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First, They Give You Money; Then, They Take Your Freedom

Buried in legislation that would begin treating “sugary drinks” in Rhode Island as something akin to cigarettes or alcoholic beverages is one of the best arguments for turning down the government when it wants to give us things.  H5787 and S0452 — led by Central Falls Democrat Representative Shelby Maldonado and Pawtucket/North Providence Democrat Senator Donna Nesselbush — would create new, burdensome licensing requirements for businesses seeking to sell the evil elixirs and impose an inflation-adjusted tax on them, enforcing the law not just with fines and licensing consequences, but with a criminal charge.

Central to the rationale for the law is this language:

Medicare and Medicaid spending would be eight and one-half percent (8.5%) and eleven and eight tenths percent (11.8%) lower, respectively, in the absence of obesity-related spending.

There you go: The price of letting government pay for things, like health care, is that government then gets to tell you how to live.  This will get worse if we don’t make such politicians pay a political price of their own.

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Labor Unions, Less About Workers and More About Government

The American Interest offers what might be termed a labor thought for today if it hadn’t been sitting in my bookmarks for a week:

It’s significant that ground zero for public sector union reform is the upper-Midwest, once the capital of organized labor. Democrats try to cast such reforms as a betrayal of workers, but in a post-industrial age when half of union members are public employees whose demands for fatter benefits packages come at direct expense of the taxpayers, many voters don’t see it that way. As James Sherk noted in our pages last year, “A movement formed to defend blue-collar laborers now fights primarily to help white-collar workers expand government.”

That point cannot be sufficiently emphasized:  labor unions, overall, are now dominated by the public-sector subsegment, which has a very different model.

In the private sector, the union negotiates with management for the share of profits from sales to customers that goes to the workers.  In the public sector, the union helps elect management with whom it can conspire to take more money from taxpayers, who must either leave the area or pay up once the unions achieve political dominance, as they have in Rhode Island.  That is, in the public sector, it’s a process more resembling theft than negotiation.

Of course, one should note that the strength of unions in the private sector, such as it is, often comes with their ability to manipulate the law to force clients — mainly governments — to use union labor or to box competitors out of big markets — like government projects.  In that regard, even more of organized labor should properly be seen as existing in the public sector.

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UHIP & Prostitution? Big Government Is Not Competent Enough To Run Our Lives

The status quo in Rhode Island needs a reality check with regard to the now epic UHIP computer systems disaster. With reports of Rhode Islanders being driven to extreme measures to make up for the loss of social safety net, the insiders must realize that once again they have headed down the wrong path. Big government is incompetent to run our lives.

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Risk Aversion in Stocks and in Politics

Here’s an interesting find from Justin LaHart in the Wall Street Journal, in a brief article titled “Why the Stock Market Doesn’t Like Republicans“:

The two economists created a model where people have a choice between being entrepreneurs and working for the government, and of voting for a political party that favors lower taxes or higher taxes. When risk aversion is low, more people want to be entrepreneurs and to vote for the low-tax party. When risk aversion is high, the opposite is true.

It is a highly simplified version of U.S. politics and economics. But the implications for stock prices are interesting. The low-tax party gets elected when risk aversion is low, and then if risk aversion merely returns to the mean, stocks suffer. For the high-tax party, the opposite is true.

The next question, obviously, is what causes these changes in sentiment, because the variables seem more to correlate than to cause one another.

Of course, they may have a causative relationship indirectly.  The high-tax party, for example, is likely to sense this dynamic (whether consciously recognizing it or not) and change policy in a way that makes people more risk-averse (such as regulations to make independent activity more difficulty while acclimating people to dependence on government’s socialization of risk).  Indeed, even when they promote entrepreneurialism, they strive to make it seem like something that cannot be done without the safety net of government subsidies.  (“You didn’t build that.“)

The insight has implications for advocacy, too.  Conservatives who make a theme of imminent doom under progressive rule — however accurate that theme is — may be making the public more inclined to fall for progressive promises of security.  The key, perhaps, is to make people feel secure in their families and their own ability to transcend

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Making Distinctions on Immigration

This New American Economy study of immigration has been going around:

Though it is our nation’s smallest state, Rhode Island is home to almost 140,000 immigrants. The state’s immigrants are mostly of working age and play a valuable role in both the manufacturing and software industries. They are also bolstering the housing market by buying the wave of homes coming on the market as baby boomers retire; all of these positive contributions are critical to the success of Rhode Island’s economy.

For the most part, this has been deployed as part of the mainstream effort to blur lines on immigration, proclaiming the value of immigrants generally.  That has always been a distortion of the debate; I don’t know anybody who objects to controlled immigration that takes account of the national interest and emphasizes assimilation.  The first objection people have is to illegal immigration, and the (distant) second objection is to indiscriminate legal immigration that bolsters welfare roles and puts downward pressure on low-end wages.

With respect to illegal immigrants, note that, overall, immigrants in Rhode Island pay $886.1 million in state and federal taxes, based on income of $3,500 million.  That’s 25.3%.  By contrast, illegal immigrants pay $43.7 million on income of $365.2 million, which is 12.0% — less than half the rate for all immigrants.  (The proportion for state taxes is roughly the same as taxes overall.)  Note that the numbers for legal immigrants would be substantially more positive than the presented numbers, because illegal immigrants account for 20% of them and bring the numbers down.

Those on the political Left might say that this proves that illegal immigrants should be normalized so they’ll pay more taxes, but the type of work they do is different, as is their propensity to need financial assistance.   The New American Economy study (surprise, surprise) doesn’t give information on welfare programs and other public expenditures (such as for education), but that’d probably be higher for the illegals, too.

Rhode Island should refocus immigration policy on those who contribute the most, certainly until our employment situation is no longer stagnant.

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Government Coercion by Another Means

Here’s the article I mentioned in this week’s podcast, about tax deals for corporate charity:

A bipartisan group of congressmen recently introduced a new bill intended to reinvigorate America’s poorest communities. The Investing in Opportunity Act (IOA) will allow investors to temporarily delay paying capital-gains taxes on their investments if they choose to reinvest the money into “opportunity zones” or distressed communities across the country.

The legislation was cosponsored in the Senate by Republican Tim Scott of South Carolina and Democrat Cory Booker of New Jersey, and in the House by Pat Tiberi (R-Ohio) and Ron Kind (D-Wisc.).  These congressmen report that their bill has garnered bipartisan support in both chambers, and they believe that its provisions will allow for tremendous economic growth in some of the country’s most underserved communities.

I might have misspoken in the podcast and attributed the article to the legislator.  The legislator is Tim Scott; the writer is Alexandra Desanctis. Whatever the case, this isn’t a direction in which we should go.

There’s a push among conservatives, recently, to rephrase policies in terms more amenable to the themes in which the Left has caught up the public conversation.  On one end, this is an obvious thing to do — to explain why conservative policies are the ones that will actually help individuals and families come to their full fruition.

Less obvious are policies that accomplish some of the Left’s goals (like making government central to charity), but that have potential to start to reshape thinking.  In that way, for example, taking the step suggested by Representative Scott could lead, in the future, to the additional step of questioning why government’s picking charitable causes at all.

I think this proposal goes a little too far over that line.

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Keeping Up with the Pros in the Bureaucracy

The odds are pretty obvious and challenging, if you think about it:  Government at all levels employs millions of people; many of them have access to information the public does not; many of them make decisions that affect their own compensation and that of their peers; and (at least for now) their continued wealth and opportunity depends on getting people to allow government to take their money away.

Since the years of Obama stimulus spending — let’s say Rhode Island’s fiscal years 2009 through 2011 — I’ve been convinced that the administration’s goal was to ensure that government agencies were insulated from the recession.  (Another goal was to launder money to left-wing activists, but that’s not my subject with this post.)  As time moves along and data becomes more available, it’ll just take some work to trace the dollars.

But it is a lot of work.  The general public, occupied during working hours in their own private-sector occupations, can’t hope to keep up.  This fund blends into that fund from the other source through technical accounting categories, with repositories here and there that must remain shielded from public view for privacy or other reasons.  The opportunity to mislead is structural.

In a small way, though, I think I’ve got a handle on how the Tiverton School Department transformed temporary stimulus money into a permanent increase in local funding and have written about it on Tiverton Fact Check:

In summary, when the state money shifted from regular aid to “restricted,” the school department built the excess into its budget.  But when the funds shifted back, the increase was buried in this “restatement,” so local taxpayers would remain forever responsible for the supposedly temporary increase.  As a matter of fact, the “restricted” aid didn’t actually decrease much; the accounts just changed.

Thus, the Tiverton schools maintained healthy budget growth even as the Great Recession wore on and housing values plummeted.

I’d be surprised if something similar wasn’t accomplished by school districts throughout Rhode Island and across the United States.  Actual stimulus would have been a government reduction in taxes, but that wasn’t Obama’s goal.

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A Well-Planned “Shock” To The System Is, Indeed, Warranted

According to the Rhode Island Family Prosperity Index, “startups aren’t the only thing when it comes to job growth. They’re the only thing.” The only way to incentivize enough start-up activity to make a difference in our state is to create a business climate that is attractive enough to make thousands of entrepreneurs want to invest here. Crony deals for a few dozen companies will not get it done.

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Educational Efficiency Requires Lower Spending

Here’s an interesting study.  It’s from GEMS Educational Solutions, and I found it via a positive mention in a Guardian article, so we’re probably not talking a right-wing group, here.

The study compares certain educational statistics across countries, and one of its principles is that “inefficiency can be a result of either underpaying or overpaying teachers.”  By that measure, the United States would become more efficient (better managing results versus tax rates) by lowering salaries by five percent and increasing class sizes by 10%.

Rhode Island’s teacher salaries are top 10 for the country, so 5% would be too low for our state.  Also, the 15.3 student:teacher ratio listed on GEMS’s application compares with a Rhode Island average of 8.

To be clear, these are back-of-the-envelope comparisons.  A more-thorough review might require adjustments of the numbers (different years, different teacher roles included in the student ratios, etc.).  I come across people, though, especially locally, who find inconceivable the idea that less spending on anything government does might be bad.

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Mike Stenhouse on GoLocal LIVE – Gov’s Manufacturing Council

Thanks to Kate Nagle and GoLocalProv for inviting the Rhode Island Center for Freedom and Prosperity’s Mike Stenhouse on their new GoLocal LIVE program yesterday. They discussed, in part, Governor Raimondo’s recently announced manufacturing advisory council, which is comprised of lots of people but not a whole lot of economic diversity.

Meanwhile, congratulations and best wishes to Kate Nagle, Molly O’Brien and GoLocalProv on the launch of their cutting edge new program!

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Some Day, My Prince … Er, Cheap, Green Energy Will Come

You may have been keeping half an eye on the proposed power plant that a firm called Invenergy would like to build in Burrillville. Friday, the Providence Journal reported that

Invenergy has failed to sell the second half of the power output of its proposed fossil fuel-burning power plant in Burrillville to the regional electric grid.

Opponents of the proposed plant understandably view this development as good news. However, it is not a fatal blow for the proposed power plant, as the article notes.

Further along, the article also notes that New England has had 4,200 megawatts of generating capacity taken off line (my observation: this happened in large part due to out-of-control EPA regulations by the Obama administration), and another 6,000 megawatts are at risk of going off line. Accordingly, many of us are concerned about the cost and continued adequate supply of electricity.

Environmentalists believe they have the answer.

But opponents of the plant say that renewable sources can fill in any need for new power in New England.

Yikes. Sorry, no, that is simply not the case.

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So, Free Tuition to a College with “Deficiencies” Training Teachers Whose Students Aren’t Proficient?

This news, reported in an early-January article by G. Wayne Miller in the Providence Journal kind of disappeared with the governor’s announcement of free tuition, but it’s relevant at the front and back ends:

A Rhode Island Department of Education review of Rhode Island College has found multiple deficiencies in educator programs at the school, which graduates a majority of the state’s elementary and secondary school teachers and administrators.

Problems at two master’s-level programs were judged so severe that RIDE declined to renew them. Seven other programs were conditionally approved. A tenth was approved “with distinction.”

As the article states, this college is graduating “a majority” of the “teachers and administrators,” and the schools at which those graduates are going on to teach are often leaving students to graduate without being proficient in math and reading.  So Democrat Governor Gina Raimondo is proposing to give free-to-the-student (paid by taxpayers) tuition to students who often aren’t adequately prepared for college, some of whom will enroll in programs for which the state has reason for concern and then go on to teach at the schools that aren’t offering adequate college preparation.

That sounds very Rhode Island, but it doesn’t sound like a winning formula for the people who live here.

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Discount Rate Assumptions and the Certainty of Tax Increases

After years attempting to interpret public documents related to pension funds to understand the method of deciding what a reasonable investment return assumption would be, I finally have it straight from a municipal investment advisor. As I’ve posted on Tiverton Fact Check:

Me: So if a town comes to you and says, “We want to hit this number,” you say, “Well, what’s your risk?,” and that’ll play into seven-and-a-half percent.  The fact that the town can then in 20, 30 years increase taxes to make up for the loss, then you have a little higher tolerance for risk, so you can go up to 7.5%, which you may never hit, but in the end of 20, 30 years, you’ve got other assets — taxpayers — you can take money from.  Is that part of the conversation?

Gene McCabe, Director of Investments for Washington Trust:It is.

In the not-too-distant future, I suspect it’ll become unreasonably expensive for us municipal assets.  Elected officials and government employees should start pondering what will happen when assumptions about how much money can be confiscated from Rhode Islanders prove as fanciful as assumptions about high returns at the stock market roulette wheel.

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Can Lawmakers Become Rhode Island’s Heroes?

Everyone concerned about the well-being of our state’s families should be alarmed by our unacceptable 48th-place ranking on the Family Prosperity Index (FPI). The FPI demonstrates quantitatively the undeniable link between economic and social policy in determining family prosperity. Whether it is criminal justice reform, taxation, or education, if we are to improve our state’s dismal 48th place ranking in overall family prosperity, we must make helping families the focus of our public policy and private advocacy. Lawmakers can become heroes if they can construct policies that actually address the real needs of real families.

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Doesn’t Money Have to Come from Somewhere?

A nagging question is never addressed in this Christine Dunn’s Providence Journal article:

One of the Trump administration’s first actions last Friday was the suspension of a previously announced 0.25 percentage point rate cut in the Federal Housing Administration’s annual mortgage insurance premium. The planned cut, scheduled to become effective Jan. 27, had been projected to save new FHA-insured homeowners an average of $500 this year….

The FHA is a part of the U.S. Department of Housing and Urban Development, and it offers mortgage insurance, most often to first-time buyers and low-income individuals. An estimated 16 percent of mortgages in the U.S. are FHA-insured. The mortgage insurance is designed to protect lenders against defaults.

Was there no information about why the Trump administration took this action or where the money comes from?  Maybe this move benefits corporate interests, or maybe it benefits taxpayers; it would seem incumbent upon journalists reporting the benefits of a government program for the recipients to also give some sense of whom it affects adversely.

Inadvertently or deliberately, this omission perpetuates an imbalanced understanding in the public, disallowing us from weighing costs when assessing how well government is making decisions.

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When the “Home-School Community” Is Separate from “the Community”

In Tiverton, the School Committee sees public education as promoting government-branded schools, not ensuring educational services that suit the needs of all of our children, as I’ve written on Tiverton Fact Check:

This distinction became clear at the January 24 meeting of the Tiverton School Committee, which introduced a new policy explicitly denying home-schooled students the opportunity to take classes — particularly technical and vocational classes — outside of the district through arrangements that Tiverton has made. Students enrolled in Tiverton schools can take such classes, even attending alternative schools full time at no cost to their families. …

The education officials in Tiverton have already decided that it is the responsibility of taxpayers to cover the tuition of students who want courses of education that they can’t get within the district. They are just applying that policy in a discriminatory way. No matter how much you may pay in taxes or contribute to the town in some other way, unless you put your children under their complete control, you are part of “the home-school community,” which is apparently separate from simply “the community.”

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A More Holistic Path To Help Real Rhode Islanders

It is time to challenge the status quo insider mindset and to search for a more holistic path to help real Rhode Islanders improve their quality of life. This week, the Center held a forum at Bryant University that provided an ideal opportunity for community, religious, and political leaders to convene to begin the process. We brought together leaders on both the left and right to discuss the challenging questions, and the strongest voices stood in stark contrast to the corporate tax-credit policies that have been the center-piece of the Raimondo administration’s economic development agenda.

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