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Moore: Will Brookings Study Remember RI’s Forgotten People?

Monday, August 17, 2015

 

If economic studies and research were all it took to create a vibrant economy, the state of Rhode Island would be able to pave its streets with gold.

Lord knows, the state has had enough of them throughout the years. Whether it was Ira Magaziner’s Greenhouse compact from 1983, or former Governor Donald Carcieri’s Economic Development Summits or Tax Policy Panels, or the “Fourth Economy” study spearheaded while Lincoln Chafee was governor, the state has had no shortage of retrospectives about our economic woes and suggestions to improve the state going forward. 

Now, it’s Gina Raimondo’s turn. The current Rhode Island Governor announced a new study that will take a look at opportunities to expand the state’s economy and grow jobs here in the Ocean State earlier last week. It will be privately funded by non-profits and individuals from the finance industry.

But endless studies filled with vague concepts and suggestions that will benefit the industries of the people who funded them are not what Rhode Island needs to improve its economy.

Endless Studies

Rhode Islanders should be skeptical about the results of a privately funded study. Consultants have this annoying habit of telling the people who pay them exactly what they’d like to hear. Don’t be surprised if the study comes back with recommendations that would benefit the finance industry. 

Regardless of that fact, Rhode Islanders don’t need eggheads rolling in here and telling us the sources of our woes.

Here’s the thing: Rhode Island’s problems are actually simple and straightforward, but that doesn’t mean they’re easy to solve. In other words, they’re easy to ascertain, comprehend, and describe, but they’re difficult to solve, because it would take an extraordinary amount of courage to stand up to the entrenched special interests that benefit so nicely from the backwards, provincial mindset of ‘that’s how things have always been done’. 

Regionalize 

For instance, who in their right mind would think that the state of Rhode Island, roughly 45 miles long and about 20 or so miles wide, would need 39 cities and towns—all with their own management systems in place (mayors, town managers, councils, inspectors etc)? It’s an antiquated system that a remnant of a government set up before the advent of automobiles. 

Yet because the people in power in each respective city and town have no intention of relinquishing any, the people of Rhode Island are unable to achieve the cost savings that would assuredly be achieved from the economies of scale from regionalization of local government functions. Further, the reformation that would accompany regionalization would also mean that government positions would become obsolete and public sector employees would have to find employment in the Rhode Island’s private sector where they’d have to suffer the realities of harsh market forces. Let’s face it, nobody wants to enact a new policy, or even support one, that would force the layoff of their cousin, even if it would mean making Rhode Island a better place for everyone else.

RI’s Model: Tax, Spend, Regulate

The sad, simple reality about Rhode Island is that it taxes too much, spends too much, and then regulates too much. You don’t have to be a radical conservative to recognize this fact either. Forbes Magazine, an objective source with no beef with Rhode Island, ranks the state as having the 43rd highest tax burden in the nation. I know this is hard for some people to wrap their heads around, but capital goes where it’s treated the best. There’s a reason why Walmart is the biggest retailer in the world, they have the lowest prices. They treat people’s money nicely.

And to add insult to injury, even after shooting ourselves in the foot, we still don’t have enough money to do basic things like pave the roads and fix our bridges. Rhode Island refuses to spend its money efficiently. 
It’s not only capital that goes where it’s treated the best, labor is no different. A 2012 study by the Ocean State Center For Freedom and Prosperity, subsequently reported in GoLocalProv, found that Rhode Island public sector employees are compensated 26.5% higher than people who work in private industry. That means the people who work for the private sector, which funds the government, are forced to make less money so that they can make sure the state public sector workers enjoy a better standard of living than they do. 

This discourages private sector workers from remaining in Rhode Island, because the private sector workers are forced to work harder than they would in any other New England state to support their government worker counterparts, since they’re forced to pay them more. 

The Forgotten People

They’re Rhode Island’s forgotten people—the folks with no connection to the government, who toil in away in the private sector, working increasingly harder to make ends meet to support a state government that’s as expensive as it is ineffective. 

Until the private sector workers (the ones who don’t survive on government contracts) in Rhode Island are treated better, the state will continue to languish. The state needs to enact reforms to reduce the cost, size, and scope of the state government. Any study that doesn’t recommend making the state government less obtrusive and more affordable will be nothing but sweet nothings and pie-in-the-sky wishing. And hardworking people will continue voting with their feet and taking their capital and their labor elsewhere.

Russell Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected] Follow him on twitter @russmoore713.

 

Related Slideshow: Leaders on Fixing RI’s Economy

Recent rankings put Rhode Island #37 for business climate.  And while that takes the state out of its most bottom-dwelling days, leaders across RI have weighed in as to what could futher the state moving forward. 

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Leadership Issues

Dr. Edward Mazze, URI Distinguished Professor of Business

"Knowing who is in charge when it comes to setting policy, making things happen and being able to mobilize resources to support policy. Economic development in Rhode Island is fragmented, cities competing against cities, cities competing against the state, the executive branch competing against the legislature. There is no "one state" economic development focus. The Governor has to be in charge in charge of setting policy, and have the resources to accomplish her objectives.

ECONOMIC GAME CHANGER: Line item veto so the Governor can make things happen."

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State Taxes

Dr. Edward Mazze, URI Distinguished Professor of Business

"State taxes (business and personal income, sales, estate) and local taxes (property) impact every decision a business makes.  High taxes exist in Rhode Island because the state is divided into so many cities and towns needing funds to support their activities. The state needs to look at different ways to reorganize local government structure.  Without a new structure, state and local governments will continue to have increasing deficits which will require increasing taxes.

ECONOMIC GAME CHANGER: Government-Business Task Force under the leadership of the Lieutenant Governor to recommend a structure best suited to provide the services required by Rhode Island taxpayers in a more economic and efficient manner."

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Recruiting

Dr. Edward Mazze, URI Distinguished Professor of Business

"The best recruiters for economic development are the business community. Chambers, professional groups and educational institutions play a role an important role in this activity but it is nowhere as important as the role played by individual business people/leaders. Many of Rhode Island's largest businesses are "owned" and/or "headquartered" in other states or countries.

ECONOMIC GAME CHANGER: Getting business people "invested" in economic development and letting the private sector do their thing."

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Support vs. Stars

Dr. Edward Mazze, URI Distinguished Professor of Business

"Reaching for the giant business "stars" and not taking advantage of the state's strategic assets, namely, the small business community. The state's strategic location and assets provides a competitive advantage to marine industries, the hospitality industry, exporting and importing, health and education and professional services- many of these industries  are made up of small/medium sized businesses. 

ECONOMIC GAME CHANGER: Providing the support ( tax credits, less burdensome regulations, a better tax structure) for small businesses to survive and grow. Small businesses are the Main Street businesses in Rhode Island and create jobs."

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Multi-Faceted Approach

Gary Sasse, Founding Director of the Hassenfeld Institute for Leadership at Bryant University and Former Director of Administration 

"The centerpiece of an economic development strategy is the productivity with which a state uses its human and capital resources. Only businesses can create jobs and economic growth. Therefore, states compete to offer the most productive climate for the private sector to succeed.

There is no silver bullet. Making Rhode Island economic competitive requires a five-part strategy encompassing workforce development, urban education reform,  tax competitiveness, targeted recruitment and retention and technology commercialization with an emphasis on middle class jobs and small business."

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195 Incentives

Laurie White, President, Greater Providence Chamber of Commerce

"I would...add that the $25 million incentive pool to maximize a game changing investment on the 195 lands is critically important for many reasons including sending a signal that RI's period of unilateral disarmament is over."

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Game Changes Needed

Larry Girouard, RI Taxpayers

"There is not one game changer that will begin to drive the RI brand up the competitive ladder ... Rhode Island will need a series of “game changes” if the business community is to take notice.  

*Line Item Veto for the Governor ... 44 states have this.  The Line Item Veto will provide some checks and balances regarding leadership spending.

* Put real teeth in the ethics commission ... need I say more

* Develop a more stringent approach to bills where, in the short term (1-2 years) the focus will be on only those bills that have an impact on the RI competitive brand.  Each bill should have an economic impact statement associated with it to justify the legislature spending its valuable time on it.

* All bonds over $50,000 must be approved by the voters.

 
 

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