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Rhode Island’s Politicians Are Failing

For too long, the political class has failed the people of our state. At $888 per year for each of Rhode Island’s one million residents, a family of four is paying over $3,500 annually for excessive compensation deals for government workers, while the basic needs of their own families are being ignored by politicians.

With almost two-thirds of these excessive costs being heaped upon municipal taxpayers, our recent Public Union Excesses report further estimates that property taxes could be reduced by 25% if more reasonable, market-based collective bargaining agreements were negotiated.

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Rhode Island: An OK Place to Live

Obviously, the more subjective the thing an index attempts to measure, the more subject it will be to interpretation, and WalletHub has made a cottage industry of cranking out subjective rankings.  That said, the Web site’s “Best States to Live in” ranking from June has some interesting considerations for the Ocean State.

Notably, the Ocean State is supposedly the 29th best state in which to live… which seems OK, considering Rhode Islanders’ expectation to come in at the very bottom of all rankings.  OK begins to look not so good, though, when one zooms out on the map.  WalletHub claims Massachusetts is #1 and New Hampshire #3.  Vermont and Maine are both in the teens, and Connecticut comes in at #20.

Looking at the subcategories, RI’s worst result was in “affordability,” which shouldn’t surprise anybody.  The Ocean State was the fourth least affordable state, after New York, California, and New Jersey.  But here’s the thing:  No New England states are very affordable.  Massachusetts, for example, is 43rd and New Hampshire is 42nd.

So what makes the difference?  Massachusetts is in the top 5 for everything else:  economy, education & health, quality of life, and safety.  New Hampshire only misses the top 5 in quality of life.  Meanwhile, Rhode Island only breaks the top 20 on the safety subcategory (at #5).  The conclusion is that Rhode Island might not be able to avoid being expensive, but that only means it can’t afford to be unattractive by other measures.

Here’s where the subjectivity of the index becomes important.  Quality of life includes things that Rhode Island can’t help, like the weather, and things that depend on one’s values and interests.  The importance of “miles of trails for bicycling and walking” will vary from person to person.

But quality of life also includes things like the quality of the roads, which is pretty universally valued.  Meanwhile, multiple criteria that the index uses center around leisure activities that cost money, which means disposable income is a factor, as is the ease with which businesses can pop up to answer the demand.

MIT’s Living Wage Calculator states that a single Rhode Islander needs to make $12.35 per hour over a 2,080-hour workyear.  However, $1.86 of that goes to taxes.  For comparison, in New Hampshire, only $1.50 per hour goes to taxes.

This all suggests an unsurprising solution for improving Rhode Island’s standing:  lower taxes, use the money that is collected for things that are of more universal value, and decrease regulations.  We’d all have more money to spend, we’d feel better about our day-to-day life, and we’d be better able to answer each other’s needs.

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The Question of Cashlessness and Dictatorship

Since we’ve recently had some discussion about cashless business and the way it connects with freedom, which is particularly appropriate this week, developments in Hong Kong deserve a timely mention:

In Hong Kong, most people use a contactless smart card called an “Octopus card” to pay for everything from transit, to parking, and even retail purchases. It’s pretty handy: Just wave your tentacular card over the sensor and make your way to the platform.

But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the protests? You could get put on a list, even if you just happened to be in the area.

So the savvy subversives turned to cash instead. Normally, the lines for the single-ticket machines that accept cash are populated only by a few confused tourists, while locals whiz through the turnstiles with their fintech wizardry.

How do I reconcile my agreement with the concerns of Reason’s Andrea O’Sullivan, who wrote the above, and my aversion to the Rhode Island government’s ban on cashless retail?  Well, I ask myself an important question:  Did the General Assembly pass and the governor sign that legislation in order to preserve the rights and anonymity of the people of Rhode Island?

No.  By all appearances, somebody complained to a legislator or two about running into difficulty making a purchase at some point.  The politicians thought the legislation would buy them some good will from desired constituencies (like young voters), and they don’t give much thought to the rights of business owners to define their own business models.  That doesn’t mean that the legislators’ conclusions were wrong or right, but it does suggest that they weren’t crafted carefully in such a way as to balance the interests of various groups and all of our interest in preserving our freedom.

Yes, Hong Kong does give us preview of a dystopian future.  Everybody’s accustomed to life without cash, and they’re on the dangerous edge of a communist dictatorship.  In evaluating legislation in the Ocean State, we shouldn’t start by imagining how it would play if transported into a dictatorship, but rather by asking whether it brings us closer to being one.

To avoid the dystopia, we need the freedom to innovate.  A society in which the government does not feel it has the authority to impose business requirements is one in which people will develop new technologies and value their freedom, competing against large conglomerates that, themselves, would one day be subject to takeover by a central government.

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Cashless Businesses and a Boundaryless Legislature

As the budget rolls its way through the General Assembly, it’s useful to look for reminders about the political philosophy of our legislators.  In that vein, consider the legislation to ban cashless retail:

The General Assembly today passed legislation introduced by Rep. Mia Ackerman (D-Dist. 45, Cumberland, Lincoln) and Sen. William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket) that would protect the rights of customers to pay for things in cash.

“More and more retailers are shifting to cashless transactions in other parts of the country for various reasons,” said Representative Ackerman. “From a consumer perspective, this could have a negative impact on working class customers, senior citizens and college students who don’t have credit cards.”

The legislation (2019-H 5116A, 2019-S 0889) would make it unlawful for any retail establishment offering goods or services for sale to discriminate against a prospective customer by requiring the use of credit for purchase of goods or services.

Once again, we see legislators — led, in this case, by a real estate title examiner and a lawyer — who presume to set minute policy for every business in Rhode Island.  Even if one buys their argument that, all things being equal, it would be more just for businesses to accept cash, imposing that view as a blanket matter across the state makes it that much harder for people to find innovative ways to offer goods and services to each other.

Suppose, for example, there is a particular area prone to robbery.  Being able to advertise that there is never any cash on the premises might make the difference between whether a particular business finds it worthwhile to set up shop at all.  This problem is easier to understand if you think of a store that sells more-expensive products.

Or think of online sales, which the legislation exempts from the rule.  In essence, this bill would make it more difficult for somebody to compete with an online business by providing some person-to-person interaction.  That innovator couldn’t set up shop unless he or she is willing to go so far as to create processes for accepting and handling cash, which also includes having change to return to the customer.

One could say not only that this legislation is dumb, but also that it is dangerous and economically destructive to have a legislature that believes it’s even within the appropriate scope of its authority.

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Important One Year Milestone: Union Membership is Now Your Choice

The end of the 2019 school year coincides with an important milestone: June 27th will be the one year marker since the U.S. Supreme Court issued its landmark decision in Janus v. AFSCME, which determined that forcibly collecting union dues and fees from public workers, including teachers, is unconstitutional.

This summer is the perfect time to ask yourself the question: What is my union doing for me?

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Relentless Perpetuation of the “Equal Pay” Myth via Legislation

Helpful headlines notwithstanding, the Rhode Island Senate once again passed legislation to address the mythical “wage gap”:

A plan to close the gender wage gap in Rhode Island by adding new, sharper teeth to the state’s fair pay law and banning employers from asking job candidates their salary history sailed through the state Senate again Thursday.

“Rhode Island first passed an equal pay law in the 1950s, and I am sure it was revolutionary at the time, but we have not gone back and updated it unlike many other states,” said Sen. Gayle Goldin, lead sponsor of the pay equity legislation. “Passing this bill is not going to resolve the wage gap on its own, rather, this bill in combination with so many things we have worked on… is the way we will address the gender wage gap.”

And so it goes.  As long as progressives want to foster division and grievance, this legislation will keep appearing.  Maybe some year the gears of political necessity will get it over the finish line.  As that process plays on from year to year, opponents will tire of saying the same thing over and over again.  That’s the advantage of the left-wing approach to public “debate”:  When you refuse to acknowledge the other side’s arguments and just keep repeating the talking points, the other side moves to other topics, and the public just becomes used to the deception.

By way of a preventative measure, here’s my op-ed on the topic, from the Providence Journal last year around this time, which I published in more casual, expansive form in this space the month before:

Plainly put, this gives the government power to investigate just about any business and dictate changes to its pay policies, because the only pay differentials that wouldn’t have legal risks would be those between people of the same race, religion, sex, orientation, gender identity, disability, age, and nationality.  That is, for any two employees who aren’t more or less demographically identical, the lower-paid one could initiate a complaint with the state with the same treatment as complaints that the employer withheld pay, and the burden is on the employer to explain it and to prove that no other business practice could erase it.

Think about how much of an encroachment on private activity and interactions that is, as well as the presumption that government is some sort of neutral judge that can accurately assess every business decision.

If this legislation ever passes, I expect it will have some degree of the same effect as the ill-advised paid leave legislation which progressives did manage to pass last yearl.

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Upcoming Budget: More Privileges for Insiders or Real Help for RI Families?

With the General Assembly session nearing the end, we fully expect the new state budget to contain no meaningful remedies to the many problems that plague our state, such as high taxes across the board, high energy and healthcare costs, and onerous regulatory burdens on job-producers. In our Public Union Excesses report, we identified that there are $888 million per year in excessive collectively-bargained costs, responsible for driving up local property taxes by up to 25%.

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.

Minimum Wage Cuts Close to Home for Far-Left Congresswoman

Is it too much to hope that a direct negative effect of progressive laws that hits very close to home for one particular progressive superstar would change some minds?

… the very [minimum wage] policies Ocasio-Cortez is set to draw attention to ultimately led to one of her former employers shuttering its own operations.

Charles Milite, co-founder of the Coffee Shop, where Ocasio-Cortez previously worked, said that the increased minimum wage to $15 per hour for businesses with more than 11 employees led him and his partners to reevaluate their business and shut it down.

“I know it doesn’t sound like much—$2 an hour,” Milite told Crains New York Business in April. “But when you multiply it by 40 hours, by 130 people, it becomes a big number. It was going to increase our monthly payroll $46,000.”

Ocasio-Cortez mourned the loss of the Coffee Shop and stopped in before it closed its doors. “The restaurant I used to work at is closing its doors,” Ocasio-Cortez tweeted last August. “I swung by today to say hi one last time, and kid around with friends like old times.” The freshman congresswoman, however, never acknowledged the policies that led to its demise.

At the level of Ocasio-Cortez, perhaps her investment in a particular ideology is just too big a bus to turn around on the ideological street, but could those who are not so far along perhaps give the matter some thought?

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Dealing with RI’s Endangered Place

Something seems odd about declaring the Providence Superman Building as “endangered,” making one wonder whether the designation is the result of lobbying by interested parties:

Rhode Island’s tallest — and vacant — landmark, the former Industrial Trust Building in downtown Providence, otherwise known as the Superman Building, is on this year’s list of the nation’s most endangered historic places.

For more than 30 years the National Trust for Historic Preservation has produced a list of the 11 most endangered places in the country to call attention to what it considers “one-of-a-kind treasurers.”

The 91-year-old art deco Superman tower, which earned its nickname for its resemblance to the Daily Planet building from Superman comics, joins Nashville’s Music Row and the National Mall Tidal Basin in Washington, among others, as this year’s threatened places.

On the topic, Matt Allen expresses the extremity of the opposing point of view:  “This is not an ‘iconic’ building. It’s an eyesore and a terrible investment. Tear it down.”  My views are somewhere in the middle, still bogged down in questions I haven’t answered completely.

How do we measure the value of some publicly accessible (or at least publicly visible) thing, like a building or geological feature that has contributed to an area’s character?  Who gets to determine what can, can’t, should, and shouldn’t be done?

The simplest answer that conforms with my philosophy is that people who want to preserve it should find a way to buy it with private money, and then to maintain it at least to a baseline standard for health and safety.   One complication arises in my belief that local areas can answer the relevant questions differently, so if the people of Providence want to use some measure of public resources to preserve the building, then to the extent the city is acting independently from the rest of the state, I’m not going to tell them they can’t.

This only raises the next question: On the state level, do we want to be the kind of place that preserves its landmarks?

My answer on this one is “no.”  Our state isn’t so thoroughly thriving that we can afford nostalgia.  Just like protectionism with dying industries, if we manipulate the market value of a building like this, we don’t allow the best use of that property.

Let the skyline change.  Let the city’s character change.  That’s the sign of human adjustment, and we should embrace it.  Anybody who disagrees should use their own money and sweat to find some use for the antiquated hulk.

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Millennial Suffering and the Right to a Coastal Lifestyle

As a general proposition, I find debate about the conditions of different generations — Millennials, GenX, Boomers, etc. — to be not much more than merely amusing.  However, a point that David Harsanyi makes in The Federalist touches more broadly on the way a certain sort of coastal elite looks at people’s conditions and rights.

Broadly, Harsanyi acknowledges that Millennials do show slower growth in wealth and delayed achievement of life milestones, but he argues that this is a function of their choices.  Indeed, delaying milestones like marriage and home ownership are likely the causes of slower growth in wealth, rather than the effects of it.

However, the interesting point about perspective comes with this:

… millennials aren’t compelled to rent apartments in the middle of the most expensive cities in America. Yet, many are happier living in urban areas than previous generations were. Pew Research found in 2018 that 88 percent of millennials now reside in metropolitan areas. That’s also a choice.

And the urban areas that millennials choose are more expensive partly because they are far better iterations of cities than previous generations encountered. In the past 30 years, these places have undergone waves of gentrification and revival, in part to cater to the tastes of younger Americans. Most are cleaner, safer, and more livable in numerous ways—and thus, more pricey. Yes, Brooklyn was a lot cheaper in the 1970s, 1980s, and 1990s. It was also more dangerous, dirtier, and less enticing for families and businesses.

True, Harsanyi grants, half-million-dollar “veritable castles” in high-demand suburbs are out of reach for young adults, but starter homes in more reasonable zip codes are not.  That’s why we call them “starter homes.”

Of course, this point gets tangled up in the self-contradictory beliefs of modern progressives — for instance, that nobody needs a large house with all the fixin’s, but that anybody who cannot have such a house is unjustly deprived.  Just so, the insinuation on behalf of Millennials is that they have a right to live the lifestyle that coastal elites consider to be de rigeur and are deprived if they cannot.  The hardship of the generation, in other words, is that they cannot afford the things that a traditional lifestyle lived over a at least a decade helps a family to achieve.

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Help Spread the Word About the Cost of Government Unions

Wow, has our report shaken up the status quo! We have done the research, and we have connected the dots. The number one driver of the Ocean State’s declining population and jobs numbers – the high property taxes we all pay – can now be directly connected to the excessive costs of government, as mandated by government union collective bargaining agreements.

Now, we are asking your support to help us spread the word.

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A Place for Non-Standard Banking Services

Yes, à la carte, non-standard banking services like check cashing and payday loans can seem predatory, but we have to acknowledge the place they fill if we want to understand why people use them and answer the question of whether they should.

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Unfairness in RI Government’s Priorities

Mike Stenhouse’s recent op-ed in the Providence Journal puts the RI Center for Freedom & Prosperity’s Public Union Excesses report in a broader context:

Beyond these extreme financial costs, an even more corrosive impact from this political cronyism is at play. People have lost trust in their government and are fed up with betrayals from lawmakers who have forgotten them, who cater only to special-interest concerns. Lawmakers make it ever-harder for people to take care of their families and reside in Rhode Island.

For these reasons, Rhode Island is not keeping pace with the rest of the nation when it comes to jobs and population growth. After 10 years of perhaps the slowest economic recovery among all states, Rhode Island’s political leaders are failing on their promises to help the average family.

Instead, by heaping more privileges upon those who help get them elected, politicians continue to lose the trust of the people, who are also losing hope for their state. These tragic circumstances have conspired to make it a virtual certainty that the Ocean State will lose a prized U.S. congressional seat after the 2020 national census because of its stagnant population growth.

Rhode Island strangles its families and businesses with taxes and regulations, but often, the sheer unfairness of the system can be the real poison.  As a member of the Tiverton Town Council, yesterday I participated in a “business walk” hosted by the Newport County Chamber of Commerce, which involved stopping in to talk with some business owners around town.

Of course, we heard about the problem of taxes, but the subjects that really animated business owners would better be classified as injustice.  The cost of government labor was seen not only as a cause of high taxes, but also as a budget imbalance preventing infrastructure improvement.  Similarly, the capriciousness of enforcement, with the rules not seeming to apply fairly to every business and changing depending on which government inspector paid a visit, is irksome beyond the cost.

Even after figuring out how to overcome all the regulatory obstacles that the state throws in their way and even after building high taxes, regulation-driven energy costs, and government bungled healthcare expenses into their business models, they still never know when an inspector will find some new rule to enforce or the legislature will come up with some new fee or obstacle to impose.

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The Mystery of Lost Jobs in RI

Time will tell whether I’m wrong, but I’m not sure the warning in Patrick Anderson’s Providence Journal article about RI employment last week was sufficiently vehement:

A sudden plunge in the number of Rhode Island-based jobs over the winter has caused fiscal analysts to darken their outlook for the state’s economy in the coming year, but they are not expecting a major downturn.

In March, state and federal officials decided they had overcounted the number of jobs in the state at the end of last year by 7,300 positions. Then, in the first three months of this year, Rhode Island shed another 2,800 jobs, putting it 10,100 jobs shy of the record employment high water mark celebrated last December.

Economists and state labor officials are a little puzzled by the job losses.

Regarding the drop in the first quarter, one quoted economist, Michael Lynch, notes that the sector leading the losses was “administrative support/waste management services,” which includes “office administration, hiring and placing of personnel, document preparation and similar clerical services, solicitation, collection, security and surveillance services, cleaning, and waste disposal services.”  Inasmuch as the losses come in a single sector and there have been no massive layoffs to explain the drop, Lynch ascribes the trend to “noise in the data.”

We’ll see.  Another possibility is that, despite the national growth, Rhode Island’s economy isn’t supporting a particular sector, for some reason.  In this case, that sector is the one that operates offices and helps companies grow.  If it is unique in having lost jobs, it may be that Rhode Island is uniquely a bad location from which to operate a business and capitalize on broad growth.

Democrat Governor Gina Raimondo’s dismissive response that “those adjustments are pretty typical of what happens at the end of every year” is alarming in its own right.  The revisions to employment data each year reflect the fact that the state’s economy is doing something that economists didn’t expect.  If the economy had truly been as strong as Raimondo claimed while campaigning for reelection, the revision would have been up.  Instead, economists are surprised and mystified by how poorly our state is doing under her leadership.

They shouldn’t be.

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Union Excess Talk on Changing Gears

Dr. Dennis Sheehan and I had the pleasure of appearing in-studio with Mike Collins and Chris Maxwell this past Saturday for their WPRO show, Changing Gears, to talk about the report that we co-authored for the RI Center for Freedom & Prosperity about the excess costs of state and local government attributable to collective bargaining with labor unions.

Listen to “Changing Gears” on Spreaker.

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How Much Union Members Are Paid, And How Much Taxpayers Can Afford

With the third highest property taxes in the country, a major encumbrance within an overall anti-taxpayer and anti-business climate that has dropped Rhode Island into bottom-10 rankings in a number of critical national indexes, the excessive costs of collectively bargained government services can be directly linked to this statewide problem.

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Rhode Island Is Losing The Competition Between States – Look for Major Report by Center

Although the state’s rank stayed the same, this month was not a good month for the state on the Center’s Jobs & Opportunity Index. Rhode Island remains last in New England at 47th place in the country. Employment was down another 521 people from the first-reported number for February, and the labor force dropped 1,234.

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Low Revenue and Locking in the Union Advantage

A week ago, Providence Journal reporter Katherine Gregg tweeted out that the state’s revenue was under performing by about 7%:

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Note two things.  First, if not for the application of sales taxes to new items, especially online, and an increase in the various fees and such that make up “departmental receipts,” the picture would be significantly worse.  Second, about half of the shortfall is attributable to unexpectedly low income taxes.

This is fully in keeping with the latest Jobs & Opportunity Index report from the RI Center for Freedom & Prosperity, which found that Rhode Island is uniquely lagging the country in residents’ personal income growth.  In fact, we were the only state to lose personal income between the latest report from the Bureau of Economic Analysis and the originally reported numbers for the prior quarter.

Combine that fact with a downturn in employment in the Ocean State, and we’ve got a clear warning sign that we need to change direction.  Unfortunately, our governor is busy pushing progressive social-welfare policy while the General Assembly is hurrying to grab the unions everything they can before the next downturn.

That last note kind of makes one wonder what the legislators know that the rest of us don’t.  If they are expecting another recession in Rhode Island, that would be the time to lock in as much as they can for their friends in the labor unions.

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RI Down in Jobs and Innovation, Up in Lack of Hope

In terms of politics, it seems to me that the trend is the key question with news like this:

According to Bloomberg’s U.S. State Innovation Index, California and Massachusetts are ranked first and second respectively, but Rhode Island was in steep decline over the past three years.

Rhode Island is ranked 23rd in the 2019 ranking — far behind Connecticut which is ranked fourth. Most concerning is that Rhode Island fell seven positions in the ranking from the 2016 Index — the last time Bloomberg released the Index for innovation.

Now, Rhode Island is the second lowest ranked in New England — only Maine is ranked lower at #41.

This is the opposite of what ought to be happening if we have a governor who prioritizes and understands innovation.  We’ve long been able to observe as job and employment growth has slowed under Governor Gina Raimondo, and it’s turned into job and employment loss.  Now, even contrived ratings for innovation are showing a decrease in strength in a metric that the governor ought to be able to present as contrary evidence to the broader employment data if her method of economic development worked.

Read further down the GoLocalProv article linked above, and you’ll see the usual talk from government insiders presenting all the wrong metrics.  It’s always about how much money the government is managing to spend.

Raimondo somehow managed to get herself reelected, so Rhode Islanders shouldn’t expect much change in execution over the next four years.  The General Assembly, for its part, has been mainly intent on showing its fealty to organized labor.

Looking out over the landscape, the most depressing deficit is the lack of somebody to be a leading light of opposition.  In a system doing this poorly, people ought to be emerging in unexpected places to provide the right answers to a growing population of malcontents.  Where are they?

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The Employment Situation In Rhode Island Is Getting Worse – Bucking National Trend

Happy Easter from everyone at the Center to you and your family! We hope you had a great holiday weekend.

We wish we had better news to deliver. Unfortunately, the employment situation in Rhode Island is getting worse, bucking the national trend. While state politicians crow each year about not implementing broad new taxes, the unfortunate truth is that by nickle-and-diming residents and by not implementing aggressive reforms Rhode Island will continue to lose ground, nationally.

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