Stenhouse: RhodeMap RI Contains Many Anti-Business Measures

Mike Stenhouse

Our RI Center for Freedom & Prosperity, URI Economics Professor Len Lardaro, the RI Public Expenditure Council, Mayor Allan Fung, and many other organizations have been critical of the proposed RhodeMap RI economic development plan for its fundamental lack of basic economics; that despite some worthwhile goals, there is no specific road-map offered to attain those goals. With the credibility of RhodeMap RI already in question as a building-block plan for the Rhode Island economy, upon closer inspection, it appears that RhodeMap RI may actually contain recommendations that would be destructive to family budgets, economic growth, and job creation.

NO COST-BENEFIT ANALYSIS

First, RhodeMap RI does not even attempt to address the core cost-benefit analysis that any credible economic development plan should peform: How much will it cost and what are the projected returns? As the plan itself states on page 178, "With few exceptions, everything in this plan requires funding," yet it goes on to say "...  this plan does not present solutions to the issue of funding ..."  To whom, then, will the funding plan be handed to figure out? And, obviously, with no investment levels specified, neither are there any return on investment projections.

MORE GOVERNMENT-IMPOSED BURDENS ON THE BUSINESS COMMUNITY

Second, given our state's persistently poor national rankings over the years in headline after headline, there can be no question that the government-centric public policy approach - that has dominated our state for decades - has been an abject failure. RhodeMap RI would accelerate this failed approach by inserting government into even more aspects of our personal and business lives, further dragging down our state's already struggling economy.

Appendix A describes the social equity principles of the plan, which, if adhered to, would place new burdens on the business community. This sentiment was echoed by John Simmons of RIPEC at the November RhodeMapRI consortium meeting. Also, Mayor Allan Fung expressed similar concerns in a letter he sent to the planning council. Forcing businesses to comply with new social-equity guidelines would further harm our state's last-place business climate and would limit business relocation and growth in our state ... at a time when we should be tearing down barriers to economic growth, not erecting new barriers.
 
Subsection B of the Appendix discusses "living wages", which, if referring to new minimum wage hikes, would actually increase the cost of employment in our state and would further burden employers, leading to fewer jobs for people who are looking for work. Policies regarding wage rates must be reserved for General Assembly debate, not adopted as a principle in a bureaucratic document outside of the legislative process.

ANTI FREE-MARKET APPROACH

Third, RhodeMap RI's open disdain for the free-market system should be of concern to every resident in our state hoping to participate in a booming private sector. 

 Subsection C of the appendix is direct in its anti-business language; "Use public funds for public good, especially for marginalized populations ... not private profit ... to finance projects that overwhelmingly benefit big business." Is not private sector jobs growth a common good? Mayor Fung points out the success that he and the City of Cranston have had in public-private partnerships and questions whether smart growth plans would be wise to preclude such partnerships, which could employ hundreds or thousands of Rhode Islanders.

Further, the actual Minutes from the October 16 RhodeMapRI Consortium Meeting offer more distrust of the free-enterprise system, stating: "The market will never take care of marginalized populations. Consequently the plan has to have sticks (laws/regulations) for things the market won't otherwise do, as well as carrots (incentives)."

FAMILIES TO BEAR PROPERTY TAX HIKES

Fourth, the sticks and carrots that RhodeMap RI contemplates would manifest via manipulation of local property taxes so that they become a weapon against those who do not live in preferred communities and as a reward to those who obey the plan. Annual property tax caps in municipalities would be wiped away, leading to unchecked residential and commercial property tax hikes, as one means to fund the 'growth centers' the plan envisions.

Yet page-159 of the plan itself  discusses that local property taxes are already too high across most of Rhode Island; however it is precisely an increase in these same local taxes that the RhodeMapRI plan relies upon. How can this make sense?

Subsection C also recommends creation of "Community Benefit Agreements" that would somehow ensure that "current housing costs" are maintained for people or businesses that may be displaced during development. This rent-control concept is a failed idea from the past and would artificially distort the normal housing and rental markets. Further, someone would have to pay to ensure these price-control guarantees ... either landlords or taxpayers ... and such unfunded-mandates would result in even greater economic decline for those communities and for our state.

Finally, with local and state taxpayers in mind, page-141 of the plan discusses "resiliency" provisions that would require significant investment to "increase the state's resiliency to climate change." The cost to taxpayers of developing such climate change resiliency infrastructures would certainly be high. The return on investment of such projects is unspecified and, with recent history as a guide, often produces negative economic impact. Such, costly, unproven, even un-necessary burdens on taxpayers, with high potential unintended costs to state and local economies, is not a risk our state should take, considering its fragile jobs market.

CONCLUSION

It is the position of the Center and most economists, that the free-market capitalist system has raised the standard of living of more people across the world than any other system ever devised by man. RhodeMap RI, with its big government and anti-enterprise approach, would turn this system on its head in the Ocean State.

If our state is to return prosperity to its residents, a new era of public policy, free from oppressive government regulations and taxations ... not more of it, per the RhodeMap RI scheme ... must be the "rhode" the Ocean State takes. The free-market should be freed to work its 'invisible hand', and government should get out of the way. If adopted, Professor Len Lardaro suggests the plan be renamed - TrainWreck RI; we regrettably concur.


Mike Stenhouse is CEO for the RI Center for Freedom & Prosperity and holds an Economics degree from Harvard University.

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