We’re No. 1 — And A Lot Of Other Numbers, Too

Once again, Rhode Island makes a Forbes list. Last time around, Providence made 10th Most Miserable City. This time, we’ve hit the top — as Worst State for Business. But this may say more about them than about us.

As always, Forbes’ metric is somewhat curious, even before examination. Forbes loves to make lists like this, but the results can be perplexing, and the methodolgy dubious. Last year, an otherwise objective comparison of nations by “tax burden” scored them according to a perhaps less objective (if the choice of words is any indication) “misery index,” with such hellholes as Sweden, Denmark, Belgium, France, and Norway at the top. By coincidence, these same miserable states also routinely rank high on The Economist’s Quality of Life Index (which, in case it’s not clear from the name, means that they’re awesome places to live). Countries that placed high on both lists are also, according to Forbes, among Europe’s Happiest Places, have The Best Minimum Wages in Europe, and have some of The World’s Happiest Cities — making them, confoundedly, both the most and least miserable at the same time.

But it’s not just Forbes that seems confused. In PBN’s article, Ted Nesi finds it “somewhat surprising” that despite our being the worst for business, we ranked in the top half for quality of life, at #21. (Forbes also ranked Providence #12 among America’s Thriftiest Cities, though we ranked 165/200 for Best Places for Business and Careers, 5th Most Overpriced, and 4th Most Stressful. And we topped their list of Cities Where It’s Hardest to Get By. Thankfully, we made #2 for Unemployment Pay.)

It should be no surprise to anyone that there’s a relationship between wages, taxes, and quality of life. But why does there seem to be an inherent conflict between the interests of business and the interests of people? Can’t we just get along?

A big part of the answer lies in how modern businesses function, with a rabid focus on the bottom line. Profits are great, but stock corporations rely on constant growth, to the detriment of all other considerations. In fat times, everyone supposedly benefits; in lean times, such as now, everyone must suffer. But the suffering isn’t equal: In terms of individual sacrifice, the rich do suffer less. Sure, Bill Gates lost $10 million in one day on the market. But he still wasn’t worried about how he was going to buy toilet paper, meet his mortgage, feed his family, and pay the electric bill. The rich can tumble spectacularly on paper, but they’re not in danger of going hungry or homeless — unlike countless much smaller casualties in this most recent economic dive.

In olden times, the word “company” referred to a group of people working together for common goals. In theory, a business operates for everyone’s mutual benefit — the owners, the managers, the workers, and the community. In practice, it’s often considerably less equal, with workers and the community often getting short-shafted, while those at the top seem less impacted: If Lifespan is so tight that they have to consider a pay freeze, why is CEO George Vecchione the highest-paid healthcare executive in New England, making nearly $3 million? This company, just one example among many, does not seem to have an equal emphasis on everyone’s gains from its enterprise.

In the larger scope, there’s a terminal failure to the theory of stock capitalism, as it relies on an assumption that infinite growth is possible. Logically, this requires an infinitely exapandable market, which in turn demands infinite resources in an infinitely great world — which we don’t have. Sooner or later, it must run out, and the gravy train must end. While the mechanisms and mechanations of Wall Street were seen to reach dizzying heights of inscrutible complexity in public hearings last year (to the extent that even some of the giants of finance admitted they couldn’t make sense of it), in the final analysis it all really comes down to a global feeding frenzy, in which some hope to win and most are sure to lose. The concept of enough simply doesn’t exist in this reality, and that’s why temperance and fairness go hungry while greed and corruption gorge.

One way to balance these forces is through government regulation. Businesses (and Forbes) hate it, it’s often done poorly, and invites all manner of corruption and political shenanigans. But at least in theory, it gives The People some measure of influence over the proven inclination of big businesses to exploit workers and communities. For all its many frustrations and hazards, this is the only thing we have going right now.

Another way is the system that used to be in place ages ago, where all enterprises were publicly chartered. In this model, community service was inherently required, or a business could lose its charter. While that didn’t stop the shenanigans entirely, it did dampen them considerably.

I don’t have any easy answers. But it seems obvious that until and unless we stop thinking of business and people as natural enemies in common environments, neither willl have real and meaningful peace, pleasure, or prosperity.

14 thoughts on “We’re No. 1 — And A Lot Of Other Numbers, Too”

  1. I’m actually a little bit surprised, despite all the evidence against it, that annexation hasn’t taken place already. The city limits of Providence are very small. This means that outside of the taxes collected within those small limits, the city has to rely on state aid to get by. We have seen in the last few years what that means during a recession, when everyone wants to hold onto their money. Annexing the immediate suburbs benefits the metro area as a whole by redistributing tax revenue fairly as a metro area.

  2. Turns out that somebody in my office (and you can imagine who) has known about this for a month and was sworn to secrecy. There’s a Projo poll that shows 86% in favor vs. 14% opposed. (Can’t link cuz Projo is teh suck.) Is it possible that around 14% of all Rhode Islanders are, in fact, municipal employees?

  3. Amazing. I was just about to post that same list of cities (as an urban analogue to Chariho) with my (already lengthy) reply above, short only Central Falls (because I overlooked it – sorry!) and E-Pro (whom I surprised might go along with a metro plan, instead of an East Bay plan).

  4. Excellent suggestion, and an obvious and tried and true one: consolidated trans-municipal school districts. It seems to work in Hope Valley, with various Chariho authorities handling functions that those towns have trouble with on their own.

  5. In fact, annexation is a novelty pretty much only in New England, where most municipalities are incorporated and there is little land that’s not within some local jurisdiction. (The major exception is the huge, very sparsely populated and mostly undeveloped area of Maine east of Bangor and south of the Alagash, a very large part of which is administered directly by the state because there aren’t enough people there to run it.)

    In most of the U.S., most municipalities are not incorporated, and this is the legal distinction between the words “town” and “city” outside of New England. (Oddly, it’s also the same way in England, and most Brits and Americans understand this distinction and are probably confused by New England.) This is what those oddly shaped yellow blotches around cities describe: the legal limits of the incorporated area; everything outside that is unincorporated, and technically county land (if it’s not state or federal).

    County government is the norm in most of the U.S., where the county seat — some city, always — does the bulk of what are state and municipal functions in New England. It will sound odd to most New Englanders, but in most of the rest of the country, the county seat can and often will annex outlying areas of its county, incorporating them into the city proper.

    This is one reason why school districts are so much larger in the rest of the U.S., and common logic suggests that this is inherently more efficient. I’ve heard, however, that it ain’t necessarily so. There is something to be gained from economies of scale, but there’s also an invisible limit to that, where you instead approach diminishing gains. (We’ve already found this out about our massive power grids — not that we’re doing anything about it.) I get the sense that a great deal of how much you waste or save depends on management at least as much as size.

    We also need to be realistic about the culture of New England. However much sense it may make on paper, many Yankees are loathe to let go of their towns for any reason, even a very good one. Witness the reaction to Rep. Pagliarini’s proposal to combine a huge part of Western Rhode Island into a single new town, to be called Westconnaug. Towns do disappear from time to time, but they do so organically, not by fiat. Historically, the opposite has actually been the prevailing trend: most existing New England towns used to be part of another, larger one.

    At the same time, I also can’t imagine these same constituents giving up control to the state. (And I can’t blame them either.) So the only solution I can see is better management. And that really falls to constituents. Left alone, government inevitably degrades. But it also suffers when overmanaged. (This generation’s textbook example: ballot initiative.) Good, clean, professional government works well when constituents and media do their job. So perhaps the problem in R.I. lies not with the goons in office, but the schlubs who elected them (or don’t vote), and a media with more immediate concerns.

  6. Thanks, Frymaster and Corey.

    Yes, the DOT does a lot more than just paving our interstates, and that’s just my own ‘cocktail napkin math’ (State DOT budget divided by miles of federally recognized ‘highway’), so the real numbers are probably wildly erroneous, but I believe the take-away from a more exhaustive analysis would be the same: We’re getting terrible -value- from the taxes that we do collect, and we have a much smaller per-capita source for those taxes. Because of this, we have somewhat steep taxes. Our small size makes it such that corporations large and small from retail, to construction, to energy delivery are able to ‘cover’ Rhode Island from nearby states that have better regulatory climates and lower taxes.

    If Rhode Island wants to have lower unemployment, it’s going to have to provide better value from its tax dollars than our neighbors. I think we can all agree that right now we’re in something of a ‘death spiral’ (smaller tax base -> less revenues -> higher taxes -> business and population exodus -> repeat). On top of that, we’re on the hook for -ten billion dollars- worth of unfunded pension promises to state employees, which is well over an entire year’s budget. Like I said, consolidation would -help- through economies of scale and some reduction of redundancy, but those are only band-aids on a shotgun wound.

    The real advantage I see to consolidation happens several years after it’s done: We’ll be able to retain quality, competent management to handle regional payrolls, budgets, and contracts. Right now the system is far too close-to-home, with amateur school boards and ‘football jock’ town halls essentially having (and failing) to make tough decisions about their neighbors and friends. I’m a big fan of local representation, but I think we may be so fragmented that we are unable to put the talent we need into local governance.

    Corey, I believe that regionalization would help with funding the schools, too. Once the districts are larger, money can be allocated where it’s needed most, instead of each village ‘taking care of their own’ and leaving poorer areas to the dogs.

  7. I’m not apologizing for the political regime here, I’m just saying that Forbes is the other extreme, and that living up to their standards is more or less physically impossible for a place like Rhode Island.

    Yes, the state is fucked up, but every state is fucked up for its own reasons. The disparity between educational spending and test scores is probably the single most serious issue here, although even at that, it’s a good example of how statistics can be much more complicated than they seem. The vast majority of public school students in Rhode Island attend urban schools, which also happen to be horribly under funded here, and therefore perform abysmally. The vast majority of funding goes to rural and suburban school districts, which actually perform fairly well, but because there are a lot less of them, the average test scores don’t reflect well. The details get lost in the averages to a great extent.

  8. MG, are those costs calculated on your part based on the 60 miles of highway? That’s proper divided highway, I presume. Doesn’t RIDOT need to maintain state highways, too? If published stats, links please.

    What’s refreshing about your take is that – unlike the hyper-capitalists/tea-baggers – you recognize that are two sides to the ledger: 1) what you pay & 2) what you get. And that is actually a discussion that people could and _SHOULD_ have. Bitching about paying taxes is for Republicans, er, losers. (Insert erroneous statement about how I never paid taxes cuz I never got a job and live with my parents.)

    What’s particularly galling about the state of discussion regarding municipal consolidation is that people act like this is some new, wacky idea that’s never been tried before. Which is bunk.

    The UK just went through a major consolidation of cities and counties into city regions – this is Leeds. And several US cities like Louisville have merged with their surrounding counties (hint, f-ing, hint).

    So this is doable, RI, and it _HAS_ been done. Even here in the US.

  9. A response to both Wesli and Corey. I think if you dig deep into Rhode Island’s finances, you can see a real reason we’re shunned. Sure, taxes are a necessity, I think pretty much everyone can agree with that (some teabaggers aside). What I see is that our state spends -more- than our neighbors, for worse results.

    We only have about 60 miles of highway, but out DOT has double the per-mile budget of Massachusetts. Every mile of Rhode Island highway costs $5 Million per year, and the national average is about $850K. Every two years the DOT says ‘we have to borrow money to fix the roads and bridges, we’ll even get matching federal funds’, and we fall for it -every time-.

    Our teachers are paid in the top fifth of the nation, but our test scores are in the bottom quartile.

    I’m OK with spending less and getting less. I’m OK with spending a lot and getting a lot. What I cannot abide is spending more and getting less, which is what Rhode Island seems to do. Our city-state status and high density should work for us, not against us.

    Virtually everyone in RI agrees that we need to consolidate municipalities, and regionalize services, yet nobody has offered a good plan. While I think that the consolidation would only shave a few points off the overall inefficiency of the system, it’s the first step in making other much needed drastic changes to our expenditure and accounting systems.

  10. This is a really good piece about why I get so annoyed with people who do nothing but complain about the price of living in Rhode Island. It’s tiny. What little we had in the way of natural resources was consumed a long time ago. Living here is intrinsically expensive because there’s so little room for irresponsible development, which the entire rest of America depends upon to make its money. How can people expect us to accommodate that?

    What’s even more infuriating is that people care more about numbers on paper than they do about any of the actual things around them that make life worth living. We have magazines like Forbes to prove it.

  11. That’s the part I can’t understand. Even a child can grasp that infrastructure, law enforcement, emergency services, and the like, are all products of taxation. That and the pay workers receive are the two key factors in most quality-of-life issues (and thus rankings). Taxes are part of the reality of civilisation, going back to ancient Mesopotamia. Without it, none of what we take for granted would be possible. And pay is the necessary evil that replaced its predecessor, slavery, going back at least as far. Somewhere a few centuries ago, people realised that building your society on the backs of prisoners of war was inhumane, and they started paying people to do stuff like build roads. It was a painful economic shift, no doubt, but we’re better for it.

    So, modern businesses resent paying taxes and wages, and resent government regulation making them act fairly and decently. Yet it’s obvious that we all need those things, and modern society is impossible without them. If a child can understand this, why can’t business magazines?

  12. Ye beady eyes of Stevie Forbes make me wonder if he transmogrifies into a rodent under cover of darkness as he scurries about, doing the bidding of his masters at the GOP/NewsCorp. I wouldn’t doubt that they futzed with the numbers _UNTIL_ RI was at the bottom, just so they could say: See, those East Coast elitist socialists are destroying America.

    As ye know my mastery of the dark art of statistical incantations, I share my own crunching of the numbers. I simply divided the gross state product by the population of each state to produce a rough productivity index. RI is #24 near the average, but well below mean which lands at #12.

    Look at the line for WV. They are #4 for cost of business, but still rank #46, barely ahead of RI. In the productivity index, WV is still at the bottom of the barrel at #49. DE is the upper outlier at 10% over NY in the #2 spot, doubtless because virtually every corporation in the US is registered there. (DE actually has zip-codes (multiple) for all the corporations that don’t actually have a physical address in state. Credit cards companies alone are a HUGE windfall.)

    What is ye take-away? That cost of business is only one factor in the overall equation, and not a very important one, at that.

    So why ye fuss? And why is it in the left-most data column, reserved for the most important data? Because to the hyper-capitalists, no amount of reality can ever break their self-induced spell of willful (and woeful) ignorance.

    TAXES. ARE. EVIL. AND. WILL. EAT. YOUR. CHILDREN.

    Why does this magazine enjoy so hallowed a reputation? This is transparent BS. Don’t believe ye hype!

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