Brookings Institute

January 19, 2016January 20, 2016

A tale of two Brookings reports

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On Friday, the Brookings Metropolitan program released a report, City and metropolitan inequality on the rise, driven by declining incomes in which Rhode Island’s largest and capital city, Providence, emerges as the city with the 5th highest level of income inequality in the nation. A principal cause of this high rating is the erosion of wages (and hence income) for low income workers in Rhode Island, a situation likely exacerbated in Providence. Too many Rhode Island workers continue to feel the ongoing pain of the Great Recession that began more than eight years ago, and (at least officially) ended more than six years ago, experiencing levels of long-term unemployment, and underemployment that erode their financial well-being. The Rhode Island economy isn’t working for these people. Among those currently in the slow lane on the “Rhode to Prosperity” workers of color comprise a disproportionate share, as recently documented in The State of Working Rhode Island: Workers of Color.

On Tuesday, the Brookings Metropolitan program released a report, Rhode Island Innovates: A Competitive Strategy for the Ocean State¸ a report that expertly assesses the Rhode Island economy, using complex sector-based analyses to identify its comparative areas of strength, and some of the challenges that may prevent businesses from choosing the Ocean State as their home. The Brookings study presents several strategies to improve the business climate, noting that “Rhode Island is poised to emerge as a leader on business environment re-engineering.”

To Brookings’ credit, they point in Rhode Island Innovates to the importance of sustaining “good jobs” (which they define as those that “offer livable wages with benefits for full-time workers who have less than a four-year degree”), and they correctly note that the old mantra of “jobs, jobs, jobs” is no longer adequate or appropriate to today’s economic realities. Yet it feels very much like the two Brookings reports each exist in their own spheres. What Rhode Island (and arguably every other state in the nation) needs is an approach to the economy that integrates the needs of its workforce with the needs of the business community. Innovation and growth are important, but unless such growth advances the well-being of Rhode Islanders regardless of age, race and ethnicity, we will remain diminished as a state.

January 19, 2016

First look at ‘Rhode Island Innovates: A Competitive Strategy for the Ocean State’

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Brookings Institute‘s new report, “Rhode Island Innovates: A Competitive Strategy for the Ocean State,” was formally presented to Governor Gina Raimondo and other government leaders this morning at the Rhode Island Foundation downtown.

The report can be accessed here.

The executive summary can be read here.

Perhaps the biggest surprise comes early on, when the report declares that Rhode Island’s economy is “less dire than middling.” To hear many people say it, Rhode Island is steps away from economic implosion. The Brookings report is more optimistic.

In the report Brookings offers a package of “initiatives and action steps” … that are “intended as a comprehensive package” of reforms. They see the culmination of these ideas as requiring “a new degree of partnership across the public, private, civic, and philanthropic sectors.”

There’s a lot to digest here in a two hundred page report, but some quick thoughts:

The word “poverty” occurs three times in the report, and two of those times in exactly the same context: merely noting its existence. In a state with over 14 percent poverty and nearly 1 in 5 children living in poverty, you’d think a report on creating a better economic climate might address the subject more forthrightly.
Brookings defines “good jobs” as jobs that “offer livable wages with benefits for full-time workers who have less than a four-year degree.” Nowhere in the report is the idea of raising the minimum wage mentioned, yet many of the sectors that Brookings see as having growth potential such as hospitality or shipping create the kind of low paying jobs you might see at a fast food restaurant or a warehouse fulfillment center.
Taxes: “it is important to keep in mind,” says the report, “that low taxes alone do not spur economic growth.” Yet the report then cites the fact that “Rhode Island ranks 45th in the nation in the Tax Foundation’s 2016 State Business Tax Climate Index.” Yet as economist Peter Fisher ably demonstrates, “Combining more than 115 features of state tax law into a single index number produces a state ranking that turns out to bear very little relationship to what businesses actually pay in one state versus another.” The Brookings Institute’s reliance on the Tax Foundation, which “represents the corporate view of tax policy” calls into question the supposed neutrality of this report.

As I get into the report more and have a chance to hear from others I’m sure I’ll have more to say on this report. In the meantime, I present it here for everyone to get their eyes on the page and contribute to the public discussion.

Here’s the slideshow off the Brookings site:

January 16, 2016January 19, 2016

Raimondo in Davos: The promise of capitalist salvation

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Apotheosis of the Medici by Luca Giordano (1672)

When Governor Gina Raimondo attends the World Economic Forum (WEF) in Davos, Switzerland for four days this week, she’ll be one of many political leaders having private, off-the-record meetings “with high-ranking representatives of the world’s leading corporations.” Putting aside that many of the corporations that fund WEF and set the forum’s agendas “have criminal records, are under investigation for potential criminal activity (e.g., bribery), are mired in significant legal/ethical issues, or have blatant conflicts of interest,” there is the question of what, if anything, actually gets done there.

WEF attendees talk a lot about the problems of the world, such as Climate Change and Economic Inequality, (This year they plan to talk about “Mastering the Fourth Industrial Revolution” for instance) but the tools participants have at their disposal to deal with these problems, economic and political power, are not the tools that will effect real solutions.

“The governor’s top priority is creating jobs and turning around our economy so everyone has the opportunity to make it in Rhode Island,” said Raimondo spokesperson Marie Aberger, “An important part of her job is selling Rhode Island to attract new businesses and opportunities to our state.”

Sure, some billionaire may move a few jobs towards Rhode Island if Raimondo can catch the right ear, but this does nothing to address the systemic issues mentioned above.

Failed tax policies and wasteful investments in fossil fuel infrastructure can be dealt with through smart policy adjustments without having to travel to Davos. In a recent Brookings Institute report on inequality where Providence fared especially poorly, the authors suggested that, “Housing is an area where local officials—mayors, city councilors, county executives and commissioners—have somewhat greater scope to address needs, at least by influencing the supply side of the market.” This is something Raimondo could help begin to address from her State House office, no trip to Switzerland required.

But there is another reasons to make the pilgrimage to Davos.

WEF has been criticized for being populated with corporate “transnationalists” who “have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations.”

A journey to Davos, then, could be wasted on a gamble to court the favor of the criminal corporate elite and to beg financial indulgences from the masters of the universe, or the journey could be one of neoliberal salvation, a chance to transcend petty human concerns and perhaps join the ranks of the those who live far above the law and make decisions not based on compassion or human rights but on the basis of profit and power.

This is the apotheosis…

…transcendence though capitalism.

This is the true promise of Davos.