August 18, 2012

What Happens In A Good Economy

Patrick Laverty

It's not that often where I can find an article on that has much relevance to Rhode Island, but this one caught my eye. It just shows what a little ingenuity and work can do when you actually have a thriving economy.

Out in North Dakota where the unemployment rate currently sits at 3% due to a new oil boom, a high school student was able to identify a need. Due to the nature of the work and the places that people are living, showers can be hard to come by. Even to the point where people wait hours for a shower at a truck stop. This teen then hatched a plan to purchase an 18-wheeler trailer, retrofit it with shower rooms and an office, and purchase a separate water tank. He offers the service for a fee to the workers.

Sure, I get the point that North Dakota might have gotten lucky with the oil boom. That's like hitting the lottery. But at the same time, the state has been smart enough to simply get out of the way and let the business and entrepreneurs thrive. Business begets business. When you let the market thrive, other businesses will piggyback on top of it and when people perceive a need, they'll work to fill that need.

The other thing that struck me in the article was the kid's attitude with regard to work and money.

Jensen said that while his parents would always be there to assist if he really needed it, the burden of tuition rests squarely on him. He is determined to balance his passion for music with the reality of life.
"Music is what I absolutely love doing, but for anything in life, if it doesn't pay the bills you gotta find something that does," he said.
"you gotta find something that does." Wow. If you fail at something, keep working to find something else that you can be successful at. That is about as opposite from the "what's in it for me" and the "where's my handouts" attitude that seems so prevalent here in Rhode Island.

North Dakota is about 1800 miles from Rhode Island but judging by the differences in the states, North Dakota might as well be Mars.

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Contrast that with the RI model as told earlier this week in the projo:
A Liberian teen finagles, with help from members of the government union kleptocracy, admission to the US along with an SSI check for a fake disability.
Now he is working and his "benefactors" are demanding the government allow him to keep both his fake disability check and his earnings...
Someone tell me we are not f***** in this state. I dare ya'.

Posted by: Tommy Cranston at August 19, 2012 11:59 AM

Rhode Island's state house, as best described by Jane in "Tarzan's New York Adventure","We are going into places where men's minds are tangled worse that the worst underbrush in the jungle, and I'm afraid. More afraid than I've ever been in my life. Everywhere we'll be met with lies and deceit. Your honesty and directness will only be handicaps."

And Tarzan's first thought as he enters Club Moonbeam sounds like what a normal person would say walking into our statehouse while the GA is in session. "Smell like a Swahili swamp. Why people stay?"

And Jane's response is consistent with the GA members are thinking at any moment, "It's what they call having a good time."

What the hell are we all doing here?

Posted by: John at August 19, 2012 12:49 PM

Patrick, entrepreneurship like that can't happen in RI. By the time this young man paid all the thugs, ie. permits, fees, inspections, unions, he'd have to get $45.00 a shower, basically putting him out of business before he even started. Not to mention the 6 mo to 1 year wait for all that red tape to get done.

Here in little old RI, it's much easier to apply for food stamps and welfare assistance than it is to start a new business. Plus, starting a new business is MUCH riskier.

Also, if RI ever fell into a 'lottery winner' like ND did, we'd shut the whole industry down immediately because the new industry didn't have proper housing with showers for their employees. The ACLU would have a conniption.

Nope, ain't happening here, ever.

"North Dakota is about 1800 miles from Rhode Island but judging by the differences in the states, North Dakota might as well be Mars."

Well said.

Posted by: RITaxpayer at August 19, 2012 12:52 PM

North Dakota has a government-owned bank, a government-owned grain mill and a government-owned railroad. Started by socialist Republicans (I am not making this up). That's not getting out of the way, that's complete interventionism.

Nothing in this story in terms of ingenuity is unique to North Dakota. It's harder in difficult times for this kind of ingenuity to thrive, precisely because consumers don't have money to throw around. North Dakotans do, due to a resource boom that's led to a shortage of housing (and water, clearly).

You can't do this in Rhode Island, not because of some sort of attitude, but because the money simply isn't there.

Posted by: SGH at August 20, 2012 12:19 AM

SGH - A government-owned bank or railroad isn't even close to "complete interventionism," which would more accurately describe Rhode Island with the EDC investing 100's of millions in public dollars and its burdensome taxes and regulations. Taxes, regulatory schemes, and political climate have a far bigger impact on the entrepeneurial culture of a state than one or two isolated government-sponsored organizations. Your (circular) narrative about low consumer investment doesn't hold up when you compare Rhode Island to its immediate neighbors. New Hampshire, Massachusetts, and Connecticut have similar resources and geographical features and don't seem to have the kind of severe long-term economic stagnation that Rhode Island does. Public policy is the most likely culprit for this phenomenon.

Posted by: Dan at August 20, 2012 11:14 AM

Dan, Massachusetts has a major economic center in Boston, Connecticut is essentially propped up by NYC (the eastern portion of the state is in the same economic straits as Rhode Island) and your mention of New Hampshire ignores that Vermont is doing slightly better unemployment wise, and Vermont's economic strategy is the polar opposite of New Hampshire's (proving both strategies can work in these specific places).

As for the EDC, I don't think (reprehensibly foolish) unwatched loans are anywhere near the sort of government interventionism that a state bank like ND's routinely does in handing out its loans (it specifically gives to businesses that corporate banks won't lend to). A major difference is that ND's state bank is run by bankers, and the RIEDC is run by economic developers.

My argument is that in Rhode Island, we lack the willingness to loan out money, and then there are few people who can afford to invest in any sort of start-up. There's also an issue of the kind of ingenuity that we need. For instance, this is a case of someone coming up with an idea that profits off the internal economy of a state.

Rhode Island's problem is that it lacks what North Dakota has: something to sell outside its borders. In our boom times, we were a textile manufacturer and a machine tools manufacturer as well as a shipbuilder. These are all things which were sold beyond our borders.

That's where our ingenuity needs to be focused, on coming up with things to sell outside (Alex and Ani as a great example of this). Unless you're a payday lender, you're not going to get rich off of Rhode Islanders until they're getting rich off of someone else.

Posted by: SGH at August 20, 2012 11:47 AM

SGH - This is illustrative of my general issue with progressive interventionist-types - you have a convenient narrative to explain away literally anything and everything that doesn't jive with your preconceptions. So when a small-government state succeeds, it's only because of "this" or "that" specialized circumstance, but when an interventionist state state falters, it's because of "this" or "that" handicap beyond its control or a failure to ramp up its interventionism to the arbitrary levels that you would prefer. None of your theories are at all testable or falsifiable.

You say that Vermont is the "polar opposite" of New Hampshire. I find this very hard to believe in a number of respects. Look at regulatory burden, entitlements spending, welfare spending, total public spending, public loans made, political corruption, etc. I've also never claimed that unemployment rates are the be-all, end-all. Government could easily make the unemployment rate 0 tomorrow, but it would be very destructive to do so. New Hampshire also has significantly higher average and median household incomes, to name one important measure.

Posted by: Dan at August 20, 2012 2:22 PM

A thought. Yes RI politicians have been corrupt and backward looking for eons. A larger problem is that the remaining population might also be damaged goods. The majority are cynical and expectant of doom. You are what you think and RI's pols have bred generations of despair and helped expedite many of the best and brightest to leave the state.

Posted by: ANTHONY at August 20, 2012 2:52 PM
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