January 26, 2008

The Business of Business Is... Healthcare?

Justin Katz

As disappointing as it is that Ian Donnis would write approvingly of something spat onto the public square by the NEA's Patrick Crowley, it's more disappointing that he seems to agree:

Pat Crowley has a strong post up at RI's Future, pointing to a state report to indicate how Rhode Island taxpayers are paying more than $5 million (plus about $6M from the feds) to pay for health insurance for workers at some of the state's biggest and more profitable corporations

Yeah, it's a nice bit of spin disguised as presumption for those who share the view of Crowley's boss, Bob Walsh, that employers who don't provide public-union-like benefits to employees "are terrible people [who] shouldn’t be allowed to exist." In that view, many employers provide health insurance (often with a you-pay-for-it caveat) to their workers, so it must be considered a moral obligation. That obligation being presumed to be universally acknowledged, the progressives acquire the suspicion that, somewhere along the hierarchy, the companies let themselves off the hook with an assuagement of guilt that the public will pick up the slack. Hence the bizarre characterization of the process as "corporate welfare."

The obvious question, in response to the moralists' insinuations is what we should do about the problem, and one can imagine their answer being to make the employers provide health coverage. That would be the logical reaction to our discovery of such injurious behavior.

So what would be the consequence of government dictation of minimum benefits for employees? Will employers just throw up their hands — "fellas, they got us" — and take the financial blow? No. They'll attempt to make up the expense elsewhere. Perhaps they'll attempt to levy a sort of third-party tax on customers, passing on the cost of government mandates to them. Perhaps they'll lower salaries or lay people off. And if the cost of doing business in Rhode Island becomes too high, if customers will not accept increased costs, or if employees cannot be attracted with lower salaries (but higher benefits), then the businesses will close down or leave.

I wonder, were that to happen, whether progressives would then declare the various public costs of supporting the unemployed to be corporate welfare "going to" (Crowley's words) the companies that no longer employ the money's actual recipients.

The truly disheartening realization is that Donnis, whom I take to be somewhat representative of honorable and well-intentioned progressives in the state, apparently fails to make the connection between this very approach to issues facing the public and the state's problems, which he readily acknowledges:

While I'd like to claim credit for coining the subject line in this post ["Rhode Island and Sisyphus Plantations"], that honor goes to URI professor of economics Len Lardaro, who uses it to describe the Ocean State's seemingly perpetual budget problems. ...

Lardaro believes that voter dissatisfaction will bring a number of new lawmakers, Democrats and Republicans, into office this year, and that that will have a salutary effect.

We'll have to wait to see if the professor is right. In the interim, state officials will have to keep rolling budget deficits up the proverbial hill.

Everybody understands (if they don't have a financial or ideological reason not to) that Rhode Island needs to improve its business environment. But that term doesn't just include tax rates. It isn't limited to infrastructure, roads, location, schools, real estate costs, and so on. It also involves the likelihood that a region's culture will lead it to push the government past its bounds in regulating corporations. There's a reason that only two insurance companies operate in Rhode Island. There's a reason healthcare expenses are so high. And there is a multiplicity of reasons that businesses choose not to operate in our state, making it difficult for Rhode Islanders to find work, let alone jobs with stellar benefits.

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Why aren't employers required to buy me auto insurance. I have to drive to and from work to get there. You'd think there would be some moral outrage that they aren't required to do it...

Posted by: Greg at January 26, 2008 6:24 PM

The great misconception that has long been taken as gospel by the brain trust that rules the General Assembly is that all of the factors you mention can be offset by a specially targeted tax break. Just come up to Smith Hill, Mr. CEO, kiss the speaker's ring, play the game, and we will give you a tax break that will induce you to invest in (or, more commonly lately, not leave) Rhode Island.

Unfortunately, as you accurately point out, a very large number of companies saw through this charade long ago. And the internet has made the opinions of RI's more extreme "opinion leaders" far more visible than they ever were before. RI's terrible reputation among national and global business leaders is a big reason why RI small business employment, as a percentage of total private sector employment, is among the highest in the country. Middle size and big companies simply don't want to move here, and the smaller ones don't want to invest and make themselves targets for the "RI shakedown."

How long do you really think it will be before GTech's Italian masters (and remember, they're northern Italians) decide to leave RI? Did all those tax breaks keep APC from being taken over? Will they help spare Textron? CVS is a special case, for now at least. But I suspect that a high profile conviction or two might induce a new CEO to move HQ somewhere else as part of his or her "clean sweep."

The people who run middle size and big businesses didn't get there by being fools, Walsh, Crowley, Brewster, Montanaro, Nee and other RI geniuses' opinions aside. They long ago figured out what the RI game was about, and concluded it wasn't for them. And it will take many years to change that reputation.

One more example of how the RI Democratic Party dug a very large hole for the Ocean State that will take those few taxpayers who decide to stay years to (painfully) escape.

Posted by: John at January 26, 2008 7:56 PM

I don't think it would really be that painful, nor take that long if we had leaders with the courage to stop the State goverment from doing all the things it does so wrong.

If you're a drunk living off state aid, an illegal alien or a public employee unionista, the medicine would taste bitter. But for those of us who pay for goverment, it might not be so bad if done with courage and conviction.

Starting with the Governor, those of us who love the state and want to fix it need to start ingnoring the Bob Walshes and the Pat Crowleys. There is not a single thing that is good for all of us that they would be satisfied with. The only thing that satisfies them is finding new ways of screwing the rest of us. So, screw them!

Posted by: George at January 26, 2008 9:12 PM

"a region's culture will lead it to push the government past its bounds in regulating corporations"

That's right. Possibly the biggest reason this state is dead last in business climate.

For example, the workers comp insurance "crisis" in Rhode Island (early 1990's?) was 100% created by the General Assembly, who piled more and more coverage requirements on these companies, to the point that they all said, we're outa here.

One of my favorites in this category was that if an employee was denied a claim, the workers comp insurance company had to pay for the attorney the employee hired to sue the workers comp insurance company, regardless of the merit of the claim or whether it was upheld in court.

Posted by: Monique at January 26, 2008 9:55 PM

Rhode Island: Dead State Walking

Posted by: Ragin' Rhode Islander at January 27, 2008 12:35 AM

can someone confirm that rite care provies viagra

Posted by: johnpaycheck at January 27, 2008 9:16 AM

Viagra-I believe it's true. No poverty pimp or their PROJO fellow travelers has ever contradicted it.

Posted by: Mike at January 27, 2008 11:31 AM

who do you think is vulnerable in the ga???i guess it depends who is running against them.

i have been a long time believer that incumbents are very vulnerable during tough ecominc times.. other things dont bother voters but money problems lead to a kick the bums out mentality

Posted by: johnpaycheck at January 27, 2008 9:31 PM
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