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When an Administration Cares About Regulatory Reform

In the Washington Examiner, Paul Bedard points to an under-reported achievement of the Trump administration:

When he came to office, Trump promised to cut two regulations for every new one he imposed.

The duo said that the percentage is actually 3.75 to 1, an unprecedented reduction.

Trump believes that cutting regulations, while it receives few headlines, is one of his team’s biggest accomplishments and a driver in the improving economy and investment in the United States.

Contrast this with Rhode Island’s efforts.  Here, it takes years to create a special commission that takes years to get rolling in order to produce a short list of licenses and regulations that can maybe be taken off the books, which list the legislature will trim before it becomes law, after which the special interests that benefited from the existence of the regulations will agitate to put them back.

This shouldn’t be so hard.  Rhode Island overtaxes and over-regulates.  We need a strong, quick push that changes the impression of our state into one barreling in the right direction, and the right direction is not extending limited taxpayer subsidies to counteract the effects of our taxes and regulations for hand-picked companies willing to cut deals with politicians.

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Some Unanswered Questions on Housing

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

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

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

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

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

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

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Arthur Brooks Of AEI Inspires Audience at Center’s Leadership Luncheon

This last week, one of America’s leading conservative thinkers, Arthur Brooks of the American Enterprise Institute, inspired over sixty local leaders at our Rhode Island Center for Freedom & Prosperity leadership luncheon. One guest said: “Every once in a while I get the opportunity to experience something that will change my life in such a profound positive way, that was exactly what happened to me yesterday as I listened to Mr. Arthur Brooks’ words of wisdom. I was further empowered and assured that together we all can and should make that needed difference!”

With “life entrepreneurship” as his central theme, Brooks encouraged the lawmakers and civic leaders in the audience to advance a “start up your life” attitude among the people of Rhode Island. Brooks said that by taking the risk of investing love, time, and commitment to the important people and self-improvement opportunities in one’s life, that this “start up your life” attitude will bring happiness, prosperity, and overall returns on that investment many times over.

The feedback from the bipartisan attendees, whether liberal or conservative, was overwhelmingly positive. As only Arthur Brooks can do, he challenged us intellectually to consider the kind of moral, family, and work culture we want to have in our state. Click here now to see pictures of the event.

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Licensing’s Contribution to Inequality

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

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

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

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

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

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A Tip for the Restaurant Industry When It Gets into Politics

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

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

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

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Rent Seeking Pot Dealers Look to the Government Crime Boss

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

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

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

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

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

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

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

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A Subtle Distinction on Government Problem Solving

I recently came across this story on regulation in Ohio, and the statement the Republican Senate president, Larry Obhof seems broadly applicable and worth sharing:

Ohio has nearly 250,000 regulatory restrictions in its code, according to research from George Mason University. The study’s authors say this holds back economic growth for industries like manufacturing and health care.

Republican Senate president Larry Obhof says he wants to take a broad look at Ohio’s code to see what they can do to scale back these regulations. He adds that a mindset change is needed for people in the legislature and state agencies.

“Who start the day looking for problems to solve and trying to solve those, and what I’d like to see is a reset where they start the day and some significant number of them are saying can I find a burden that we don’t need that we can get rid of,” said Obhof.

This gets right to the subtle (and detrimental) shift in Americans’ attitude and, perhaps, a chief dividing line between ideologies.  One view is that government exists to solve people’s problems; another is that government exists to remove a limited number of problems from people’s path.

When the goal is to remove problems (like foreign invasion, inadequate basic infrastructure, and so on), the emphasis is much more securely on avoiding causing additional problems in the process.  When we make government a more active participant in the solving of problems, unintended consequences can be written off on account of good intentions — “nobody can solve everything, but at least we tried.”

And when government is a problem solver, there is no boundary.  It should try to solve every problem it can.  When government is just a mechanism to take a few big problems off the table for the public at large, the debate becomes whether something is a problem or an area in which freedom makes it a challenge for the people to resolve among themselves.

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Hair Braiders Should Have the #RIghtToEarn a Living

Oppressive Regulations Harm Low Income Families. Hair braiding is a generational and practical African-style art-form for Jocelyn DoCouto and her family, which hail from Senegal and Cape Verde. Yet, unable to afford the burdensome levels of fees and training required to receive permission from the government to legally work in a field that presents no safety risks, Jocelyn, as well as other would-be entrepreneurs, are not able to operate a business that would provide them hope to achieve financial independence.

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Racking Up Fees from the Working Class Through Licenses in Tennessee

Instapundit Glenn Reynolds is embarrassed to report this, from his home state of Tennessee:

“I never did any other job but hair braiding my whole life,” she said. “I cannot recall a time when I did not know how.”

But in recent years, Tennessee has forced Fatou to pay a staggering $16,000 in fines, simply because she employed workers who did not have a government license to braid hair. Nor is she alone. After examining meeting minutes and disciplinary actions for the Tennessee Board of Cosmetology and Barber Examiners, the Institute for Justice has identified nearly $100,000 in fines levied against dozens of braiders and more than 30 different natural hair shops and salons since 2009. All of those violations were for unlicensed braiding; none were triggered by any health or sanitation violation.

It’d be interesting to tally up all such fines in Rhode Island, not only for hair braiding but for every other egregious occupational license.

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Can We Realize The Destruction Of Families Has Unintended Consequences?

In the Providence Journal this week, Wendy P. Warcholik and J. Scott Moody write, “This growing number of children in Rhode Island without a solid familial foundation should give us all pause. This is not a problem that is going to just go away, and we must find ways to help these children before tragedy strikes, perhaps in your own neighborhood.”

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Let’s Avoid the Big Government Trap with Regulation

George Mason University Economics Professor Tyler Cowen sees occupational licensing as such a problem, he’s willing to modify his conservative leanings in order to suggest that the federal government step in on the issue:

Unfortunately, I don’t expect the federal bureaucracy to usher in the reign of Milton Friedman’s Chicago School economics. But the federal regulatory process would likely pay less heed to local special interests, and it would produce a more homogenized and less idiosyncratic body of regulatory law more geared toward the most important cases, such as medicine and child care. The federal government is less likely than many state and local governments to obsess over licensing rules for fortune tellers, florists and athletic trainers.

Cowen is falling into the progressive trap.  He recognizes that the “machinery for creating new licenses is much better organized and funded than the institutions for getting rid of them, and once in place these requirements have natural defenders, namely those who have invested in the credentials,” but he somehow imagines this advantage will simply disappear at the federal level.  Why wouldn’t these state-by-state organizations just start making alliances across state lines?

The assumption that a federal bureaucracy will be free of an inclination to the petty has little foundation in theory or experience.  Presumably, the agency will collect fees through regulation, and that will certainly be the source of its power.  Even just incentives toward job security will keep the numbers of licenses growing.

In cases of asymmetrical incentives, we’re always better off keeping decisions at the smallest scale possible.  The number of dog walkers in a particular town, for example, who want to create some kind of local license will more easily matched before the town council by people who think the license would be unnecessary protectionism.  At the federal level, the side with incentive to organize will have even more aggregated power, while the other side will be even more difficult to organize.

Frustrating as it can be, there is no end run to limited government that goes through big government.

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Standing Against The Progressive-Left

At our Center, we know that the extreme levels of taxation and over-regulation forced on Rhode Islanders by an ever-growing government is the primary culprit in causing our state’s sad performance. Look at it this way— heavy handed action by a state government that mainly seeks to perpetuate itself, actually works against the best-interests of the very individuals it is supposed to be serving.

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The Society-Wide Human Cost of Occupational Licensing

Apply this principle — from a Reason interview with a Boston hair stylist:

If people want to work in Zona’s salons, in virtually any capacity, they must first obtain a cosmetologist license from the Commonwealth of Massachusetts. That’s true even for positions that don’t have anything to do with cutting, coloring, or styling hair. Even shampooing or blow-drying hair, or being a stylist’s assistant—the types of entry-level jobs that allow someone to test out the profession before deciding whether to work in it—must be filled only by licensed professionals. …

These one-size-fits-all licensing rules make it harder to find new employees. They also contribute to high turnover in the profession, Zona says, because newly minted cosmetologists who never had a chance to try an entry-level job before getting a license often leave the profession because it’s different from what they expected. That’s not good for businesses, which want a stable workforce, and it’s even worse for those workers who wasted thousands of dollars and months of their lives.

This can’t be a problem only in hair styling, and if we consider the cost in human potential (for people who never find their vocation because of licensing walls) as well as in innovation (due to the loss of variety and perspectives), licensing is doing real harm to our entire society.

I’ve been extremely fortunate to be (for whatever reason) the sort of person whom others ask to do something when they just can’t find anybody.  I’ve done sales, teaching, graphic design, construction, and countless one-off projects for pay and as a volunteer.  Some of those efforts turned out better than others (some ended pretty badly), but that’s life, and outcomes vary dramatically even for people who go through years of training, but they’ve already invested so much that their options are limited.

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Bringing Logic to the Net Neutrality Debate

The Sunday Providence Journal carried my op-ed on net neutrality:

Really, with what other service do people insist that customers’ only options must be everything or nothing? Should we all have to have the same gym memberships? Should every car have to have the same engine and the same sound system?

A preference for an all-or-nothing industry, as with health care, tends to mean that the advocates want to be able to control the “all” so they can control our lives. Auton and Holden probably have no such intent, but following their suggestion would clear a path for those who do.

One comment, from Mike Berry illustrates the challenge of political discourse these days:

Hard to follow the logic here.
Mandatory free and open access cannot possibly restrict what ISPs sell us. It does the opposite.
Internet access is not like gym memberships or auto service. It should be a utility in which, yes, we ALL get the same thing!!

Notice the immediate logical inconsistency in Berry’s response.  On the one hand, he says net neutrality “cannot possibly restrict what ISPs sell us”; on the other hand, he insists that ISPs should sell everybody the exact same thing.

Objectively, it appears that Berry is tangled up in the talking points.  Proponents of net neutrality use phrases like “mandatory free and open access” because that implies more access not less, but using a talking point doesn’t mean it’s accurate.  Maybe if Internet access were some boundless resource that could simply be plucked for free and distributed without limit, but that isn’t the case.

The mention of utilities is also instructive.  Think about your electric bill.  Regulators and activists are working to ensure that you cannot get electricity from coal while they force you to pay extra for politically favored energy like wind.

In that case, we’re only talking about how the product is generated.  With the Internet, the control of the “utility” would implicitly cover what we receive.  We’ll quickly find that disfavored content — the coal of the Internet — is blocked while we wind up with government fees on our bills to fund content or services to which we object.

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Rhode Island Shouldn’t Let the Manufacturing Surge Pass Us By

To some extent, a commentary essay by  David Farr and Jay Timmons is a bit of a promotional spot for their organizations and the manufacturing industry generally, but this is broadly encouraging:

At the end of 2017, the National Association of Manufacturers surveyed its membership and the results were recording-breaking. Almost 95 percent of respondents felt positive about the outlook of their businesses — an all-time high in the survey’s 20-year history.

From our perch in Rhode Island, however, it’s difficult not to gulp a little at this:

Manufacturers’ newfound confidence didn’t happen by accident. Major developments in Washington, D.C., dramatically improved the business climate in the United States, most notably regulatory relief and, at the end of the year, historic tax reform.

It all freed up time, energy and resources that would otherwise have gone toward complying with complicated federal rules and the highest tax rates in the developed world. As a result, manufacturers are investing in their people and communities. We’re seeing story after story of businesses expanding their operations, offering raises or bonuses, buying new equipment and hiring new workers.

It’s early, yet, for state-level analysis, but early indications from economic data suggest that the national surge has been weaker in Rhode Island, if it hasn’t been passing us by entirely.  We need to impress upon our elected officials that they must change the approach of state government.

(via Stephen Green)

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Misconceptions About Net Neutrality and Who Wants to Control Us

Rhode Island Library Association heads Kieran Auton and Julie Holden recently published an op-ed in the Providence Journal that opens with a misleading introduction and moves into a silly argument about net neutrality.  Here’s the introduction:

These days, when we talk on the phone, send a text, or stream a movie, we expect our experience to be seamless. If we are at work, at school, at home, or in the library, being online and being connected is a way of life. Yet, our state is economically diverse, and many cannot afford internet service in their homes. Every day, thousands of Rhode Islanders go to their local library for free high-speed internet access. In fact, libraries are the main provider of internet access for many in our

Ending net neutrality is not about allowing Internet service providers to put the screws to low-income households and low-revenue non-profits.  If anything, it opens the possibility of getting the Internet into households that don’t have it, because it allows the variation of plans.  Perhaps a low-income household can’t afford the cost of a plan with streaming television and video games but could afford a plan that allows its members to do job searches and school research and other classic Internet activities.  Perhaps a library could differentiate its Internet access, with a few dedicated machines for high-powered activity, but many more for activities more typical of a library, like reading and research.

The policy that Auton and Holden prefer is akin to forcing everybody to buy the same data plan for their cell phones.  Internet providers are companies.  They need customers, and they won’t stay in business long if they don’t give customers what they want.  Differentiation helps that objective.  Really, with what other service do people insist that customers’ only options must be everything or nothing?

Typically, the answer to that question is that a preference for an all-or-nothing industry, as with health care, tends to mean that the advocates want to be able to control the “all” so they can control our lives.

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