July 4, 2008

Myths and Conclusions

Justin Katz

Without gainsaying my own potential culpability, I have to admit that a recent business-section column by URI business administration professor Edward Mazze left me confused. He asserts five myths of varying persuasiveness, but his explanations don't consistently jibe.

He and I agree on the first myth, which he states as follows:

First, without financial incentives or tax subsidies companies will not relocate to Rhode Island or stay in the state.

Rhode Island's ostensible leaders spend too much time trying to be micromanagers of the state's economic success, and Mazze is precisely correct in his explanation:

Taxes and incentives are important if they fit into a plan that targets specific geographic areas, population groups and industries for economic growth. ... We need to move from Rhode Island being the “let’s make a deal” state to the right climate for business to succeed state.

His second "myth," however, he treats as ambiguously mythical:

Second, we need to have infrastructure for economic development.

He argues that, in reality, "the infrastructure develops as a result of economic progress," but then he concludes that Rhode Island should "rethink our priorities and make sure that infrastructure investments receive top priority from the governor and legislature." It seems to me that, rather than attempting to adhere to a rigid structure of supposed myths, Mazze would have done better to argue for economic holism. In this case, infrastructure and progress represent a self-reinforcing cycle, whereby each makes more of the other possible.

In the case of his third "myth," Mazze slips such a large consideration bearing on unionization under the table that he comes close to contradicting himself:

Third, the unions make it impossible to do business in Rhode Island.

He argues that "unions are the greatest supporter of economic development since it leads to jobs," but in failing to emphasize the qualifier that unions support jobs for union members, he misses the underlying relevance of the burden of "legislation [that] is often introduced that adds new rules, regulations and fees for businesses": those rules, regulations, and fees build protective walls around the state's powerholders, including established unions. Mazze doesn't even draw the obvious connection of unionization with a necessity that he rightly declares:

The state needs to make tough decisions regarding the consolidation of services and departments and restructuring education, police, fire and other services on a county basis.

What do public education, police, fire, and other services all have in common in Rhode Island?

With myth number 4, we're back to agreement:

Fourth, projects that create large numbers of jobs such as the expansion of the airport, the location of a port and the building of a resort casino are not the types of jobs Rhode Islanders need.

I differ with respect to the advisability of Rhode Island's getting into the casino business, but the broader point that our leaders' (again, micromanaging) tendency to seek just the right economic development ultimately hinders progress. Young workers need education as well as the financial stability provided by working parents. If a carpenter cannot find work in Rhode Island, he can't lift his children toward more lucrative careers; if families cannot find regular ol' work in this state, they'll bring their children elsewhere. If adults cannot make their livings with less glamorous occupations, leaving sufficient time for independent pursuits, they cannot develop new skills (e.g., by attending night school).

Myth #5 is another with a point well taken, but perhaps without the mandate that it be cast in terms of popular error:

Fifth, economic development is a government responsibility.

I'd posit that economic development is a government responsibility, but it is one answered by getting out of the way. If it is not a government responsibility, then one cannot blame the government for its insidious and disruptive meddling. Our "leaders" responsibility requires them to cease behaving as if they've the wisdom and experience to guide our economy toward the sort of businesses that they'd prefer.

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You can't have high taxes and a welfare state --and also a vibrant economy. The productive components of that vibrant economy will resist locating there.

Yes, government needs to get out of the way.

Quonset is a gorgeous facility, perhaps perfect for a biotech park or other new economy use. That is the type of *real* economic development that is needed.

Posted by: Citizen Critic at July 4, 2008 2:43 PM

Interestingly, he starts his essay by writing "the total number of people employed in Rhode Island will decline due to the large number of state personnel retiring".

At least these people are leaving by their own choice on their terms with a fat pension, compared to the folks in the Private sector who not only have to carry these early Retiree leeches on their backs, but also have to deal with losing their own jobs in a difficult economy.

As Justin correctly noted, Mr. Mazze on the one hand says Unions support economic development, yet on the other hand suggests the state must embark on a "consolidation of services and departments and restructuring education, police, fire and other services on a county basis."

Did Mr. Mazze not notice that is / was the Union that embarks on the "bump & grind / grievance" process whenever streamlining is attempted?

Also, with respect to the age-old crutch of "consolidation" used in dealing with our out of control spending, it is interesting to note that per the NEA's own research, there are 15,416 school districts nationwide educating 48,727,536 students, resulting in an average of 3,161 students per district.

By contrast, RI has 36 districts and 161,237 students, for an average of 4,479 students per district ...far more "efficient" than the national average, yet our costs are in the Top 10 of the nation.

Our costs are too high due to the UNIONS, not due to the lack of consolidation.

Posted by: George Elbow at July 4, 2008 7:10 PM

[Excellent post, Justin.]

"The state needs to make tough decisions regarding the consolidation of services and departments and restructuring education, police, fire and other services on a county basis."

Has anyone actually run some numbers to try to get a handle on what would be saved with consolidation? The lion's share of state and local budgets goes to fund the salaries and benefits of our valued (not sarcasm) public employees, the vast majority of whom would be retained with any consolidation effort. Therefore, wouldn't the corresponding savings be quite small? George E's calculation as to the student size of our current districts only reinforces my reservations.

Posted by: Monique at July 4, 2008 8:09 PM

Can you imagine if Bob Walsh had only ONE contract to deal with, and thus just one group of nitwits to focus his diabolical efforts at convincing people that throwing more money at his Union flock will improve education.

Consolidation is just a an excuse & diversion used by our spineless do-nothing "leaders" who refuse to confront and say "no" to the Unions.

At least with the current set-up, there is a chance, albeit a slim one, that we get at least one School Committee that applies common sense and tells Bob Walsh & Co. to go pound sand.

But, rather than deal with real issue, we have people that talk about "consolidation" as if it will change the fact that we give the store away to the Unions.

Posted by: George Elbow at July 4, 2008 10:27 PM

I would accept one contract for the entire NEA if I could take my child (and the money) out of the school if I didn't like it. Choice is the only solution. Until then, keep control as local as possible.

And we should remember that consolidation is what got us into this mess with welfare. Welfare was once a local run program. We consolidated to save money and it’s gotten bigger and more inefficient ever since. Consolidation has reduced accountability.

Posted by: William Felkner at July 4, 2008 10:58 PM


Hawaii is approximately 1,600 miles long made up of various islands. A little larger than RI in total land mass.

Hawaii has state government plus a local county seat of government made up of 4 counties, 4 mayors and 4 city councils and local government services. There is one centralized Department of Education and one school district for the whole state.

Hawaii is the second most unionized state in the nation (New York is #1) but has a very highly streamlined, efficient and cost effective government.

RI would have to amend state constitution to change to a county government system however; the taxpayer cost savings would be tremendous over having 39 cities and town governments plus state government.

One very large problem I can see is which mayor and city council or town administrator and town council would take over control of Providence, Washington, Newport and Kent counties eliminating all other mayors, administrators and councils. Same would be true of down sizing the school departments to 4 or 1 state-wide district.

Posted by: Ken at July 5, 2008 1:11 AM


You are very correct. Competition is what makes capitalism efficient, and the unions fear it like the smelly socks fear the Clorox.

The ultimate freedom of choice is to vote with your feet and move out of state.

The straw that broke the camel's back was when the General Assembly leadership (and their henchmen) lied to the public by telling them that they opposed the Voter Initiative Amendment on the grounds of "civil rights." That was pure BS. In reality, the VI legislation was deemed model legislation and had very strong civil rights proections. Their real reason for opposing VI was they felt their strangehold on state government was threatened. The dire consequences for the state of dis-empowering the people didn't matter to them.

I have little confidence in the ability of RI's voters to elect good public officials.

When your public officials blatantly lie to you, drastic action is needed. For me, the only action was to immediately move.

Posted by: Citizen Critic at July 5, 2008 3:43 AM


Remind us again what the median salary of a Union teacher in Hawaii is and then compare that to what the median salary is for a RI Union teacher.

Then remind us what the average Student-to-Teacher ratio is in Hawaii vs RI.

Very simply, Ken, all men/women may be created equal, but NOT all Unions are created equal. RI's Unions, unlike HI, have an extra Entitlement gene in their systems.

There's a reason you are living in Paradise.

Posted by: George Elbow at July 5, 2008 11:05 AM

George Elbow,

Yes there is a reason why I moved out of RI to HI; to pay for one school department administration in HI instead of paying for 38 school administrations in RI.

Face facts George Elbow, in all aspects of RI state and local government there is an over abundance of extra administration and management.

HI state and local government administers with just 5 (state and 4 county seats) across 137 islands stretching some 1,600 miles in the ocean and has a budget surplus to what RI needs 40 (state and 39 cities and towns) on dry land with a budget deficit.

You may keep your blinders on blaming the unions and NEA while you and RI slowly sink down the tubes.

Posted by: Ken at July 5, 2008 6:04 PM


Any chance of you answer the questions at hand?

Once again, do you care to share with us what the Median Union Teacher salary is in HI vs RI?

Would you please share with us the Student-to-Teacher ratio in HI vs RI?

Care to share with us what happened in RI when the Gov tried to consolidate services and reduce the number of employees??

I could go on if you'd like, but lets start with the easy stuff.

Yes, consolidation can perhaps save some funds, but the reality is that the 800 pound gorrilla in the room is the Unions, led by the NEA.

Looking forward to answers to the above noted questions.

Posted by: George Elbow at July 5, 2008 9:30 PM

George Elbow,

As I indicated to you once before when you tried to compare onions and potatoes, you can not compare NEA HI teachers to RI NEA teachers based just on average salary and classroom size.

In HI there are a completely different set of values, working, living and culture conditions than that on the mainland. Children and families look forward to attending summer school after regular school is on break. Schools in HI are considered the mainstay of each community. Parents and local business paint do repairs and landscape neighborhood schools in HI.

HI teachers work full year and must pass a state test every 5 years to continue keeping their job and as of last year they are now subject to random drug testing per state and NEA union contract.

A husband and wife teacher team hired as first year teachers combined incomes for first 5-8 years would not qualify them for a conventional home mortgage in HI. Average house price is $625K.

HI looses on average 1,500 teachers a year due to high cost of living which the Republican Governor, GA and Department of Education recognizes is a problem because replacements are not always available causing class sizes to be increased.

However George Elbow, NEA unions were not the subject of my comment to Monique It was about the inefficiency of state and local RI governments and where consolidation could be made to save tax dollars related to the way HI State and local governments are doing business.

RI and HI are almost the same land mass, HI being larger and more spread out across the ocean versus RI being compact and all on land (except for block island).

When you grow up maybe we can have a discussion because you are wasting everyone’s time.

Posted by: Ken at July 5, 2008 11:43 PM

Not unlike many of the weak-minded posters (e.g. EMT, Tom "Giving Selflessly" Kenney, Bob Walsh) when confronted questions that address the issue, you chose not to answer them directly. But you certainly answered them indirectly. So, you get a B+.

In a nut shell, what you've described is exactly what I explained from the beginning, which is that, unlike HI, RI Union members have an ENTITLEMENT gene that does not exist in HI. It just took a while to pull it out of you.

Let’s review, shall we?

Avg. Teacher Salary vs Median Household Income:

HI - $49,292 vs $61,005
RI - $54,730 vs $52,421 (In RI, ONE teacher earns MORE then the ENTIRE income of many Households)

Students-to-Teacher ratio:

HI – 16.0 Students to 1 Teacher
RI – 11.1 Students to 1 Teacher (In RI, education is a jobs program)

Non-Instructional Staff per 10,000 students (includes Administrators):

HI – 46.6
RI – 28.0 (for all your ranting, HI has far more Administrators than RI, probably 'cuz all our money is going to Teachers ...see above)

SAT Scores:

HI 1463 (#48 in the nation)
RI – 1486 (3 way tie for #39 in the nation ...despite all the extra spending and extra teachers, performance is barely ahead of HI ...a mere 23 points ahead)

In summary Ken, it is clear that, unlike in HI, the UNIONS in RI run the state, and run it into the ground financially & economically.

Consolidation, although it may have some benefits, is NOT the answer. It is just a chicken-crap excuse for not dealing with the REAL ISSUE, which is the need to reign in the Unions and tell them “NO MORE”.

When you "grow up", you’ll learn that decisions should be based on facts & data, not emotion. Like it or not Ken, you can NOT argue with the above noted facts.

In HI, with respect to Education, you “Do it for the Children”. In RI, that is just a cheap slogan used by the Unions. What they really mean is “Do it for the Entitlement Minded, Unaccountable, Overpaid, Underperforming Union Members in the guise of Doing It For the Children.”

The good news for you Ken is that you made the right decision to get out of this ENTITLEMENT minded, Union infested nanny-State. It would be nice if you could lure a few of your Union Comrades into joining you. A good start would be getting Chairman Mao, I mean, Bob Walsh to join you there in HI.

Posted by: George Elbow at July 6, 2008 9:12 AM

Excellent analysis, George E, in particular, this stat:

Avg. Teacher Salary vs Median Household Income:

HI - $49,292 vs $61,005
RI - $54,730 vs $52,421 (In RI, ONE teacher earns MORE then the ENTIRE income of many Households)

As you seem to have these figures close at hand and not because (ahem) I am lazy, do you know what the national average is for these two figures?

Posted by: Monique at July 6, 2008 9:26 AM

RI Teacher pay exceeds the national average, as well as other New England states, when compared to Median Household Income (i.e. the ability of the customer to pay).

Avg. Teacher Salary vs Median Household Income; Teacher salary as % of Median HH Income:

RI - $54,730 vs $52,421; 104.4% (In RI, ONE teacher earns MORE then the ENTIRE income of many Households)

MA - $56,369 vs $56,592; 99.6%
Conn - $59,304 vs $60,551; 97.9%
NH - $45,263 vs $60,411; 74.9%
HI - $49,292 vs $61,005; 80.8%
US - $49,292 vs $61,005; 102.1%

It is actually worse than the above numbers indicate, as RI teachers pay next to nothing for their health-care. Most pay 10 – 15%, with many paying nothing. In MA and other states, they pay 25% and higher. And we haven’t even talked about their precious Pensions that allow them to Retire in their 50s.

You’ve got to hand it to Andrew’s pal Bob Walsh. Bob indeed has done a masterful job of fleecing the taxpayers. When we let things like the "Walshian Assumptions" go without vigorous challenge in the name of "engaging", the above is the result (i.e. out of control cost structures that are unsustainable for the paying public).

Posted by: George Elbow at July 6, 2008 1:01 PM

Woops ...had a typo in the above post.

US - $49,292 vs $61,005; 102.1% should have read as follows:

US - $49,029 Avg Teacher Pay vs US Median House Hold Income $48,023; Teacher Pay is 102.1% of Median HH Income

Posted by: George Elbow at July 6, 2008 3:05 PM

Thank you, George E.

Before health bennies yet. These figures would be acceptable if RI student performance trended similarly.

Posted by: Monique at July 7, 2008 10:04 PM
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