Howard: To fix RI, stop asking experts, start asking residentsJuly 5th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Ted Nesi is off. He’ll return on Friday.
A reading of an old newspaper article (or a history book) can often provide insight into present circumstances. It’s enlightening, and a bit frustrating, to discover that the same battles tend to be fought decade after decade. So it is with Rhode Island. Take this accounting of Rhode Island’s problems:
- Unemployment is high, at 11%.
- State investment in education isn’t pretty; the governor balked at raising URI faculty pay by 3% while costs are increasing. Their union said most of the raise would pay health insurance premiums.
- Highways aren’t much better: Rhode Island has the fourth-highest rate of structurally deficient bridges in the United States.
- Income taxes are down; the highest bracket pays 5.99% on earnings over $129,900. The other tax brackets are 4.75% for earnings more than $57,150 and 3.75% on the rest of wage-earners [pdf]. Combined, state and local taxes take 11.9% from the 20% of taxpayers with the lowest incomes while reducing the incomes of the top 1% by a mere 5.6% [pdf].
- Observers are suggesting that the state should essentially fail to pay the loan guarantee it made for 38 Studios by fulfilling only the moral obligation. It might take a hit on its borrowing costs, but it’d be better than paying roughly $100 million to bondholders.
In contrast, a 2002 article by Brian Jones in the Providence Phoenix said that under former Gov. Lincoln Almond the following happened:
- Unemployment down to 4% from 7% in 1995.
- Half a billion dollars invested in construction at state colleges, while health insurance was increasing among Rhode Islanders.
- Roads improved while the interest rates on state bonds fell.
- Taxes down 10%.
Well, at least taxes are down even more since 2002. That’ll come as a relief to the 11% of Rhode Islanders still unemployed, and the others who are underemployed or simply aren’t counted because they’ve given up looking for jobs.
It’s incredible how a decade can make a difference. Lincoln Almond seems like the most competent administrator in the entirety of Rhode Island’s history. And this was a man portrayed on the front page of The Journal in 2002 as chronically asleep.
A few other articles reveal the cyclical nature of Rhode Island’s economic woes: an April interview Ted Nesi did with the Information Technology and Innovation Foundation’s Robert Atkinson, an article in 2008 by Ian Donnis, and finally a 1997 article by Peter Phipps from The Journal expounding on the state’s cycle of convening councils to study and recommend policy.
Rhode Island is stuck in a rut. We’ve largely turned away from the course set by Governor Almond, retaining only the tax policy. And this chronic inability to address the problems facing this state has clearly eroded our citizens’ faith in government. (Try pointing out that Rhode Island doesn’t rank anything more than middling at worst in corruption rankings.)
Part of the problem is the nature of statehood. States don’t have access to the tools the federal government does. There are only two options for addressing budget deficits: cut spending or raise taxes. Since raising taxes – even on the wealthiest – has been ruled out by leaders, states have to cut spending.
There’s a further problem here. Virtually all economic reports are based around the idea of funding the “next generation” of high-paying jobs. Usually these are also highly-skilled jobs. Thus we learn that Rhode Island must invest in work force development.
We’re never going to invest in serious work force development: Our most recent high-profile foray into the technology sector has collapsed with 38 Studios. (In the meantime, the highly-efficient Slater Technology Fund - established in 1997 during Governor Almond’s tenure – is still backing effective companies with a $33.6 million state investment over 15 years.)
There’s only one best work force development: providing jobs and reducing the burden on your poorest citizens. Reducing in-state tuition at our state colleges needs to be a priority, so that Rhode Islanders can not only afford an education but also graduate with less debt and thus pump more discretionary spending into the economy. In turn, that generation will have more money to spend on their children.
Put another way, new technology doesn’t necessarily lead to better-paying jobs. Improvements in weaving didn’t make workers richer in the 18th century; it actually destroyed thousands of livelihoods. However, the costs of food had dramatically decreased the century before, meaning that even though workers had less physically, they were able to spend more because they weren’t spending it all on food.
If the 38 Studios disaster has proven to us anything, it’s that Rhode Island can’t succeed by pretending to be something it simply isn’t. Rhode Island needs to engage with its own citizens – if only because they’re hurting.
It’s not enough to simply pull together some “economic experts” to point the way forward. It’s time to go to Woonsocket, to Westerly, to Newport, to Providence – every city, town and village in this state – and ask Rhode Islanders what they need. Then you’ll have your economic vision.
Samuel G. Howard is a featured writer at Rhode Island’s Future. He grew up in Providence.