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Tuesday, April 29, 2014

Rhetoric versus reality

Debating the Heritage Foundation

Stephen Moore, conservative economist 
who doesn’t understand Rhode Island.
Stephen Moore, the Royal Economist at the Heritage Foundation came to town last Saturday, to debate me in an event sponsored by the Rhode Island Center for Freedom, Prosperity, and Apple Pie. Was it an educational experience?  Well, possibly.

I did learn, for example, that Moore knows pretty much nothing about Rhode Island politics, economics, the history of its manufacturing sector, or even the legislative history of the past 25 years.

And he admits it, too, though he very much wants our state to take his advice. For example, he made repeated references to the way we “demonize” business owners and tax them at high rates without being able to be specific about what he meant, or to contradict the long list I gave him of tax cuts for rich people we have enacted over the past 20 years. In fact, the number of broad-based tax increases enacted by the state legislature since 1993 is zero, while taxes were cut for rich people in 1996, 1998, 2001 (twice), 2005, 2006 and 2010.

Sam Bell was with me and between the two of us, we cited not just the tax cuts, but specific facts about abortion, guns, and labor at the state house, to point out that Rhode Island has been in the grip of conservative ideology for two decades — despite control of the Assembly by the Democratic party. Faced with these examples, Moore persisted in saying there was no evidence (his words) that Rhode Island was not ruled by liberals. After that, it’s difficult to imagine what, precisely, he would think constituted evidence.

Moore even repeated the right-wing shibboleth that raising the minimum wage will make unemployment rise. Now of course he has to claim that, or else go back on years of his writing. Still, it’s an odd thing to baldly make the claim in a state where the minimum wage went up in January and the unemployment rate has just ticked down, a month or two later.

Do I think those are cause and effect?  No, not simply, but it is at least consistent with the effects I predict for an increase in the minimum wage. It seems to me that there is a heavier burden on the person who claims that the future will be exactly the opposite of what happened just last month, but Moore does not appear to see it that way.

Despite both his ignorance of our state and utter disregard for the evidence Sam and I did present, Moore happily claimed that yet more tax cuts for rich people — doing away with the estate tax, or even better, the income tax — are the cure for what ails our state. Late in the debate, he fell back on the claim commonly used by people who can’t win on the facts: “perception can become reality.”  As if the only rational way to address the misperception of business magazine editors and conservative economists is for the state to sacrifice a billion dollars of revenue.

He further insisted that we needed to do something “bold” and suggested Rhode Island should become a “right to work” state. He blamed our loss of manufacturing on unions, though of course our state’s biggest lost manufacturing sectors (textiles, plastics, costume jewelry) were not heavily unionized.

Beyond this, there is a decent body of evidence to suggest that Rhode Island’s economic troubles stem mainly from underpaying its lowest-paid workers, but time limitations and the moderator prevented me from presenting that evidence. (It is, however, described in my book, “Ten Things You Don’t Know About Rhode Island” a copy of which I inscribed and gave to Moore since he so obviously needed it.)  But all the other evidence I presented was ignored, so I don’t see that Moore’s side of the debate suffered much for this.

So in the end, what do we learn?  That Steve Moore, and those who enable him, such as the Center for Apple Pie that sponsored this debate, care very little for evidence or for anything that might disturb or even enrich their understanding of our state and its economic woes. But that’s ok for them, because they are supported by a legion of people who agree with them, like those in the audience on Saturday.

Here’s the problem, though. As I’ve written before, there is a moral dimension to lobbying. Lives are ruined and people die because of bad decisions made at the state house. Advocates have a responsibility to test their hypotheses in an intellectually honest fashion.

Our state has a high unemployment rate. That is where inquiry begins, not where it ends. It matters a lot to sensible policy whether that is due to state policy, federal policy, history of the labor market, the decisions of private employers, the conditions of the local credit market, the price of tea in China, or anything else.

A responsible advocate will examine as many possibilities as seem reasonable before insisting on a solution. But I didn’t see any of that curiosity on display Saturday. Indeed, I got a couple of indignant snorts from the audience merely for suggesting that if you look at our state’s unemployment rate in terms of metropolitan areas, it might tell a different story than looking at state rates. (There are 32 metro areas in the country, in a dozen different states, in worse shape than Providence.)

Quite to the contrary, Moore is willing — even eager — to parachute into our state and make outrageous recommendations about state policy while remaining ignorant of pretty much all the actual facts. This, it seems to me, is a deeply irresponsible use of the prominent position he holds. So that’s what I learned on Saturday. I was paid to be there, so that was ok for me, but if you slept in on that rainy morning, and weren’t at URI to see our little show, it seems to me that you probably came out ahead.

Tom Sgouros is a freelance engineer, policy analyst, and writer. Check out his new book, "Checking the Banks: The Nuts and Bolts of Banking for People Who Want to Fix It" from Light Publications.