Progressive News, Opinion, and Analysis
Matthew Lannon is 12-year-old. He’s a boy scout, he goes to church, he plays video games and sometimes fights with his sister. In many ways, he’s just like all the other kids his age … except that Rhode Island won’t let his parents get married.
Listen to him speak about why marriage equality matters to him with a wisdom and compassion beyond the ability of many more than twice his age.
“To cut or raise state taxes,” wrote Kathy Gregg in Friday’s Providence Journal, “which is better for Rhode Island’s struggling economy?”
It’s a fair question, given that Rhode Island’s political punditry is at odds over the answer. Those who advocate for the rich and powerful say raising taxes will hinder growth and the those who advocate for the working class saying the rich need to start paying their fare share for the state to recover.
A new research paper by two nonpartisan economists says the right is wrong on this one.
“While business concerns about government regulation and taxes also rose steadily from 2008 to 2011, there is no evidence that job losses were larger in states where businesses were more worried about these factors,” reads the report.
Here are the bios of the two economists who authored the study: “Atif Mian is a professor of economics and public policy at Princeton University and a visiting scholar at the Federal Reserve Bank of San Francisco. Amir Sufi is a professor of finance at the University of Chicago Booth School of Business.”
In Gregg’s story, House Speaker Gordon Fox is quoted as saying, “one thing we keep hearing from the business community is they want predictability in their tax policies … . If we are going to move [away] from that standard convince me and others reps why we should.”
Well here you go, Mr. Speaker and other legislators. The finale of these two nationally recognized nonpartisan economists research refutes this exact claim (emphasis mine):
The state-level evidence is less consistent about regulation and taxes as factors holding back employment. There are important caveats. For example, it’s possible that business uncertainty held back hiring nationally but did not show up differently across states. Or perhaps the NFIB’s specific question does not capture the type of policy uncertainty that researchers believe has been holding back hiring. In any case, the view that government-induced uncertainty held back employment must be consistent with the absence of any state-level correlation between employment growth and increases in business concerns about regulation and taxes.
This begs a question: If government-induced uncertainty is not holding back hiring, then what is? The basic pattern in Mian and Sufi (2012) continued to hold through 2012. U.S. counties with high household debt levels coming into the recession are the same counties with depressed levels of employment in the nontradable sector today. So why did the initial demand shock in these counties have a more permanent effect on employment? Important long-term trends should be considered here, in particular the continued decline in manufacturing and other mid-skill “routine” jobs (see, for example, Charles, Hurst, and Notowidigdo 2012 and Jaimovich and Siu 2012). Understanding why the United States has had such difficulty replacing lost jobs in the long run remains an open question.
It’s important to keep in mind that while activists on either side of the political spectrum may disagree on whether high taxes help or hinder economic growth, the public is not. A poll done last year by Fleming and Associates (the same pollster that WPRI uses) showed that almost 70 percent of respondents want to raise taxes on Rhode Island’s richest residents.
While this study doesn’t prove the public and progressives are right, it does show that the right is wrong. Or, it at least shows that the logic local conservatives have offered for why to resist raising revenue from the rich doesn’t hold economic water.
The Responsible Contract Resolution Act – better known as binding arbitration – will be debated in committee at the State House today. At this hearing, and in the local media before and after it, you will hear many of the Rhode Island’s most vocal union busters complain that the bill is tantamount to letting labor sign its own checks.
Nonsense.
Connecticut has binding arbitration for teachers and none of the doomsday scenarios that conservative pundits claim binding arbitration will bring have played out there. (Note that chattering class here typically only compares Rhode Island to our neighbors when it benefits right-wing talking points, but Sam Howard has a great piece on this local tradition today!)
Interestingly enough, the teachers and taxpayers from Newtown, Connecticut went to binding arbitration in October.
Connecticut has had binding arbitration for teachers since 1979 and in 1986 the state expanded the program to include all state workers (municipal workers were already covered). This is a clear cut sign that the state thought the system worked.
In fact, 26 states have binding arbitration for public sector workers. And Rhode Island is one of them! We even have binding arbitration for teachers, just not on financial matters.
Binding arbitration is just a dispute resolotuion tool that protects vital social services from being interrupted because of financial disagreements. Rhode Island, per its laws, believes public safety is worth this protection but not public education. This bill would elevate education to a similar standard as police and fire, show teachers that the state supports their efforts and, yes, it would also likely cost local taxpayers a little bit more.
But that isn’t necessarily bad for the economy and you can certainly make a strong argument that it is good for education. We should have the debate about finances, for sure, but we should have the other debate too.
“Competition” is the word on seemingly every policy-maker’s lips. The Governor tells us that we must improve it. Our Senate Policy Office and the Rhode Island Public Expenditures Council have suggestions for how to do that. “Competition” is the stated reason for doing away with programs such as temporary disability insurance, the worker-funded program that allows for things like maternity leave. That Rhode Island must become more competitive is accepted wisdom.
Once again, the accepted wisdom is wrong. We say “increase Rhode Island’s competitiveness, make us more attractive to business.” But Rhode Island already can be attractive to business. If an ill-conceived business idea can receive $75 million with no questions asked, then Rhode Island has a way to attract businesses here: throw guaranteed millions at them. That is certainly competitive. That is certainly attractive.
Competition is the wrong philosophy for Rhode Island. First, it seeks to make Rhode Island something it is not. Does Massachusetts have this? Then we must have it. Does Texas have this other policy? Then we must have it! We cease to favor originality, instead seeking the square pegs of the world to fit into our round hole. Our collection of useless pegs is immense. And they have not grown more useful. We must not think about Rhode Island as being a new Massachusetts or a second Singapore or some other such nonsense. These other places already are the best at being themselves. We cannot always replicate what they have done. We must seek to be the best Rhode Island we can be. Our state’s policy should not be dictated by those who insult our state and its people at every turn. Rather we need to listen to those who adore it.
Second, the philosophy of competition distracts from our real goal for our economy: growth. When we talk about making Rhode Island more attractive or increasing competition, we are not talking about making it more attractive for our own people. We are talking about attracting businesses from elsewhere. This is not growth, it is trade diversion; snatching away the wealth of others. We impoverish one area of America to slightly enrich another. This kind of competition benefits not the people of this country, but aristocracy of this country.
This policy led to the disaster of 38 Studios. This policy gives away millions to outside businesses who deal only in hypotheticals while giving nothing to our own people who deal with realities every day. Instead of focusing our resources on attracting a hypothetical outsider, we should focus on the very real Rhode Islander who needs to be fostered, whose economic situation needs to be bolstered. This is a strategy of growth, of building our economy from the ground up. This strategy benefits us all.
Rhode Island was the birthplace of the Industrial Revolution in America. Once we fostered our own industry. Once we utilized what we had already, what made us unique and special, and we built factories and roads and our state grew and grew. And in the name of competition and attractiveness, in worship of these twin false idols, we destroyed it all.
We suffered through a blizzard the past few days, as tons of snow were dumped on us by sheer chance. A blizzard can be a demonstrative experience. In such conditions we do not favor competition, but collaboration. Neighbors work to clear each other’s walkways, they assist when we’ve lost power, in some cases they clear the streets when the plows have been unable to. Those who compete at such times are rightfully reviled and disdained.
For the past four years plus Rhode Island has been struggling through an economic blizzard and its aftermath. We should revile those who call for competition as utterly as we revile those who dump snow into their neighbors’ yards. We are not here to fight against our neighbors and battle over what little we have. We need to reach out, to help those who need it, and ask what help they require. And we should not ask those who have sacrificed too much already to sacrifice more. But that is exactly what we appear likely to see.
If this blizzard has proved one thing, it is that we will never be Florida. We need to be the best Rhode Island we can be. And that means being better Rhode Islanders.
