June 28, 2008

It Doesn't Have to Be This Way

Justin Katz

Continuing grim news about the relative position of Rhode Island's economy:

Rhode Island last month posted the second-highest unemployment rate in the country, after Michigan, according to a report out today by the U.S. Bureau of Labor Statistics.

Rhode Island's unemployment rate last month was 7.2 percent; Michigan's rate was 8.5 percent.

Rhode Island’s unemployment rate in May was at its highest since January 1994.

The New England unemployment rate rose 0.6 percentage point over the month to 5.1 percent, its highest rate since March 2004.

With Rhode Island and Michigan leading the recessionary pack, it's tough to blame free market policies or Republicans. Unfortunately, it appears that too many people 'round here are invested (financially or ideologically) in our wrongheaded system for our leaders to do more than try to weather the storm, probably for several years to come.

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Given these facts, one wonders whether or not RI and MI have anything else in common besides high unemployment and an economy in recession.

I wonder what the common denominator could be. Hmmm?

Gee, I wonder if the dismal economic results have anything to do with UNION dominated politics & policy?

You know, those "economic policies" that eminate from Stink Tanks like NEA-RI and RIFutureless that run counter to Free Market principals, resulting in people being paid salary & benefits based on the passage of time (tenure & seniority) versus merit (i.e. productivity, performance, results, customer demand, etc.) ...policies that result in ever increasing Taxes to pay for the unsustainable cost structures created by the Unions.

Indeed, I wonder if there is a common thread between the two state's miserable circumstances?

Posted by: George Elbow at June 28, 2008 7:06 AM

high energy costs ..... free market
housing downturn ..... free market
lending practices ..... free market

US President for
last 7 plus years ..... Republican

RI Governor for
last 6 years ..... Republican

Posted by: Phil at June 28, 2008 9:26 AM

What's your point?

Are you suggesting you prefer the Socialist policies of France, Germany, etc,? Check out the state of their economies.

Or do you prefer the old Soviet Union, which collapsed from the inefficiencies that you seem to pine for.

You’re the guy that whines about the “rich” but never defines what “rich” is.

But for the Free Market, you wouldn’t have a computer. But for the Free Market, you wouldn't have a Car, a washing machine, and just about everything else in your life that makes living easy.

The problem is there “consumers” and “producers”. But there can be NO consumption until someone Produces. Folks like you seem to think that you are ENTITLED to go thru life consuming the production of others without ever contributing yourselves. You're like ticks …like infants helplessly sucking on the tit.

And in case you didn't notice, the RI Gov doesn't legislate the laws that have ruined the state ...the GA does. Also, the GA ultimately sets the Budget.

How are our Schools doing, Phil? You forgot to mention those bastions of monopolistic, anti-choice, anti-competition Union bulwarks.

And how is the State's Pension system that provides GUARANTEED benefits to those that contribute so little? Oh that's right, Bob Walsh said "don't worry, with my Walshian Assumptions of 8.25% annual returns, everything should be fine in 22 short years ...just ignore the current market and the losses it is generating."

BTW, if you were trying to say George Bush sucks, then at least you got one thing right.

Posted by: George Elbow at June 28, 2008 10:09 AM

We're not alone. Here's what Chester Finn wrote in the WSJ today:

"The Self-Inflicted Economic Death of Ohio
June 28, 2008; Page A9

Once known as the Mother of Presidents, Ohio is now getting poorer, older and dumber – and making all the wrong moves to reverse the situation.

And that may actually be a plus for Barack Obama. His party is finding that lofty, vague promises of change combined with high-spending, high-tax, welfare state-ish policies are a political winner in the state. How else to explain why Gov. Ted Strickland's approval ratings are in the mid-50s or why Democrats may even win control of the state House for the first time in 14 years?

Gov. Ted Strickland
But as a formula for economic revival, it is madness. Ohio already has the fifth-heaviest state and local tax burden in the country (up from 30th in 1990) and finds itself stagnating. Its unemployment rate, 6.3%, is above the national rate of 5.5%, even as the state's work force shrinks as people emigrate. Ohio's median household income is also falling – in 2006 it was $44,500, down 0.5% from the previous year – while the national figure ($48,500) was up 1.6%. During the closing decades of the 20th century, incomes rose twice as fast across the country as in Ohio.

The state has been deindustrializing for ages – the sprawling General Motors and NCR plants of my Dayton childhood are long gone. Every metropolitan area has seen manufacturing employment plunge. The state lost more than 200,000 nonfarm jobs over the past seven years alone. Of Ohio's 10 largest corporations (including Procter & Gamble and other well known companies), just two have posted positive returns so far this year. A surefire way to have one's portfolio underperform the market these days is to invest in Ohio.

Any sane strategy for turning this around would start by strengthening the state's human capital for a globalized, knowledge-based economy while making Ohio more hospitable to high-tech and brain-powered firms. To his credit, higher education chancellor Eric Fingerhut is moving to make the state's colleges more accountable for their performance, and more transparent to students and taxpayers. Primary-secondary schooling has seen a few decent efforts, too, such as a new initiative to beef up science and technology education. The state's first "KIPP" academy will soon open in Columbus.

But the distance to be covered is vast. Ohio ranks 41st in the percentage of adults with bachelor's degrees. Though it has many fine colleges, their young graduates don't stick around. They head for the coasts or for "happening places" in between, none of which (with the partial exception of Columbus) happens to be in the Buckeye State.

Bright Ohio kids aren't even enrolling in nearby colleges. The Cincinnati Enquirer recently reported that almost half the top seniors in local high schools were headed for out-of-state campuses. As jobs and young people exit, the remaining population ages. The Census Bureau projects that Ohioans over 65 will rise to 20% by 2030, up from 13% in 2000.

Even some well-established cultural institutions are faltering. The 57-year-old Columbus Symphony is broke and canceled its summer season. There is not a single downtown in Ohio that could be described as "lively" in the evening.

The government sector is still growing, of course, abetted by rising taxes on what's left of the private economy. Some big nonprofits are doing well, too, especially major medical institutions such as the acclaimed Cleveland Clinic. But urban public school systems – beset by shrinking enrollments, obdurate teacher unions and an aging workforce – are stumbling, ever more dependent for revenue on local bond issues that strapped voters are ever likelier to reject.

In both the public and private sectors, what one witnesses in Ohio are the most senior employees clinging to what's left of the economy, fending off change, demanding ever more burdensome contracts and costlier benefits. The ship is slowly sinking, but as the more agile passengers and crew take to the lifeboats and sail off, those who remain on board climb to the upper decks, determined to grab whatever plunder they can, confident that the rising waters won't reach them.

Few are paying attention to tomorrow and even those who do often come up with harebrained schemes. Gov. Strickland, for one, has yet to unveil an education-reform strategy a full two years into his term, but has been inviting education interest groups to briefings and workshops filled with vague, psychobabbling talk of creativity and innovation. While demanding greater control over the K-12 system than his predecessors enjoyed, he has also signaled his intention to back away from academic standards, testing and accountability, and to abandon Ohio's pioneering school-voucher and charter-school programs.

Mr. Strickland's approval ratings remain strong, perhaps because he's giving the teacher unions and other adult interests what they want.

Yet Ohio needs wrenching change on almost every front, not feel-good policies designed to placate and cosset survivors of the current economic meltdown.

Mr. Finn, a native of Dayton, Ohio, is president of the Thomas B. Fordham Institute.

Posted by: John at June 28, 2008 12:09 PM

"RI Governor for
last 6 years ..... Republican"

Phil, you're hilarious.

Democrats in the legislative branch have controlled this state for decades. It was they who brought us the fourth highest taxes in the country, social spending in the top third, the second worst bridges and roads, poorly performing education system, etc, etc.

But you clearly see a problem as you are looking for someone to blame for the condition of our state. So when was the last time you called the responsible party - Speaker Murphy and Senate President Montalbano - to register your dissatisfaction?

Posted by: Monique at June 28, 2008 2:15 PM

How can this be? RI, OH, and MI are all beacons of progressive politics. They are a workers pardise.

Isn't it funny how President Bush and Governor Carcieri get heaps of blame from the Progressives (and from Phil above) --but the US Congress and the RI General Assembly get a free pass? Gee, that's odd.

Governor Strickland is a big Hillary supporter, and so is Ohio. Who would have thought that Hillary would be such a hit in a high tax state that is "getting poorer, older and dumber?"

The same odd demographics showed up in WV and RI.

That's regressive politics for you!

Posted by: Citizen Critic at June 28, 2008 2:35 PM

Monique or Susan from Providence or whoever
Thanks for agreeing with the five connections made in the post. This obviously was in response to JUSTINKATZ " With Rhode Island and Michigan leading the recessionary pack, it's tough to blame free market policies or Republicans."
It's like shooting fisn in a barrel, a pratice I don't recommend though.
Your response about Democrats in the legislative branch sounds like Carcieri's talking points. Do you work for the great executive or do you just feel compelled to rush to his defense even after only mild and implied criticism.

Posted by: Phil at June 29, 2008 4:41 AM


Do you actually believe in and support what the Union-backed General Assembly has been doing over the last several decades?

Do you believe it is fair, never mind sustainable, to confiscate funds from hard-working and productive taxpayers so that Union members can retire in their 40s and 50s, with GAURANTEED pensions (and healthcare) that automatically grow by 3%+ per year?

Could you ever imagine yourself trying to establish a business, while having to incurr the cost of such madness? Your business would be bankrupt in no time, as you wouldn't have the ability to just pass the bill on to your customers as the Union (and GA) does.

Face it Phil, the Free Market didn't cause RI's taxes to be amongst the highest in the nation. The Free Market didn't cause RI's student Test Scores to be amongst the lowest in the nation, while our Teacher pay is amongst the highest. The Free Market didn't cause RI to have the second most underfunded Pension system in the Nation. The Free Market didn't cause RI to have the highest per-capita Firefighting cost in the nation.

Rather, it was the Unions and their anti-Free Market practices (anti-competition, anti-choice, anti-pay for performance, anti-selfreliance) championed by the Bob Walshes of the world that got us here.

Posted by: George Elbow at June 29, 2008 9:06 AM

In previous posts I’ve stated that the “Rustbelt” is spreading from Michigan / Ohio / PA etc. to the Northeast, and RI in particular.

Areas of Democrat control / high unionization rates – particularly public sector unionization rates which equals public sector union domination of politics – are in slow but continuous economic decline.

For decades now Michigan has been experiencing this dynamic. And has its political class made the changes necessary to create a competitive economic environment in Michigan? No. They just keep raising taxes to keep the dance going as long as possible for their union masters. Oh, and they hire Jeff Daniels to do some TV commercials extolling Michigan’s great business climate – their version of Rhode Island’s “but we have a great quality of life!”

While there are some initial indications that our General Assembly is starting to “get it,” there is little reason to believe that it’ll make the tough decisions necessary to make Rhode Island truly economically competitive. At most they seem to be inclined to not make us any worse than Massachusetts, which itself is in slow decline (albeit at a slower rate than RI).

For any younger person, budding entrepreneur, or one of any age with the option of relocating, the questions you should be asking yourself are: “Am I willing to subject my economic future to the decision-making at the RI General Assembly?”

Stay here and you might make it, but it will by swimming against an outgoing tide, so it will be harder for you to make it, and you probably won’t make it as far as you would if you relocate to a growing area (the Southeast / Sunbelt) where the political dynamics favor business and those pursuing the American Dream, whether as an employer or employee.

Stay here and you will pay exorbitant taxes – including exorbitant property taxes – only to have to cough up private school tuition in order for your children to have a decent shot and a brighter future (and avoid being subjected to an educational system controlled by the likes of NEA’s Pat Crowley).

Get out if you can; while you can. Rhode Island seems determined to follow the Rustbelt model of Democrat union pandering and continual economic decline.

Posted by: Tom W at June 29, 2008 10:54 AM

"Do you work for the great executive"

No, I do not. Nor any person or agency in state government. Actually, a state job has always been my highest aspiration. Probably the Executive Branch is not the place to seek one, however. In view of the Governor's funny ideas about the size of government, job security would be an issue.

" or do you just feel compelled to rush to his defense even after only mild and implied criticism."

What exactly is your criticism, Phil? What substantive role did any RI Governor, Dem or GOP, play in the litany of ills that has been inflicted on Rhode Island over the last several decades? Please be specific.

FYG, my comment was not a defense of anyone but a correction of your erroneous statement which entirely misrepresented where power is vested in RI state government and who, therefore, is responsible for the present condition of our state.

Posted by: Monique at June 29, 2008 11:27 AM


You wrote: "What exactly is your criticism, Phil? What substantive role did any RI Governor, Dem or GOP, play in the litany of ills that has been inflicted on Rhode Island over the last several decades? Please be specific."

Don't hold your breath waiting for an answer. The "Phils" of the world (e.g. Bob Walsh, Tom Kenney, EMT ...and to a lesser extent Rhody) don't respond to direct questions, especially when you ask them for specifics. To answer would be to acknowledge they are wrong & misguided.

Posted by: George Elbow at June 29, 2008 2:01 PM

"RI Governor for
last 6 years ..... Republican"

Considering his veto can be overridden at will, your argument is meaningless. The General Ass. decides what happens to this state.

Actually, a few hundred voters in West Warwick if you really want to get technical.

Posted by: EMT at June 29, 2008 4:18 PM

What has this Governor done?
A long costly fight with unions resulting in a recent three year deal.
Vetos that have been overridden.
Higher unemployment after 6 years with self described "CEO of the State" at the helm.
Steady employment for Steve Kass.
" " " wife's niece.
Catholic ceremonies in the State House.
Opposition to Quonset port developement
" to Narragansett Indian Casino
"Big Audit"
Fawning support of George W. Bush
Little fruitful work with the State's Congressional delegation in Washington.
His staff producing a ridiculous security document just after Sept. 11th that lasted less than 24 hours.
His staff's handling of the Dec. 13 snowstorm.
Ordering the State Police to raid the Narragansett Indian smoke shop. (while on vacation)

Posted by: Phil at June 29, 2008 9:53 PM

So what you're saying, Phil, is:

Fourth highest taxes - not the Governor's fault.

Abysmal business climate and corresponding recession - not the Governor's fault.

Poorly performing education system - not the Governor's fault.

Spending on social programs instead of bridges and roads - not the Governor's fault.

Everything in Justin's post (the subject of this thread) - not the Governor's fault.

Posted by: Monique at June 29, 2008 11:19 PM

Its true that I don't lay blame for all ills on the Governor. I do see him as a weak and ineffectual leader and that contributes to the problems you have listed.
"But you clearly see a problem as you are looking for someone to blame for the condition of our state."
Not true. The die was cast when the Gov was re elected. The voters are filling the House and Senate with Dems and returning a do nother chief executive to office. It there's wisdom in that I don't see it but I don't spend my time complaining on talk radio like you and the gov.

Posted by: Phil at June 30, 2008 6:41 AM

CC: Ohio is a bastion of progressive politics? You cannot be serious. Go back to what happened there in the '04 presidential election and tell me how progressive that state's electorate is.
As for Carcieri, I wonder if he honestly believes no new private sector jobs are better than unionized private sector jobs - I think his pathological fear that a few new jobs might be unionized prompted his veto of the green jobs initiative.

Posted by: rhody at June 30, 2008 11:37 AM
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