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Does Regunberg Want Rhode Island to Confiscate the PawSox?

If anybody should not be skipping debates, it’s Democrat Lieutenant Governor Daniel McKee.  Apart from his status as incumbent, he’s an experienced manager running against a far-left young guy who has just about no real-world experience.  He ought to seek out opportunities to illustrate the contrast.

The example that brought this advice to mind was the RIPR interview/debate that I mentioned the other day.  At one point, Regunberg responds to a question about the emigration of the PawSox to Worcester with this:

First of all, I just want to say that this is a really sad moment for our state.  It’s a sad moment for Pawtucket.  It’s a sad moment for families across Rhode Island to lose this icon from our state.  I think there’s blame to go around at the state level.  As you know, I supported the Senate proposal, which I think would have had a shot of keeping the team here, and the speaker did not.  What I get the most frustrated with, however, is this idea of a small group of millionaires and billionaires who are making that choice to take this treasure out of our state for their own profit maximization.  I don’t think that’s right.

Interviewers Ian Donnis and Scott MacKay didn’t follow up on this stunning statement, but McKee should have been there to do so.  Sure, progressives can declare that the decisions of people who act in their own interests with their own property are “not right,” but when those progressives are trying to win government offices, the matter cannot stop there.

What exactly would Regunberg propose to do about?  Effectively socialize the baseball team, with government taking it over?  Increase the corporate welfare that the state might have offered the team to stay… helping those “millionaires and billionaires” even more?

I contacted the candidate for a response to these questions, but he has not replied.  It’d be nice if journalists would pose such questions directly to young progressives while the microphone is already on, but in the absence of that, the duty falls to the opposing candidate.

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Giving a Little Balanced Economic Thinking to Climate Change and the Poor

One needn’t agree with everything a climate change skeptic says to observe something conspicuous from the alarmist side.  They rarely treat the question of climate change as an issue with unfortunate trade-offs, as Byorn Lomborg does in an essay for the New York Post:

Activist organizations like Worldwatch argue that higher temperatures will make more people hungry, so drastic carbon cuts are needed. But a comprehensive new study published in Nature Climate Change led by researchers from the International Institute for Applied Systems Analysis has found that strong global climate action would cause far more hunger and food insecurity than climate change itself.

The scientists used eight global-agricultural models to analyze various scenarios between now and 2050. These models suggest, on average, that climate change could put an extra 24 million people at risk of hunger. But a global carbon tax would increase food prices and push 78 million more people into risk of hunger. The areas expected to be most vulnerable are sub-Saharan Africa and India.

Indeed, the attitude of alarmists is pretty good evidence that their solutions come before their reason for them, because the depth of analysis is lacking.  A promotional interview of progressive candidate for lieutenant governor Aaron Regunberg that Rhode Island Public Radio (RIPR) misleadingly presents as a “debate” contains a good example.

Regunberg pitches the move to reduce the flow of traditional energy into the state as a good economic trade-off.  Imported fuel sends our energy dollars out of state, he says, while home-grown green energy production keeps energy dollars here.  Even without going into the ways in which modern companies are constructed (with supply lines crossing many borders), we can observe Regunberg’s lack of economic depth.

If imported traditional energy is (let’s just say) half the cost of local green energy, it is a cold comfort to local residents that they’re spending twice as much on energy, but with the extra going people who happen to share their state.  On the commercial side, local businesses could reinvest that money in themselves.  In both cases, all of the extra money going into the local green machine is coming out of the local economy anyway.

As with Regunberg’s claims about single-payer health care, progressives insist that their policies are 100% upside and the only reason to disagree is some sort of hatred or greed. On its face, that’s foolish.

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Matt Brown Gets the Problems Right but the Solutions Dead Wrong

See, here’s the thing.  I don’t think anybody outside of Matt Brown’s progressive base believes that his socialist policy suggestions will fix the problems he describes:

“How did we end up in the situation where the roads are broken, the hospitals are closing, the schools aren’t providing a good education for our kids, we’re 50th out of the 50 states for education of Latino children, the school buildings are falling down,” he said. “That’s a pretty extreme situation to be in. And that’s going to take some bold ideas and some real changes.”

How did we end up in this situation?  Because big-government progressivism has redirected the money that we were taxed and feed from infrastructure maintenance to insider deals, interest-group buy-offs, and bureaucratic proliferation.  Because the progressive urge to take control of everything has squeezed opportunity out of our state, leading to the exit of productive Rhode Islanders and a lack of paying demand for services such as hospitals (while lowering the availability and quality of those services and driving up the costs).  And because co-opting public schools as a means of indoctrination and a funding mechanism for left-wing teachers unions has undermined the incentives for a healthy system.

If you agree with Matt Brown about the problems, you have to disagree with him about the solutions.

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The Balance of Freedoms in Rhode Island

A thousand discussions could be sparked by the Cato Institute’s Freedom in the 50 States ranking and Rhode’s Island’s 42nd place ranking.

The datapoints that go into the index cover a wide range of issues and are subjective.  For example, Rhode Island is number 1 in “marriage freedom,” largely on the strength of its same-sex partnership laws, but some might suggest that the use of government to redefine a cultural institution is hardly a marker of freedom.  Some might also note that same-sex marriage accounts for 2% of a state’s overall score while religious freedom accounts for only 0.01%.

On the other end of the spectrum, the only area in which Rhode Island is dead last is asset forfeiture. However, another low rank for the state could arguably be considered its defining problem: labor market freedom.  Here, our 49th place ranking results from laws on:

  • General right-to-work law
  • Short-term disability insurance
  • Noncompete agreements permitted
  • Minimum wage
  • Workers’ compensation funding regulations
  • Workers’ compensation coverage regulations
  • Employer verification of legal status
  • Employee anti-discrimination law
  • Paid family leave

The total effect of these policies has been that Rhode Island hasn’t budged from 49th since the first year measured: 2000.

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Rhode Island has a great deal going for it, but if people can’t find work here, they won’t live here.  The Ocean State is roughly in the middle fifth for fiscal and personal freedom — although dropping from 18th to 27th in fiscal freedom from 2000 to 2016 and from 12th to 31st in personal freedom.  If we take Cato’s weightings as our guide, that decline has been making life less free.  But those changes pale in comparison to our languishing at the edge of the bottom fifth in regulatory freedom throughout, and that’s an area in which we need great resolve and quick action to improve.

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Raimondo’s Debt and the Strong Economy

In early July, we reported that the first RhodeWorks tolls were performing as projected, which the state Department of Transportation (RIDOT) promoted as a positive sign.  However, this may be another area in which Democrat Governor Gina Raimondo is indebted to Republican President Donald Trump:

The transportation sector is a reflection of the goods-based economy in the US. Demand has been blistering across all modes of transportation. Freight shipment volume (not pricing… we’ll get to pricing in a moment) by truck, rail, air, and barge, according to the Cass Freight Index jumped 10.6% in July compared to a year earlier. This pushed the index, which is not seasonally adjusted, to its highest level for July since 2007.

The dynamics in the transportation sector are “clearly signaling that the US economy, at least for now, is ignoring all of the angst coming out of Washington D.C. about the trade wars,” the report by Cass said.

Things are just easier when the economy is strong… even bad government.

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Another Angle (or Silver Lining) in the Loss of the PawSox

There’s another aspect of the Worcester’s PawSox gain that Rhode Islanders haven’t spent much time discussing, and it is visible in the reporting of Ethan Epstein in The Weekly Standard (emphasis added):

But the PawSox owners announced that the next two years they play at McCoy will be their last. Roughly three years ago, they announced their plans to vacate McCoy. Pawtucket, Providence, and Worcester jockeyed for position. The owners played the competitors against each other masterfully, and in the end, Worcester evidently made the team an offer it couldn’t refuse: It will build a new $90 million stadium and apartment complex. The state of Massachusetts is fronting $35 million; and “the city of Worcester is expected to borrow $100 million, some of which would be repaid by the team,” the Providence CBS affiliate reported. The deal required no input from the state legislature, and was put together in secret. The only apparent cost to the PawSox is that they will now known by the unfortunate moniker “WooSox.”

Somehow, the City of Worcester was able to pledge $100 million with no public awareness whatsoever.  John DePetro and I disagreed, on WNRI earlier today, about the significance of this angle, but I don’t think it should be dismissed.  I certainly want a governing system that allowed municipal leaders to do such a thing.

Yes, Massachusetts has been doing much better than Rhode Island in recent decades, with some solid reforms, and has therefore built up more trust equity with the voting public.  By contrast, Rhode Island is still suffering a loss of confidence from 38 Studios which (importantly) has been further strained by Democrat Governor Gina Raimondo’s preferred economic development method of making special deals with powerful insiders and wealthy out-of-state interests.

That doesn’t mean Massachusetts’s luck will continue, or that Rhode Island won’t reevaluate its government.  On the first count, I’ve long been noting that Massachusetts’s lead in education has been flagging ever since concessions to the labor unions under Deval Patrick, and we’ll have to wait a while to see whether the WooSox gamble pays off.  On the second count, we can only hope that the nationally visible face plant with the erstwhile PawSox will cause insiders and the voting public alike to conclude that we just can’t continue on in the way that we’ve been governing ourselves.

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Panhandling Through an App

My first impulse is to recoil from the image of homeless people carrying bar codes so people can easily scan them to purchase their daily hit of good feeling:

A new social innovation project, called Greater Change, hands homeless people a QR code, similar to the kind issued for online tickets.

Passersby who wish to give money – but who may not have any change in their pocket – can scan the code using their smart phone, and make an online payment to the person.

The donation goes into an account which is managed by a case worker who ensures that the money is spent on agreed targets, such as saving for a rental deposit or a new passport.

The program also raises the specter of human-tracking, if the app grabs information about the location of each donation.

But these negative reactions probably miss the unique circumstances of the homeless, who are typically in their predicament because they have some problem that has moved beyond their control, be it addiction or mental illness.  Having donations go to some account that is allocated for purposes that will help them reduces the concern that they’ll use the money to feed their problems.  This is essentially a more flexible version of my practice of carrying around supermarket gift cards.

Of course, money is fungible, so whether it’s a gift card or a credit to a welfare account, nothing prevents the recipient from using that money to free up cash for the purchase of drugs, or whatever.  Still, incremental improvements remain improvements.

These cards would also help donors determine which panhandlers are truly needy.  Not long ago, I spotted a young guy who didn’t look especially destitute energetically soliciting funds on the street, and for some reason, I got the strong impression that he was just trying to raise enough money to buy something at the liquor store on the corner.  Such people wouldn’t have the donation cards.

To improve the program further, we should consider the extent to which government really needs to be involved.  I think, for example, of affiliate programs from banks and other organizations that have negotiated discounts for members.  Banks, for example, could have special accounts that come with these cards and restrict the use of the money.  Opening the process up in that way would help alleviate the human-tracking concern, too.

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A World in Which Only the Inexperienced Can Manage Big Programs

As we enter the thick of election season, Brian Riedl’s reminder on Vox should be firm in our minds:

… the democratic socialist agenda will face resistance not only from other lawmakers but from basic math. Their promises, which include free college, a single-payer health care system, guaranteed jobs, and more, would require astonishingly high expenditures that would cause the federal deficit to skyrocket. Once the costs become clear, most mainstream politicians and voters will surely balk. Making big promises is one thing; paying for them is another.

Riedl tallies $42.5 trillion (with a “t”) in new taxpayer spending over the first decade of the progressive program.  And, as Stephen Green further notes, “that’s before the ripple effects create the need for even more spending, which creates even more ripple effects, etc., until a once-wealthy country is ruined.”

Fortunately, if a conservative cabal were choosing the representatives of democratic socialism with an eye toward making it easy for the public to see the problem, they couldn’t have done better.  Bernie Sanders, for example, is an old rich guy whose wife’s questionable leadership of a Vermont college may have contributed to its closure.  Recent socialist upstart Alexandria Ocasio-Cortez has been a veritable gift to conservative meme-makers and humorists.  In Rhode Island, the standard bearer for the far left is Aaron Regunberg, an Ivy League transplant from another state who, as far as anybody knows, has never held a real job in his life.

Unfortunately, it’s a powerful ploy to promise people that the government can give them everything they need and want… and don’t worry, the people in control will always be on your cultural and ideological side.  Promise!  As for those who propose that we govern our society under the restrictions of reality, well, they’re demons, all of them.

Those of us demons in that reality-based camp have our work cut out for us.  The country’s education system has softened up a couple generations for the sort of mushy thinking that leads one to believe that politicians with dubious experience actually running things will be able to manage a number as big as $42,500,000,000,000, which is, like, a really big number.

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Dickinson Gets Attention, but Offers Little

By way of a follow-up to yesterday’s post about Spencer Dickinson’s play for some press coverage, I note that the Providence Journal did send a reporter outside its door to cover his press conference.  However, I can’t say the reported substance of his presentation is very encouraging:

“The topic is this: National rankings by respected financial publications. They’re bad. And year after year, they don’t get better. They probably discourage some good businesses from coming here. What would you do about it?

“We need a program to deal with it,” Dickinson said.

If Rhode Island wants better grades in the rankings, he said, someone needs to go consult the professors and figure out how to improve performance.

The thing is, Rhode Island politicians have already tried analyzing the the rankings, when the state Senate investigated “moving the needle,” and it didn’t fix anything.  Elected officials attempted to game the rankings, rather than unleash the economy, and they tweaked some tax rates while increasing overall taxation.

We don’t “need a program.”  We need a statement of principle and the willingness to pursue it, and that statement of principle needs to be that government should get out of the way.  Dickinson’s campaign Web site doesn’t provide any additional details about how he proposes to move the economic needle, but based on the issues that he does emphasize, his approach would be entirely wrong, amounting to more government in the way.

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Acknowledging the Beacon Our Ship of State Should Follow

My op-ed in the Providence Journal is ruffling some feathers around the state:

No one who seeks to captain our state’s ship seems capable or courageous enough to speak out about the destructive and unjust principles of the progressive agenda. Socialism inevitably leads to economic depression. And the confiscation of private property from some — in order for politicians to give it to their supporters — is inherently immoral. Openly violating one’s private space or property rights cannot possibly be the direction most Rhode Islanders want our government to steer towards.

Ironically, the way to avoid shipwreck is shining like a beacon in the night. Recent federal policies to reduce tax, trade and regulatory burdens, and to increase energy production, have led dramatically to prosperity. The second-quarter national gross domestic product increase of 4.1 percent is the latest in an impressive string of positive indicators, including historic lows in unemployment rates across many demographics, rising personal incomes, the return of manufacturing jobs once considered extinct, increasing labor participation rates and declining food stamps rolls.

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The Value of Restrictive Welfare

I agree with much of what Paul Winfree writes in the Washington Times related to Ontario’s abandoned experiment with a universal basic income, but he misses something essential:

There are some benefits to a basic income, especially when used to replace the current welfare system. For instance, a UBI leaves recipients free to decide how to spend their benefits. Many existing welfare programs use incentives, “nudges,” and other requirements to micromanage how the poor use their benefits. The assumption is that poor people lack certain virtues or fall victim to vices to which the rest of us are immune, and the expert managers of the welfare system know better.

I’m with the economist Lionel Robbins, who called this assumption, as applied to political calculations, “morally revolting.”

What Winfree misses is the value of restrictions on welfare to the recipients.   Sure, from an economic standpoint, leaving recipients free to use the cash however they want is more efficient for the economy, including the household economy of the recipient.  However, that efficiency reduces the disincentive to rely on the government, increasing the short-term value of welfare payments versus earned income.

If I tell you I’ll give you $100 for spending the day shoveling sewage in August, you might do it if you really need the money.  But if I also give you the option of doing nothing and collecting $50, you’ll evaluate the choice based on whether an extra $50 is worth the toil.

From the community’s point of view, the weighting is the opposite.  If we have $50 just lying around doing nothing for the economy, giving it to you may have some minor benefits by putting it in circulation.  But if you’re working, the community gets not only productive labor, but also the value of you becoming independent and better adapted to the economy.

Placing restrictions on the money we give you increases its value to the community while decreasing its value to you in a way that is relatively beneficial for the community.  This would be true even if the restrictions were entirely arbitrary, but if we manage to stumble into a worthy moral principle, it’s even more so.

Unfortunately, in our public debate, economists often lose sight of less-tangible values, while advocates ignore economics.

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The Best Worker Leverage Is a Strong Economy

And here comes the news that workers’ pay is on the rise; from the Wall Street Journal:

U.S. workers received their biggest pay increases in nearly a decade over the 12 months through June, a sign the strong labor market is boosting wages as employers compete for scarcer workers.

The Labor Department’s employment-cost index rose 2.8% in the year to June compared, the government said Tuesday. Wages and salaries, which account for about 70% of all employment costs, also rose 2.8% from a year earlier, the strongest gain for both measures since September 2008.

Since the end of the most recent recession, U.S. unemployment has fallen to 4% in June from nearly 10% nine years earlier. Wage growth, stubbornly sluggish for years following the 2007-2009 downturn, has picked up as the labor market has tightened and employers have raised pay to attract and retain workers.

The government can increase minimum wages and spend taxpayer dollars on training programs and the like, but such strategies don’t address underlying causes, so they have consequences.  Job training makes more workers qualified for better jobs, but even if the training is in perfect alignment with the needs of employers, it just gives employers more options, which will suppress wages.  Minimum wages stand between employers and employees who are willing to agree to a lower wage and suppresses jobs.

A strong economy, with a free market allowing plenty of room for exploration, gives employees leverage.  The employer’s incentive to hire comes from the ability to make a profit, so employees can negotiate for more of the rewards of responding to that incentive.

This lesson applies even in less-robust times, in that the economy is almost always strong in some sector.  If prices (including wages) are permitted to work, the strong sectors will draw workers to them, increasing workers’ leverage in every sector and increasing the wealth of the overall society.

Why do we find this so difficult to understand?

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The Economic Instability of Too Much Government

I almost added this quotation from a recent Hummel Report to my post Saturday about Hodges Badge’s pulling manufacturing from Rhode Island:

A plan to redevelop a section of the city from Providence Place mall to Olneyville along the Woonasquatucket River has run into a riptide of opposition from business owners who see it as a stealth attempt to seize their properties.“This is an industrial area,” said Lemus, who came to Rhode Island from El Salvador in 1980 at age 11. “They call it blight, but we call it an industrial area. They want to make it mixed-use, residential; they want to have people walking, bicycling the street. But it wasn’t designed for that, it was designed to conduct business.”

Lemus said he and his brother spent four years making improvements to their property after they bought it — with no taxpayer help. “There is no tax stabilization, no tax breaks, there’s no money pulled out from any place in the city. We don’t owe anybody anything.”

This is a toxic combination for businesses:  the sense that others are getting special deals and the knowledge that state and local governments can come in at any time, following a questionable process, and change the rules around everything in which you’ve invested your life.  In those circumstances, fewer people will take risks and work to build dreams in Rhode Island, either because they’ll go elsewhere or simply conclude that they’re better off going along to get along.

In settling on the ideal economy, there is a balance to be struck between individual freedom and government-supported predictability, but too much government brings its own instability as somebody other than the invested individuals makes decisions according to their own ideology or interests.

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Truck Tolls: *Sigh* No, Peter and Gene, We Cannot Conclude that Truck Drivers Support Them

Every Thursday morning, as you probably know, WPRO’s Gene Valicenti hosts RIDOT Director Peter Alviti on the WPRO Morning News for a half hour plus segment. (Yeah, I know, I find it annoying, too.) Alviti takes questions from callers and spends a significant amount of air time promoting Governor Gina Raimondo’s wasteful, unnecessary, highly damaging RhodeWorks toll scheme.

On July 19, Alviti ratcheted it up a notch by involving his host.

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Conservative Policies Produce Rapid Economic Growth

For eight years, progressive-left politicians have told us that the ‘new normal’ for economic growth would be limited to the 2% range. And for years, our Center and other free-market advocates argued that major tax and regulatory reductions would reverse this course and lead to rapid economic growth, meaning more money and prosperity for families. After this week’s 4.1% GDP growth report, there can no longer be any doubt that we were right.

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Take Hodges Badge Departure as Another Warning Sign

As Democrat Governor Gina Raimondo spins Rhode Island’s economic numbers and the news media touts her “wooing” of blockchain companies, an article  from the Newport Daily News a couple of weeks ago hasn’t gotten much attention:

Hodges Badge Co. Inc. has made the “difficult decision” to close its Portsmouth plant this November and consolidate production at its Washington, Missouri, facility, according to a company statement.

“Hodges Badge Company Inc. is a 98-year-old family-owned company and we consider each one of our employees as part of our extended family,” according to the statement attributed to Rick Hodges, the company president and CEO. “We greatly appreciate being part of the Portsmouth community and are truly grateful to all the employees who contributed to our success over the past several decades. This is a necessary and critical economic decision that we do not take lightly, and we will be working with each of our employees to provide compensation packages and on-site outplacement services.”

The facility in Portsmouth opened in 1974 and employs around 92 people.  Rhode Island just won’t allow the company to justify keeping those jobs here.

To be sure, that’s not only a tax and regulation issue.  For Hodges Badge, energy played a big role, too:

Despite other business reforms aimed at reducing electricity costs, the plant still consumed 451,000 kilowatts of power for all of 2008 at a cost of $91,000, according to a Daily News article in July 2009. That was twice as much as the company paid to power its Missouri plant.

“I live here and I love it here, but how long can you realistically sustain that?” Rick Hodges said at that time.

Imagine how the current political landscape looks from that perspective.  The governor is touting more crony wind deals; NIMBYism is hindering an effort to increase power production in the state; and schemes to make energy more expensive through carbon taxing are a regular feature of every legislative session and may explode into law any year.

Rick Hodges was vocally against the toll on the Sakonnet River Bridge, and it can’t have been lost on him that tolls are proliferating in the state and could return at any time.  Add in the recent mandatory-sick-leave law and the push for extremely radical “equal pay” legislation.  At some point, business owners must tire of always feeling vulnerable.  Any given legislative session could be the end of their operations for some money grab or progressive identity politics impulse.

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Only One Reason Rhode Island Can’t Lead the Nation Economically

Even if I didn’t work for the RI Center for Freedom & Prosperity, I’d suggest that the organization shouldn’t be alone in this call

“For eight years, progressive-left politicians have told us that the ‘new normal’ for economic growth would be limited to the 2% range,” said Mike Stenhouse, the Center’s CEO. “And for years, our Center and other free-market advocates argued that major tax and regulatory reductions would reverse this course and lead to rapid economic growth; meaning more money and prosperity for families. After today’s 4.1% GDP growth report, there can no longer be any doubt that we were right.”

The Center has repeatedly challenged state lawmakers to #WalkAway from the leftist polices that have kept our Ocean State in the bottom-six on many broad national indexes, including the CNBC business climate, the Family Prosperity Index, and the Jobs & Opportunity Index.

Over the past 18 months, the optimism and growth resulting from the implementation of pro-business and conservative policies at the federal level stand in stark contrast to the stagnation we experienced from liberal and progressive policies: Unemployment rates among virtually all demographic groups are at or near all time lows; personal incomes are rising; and manufacturing jobs that the the left told us were extinct are roaring back by the hundreds of thousands.

We can amplify these results in Rhode Island if we adopt similar polices. However, the Center is concerned that no gubernatorial candidate is providing the bold vision and leadership to achieve this goal. Instead, some candidates offer timid prescriptions, while others seek to take our state backward with failed progressive-socialist schemes.

The Center also challenges voters to demand that candidates clearly articulate their core philosophies: “Are they in favor of rowing our state’s boat with the successful national tide … or against it? Are they for more freedom & unbounded opportunity for prosperity … or are they for more government-control and limited expectations,” suggested Stenhouse.

There is absolutely no reason Rhode Island couldn’t be at the lead of the nation in both rankings and results.  No reason, that is, other than our willingness to let political insiders and left-wing ideologues force absurd destructive policies on our state’s economy, which is to say on our own livelihoods.

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Next/Last Round of Toll Gantries: Raimondo Administration Solicits Public Comment on an UNFINISHED Environmental Assessment

A couple of weeks ago, Governor Gina Raimondo’s Department of Transportation announced the locations of the balance of ten toll gantries and released an Environmental Assessment [PDF] of them. They also announced that hearings to take questions and comments on the E.A. would occur in three locations on July 27 – tonight, as a matter of fact.

Yes, that’s right, RIDOT is holding public hearings on a very significant project on a summer Friday evening. Quite similar in spirit, as a matter of fact, to the scheduling and location of the hearing for the first Environmental Assessment – in that case, two days before Thanksgiving hard by a cow pasture in South County so remote, the cows themselves need GPS to get there.

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The Mysteries of Public Financing

Having reviewed dozens of public financing deals, I have a hard time believing that there isn’t some catch to this arrange:

Samuel Bradner, one of the principles of the East Providence-based Peregrine Group, which is developing the project, said the tax break, known as tax-increment financing, was needed to close a gap in financing for the $28.3 million project.

Gov. Gina M. Raimondo, who chairs the Commerce board, said the project would pose no risk to the taxpayers.

Commerce Secretary Stefan Pryor explained that the developers would receive the $3.5 million over 10 years only after they had paid taxes each year. If the project is a bust and never pays taxes, the state doesn’t give the developers any money, Pryor said.

What Paul Edward Parker’s Providence Journal article gives one to understand is that the state returns taxes to the business only after having collected it and that this circular transaction somehow makes the developer a better investment for its debt.  How does that work?  The only obvious way this makes a difference is if the amount of tax creates such a margin that a too-risky project becomes palatable for lenders.  Put differently, the amount of taxation would be what makes Rhode Island businesses a bad investment.

If that’s the case, Rhode Islanders have yet another indication of how much healthier our state’s economy could be without so burdensome a tax and regulatory regime.

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Maybe the U.S. Isn’t Doing So Badly

Noting that populists on the Left and the Right tend to emphasize an unequal distribution of economic growth over the last half-century or so, James Pethokoukis reminds us that we should have a healthy suspicion of the numbers that get us to that conclusion:

A University of Chicago poll of top economists found that 70 percent agreed with the proposition that the Census Bureau’s conclusion “substantially understates how much better off people in the median American household are now economically, compared with 35 years ago.” The economist Martin Feldstein, for instance, argues that the agency fails to take into account shrinking household size, the rise in government-benefit transfers, and changes in tax policy. It also measures inflation in a way many experts think overstates the actual rise in living costs.

Depending how many of the adjustments one is willing to make, incomes for the population at large and for broad income categories, as well, have gone up by multiples of the rate that we often hear.  Since the ’70s, middle-income families have seen an increase of 42%, and the lowest-income group has seen an increase of 70%.  To the extent the middle class is shrinking, writes Pethokoukis, it’s because they’re moving up.

Even that doesn’t account for economic mobility and, as Pethokoukis highlights, the real improvements in everybody’s lives:

The idea that most Americans are worse off than they were in the 1970s seems intuitively nonsensical to those of us who were living back then. As former Obama economic adviser Jason Furman once put it: “ignore the statistics for a second and use your common sense. Remember when even upper-middle-class families worried about staying on a long distance call for too long?

When I went to college, I created real financial hardship for myself calling a girlfriend back home, and I brought with me a 20-inch black-and-white TV that picked up a handful of stations and was connected to a junkie VHS player.  To be sure, the TV was kind of antiquated technology by that point, but not laughably so.

What would be the parallel for a similarly situated student these days?  Only a seven-inch generic Android tablet, maybe — connected to the campus’s free WiFi, and with a Netflix subscription, providing the student with unimaginable entertainment and information options?

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The Ride-Sharing Plot Thickens, with Scooters

Sometimes the economic lessons come in real time.  Just this morning, I posted on a new government-subsidized bicycle-sharing in Providence, and while sifting through my news feed shortly after hitting “Publish,” this story appeared on my screen:

Three New England cities are figuring out how to respond after a California company left dozens of electric rental scooters on public sidewalks without warning.

The scooters appeared Friday morning in Providence, Rhode Island, and the Massachusetts cities of Cambridge and Somerville.

The company is Bird Rides, and according to the Providence Journal, more than 50 of the scooters have been spotted around Rhode Island’s capital.  Not being subsidized by government (at least not in Providence), Bird scooters are more expensive than the JUMP bikes to which the city just gave its blessing.  Whereas the JUMP bikes are $2 per half hour, with discounts for bulk purchases and low-income, the Bird scooters are $1 plus $0.15 for every minute of use, which would be $5.50 for that half-hour ride.

On the other hand, while JUMP appears to be a destroyer of gig-economy jobs, Bird creates opportunities for people to make money:

Kristin Gaudreau said she also plans on becoming a charger, taking the scooters home at night to recharge the batteries earning up to $100 a night.

According to the company’s Web site, that task entails going out and collecting the scooters, charging them, and then leaving them where they might be in the most demand the next morning.  Bird also pledges to pay host cities $1 per day per scooter as “revenue sharing.”  The arrangement for JUMP isn’t as clear, although the company is advertising an operations manager position open in Providence, which may entail some of the same tasks in a less disaggregated way.

The City of Providence is currently “in talks” with Bird. We’ll see if $1 per scooter is sufficient palm greasing for city hall or if it uses its power to eliminate competition to its own, subsidized offering.

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Taxpayers “Share” Their Bicycles in Providence

The mayor’s office tells The Current that a $400,000 TIGER grant of federal taxpayer money from the Rhode Island Department of Transportation enabled Providence’s new bike sharing program:

JUMP, which is owned by the ride sharing company Uber, has bike-share programs in six other U.S. cities. The City of Providence, along with Lifespan, Tufts Health Plan and the Rhode Island Public Transit Authority, sponsored JUMP’s Providence launch. …

Four hundred JUMP bikes will be available throughout the city in August, said Victor Morente, spokesman for Mayor Elorza’s office. Riders will be able to park and pick up bikes at 46 stations as well as at public bike racks. …

Bikes will be available for rent at $2 for every 30 minutes of riding. Memberships will also be available for $20 per month for 60 minutes of ride time a day. JUMP will offer reduced-cost memberships to people with low incomes.

As always, with such programs, the first question is why some entrepreneur didn’t find it worth the $1,000-per-bike investment to get this project off the ground.  The answer may be that, even at the highest price point ($4 per hour), every single bike will have to be ridden for more than 31 hours to pay for itself, and that’s if we assume no maintenance or replacement costs.  Moreover, the business model must require that some percentage of the bikes not be used at any given time, or else nobody would be willing to rely on their availability.

In short, the use of other people’s money (taxpayers) was probably the only way to overcome doubts about the demonstrated demand.  When the local Walmart will sell an adult bike for $100, most people who want them can find them.  With the subsidy, most of each sale can be profit for as long as the bikes last.

Those profits come at somebody else’s expense.  In San Francisco (with its better, more-predictable weather), JUMP bikes are cannibalizing Uber business.  The company claims to be happy about the exchange, but each lost Uber ride is a driver with no customer.  The subsidy could also block other innovations; an entrepreneur who was working on an app to allow people to share their own bikes (i.e., without the huge up-front investment for any one company) now has to compete with more-expensive, pedal-assisted bikes.

In the effort to make us behave as government wants us to be have, however, sacrificing the livelihoods and opportunities of a few unseen people is a small price to pay.

ADDENDUM (10:13 a.m., 7/21/18):

By the way, anybody who’s still having difficulty understanding how government involvement in the market produces income inequality should consider this to be an example.  The bicycles used for this offering are constructed in a largely automated process (presumably) and “shared” through an app that requires minimal human involvement, so customers’ money is flowing to the top of the income ladder, probably in distant states or countries.  Meanwhile, local Uber and taxi drivers lose customers, as do any small bike-rental shops or other actual Rhode Islanders who might offer some service that this tramples.

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