Entitlement culture destroying RI?
Rhode Island was founded on religious freedom, the concept that any person was free to worship any god or any way they wanted. Roger Williams believed that man could communicate directly with God and did not need to do so via an intermediary. Economically, New England flourished because of the Protestant “work ethic,” the concept that if one works hard they will succeed. How far we have drifted from the latter concept here in Rhode Island. At the recent Operation Clean Government Fiscal Forum, two economists—Prof. Len Lardaro and Gary Sasse—said that the problem with RI’s economy today is that RI is an “entitlement” state. That is the exact word they used.
What does this description mean for RI? It means in RI the citizens have come to expect the state and local governments to take care of them. That is, they expect the state to supply jobs rather than private industry. They expect the state to pay them if they lose their job, and to even pay them if they don’t work. Taking these expectations to the extreme results in socialism. What evidence it there to back this up?
First, the biggest employer in RI is the state and local governments; they employ somewhere between 55 and 65 thousand workers. No company in RI even comes close to this number. The biggest employers of RI workers in the private sector are companies like Raytheon, CVS, Fidelity, BOA, MetLife, Home Depot, Wal-mart, etc., and they at most only provide a couple of thousand jobs each
Why aren’t there more big businesses, especially hi–tech businesses in RI? The answer is really quite simple. RI’s business climate is dismal. In 2007 the Tax Foundation ranked RI’s business climate the worst in the country for the third year in a row. The most recent data from Forbes.com ranks RI the 6th worst state for business. See http://www.forbes.com/2008/07/30/virginia-georgia-utah-biz-cz_kb_0731beststates_table.html .
Forbes says RI’s business costs rank 42nd (a long way from the best). The state’s regulatory environment ranks 49th (next to last), and its workforce ranks 35th. The workforce ranking is based on three factors—educational attainment, net migration and projected population growth. So what this says is—that compared to a lot of other states RI workers need to be better educated and RI is losing citizens rather than gaining them. This should come as no surprise as the state’s unemployment rate is over 10%.
RI has lost 2% of its population since 2003 while 47 other states had increases, according to U.S. Census data. This trend would be even higher if not for two factors—RI has generous unemployment benefits and social welfare programs. For instance, Providence RI is ranked 2nd best in the nation for unemployment pay per Forbes. That is, unemployment pay in Providence covers “41% of the annual cost of living” according to Forbes.com. Businesses in the state pay a share of these high unemployment costs.
Considering the state’s welfare program, the Rhode Island Public Expenditure Council reports that RI’s spending on cash assistance (welfare) is 7th highest in the country. A 2004 CATO Institute study ranks RI’s welfare program 44th out of 50 states and gives it a “grade” of F. It goes on to say that the American Institute for Full Employment describes RI’s welfare program as a “celebration of dependency.” RI ranks in the “bottom 10 states for caseload reduction, decline in the birthrate for minors and percentage of births to minors, and reported work participation.”
Somehow, RI must change its ways. The state must attract more and higher-paying businesses by reducing its business and personal tax rates. It must reduce the size of government at all levels. Even though the number of state workers has decreased over the last decade, the number of city and town workers has grown, and this is one reason for RI’s high property taxes. Government in RI must find ways to privatize all but the most critical positions. The state and its cities and towns must contract out (on a competitive basis) all but the most critical functions and consolidate common operations at both the state and local level to achieve economies of scale. Reducing both the size and cost of government in RI will allow the state to reduce its tax burden and attract more businesses. It must also reduce business regulations and fees and scale back its entitlement programs.
This will not happen unless the current members in the RI General Assembly are replaced with fiscal conservatives who believe that government’s mission is to provide the best service at the lowest cost and not simply to provide jobs.