Responding to the state arts bureaucracy’s response to the Center’s spending report.
It appears that members of the Rhode Island media are digging into a report that found $225 million in cuts to the next state budget and focusing on two passing examples of past spending that aren’t even included in that total.
John Marion of Common Cause Rhode Island: “The question [of whether to have a convention] has come before the voters three times since the 1974 changes to the constitution. In 1984 it passed, it got 53.8% of the votes. In 1994 it was defeated, and only received 40.5% of the votes. And in 2004, the most recent time it was on the ballot, it received 48% of the votes.
What are its chances this time?…The only thing we have to go on is a January 2013 poll by Public Policy Polling, where they did, I believe, a sample of roughly 500 Rhode Islanders, and it came up with 40% of Rhode Islanders supporting, 25% opposing, and 35% undecided.”
Politicians and members of the media who spin ObamaCare (and HealthSource RI) enrollment as a positive aren’t equipping the public to assess their investment or preparing them for what’s to come.
Professor Robert Williams: “Some people think that the state constitutions are too easy to change, and therefore aren’t really constitutional. Some people think that state constitutions are too long, they’re too detailed….What these people are doing are comparing state constitutions to the model that all of us know, which is the United States Constitution. I want to suggest that that’s a big mistake, and as you go forward and try to determine whether to have a convention to look at your state constitution, and if you do have a convention, look at what functions and qualities a state constitution has in contrast to the US Constitution….They’re different from the United States Constitution and they ought to be different”.
Professor Alan Tarr: “Most of us revere the US Constitution….Most of us feel we couldn’t do a very good job improving on [the Founders’] handiwork. But somehow, we don’t feel the same reverence, the same attachment to our state constitutions….What we really have are two different constitutional traditions. At the national level, we value stability and continuity. At the state level, we value change and experimentation. The reflects a conflict of views, if you will, at the very point of the founding”.
Monique’s post, this morning, about HealthSource RI’s advertising in Rhode Island media brings to mind Phil Marcelo’s Providence Journal article on Saturday, which ended with this:
Those interested in enrolling may visit HealthSource RI’s “Contact Center” at 70 Royal Little Drive in Providence or its temporary location at 250A Centerville Rd. in Warwick’s Summit Executive Park.
Both locations will offer extended hours on Sunday, March 30 (noon to 9 p.m.) and Monday, March 31(8 a.m. to10 p.m.).
Rhode Islanders may also enroll by phone at (855) 840-4774 or online at www.healthsourceri.com.
Now, I don’t think Marcelo was consciously catering to a big-money advertiser. (HealthSource had given the Providence Journal $85,050 in the five months ending March 14.) Inasmuch as the health benefits exchange is a government agency, publishing the information can arguably seen as a public service announcement for readers’ benefit.
Two points must be made, though. First, it is explicitly part of HealthSource’s mission to compete with private companies offering similar products. As I’ve noted, UnitedHealth is planning a small-business product similar to the one that HealthSource provides. How would it look if United were to buy $90,000 in advertising over a few-month period and Providence Journal reporters started weaving product placements into their stories?
Maybe journalists should start being wary of the blurring line between government and profitable interests.
Second, the RI Center for Freedom & Prosperity has come under attack, recently, including in the Providence Journal, based on allegations about our funding. I’ve complained that this amounts to connecting dots without any dots. We share some political philosophy with a national movement in which certain large donors play a role, and that alone is insinuated to be evidence that our work is somehow suspect.
Yet, here is a direct pair of dots, between HealthSource RI and the Providence Journal. The link in that relationship is much more specific and conspicuous than a general link between billionaire libertarians and the Center’s work on eliminating the sales tax, and yet it isn’t even disclosed in Saturday’s story.
Is that evidence that the Providence Journal “operates largely in secret,” the phrase reporter Randal Edgar’s used about the Center?
Past: It was difficult to look at the (unsuccessful) Marcello coalition and believe they were offering reform, as much as they were offering a refashioned oligarchy to replace the old one.
Present: Here are three specific proposals for rules reform, consistent with Speaker Mattiello’s call for a House of Representatives that is truly run by its members:
Future: Trying to downplay the serious differences and avoid explaining the errors of progressivism and the excesses of unionism in order to ease the process of political coalition building isn’t likely to stop the progressives from immediately coming after Speaker Mattiello, or the unions from shifting their support elsewhere, if they don’t get their top agenda items. With the help of some standard-issue Rhode Island political inertia, the new Speaker may be able to maintain the coalition he has assembled for a time, but to prevent it from being whittled away, he will need to resolutely work at convincing a broad swath of Rhode Islanders about why his version of “jobs and the economy” is superior to competing versions which have strong constituencies amongst activists in the Democratic party.
So, today Instapundit links to a Daily Caller story about members of the Service Employees International Union (SEIU) riding along with the federal Occupational Safety and Health Administration (OSHA) when SEIU-friendly workers in non-union businesses make complaints about safety violations (which subsequently aren’t substantiated by inspectors):
OSHA deputy assistant secretary Richard Fairfax wrote in a February 21, 2013 clarification letter that union agents can accompany OSHA inspectors to site visits at companies without collective bargaining agreements. …
Maurice Baskin, an attorney representing the Associated Builders and Contractors and the National Association of Manufacturers, said in testimony before the House Subcommittee on Workforce Protections that OSHA’s clarification letter violates the OSH Act and the National Labor Relations Act.
Put this in the file for “Obama uses government agency to help unions (which help Democrats).”
The other day, I came across a Washington Times story reporting that the federal Environmental Protection Agency (EPA) is playing favorites when handing out potential election-fodder:
Twenty-eight of the Democrats’ requests have been completed. Most resulted in the EPA release of documents with some reports that a search yielded no records. The other requests are being processed or await assignment. …
Republican political committees have filed just four requests since 2012, and none of those has been fulfilled. One request that has languished for more than two years sought correspondence between John F. Kerry, a senator at the time, and EPA Administrator Lisa P. Jackson.
File this one under “Obama uses government agency to give Democrats electoral advantage.”
Of course, a quick skim of news stories involving the EPA brings us to another bulging file labeled “Obama uses government agency to change law without changing law.” Also in the drawer are files for “Obama uses government agency to stop political opposition” and (maybe most ominous) a folder simply labeled “NSA spying.”
I can’t shake the feeling that we now have exactly the sort of government that our founding documents strove so hard to prevent, one that sets the government against the people… or at least those who won’t get in line.
Steven Frias had another must-read article in the Providence Journal, earlier this week, detailing the longevity of the problems that have brought Rhode Island to its current condition — this time, voter fraud:
In the 1938 election, Rhode Island experienced it on a massive scale. A bipartisan legislative committee investigated the elections in Pawtucket and Central Falls. The committee unanimously determined that over 10 percent of the votes cast in these two communities were irregular and that hundreds of votes had been cast by floaters. In four Pawtucket precincts, there were more ballots cast than there were eligible voters. Voter fraud was also uncovered in North Providence and in the 13th Ward of Providence, which encompasses the Federal Hill neighborhood.
What followed appears to have been an example of “elect your savior” in the person of a conspiring attorney general.
Eventually, Rhode Islanders became so fed up with the fraud that they insisted on signature verification. Anybody who’s voted recently knows how weak of a protection that really is.
In our digital age, requiring a photo ID is neither overly burdensome nor, as the history shows, unwarranted.
Two parcels of Providence land for which Rhode Island Housing appears to have paid a hefty sum open up a peep hole into the operations of the state’s ruling class.
Andrew Ferguson has an interesting article about a jargon-laden and passively voiced mea culpa from the Organisation for Economic Co-operation and Development (OECD) regarding its erroneous economic projections. The key part — related to many of our battles in Rhode Island, particularly over economic modeling of the sales-tax elimination — is this:
… The biggest mistakes, the economists point out, occurred when they forecast growth rates in countries with a relatively high level of government regulation. This surprises the economists, though it won’t surprise anyone who takes a dim view of government regulation generally. The forecasters, good statists all, assumed that the regulations “would help to cushion financial shocks” in the highly regulated countries and would therefore aid recovery.
Just like the folks in RI’s Office of Revenue Analysis and the developers of the Regional Economic Models, Inc. (REMI) tool that they use for their forecasts, they hew to the belief that a rationally determined allocation of resources must be more effective. (The humor, for free marketers who catch the joke, is that the insiders then insist that the government behave irrationally… cutting critical services, for example, rather than fluff.)
Ferguson continues:
The economists now say they failed to consider the damaging effects of regulation. In the real world, regulations “delay[ed] necessary reallocations across [economic] sectors in the recovery phase”—which, translated from the Economese, means that government was retarding the ability of businesses to do what they do best: find a way to create value and make money even in calamitous circumstances.
In fairness to the economists, the politicians who set policy allow them to believe that they’re all acting with the same interest of efficiency, rather than securing power for a very limited group. But even if the politicians were completely well intentioned, the forecasts would fall short.
The reality of the economists’ predicament is that they must acknowledge something that can be divined without their extensive research and education: They simply can’t have the information necessary to make projections and real-time decisions. Only lowly business-owners and consumers have sufficient information about their own circumstances and the economic resources that it is their right to conduct.
Add another anecdote to the story of Rhode Island’s decline:
A handful of residential developers and engineers turned out Tuesday at the first public session with officials responsible for selling 19 acres of former highway land now available for development in the capital city. …
“I thought there’d be more people,” said Wayne Zuckerman of Sterling Properties in Livingston, N.J., who said he is familiar with Rhode Island. “I came because I wanted to see who the developers were … . Nineteen acres in the city. You would think — I would have thought — the room would have been filled.”
None of the people in the room seemed very enthusiastic about starting up projects. There are two telling details in the article. First:
[Jan A. Brodie, the I-195 commission’s executive director,] spoke of the challenges to develop the land — including building costs as high as in New York and Boston but lower personal income and revenue that developers can generate here.
Second:
Carla DeStefano, executive director of Stop Wasting Abandoned Property in Providence, questioned Brodie about the commission’s selection process after she said the panel had decided not to use a numbered ranking system of proposals. That “sounds a bit clandestine,” DeStefano said.
The reasoning, Brodie said, was to leave the commission room to consider the worthiness of each project, without deciding ahead of time how much specific criteria should count on a scoring chart.
Rhode Island has allowed the people who run its government to drive up costs and squelch opportunities through taxes, regulations, and general here’s-how-you-have-to-live-your-lifedness. It shows even in the selection process. The agency that the state set up to offload the land wants private developers to spend time putting together proposals without a clear, fair description of how they’ll be judged, because the insiders want maximum flexibility to pick what they like.
This is another manifestation of Rhode Island’s having no rule of law.
Bulletinbulletinbulletin.
The more I look into the situation at Tiverton’s Stone Bridge site, the better it illustrates the dysfunction of our system of government. First of all, it isn’t clear who’s paying for the project.
The parcel is owned by the town. The latest Fall River Herald article mentioning the renovations says the $2.6 million project will be funded by the RI Dept. of Transportation. Most reports put the dollar amount at $2.3 million, so the Herald article may be including the DOT money to purchase the gas station.
An older article from the Herald, now available only in cache, says it’s a mix of federal and state funding. The town’s Economic Development Commission (EDC) claims the town has received “a federal grant of $2,300,000.” The latest Dept. of Environment Management assessment of the site, however, states that “currently available funds are well below the amount required to the satisfactorily rehabilitate the east abutment,” although that’s dated 2006.
So, it looks as if some federal money, flowing through the DOT, is being mixed with state and town money to fund the project. In addition, the town, state, and federal governments will all be giving up whatever tax income they might have derived from private ownership and (perhaps) commerce on the site.
At the federal level, a couple million dollars isn’t even a drop in the bucket of $17 trillion in national debt, so nobody blinks to promise it for a walking-and-fishing park. At the state level, officials look at their investment of a few hundred thousands of dollars as a way to “bring in” much more in federal money. (“Bring in” to whom?, one might reasonably ask.) And locals in town who’ve disliked the eye-sore of business on their morning strolls commit their neighbors to a few hundred thousand more (when all is said and done) to buy the land.
No matter how the funding breaks down, though, it’s difficult to understand how our system of government can find millions of dollars for an out-of-the-way nook for pedestrians when there are still high-traffic sights like this East Providence photo across the state:
At first look, it mightn’t concern Rhode Islanders from elsewhere that the Tiverton Town Council just spent a half-million dollars buying a waterfront gas station that will now not only pay no taxes, but will be part of a renovation project costing taxpayers an estimated “$2.3 million [for] renovation over the next few years.” But look again:
On the funding side, [Town Solicitor Andrew Teitz] said, $200,000 would be coming from RIDOT, and $208,000 from RIDEM.
Yes, that’s the same Department of Transportation whose director was recently making news whining about a lack of resources. Let me refresh your memory:
Rhode Island Department of Transportation Director Michael Lewis has a message for those traversing the state’s shoddy and weatherworn roads: Get used to it.
Crumbling roads and bridges across the state, Lewis told The Breeze, aren’t likely to get fixed anytime soon because the department’s funding sources are drying up …
Here, once again, we see the pattern of officials’ taking your money at the state level (where they’ve got such a lock on the electoral system that even extreme displeasure can’t unseat them) and giving it to local governments so they can commit local taxpayers to projects without anybody’s ever getting a vote. In the recent national discussion over Russia and the Ukraine, I heard one analyst note that, while the West was wringing its hands, Vladamir Putin was changing facts on the ground.
That’s the strategy, here. It’s not difficult to slip through purchases and programs when people don’t think they’re paying. Once they own it, though, it’s their responsibility to pay for renovation and maintenance. Welcome to the facts on the ground.
Even worse, this entire deal appears to have happened in closed executive session. Many of us were waiting for the public debate of how the Town Council could possibly have the authority to make such a purchase. Oh, well.
I don’t know what to call this outrage, but it’s not democracy.
I also don’t know how many people actually stand to benefit from this. I’d wager mere hundreds of Tiverton’s 15,000 residents even pass by this spot on a regular basis, let alone stop by to rent kayaks, or whatever. And now you, no matter where you live in the state, have helped to pay for the feel-good shopping spree of my town’s little tyrants.
(Click “Continue reading” for addenda.)
Scott Rasmussen makes a clear and (I’d say) undeniable point about reportage about federal budget numbers:
It was just about impossible, though, to find any media story mentioning some basic numbers that belong in any story about a new federal budget. How much money is the federal government spending this year? How does that compare to what it spent last year, or expects to spend next year? …
It’s hard to write that the president’s budget is cutting spending by $600 billion while also reporting numbers showing spending going in the opposite direction. …
The absurdity is that while annual spending will be a trillion dollars higher in a few years, the political world is trying to claim that the budget is filled with spending cuts.
The reason for this disconnect, Rasmussen explains, is that journalists start with the government spin that it’s a “cut” when they spend less than they were thinking of spending. We saw this recently in Rhode Island, when the headlines were that Medicaid was being cut in the state, even though the program increases by hundreds of millions of dollars in the governor’s budget.
The objectionable result is that the government could increase public assistance (for example), but if it did so by shifting some into a new program, it would very possibly be reported in the news as a cut.
It’s a matter of differing opinions whether this is evidence that the media is ideologically tuned to prefer government spin or just doesn’t have the time or expertise to contradict it. Either way, resolving a cognitive dissonance by reporting a third-order number (the decrease of the increase) rather than the straight numbers serves the American electorate poorly.
I’m not sure what the right word is to describe today’s press release from the Rhode Island Dept. of Labor and Training (DLT). Cheeky? Audacious? Banal? It could go any direction. Take a look (emphasis added):
The RI Department of Labor and Training announced today that the state’s seasonally adjusted unemployment rate for January 2014 dropped to 9.2 percent, down one-tenth of a percentage point from the revised December 2013 rate and down four-tenths of a percentage point from the January 2013 rate. This is the lowest unemployment rate since November 2008.
Now take a look at the corresponding press release from last April (emphasis added):
The RI Department of Labor and Training announced today that the state’s seasonally adjusted unemployment rate for April 2013 dropped to 8.8 percent, down three-tenths of a percentage point from the March 2013 rate and 1.8 percentage points from the April 2012 rate. This represents the 10th consecutive over-the-month drop in the state’s unemployment rate, and is the lowest unemployment rate for Rhode Island since October 2008.
If you’re confused about how a 9.2% unemployment rate could in fact be lower than an 8.8% unemployment rate, then you haven’t heard about the big revision that significantly darkened the 2013 employment picture. You’d think the DLT press office might have hesitated to proclaim a historical low.
Circumspection is especially called for considering that the latest numbers show a 6,500-person drop in employment, since last year, and a 9,700 drop in labor force. The complacency within our state government and the adviser class that orbits it is unconscionable.
Justin and Bob Plain discuss legislation to force utilities to maintain customer service centers within the state, and Bob illustrates that applying economics really isn’t a priority for the Left.
On March 29th, from 9 am to 1 pm, the Hassenfeld Institute for Public Leadership at Bryant University, Roger Williams School of Law, League of Women Voters of Rhode Island and Common Cause Rhode Island will be hosting a symposium about Constitutional Conventions.
Former Central Falls mayor Charles Moreau is about to be set free “after serving half his two-year sentence” on corruption charges (background available from Michelle Smith of the Associated Press, here), as a result of a First Circuit Court of Appeals opinion from June of last year. Two key factors made the decision in USA vs. Fernandez directly relevant to the Moreau case.
1. Moreau was apparently convicted of accepting not a “bribe” but a “gratuity”. What’s the difference? The First Circuit quotes a 1999 Supreme Court opinion to explain…
[F]or bribery there must be a quid pro quo — a specific intent to give or receive something of value in exchange for an official act. An illegal gratuity, on the other hand, may constitute merely a reward for some future act that the public official will take (and may already have determined to take), or for a past act that he has already taken.
2. The court then notes the structure of Federal statute…
§ 201(b) targets (primarily) federal officials, while § 666 targets non-federal officials who happen to have a connection to federal funds. It is reasonable to assume that the federal government viewed corrupt federal officials involved in the receipt of bribes as more culpable.
…where § 201(b) makes “bribes” and “gratuities” illegal, while § 666 (yes, that’s really the number) makes only “bribes” illegal.
According to Ms. Smith’s report, with the gratuity conviction no longer valid in the First Circuit because Moreau was a local and not a Federal official, Moreau and the prosecutors have made a deal where he will plead guilty to a bribery charge, in return for a sentence of time served.
If you need one sentence to explain to your friends and neighbors the law that led to this outcome, this should do: While it’s illegal to engage in a la carte bribery of state or local officials in the US, you’re OK under Federal law if you’re able to buy them off on a retainer basis.
Three clicks starting here will bring you to a very disturbing video shot by an Oklahoma woman as she stood a few yards away from her motionless husband while the police officers who apparently killed him accidentally based on a misunderstanding pretend he’s fine. From her distance she continues to try to draw some response from him. “Please, somebody tell me he’s alive.”
At this link is the latest development in the case of Justina Pelletier. What the public knows, it discovers in pieces, around a court-imposed gag order, but it appears that when a young teenage girl who’d been receiving successful treatment at Tufts hospital in Connecticut for a debilitating, even deadly, disorder followed her doctor to Boston Children’s Hospital, some other doctor decided her problem was psychological, and the State of Massachusetts decided that her parents’ following Tufts’ advice amounted to child abuse. The parents have had only brief visits with their daughter for a year, and the child is now going into foster care, not receiving the treatment that she needs.
Last week, I came across an account by a San Francisco techie who called 911 on behalf of somebody he passed in the street and found himself naked in solitary confinement overnight after a series of (let’s call them) aggressive misunderstandings by police and corrections officers.
I don’t relate these anecdotes to argue that government employees are necessarily any more prone to error and overreach than anybody else. But three lessons should be drawn.
Two weeks ago the question was how far would the government go beyond Russian-style anti-protest laws in restricting the civil liberties of the people, in order to protect the economic arrangements of a few. We learned at the start of this week that the Ukrainian government then in place was willing to murder its own citizens, rather than let them have the same options for making their way in the world that an average European has. This is the attitude of an unfree government, one that believes that people are disposable when they impede government priorities.
Because the Ukrainian people are standing firm, they are taking meaningful and necessary steps to show their government and the world that it is government that becomes disposable, once it becomes harmful to its citizens, and the people rise up to demand that it change its priorities as a result. Free people everywhere have common cause with those seeking freedom in Ukraine — literally today — to help ensure that the government there respects this reality, as Ukraine attempts to move forward.
Justin and Bob Plain discuss the pension mess (and Justin adds a bit of after the fact textual elaboration).
The two most disturbing aspects of the Town Council meeting in Tiverton, last night, speak directly to the corruption of Rhode Island, more generally.
I’m at the Tiverton Town Council meeting, where residents used the open-comment section to express their displeasure with the way the council let an incompetent town administrator, who ought to have been held responsible for losing the town some untold thousands of dollars, ease into retirement and let an employee who was filmed apparently stealing time and resources from the town (in combination with a whistle blower’s testimony) ease into his own lucrative retirement (with around $55,000 in sick and vacation time). (Some back story, here.)
After the audience spoke, the council put an item on the agenda to allow itself to respond. Their points could be summarized as follows. (Note that these aren’t direct quotations, but my interpretation of their comments’ essence.)
This is the system that people like those on the council (now pretty much to a person) have set up, and it’s one in which nobody is ever responsible for anything or ever has to take responsibility. It’s an illegitimate system with which the rest of us comply mainly because the government has the power to take our money and put us in jail.
But let it be known far and wide: There are minimal repercussions for criminal behavior within government in Tiverton, Rhode Island, provided you’re well connected and covered with a labor union shield, and the people in power with any real plan of changing this corrupt system are few, far between, and viciously dehumanized and attacked by the people saying “trust us.”
I find myself thinking of the tens of thousands of Rhode Islanders who are unemployed (including those who no longer tell government pollsters that they are looking for work) and the thousands of struggling self-starters and small-business owners and wondering what they think when they read the Providence Journal. Consider:
The start of the new legislative session sparked raises of up to 22 percent for more than two dozen General Assembly staffers, a high-level promotion and the hiring of another former state lawmaker.
Promotions: Lawyer Frederic Marzilli was promoted to director of … Legislative Counsel … salary up from $90,458 to $121,566 a year. He replaces John O’Connor, who was given a new title — “senior legal counsel to the Speaker” — at the same $116,890 salary he had before.
And so on. From a different segment of the same link:
[Matt] Jerzyk, who held a number of titles in Providence City Hall, including deputy city solicitor, has been named legal counsel for the House Labor Committee … Jerzyk also serves as legal counsel to the House Small Business Committee… He is being paid $2,500 a month for his work on the two committees…
Jerzyk is also city solicitor in Central Falls and consulting on Providence City Council President Michael Solomon’s campaign for mayor and former state General Treasurer Frank Caprio’s bid to regain his former job as treasurer.
And then there’s the Foster teacher complaining in an op-ed about pension reform:
The reduction and suspension of the cost-of-living adjustment for state retirees is just one component of the pension reform that the legislature adopted during the 2012 legislative session. The other two components that no one chooses to discuss are deep cuts to the defined benefit of the teacher or state employee and the additional requirement that they work years longer to attain their deeply reduced pensions.
Of course, circulation numbers suggest that much of Rhode Island’s struggling population isn’t reading the Providence Journal, perhaps because of demographic shifts, perhaps because they’re all too busy struggling, or perhaps because it’s become a conduit for sowing hopelessness among them, so why bother.
Bob Plain admits that progressives believe government is about taking money from you to fund their priorities, including a special tax on guns.
“What the hell?”
That’s what a high-paid government director said to an audience of local small businesspeople upon learning that a private business was planning to offer a service that would compete with a government program.
According to ConvergenceRI, it’s a direct quote from Christine Ferguson, director of Rhode Island’s ObamaCare health benefits exchange, HealthSourceRI. Stephen Farrell, who runs UnitedHealthcare of New England, had just announced that his company is planning to open a health insurance exchange for businesses and their employees. And that’s the response from the woman who’s been given around $100 million by the federal government in order to try her hand at a healthcare-related start-up business at taxpayer expense.
She went on to express a view of competition that must only make sense in the halls of the bureaucracy:
“On the exchange, you can choose Blue Cross, Neighborhood and United – and next year, Tufts.
“[On the UnitedHealthcare exchange], the only option is with United, the only option given to employer [and employees] is within United.” …
“Let’s be clear. It’s a strategy that makes sense for their perspective – if they want to keep market share.
“What we want to do is open up the options, and to drive, from a consumer and provider perspective, competition.”
So “competition” is when all options are offered through a government monopoly.
But yes, let’s be clear. This is a government agent making a competitive sales pitch to a group of potential clients, making derogatory statements about a private company’s offering, and it’s entirely inappropriate.
Going forward, how can United or the people of Rhode Island have any confidence in the fairness of the taxation and regulatory activities of the government? (It’s a trick question; no Rhode Islander should have such confidence, as is proven again and again.)
So — hypothetically — we’ve got the entire grocery store industry fully automated, and the question is to where the extra profits will flow. With a large displaced workforce supported by unemployment and welfare, the government has alleviated some of the demand-side pressure on prices by handing out the money to keep paying current prices on food.
But pressure on prices can come from the other direction: competition.
A grocery store that simply divvies up its greater profits among a few executives and stakeholders will be at a competitive disadvantage to one that passes much of the savings on to consumers. That displaced workforce still has only limited income, so a store that can save the average family $50 a week will draw shoppers far and wide.
If that doesn’t happen, then something in the system is preventing it. In an industry like health care, it’s easy to see that regulations and mandates make entry and innovation difficult. In an industry like heavy construction, unionization keeps the largest area of cost (labor) fixed. In other areas, licensing and other hoops create the blockage and minimum wages and benefits keep up the cost of labor without unions.
The great bulk of these complications begin with or are exacerbated by government. That makes sense, too.
Established businesses, labor unions, and other special interests are already organized and powerful. Therefore, they are better able to influence the democratic and not-so-democratic processes of government.
Government, which progressives like to see as a counterbalance to private power, simply comes into line with it and amplifies its reach. A managed economy — with both direct decisions of government and public-private efforts to move the economy toward the upper crust’s vision of the future — inevitably favors the powerful and influential.
They limit competition and also ensure that there are mechanisms (including loopholes) that keep them from bearing an equal share of the burden of the income redistribution that keeps their prices up.
(more later)