Economy RSS feed for this section
justin-katz-avatar-smiling

An Obvious Step for Hair Braiding

The Institute for Justice reports that Indiana has taken an obvious (if small) step in loosening regulation:

Indiana Gov. Eric Holcomb has signed a bill that exempts natural or African-style hair braiding from the state’s cosmetology laws. Authored by Rep. Timothy Wesco and Sen. Liz Brown, HB 1243 passed by wide margins in the Indiana General Assembly.

“Indiana has long prided itself as ‘a state that works,’” said Institute for Justice Senior Legislative Counsel Lee McGrath. “This reform proves that those words are more than a motto by repealing a completely arbitrary labor-market regulation that stops braiders from earning an honest living.”

In Rhode Island, the similar bill is H5436, sponsored by Providence Democrat Anastasia Williams.

Even beyond this particular bill, Rhode Island should adopt this mentality of reform and get out of the business of extorting money from workers with binds that protect established players at the expense of their would-be competition.

justin-katz-avatar-smiling

Well, RI Does Love Passing Laws for Emotional and Political Reasons

In a Wall Street Journal op-ed with the get-right-to-the-point title, “Tuition-Free College Is Nothing More Than a Political Ploy,” Allysia Finley suggests real motivation is Democrat Governor Andrew Cuomo’s presidential aspirations.  She also suggests another topic that merits some careful research before Rhode Island jumps on the bandwagon:

Promising free tuition could steer more students to public schools from private ones. The Commission on Independent Colleges and Universities in New York estimates Gov. Cuomo’s plan would boost enrollment at public colleges by 116,000 while reducing the head count at nonprofit schools by 11%. The declines would be particularly acute at small, less selective colleges. For-profit schools would be pinched, too.

According to the commission’s analysis, the plan would shift $1.4 billion away from nonprofit colleges, resulting in 45,000 job losses. Compensating jobs would be created at public schools, but dislocations would invariably occur. “Once this is out there and implemented, possibly some of the more precarious institutions will go under,” Gary Olson, president of Daemen College, told Inside Higher Ed. “And what that will do is cause millions of dollars of lost economic impact on the local community where the college is located.”

Yes, the Commission on Independent Colleges and Universities sounds like an interested party, but our society is supposed to work by pitting such interests against each other for the public’s edification.  Perhaps one of Rhode Island’s problems is that it isn’t big enough for collective voices to emerge, even as politicians have enough power to make individual institutions wary of crossing them.

In that, Rhode Island an excellent case study in the danger of big government.  When your economy depends on the ability to procure special deals from the government, the incentive is to not advocate for your interests publicly, which leaves the public uninformed for votes.

Anyway, if Rhode Island’s non-government institutions of higher learning are too besotted or timid to argue their own interests, mark this down as another reason the General Assembly should pass the “free tuition” idea along for a study commission that might draw some real evidence out of the still waters of public discourse.

mike-stenhouse-avatar

You Can Save Rhode Island From Progressive ANTI-JOBS Agenda!

As taxpayers continue to be asked to fund generous corporate subsidy programs, lawmakers are now dueling over two new spending ideas, reimbursing localities to phase-out the car tax and public funding for free college tuition, each of which would likely further raise taxes and fees on Rhode Islanders. But would these programs make Rhode Island a better state? Not only does cutting the sales tax to 3.0% make sense for improving our state’s troubled economy, it is also the cure to the dangerous progressive agenda.

The four major PROGRESSIVE legislative initiatives that Rhode Island families and business owners should be worried about are:

justin-katz-avatar-smiling

Dealing with Disruptive (aka Opportunity-Creating) Technology

This passage from Matthew Rees’s Wall Street Journal review of Move Fast and Break Things by Jonathan Taplin is worth highlighting:

It may be hard to get stirred up about the interests of celebrity millionaires like Ms. Swift and Sir Paul, but the broader concern is legitimate: how to reward those who create content—music, film, even mere words—in an era when technology can distribute it at virtually no cost. In “Move Fast and Break Things,” Jonathan Taplin argues that today’s technology behemoths are decimating content industries and eroding the broader culture. …

[Taplin] devotes more space to a more mundane concern: money. Consider music revenues. Last year, in the U.S., they were $7.7 billion, down from $19.8 billion in 2000. In 2015, music creators earned more from the sale of vinyl records than they did from music streams on YouTube and other platforms. “How can it be,” Mr. Taplin asks, “that the arrival of digital networks composed of billions of music fans has not been a boon to musicians?”

In essence, this is the complaint of gatekeepers.  Note the assumptions embedded in the phrasing of the question: “how to reward those who create content?”  Are they rewarded, or do they earn their money?  And either way, who gets to decide what is worth rewarding?  Taplin complains that “the economics of ‘more’ [may be] drowning us in a sea of mediocrity.”  Well, it’s up to the non-mediocre to prove it, and it’s also up to those who want to support their preferred content to find ways to do so.

This is all on the content creators and those who make a career of helping them to find an angle, as well as their fans.  They have to prove that they’re worth the consolidation of society’s entertainment resources.

One can see in Taplin’s perspective the same mentality that leads to high taxes and big government: this insinuation that particular interests should find ways to use government to spread the costs of doing things they want done, but for which they don’t want the responsibility of paying.

justin-katz-avatar-smiling

The Measure of Debt in Rhode Island

The debt study put out today by the state treasurer’s office merits a more detailed look than I’ve been able to do today.  For the quick summary, see Ted Nesi’s article on WPRI:

The $10.5 billion in total public debt – excluding pensions – breaks down as $1.9 billion for Rhode Island state government, $6.6 billion for quasi-public state agencies such as Rhode Island Housing and Commerce RI, and nearly $2.05 billion for municipalities and local special districts. With pensions, the combined total rises to $17 billion, Magaziner’s office said. …

… The study suggests a community’s debt and pension liabilities should be less than 6.3% of its total assessed property value; in Providence that ratio is 17.8%, and in Woonsocket it’s 20.3%. Central Falls, Pawtucket, Johnston, West Warwick and Cranston are also above the target.

One question Rhode Islanders should consider is whether assessed property value really ought to be the measure.  Assets are certainly important to the question of debt, but mainly from the perspective of the lender, not the borrower.  For your mortgage, banks want to know your property value and other assets because they’re looking at the likelihood that you’ll be able to liquidate and pay them back if things go wrong.  That’s not really possible for a state (even “a state for sale,” as Rhode Island has been called).

From the perspective of the borrower, income is more important, because it relates to the ability to pay off the loan.  In that regard, we can look at the matter in two ways.  Rhode Islanders’ personal income (including investments) is about $44.5 billion, which means that even using the treasurer’s unrealistically sunny estimate of pension debt, government debt is about 40% the size of our income.  And of course, personal debt would come into play when thinking about personal income.

The second way to look at the public debt would be public revenue, and Rhode Island’s state and local tax revenue totals around $6 billion.  So our government owes about three years’ worth of revenue.

Each man woman and child in the state owes $17,000, around $68,000 for a family of four.  Whatever arbitrary benchmarks politicians may pick, that’s too high.

justin-katz-avatar-smiling

The Peter Pan Generation in Rhode Island and Nationally

The U.S. Census has put out a report contrasting the living conditions of young adults (18-34) over time.  Some of the long-term data is stunning, such as the collapse of young adults who are married.  Nationwide, in 1976, around 93% of women in their late 20s and 57% of women in their early 20s had been married; for men, the percentages were 75% and 38%.  By 2014, these percentages had fallen to 46% and 17% for women and 32% and 10% for men.

One suspects a great deal of social and psychological pain can be explained by the fact that women with children have not decreased by as much.  Whereas in 1976 the percentage of women who were married was substantially higher than the percentage who had children, those with children now outnumber those who are married.

It’s related data, available at the state level, that initially caught my eye, with reference to Millennials.  From 2005 to 2015, the percentage of young adults living with their parents jumped up from 26.0%, nationwide, to 34.1%.  Rhode Island had a bigger jump than the national average: from 28.6% to 37.1%.  Rhode Island’s jump was the 15th biggest in the country (3rd biggest in New England).

RIUS-18-34yrold-livewparents-2005-2015

 

As Aleister suggests at Legal Insurrection, perhaps young adults should stop pursuing useless degrees and start seeking rewarding careers in the trades.  Along the way, they should also stop voting for politicians who promise them handouts but undermine the economy.

justin-katz-avatar-smiling

Crime and the Rhode Island Puzzle

Poking around the Family Prosperity Initiative data tool, I was struck again by how well Rhode Island does when it comes to violent crime.  According to the last-published Rhode Island report, Rhode Island is fifth-best in the country by this measure.  One could consider it to be counterintuitive or obviously correlative, but Rhode Island also has one of the lowest incarceration rates in the United States, as depicted in this slide from a presentation by David Safavian, an expert with the American Conservative Union Foundation, when he spoke at Bryant University at a Family Prosperity event:

safavian-incarcerationrates

While reviewing this information, I happened to be distracted by an “Economics 101” video by the Center for Freedom and Prosperity (not the RI organization of a similar name) emphasizing the combination of stability and freedom that characterizes prosperous countries.  The video is mainly concerned with financial stability, but overall stability is critical, too.

A safe state that doesn’t lock up large numbers of its residents should have an advantage economically.  Indeed, add that advantage to all the rest — location, history, etcetera, etcetera — that ought to make Rhode Island the jewel of New England, rather than the armpit.

Unfortunately, we get other things terribly wrong, so our advantages go to waste, largely in the service of our insider system of centralized micromanagement and profiteering.

justin-katz-avatar-smiling

Live by Cronyism, Die by Cronyism

GoLocal is reporting that Blue Cross Blue Shield of Rhode Island plans to move a good chunk of its Providence workforce to East Providence:

Despite making promises to the City of Providence in 2007 to centralize its work force in its gleaming $125 million tower, Blue Cross Blue Shield of RI confirmed late Tuesday that it will be moving more than 125 jobs out of Providence to East Providence.

The Blue Cross Tower is assessed at $46 million, but only pays a portion of its tax obligation because of a generous twenty-year tax stabilization.

Average residents tend to get caught up in rhetoric and lose sight of basic realities like incentives.  Although individual workers and executives do take morality and personal fulfillment into consideration, private businesses ultimately exist to make money (whether for profit or non-profit).  If they don’t do that, they don’t get to do what it is they do.  Likewise, politicians’ have to gather votes and political support, otherwise they lose both their livelihoods and ability to accomplish what they want.

So, when a particular arrangement is no longer optimal for a business, given other opportunities, it will walk away from deals.  And when a politician comes into office who didn’t make a particular deal and is building a different base of support, the dynamic changes from that direction.

Public policy should therefore build beneficial incentives and then let people work out their deals in a free market.  From cutting deals for office buildings to reshaping an entire population for the benefit of a sugar-daddy industries (through, for example, “free tuition”), it is utter folly to accept central planners’ promises that the people can make out in the long run.

justin-katz-avatar-smiling

The Right Track for Those Who Stay

Ted Nesi highlights something in the recent Hassenfeld Institute poll that may be worth a deeper investigation:

The poll also showed that for the first time in years, more Rhode Islanders think the state is moving in the right direction than in the wrong direction, with 42% of voters saying it’s headed in the right direction, 36% saying it’s headed in the wrong direction, and 16% unsure.

Nesi combines the Hassenfeld results from the last couple of years with prior polls asking the same question on WPRI’s behalf to show that Rhode Islanders’ outlook has improved since 2010, when it was about 70% wrong track, 12% right track, to statistically even, now, at around 40%.

I wonder what effect population change has had on these numbers.  Every year for the past 12, something like 20,000 to 30,000 Rhode Islanders have left for other states.  Smaller numbers of people have moved here from other states.  Over a decade, though, that’s an exchange or loss of about one-quarter of the whole population.  If we assume people coming will have a more positive view than those leaving, that could have a big effect on a question like right-track/wrong-track.

It’d be interesting if pollsters would start asking how long survey respondents have lived in Rhode Island.  The cross-tabs might be telling.  New arrivals might skew the results positive, or those who’ve been here a while might be comparing our current stagnation with the huge deterioration of the last decade.

mike-stenhouse-avatar

Save RI: The Progressive “Fair Shot” Agenda Is Really A “No Shot” Agenda

Happy Easter! As President Franklin Delano Roosevelt, the creator of the American social safety net state said in 1935, “Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.” Rhode Island Lawmakers need to realize that our policy culture of considering only the material needs of individuals has, all along, been harmful to the family unit.

Yet, the progressive left is openly promoting job-killing, anti-business, and anti-family policies.

justin-katz-avatar-smiling

The Partnership Model of Oligarchy

One wonders: If it weren’t for the heavy government-centric packaging and cover of the left-wing Brookings Institution, wouldn’t so-called progressives be highly skeptical of efforts like the Partnership for Rhode Island?

This is about CEOs addressing large societal issues and figuring out how money and expertise might advance certain efforts, said [Neil] Steinberg, president and CEO of the Rhode Island Foundation, one of the nation’s oldest and largest community foundations.

For a refresher, refer back to my piece on the “Wexford-Brookings Franchise.”  This is about business magnates working with government insiders and non-profit profiteers to shape our society more to their liking.  (We can trust that they like being wealthy and elite, by the way.)

We’re watching every socio-political lesson from history and fiction take shape before our eyes, and so many people are caught up in low-level political squalls and identity politics that we’re strolling right along with it.

The RI Center for Freedom & Prosperity has been placing more emphasis on the need for “civic society” institutions — that is, moving authority and decision making away from government and toward other institutions by which we interact, like business, churches, non-profits, and so on — but we mean something substantially different.  In our vision, people work together to solve their problems, forming organizations as necessary.

In the Wexford-Brookings-RI Foundation model, the people who already hold all the cards in our society essentially interweave government throughout our institutions to use them as leverage in their centralized goals.  That’s not freedom; it’s subjugation, however friendly a face they manage to put on it at first.

justin-katz-avatar-smiling

Talking Yourself into Too Much Debt for Baseball

Obviously, there are some differences between a city-funded facility for a double-A minor league baseball team and a state-funded stadium for a triple-A team, but Joseph De Avila’s Wall Street Journal article on the Hartford Yard Goats caught my attention yesterday because it illustrates some of the perils:

Hartford, a city of about 124,000 residents that is facing a fiscal crisis and a high poverty rate, is on the hook for $68.6 million in bonds issued to cover most of the construction of Dunkin’ Donuts Park.

Mayor Luke Bronin, a Democrat who opposed the stadium but is now reluctantly dealing with it, said the ballpark alone will never generate enough money to pay back the debt. The original idea was that surrounding development will generate funds to pay off the loans and bring in additional tax revenue for the city.

Given the incentives and structure of government, advocates for some big expenditure have a narrow objective to get a project approved.  They just need some authority — whether an elected official or an electorate passing a ballot initiative — to give the go ahead.  Then, decision-making enters a weird realm beyond the reach of the people actually paying the bill, but with a those in charge obligated to continue on the public behalf.

So, we start out with promises and grand visions and wind up scrambling just to make something work without loosing too much money.

Mr. Bronin plans to borrow $20 million in bonds in the coming weeks to cover a shortfall in the city’s budget, and next year the city is already projecting a $65 million deficit.

Despite the challenges, Mr. Bronin said: “There is no question it’s better for the city to have a baseball park than a vacant parking lot.”

Why is there “no question”?  Hartford is now borrowing money for operating expenses.  That’s insane.  Unfortunately, many people have a vision of government in which it is a means of doing things that really make no sense at all.

justin-katz-avatar-smiling

Academic Central Planners Drift from Reality

Noting that the Federal Reserve Bank is increasingly guided by academic economists, rather than businesspeople and bankers with practical experience, TD Ameritrade founder Joe Ricketts worries about the consequences in the Wall Street Journal:

Central banking, in other words, is now dominated by academics. And while I don’t blame them for it, academics by their nature come to decision-making with a distinctly—you guessed it—academic perspective. The shift described by Mr. Grant has had consequences. For one thing, simplicity based on age-old practice has been replaced by complexity based on econometric theory. Big Data has played an increasingly prominent role in how the Fed operates, even as the Fed’s role in the economy has deepened and widened.

Rather than enlisting business leaders and bankers to fulfill the Fed’s increasingly complex mission, the nation’s political and monetary authorities turned primarily to the world’s most brilliant economists, who can be thought of more and more as monetary scientists. “Central bankers have invited politicians to abdicate leadership authority to an inbred society of PhD academics who are infected to their core with groupthink, or as I prefer to think of it: ‘groupstink,’ ” argues former Dallas Fed analyst Danielle DiMartino Booth in a new book.

Two of the important things that practical experience will tend to teach people are to be humble about one’s ability to plan in a complicated world and to be aware of the real, human consequences of decisions.  In contrast, the intellectual challenge of an academic and modeling approach is to push beyond the boundaries of practical experience.  There’s certainly a place for that — an important one — but it’s in the private sector, where people invest their own money.  A “central” anything ought to be overly staid and cautious.

monique-chartier-avatar

Leader Patricia Morgan Files Bill to Repeal (Clearly Unnecessary) Tolls

On behalf of all Rhode Islanders, thanks to Minority Leader Patricia Morgan for filing a bill to repeal RhodeWorks’ truck (wink) tolls. (See her statement after the jump.)

Governor Gina Raimondo asserted the need for tolls as a financial necessity to repair state bridges which were/are some of the worst in the country but, by golly, we just don’t have the will to find the money in the state budget (even though it’s a MAJOR public safety issue, danger, danger, Will Robinson).

However, the governor has decisively rebutted her own assertions about the fiscal necessity of tolls, as StopTollsRI.com (disclosure: I act as their spokesperson) pointed out in a letter to the Providence Journal on Sunday, by proposing a brand new, $30M/year spending program.

“Free” college tuition is at best nice to have (and it certainly would not solve the state’s employee skills gap, as the governor claims). If there is money in the budget for an expensive nice-to-have item, then it is clear that there is money for a less expensive vital service such as bridge repairs.

Legislators can now vote to repeal tolls, secure in the knowledge that public safety did not necessitate the passage of this highly destructive new revenue stream and confident that the money can be found in the budget to repair the state’s unsafe bridges. The governor has helpfully done this hard work for them.

mike-stenhouse-avatar

“Save RI”: The Antidote To The Progressive Agenda

Rhode Island families understand that our quality of life can only be improved if more and better businesses create more and better jobs! Yet, the progressive-left has a very different vision. They are openly promoting job-killing, anti-business, and anti-family policies. Their so-called “fair shot agenda” would transform our Ocean State into a liberal utopia … where businesses face even higher legal and financial risks, and where worker safety, absenteeism, and workplace productivity are compromised.

The Ocean State faces a stark choice.

justin-katz-avatar-smiling

“Free Tuition” Makes Suckers of Us All

I’ve got the “con” side of a Providence Journal commentary-page presentation of Democrat Governor Gina Raimondo’s college tuition proposal, today:

The typical transition of students to adulthood goes something like this: Children begin attending public school in kindergarten (or earlier) and graduate with diplomas at the end of the 12th grade. Depending on their interests, aptitude and resources, they will either begin working, pursue vocational training or enter college. These decisions are all highly personal and represent only the beginning of a long life in the productive labor force.

In general, where is Rhode Island going wrong for its young folks in this story?

Hint: It isn’t the lack of opportunities for insiders to buy votes or take more money from taxpayers.

On the “pro” side is Deval Patrick who (as one might expect of a politician) tries to take credit for his state’s long slog toward health, proclaiming that “in many ways, from the perspective of a shifting economy, Rhode Island today looks like Massachusetts did 10 years ago.”  Umm.  Massachusetts’s Prop 2 1/2 tax reform went into effect in the early ’80s.  The Bay State’s education reforms were implemented in the early ’90s.  On that count, as I’ve written before, Patrick’s capitulation to the teachers’ unions placed a political ceiling on Massachusetts’s progress, and its standardized scores haven’t improved.

Raimondo’s got the front-page plastered with her face under the headline, “The Raimondo Brand: Nation’s top Democrats tout R.I. governor as icon of party’s ideals.”  If that’s true, the national party is gambling a great deal on the governor’s phony self promotion.  I end my op-ed quoting from Crimetown and suggesting that “free tuition” both compromises its beneficiaries morally and makes us all suckers.  One suspects a national audience won’t be as inclined to ignore the utter failures of Rhode Island government, nor be impressed with the numbers games of its “reforms,” nor desire to emulate the policies of a governor under whom employment growth has almost entirely stopped.

justin-katz-avatar-smiling

Mike Stenhouse on with DePetro on Marijuana’s Effects on Business

Related to a brief that the RI Center for Freedom & Prosperity released this week concerning the complications that legalizing marijuana would create for Rhode Island businesses, RI Center for Freedom & Prosperity CEO Mike Stenhouse appeared on John DePetro’s WADK 1540 AM radio show. Also: a new baseball stadium and sales tax.

Click full post for audio.

justin-katz-avatar-smiling

The Cultural Key to Success

Having managed to catch up on my newspaper reading, I recommend Tunku Varadarajan’s recent Wall Street Journal interview with Thomas Sowell, if you’re able to get past the firewall.  This part particularly caught my attention, talking about how America has changed since Sowell was young:

An idea has taken root “that you’re entitled to certain things, that you don’t necessarily have to earn them,” he says. “There’s a belief that something’s wrong if you don’t have what other people have—that it’s because you’re ‘disadvantaged.’ A teenage dropout mother is told she has a disadvantage. But if you’re going to call the negative consequences of chosen behavior ‘disadvantage,’ the word is corrupt beyond repair and useful only for propaganda purposes.”

Has there been any change for the better? “Oh, yes, yes, yes,” he says. “In fact, for blacks who have education and who have not succumbed to a new lifestyle—the grievances, and the coarseness represented by rap music—it’s gotten tremendously better. What’s disheartening, though, is that when you study ethnic groups around the world, the ones that are lagging behind are those where their leaders always tell the same story: that it’s other people holding you back, and that therefore you need to stand against those other people and resist their culture. But that culture may be the key to success.”

This is the same vein of thinking as I raised during my podcast about the success of Utah.  We have to teach people to emulate success.  That doesn’t mean we have to give ourselves wholly over to every particular belief and behavior of a successful person, but that we have to give serious thought to the question of what it is that makes them successful.  Having done so, we can of course decide that we define success differently — to say that we want to be as successful as possible while remaining true to moral values.

Whatever our decisions, though, it is a disabling distraction in modern America to see other people’s success as implicitly at our expense.

justin-katz-avatar-smiling

When a College Degree Does You No Good

Bloomberg article by Steve Matthews, printed in the Providence Journal, is worth a close read.  It’s about the plight of young college graduates who wind up with jobs that didn’t actually require a degree:

About 44 percent of recent college grads were employed in jobs not requiring degrees in the final quarter of 2016, not far from the 2013 peak of 46 percent, and the share of that group in low-wage positions has held steady, data from the Federal Reserve Bank of New York showed Wednesday.

That’s a sign that the nation’s labor market isn’t at full health, despite an unemployment rate forecast to remain at 4.7 percent in March, close to the lowest in almost a decade. In fact, the elevated level of college grads in non-college jobs could mean there’s still slack and that the Fed can go slow in raising interest rates, betting that more high-wage jobs will materialize. It could also mark a more permanent shift in employment that the Fed can’t fix and be a tough challenge for President Donald Trump and Congress.

As the formula goes with such articles, Matthews opens with an anecdote to humanize the story: a hotel desk worker with a degree in something related to forest resources.  Perhaps, one might suspect, not all degrees are created equal when it comes to their job-finding capacity.

Even if we put aside entirely useless, luxury majors, our approach of broadly encouraging college degrees, period, could be predicted first to max out occupations with limited openings.  Forestry may be a highly valuable, highly technical degree (I don’t know), but the relevant jobs may be limited.

Another point worth drawing from Matthews’s article is that degrees shouldn’t come first, as an economic development plan, but last.  Filling an economy that has insufficient job opportunities with new graduates will not create new jobs.  It will just mean that somebody, somewhere is paying for an underutilized education and that the young adult has wasted time only to be sent back to the entry level of the career ladder.

Quantcast