blow their infractions out of proportion.

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Two Economic Directions for a Generation

We hear a lot of stereotypes about young adults in America today — that they’re soft snowflakes who can’t take criticism and think the world owes them ease and security.  Posts like this one by Helen Smith reinforce that view, noting that there is a 500,000-man gap of 25-to-34-year-olds who should be in the workforce but aren’t:

The colleges are hostile environments and bad fits for many of these men who know that they will not flourish there. Add in the risks of marriage for these men and the fact that many women don’t want them and leisure time playing video games seems like a better alternative, particularly if you can live at home to support a good time. It’s kind of like they are on strike or something.

Instead of punching a clock, they’ve checked out.  They live at home or collect some sort of disability or welfare subsidy.  Maybe they extend their educations (perhaps as a condition of the government’s or mom and dad’s indulgence), following up their useless four-year degrees by spending more of their youth chasing a career-specific education, or maybe they put themselves in a holding pattern, with no degrees or pursuits, just waiting for something to happen.  They’re looking for an easy path and draining their parents’ or taxpayers’ resources.

On the other hand, there’s this encouraging bit of news:

Generation Z—those who were born between the mid-1990s and early 2000s—are more often turning to trade schools to avoid the skyrocketing student debt crisis and hone skills that translate directly into jobs, from electrical engineering to cosmetology. While the power of trade unions has dwindled, and societal value still favors more elite professions, young students are finding themselves drawn to stable paychecks in fields where there’s an obvious need.

The appended podcast has the headline: “The Hot New Gen-Z Trend Is Skipping College.”  Per this narrative, young adults want to work, and their rational assessment of current conditions is finally overcoming a cultural bias for a particular direction.  More kids should go into the trades.  They provide a path with tremendous opportunity, life lessons, and fulfillment.

With a broader perspective, we can see the operation of our economy.  The young adults in the first group are spending down what their parents have earned, and the young adults in the second group are preparing to collect it, thus shifting our society’s wealth toward those who advance our economy.  This will be healthy if the government doesn’t interfere… but it will.

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Increased Wealth and Equality Lead to Gender Differences

So here’s a global research outcome, published in Sciencethat is different from what we’re supposed to believe:

We contrasted and tested two hypotheses that make opposite predictions concerning the cross-country association of gender differences in preferences with economic development and gender equality. On one hand, the attenuation of gender-specific social roles that arises in more developed and gender-egalitarian countries may alleviate differences in preferences between women and men. As a consequence, one would expect gender differences in preferences to be negatively associated with higher levels of economic development and gender equality (social role hypothesis). On the other hand, greater availability of material and social resources removes the gender-neutral goal of subsistence, which creates the scope for gender-specific ambitions and desires. In addition, more gender-equal access to those resources may allow women and men to express preferences independently from each other. …

Gender differences were found to be strongly positively associated with economic development as well as gender equality.

When men and women can afford to choose their occupations, they tend to choose differently.

Of course, this doesn’t tell us whether a particular woman is better for some job than a particular man or how much different jobs are worth in the marketplace.  It should, however, lead us to pause before declaring that any occupation that isn’t distributed 50:50 across the sexes is evidence of sexism. It should also lead us to ponder whether forcing parity would require forcing a reduction in wealth, freedom, and equality.

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When People Become Too Expensive

Blogger The Phantom spots a Reuters article that, in Phantom’s words, shows “what inevitably happens when you raise minimum wage to idiotic heights.”  A grocery company is developing automated stores that are essentially like giant vending machines.  The advantages as the blogger sees them:

Lets list the advantages for the vendors here:
No shoplifting (Which is huge)
No employee stealing (Which is huge)
Much reduced breakage (robots don’t drop stuff as much)
Much reduced spoilage (Just In Time delivery and stock rotation goes a lot faster.)
Tiny square footage compared to regular market
NO EMPLOYEES means the store can be open 24/7/365, including Sundays and holidays. It’s a vending machine.

What’s the downside for the customers or the companies making the decisions?  Well, human interaction is nice and important (at least for most of us) and has some value.  I’ve never seen a statistic, but it has always seemed to me that people will typically go into a store to buy a soda even when there’s a vending machine outside.

The value of human interaction applies to the business owners, too.  Folks start or run businesses in order to earn a living, of course, but they mostly like the idea that they’re helping people support their families and that sort of thing.  Even looking at Phantom’s list of advantages to automation can remind us that a store manager, while annoyed about breakage and such, derives value from interactions — helping an employee to improve, for example, by teaching them life lessons and work strategies.

This is why minimum wages, regulations requiring the provision of certain benefits, and other government interventions are so detrimental.  They increase the direct cost of people to the point that the business begins to not be able to provide the financial benefit to the owners and managers.  That is, they place the ancillary benefits of employing people in opposition to the primary benefit of operating a business in the first place.

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Asking the Wrong Question When the Toy Company Thinks About Leaving

I join others in wondering why it is, exactly, that nobody in Rhode Island government happened to mention that Hasbro was considering a move out of the state until the day after the election.  But the election is over, so we return to our regularly scheduled observations about politicians’ flawed mindset.  Oddly the most telling sentence on this subject has been removed from Tom Mooney’s Providence Journal article since last night:

Grebien said city officials have been talking to Hasbro for several months but that Grebien remains unclear specifically what Hasbro wants in order to stay in the city.

That is simply the wrong question and the wrong attitude, and it shows how politicians’ desire for every decision to run through their hands has put our communities at risk of extortion.  In a healthy political system, Pawtucket Mayor Donald Grebien would be asking what the city and state governments are doing that makes companies want to leave, because we’re doing something wrong if its directors feel as if they can’t remain in the state of their business’s birth.

If the state isn’t doing anything wrong and some factor beyond our control creates the necessity for the move, then we should admit that Rhode Island may no longer be the best fit for the company, or the company for Rhode Island, and society would be better off with more-efficient use of its resources.

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