Preparatory notes for Sustainable Communities meeting May 23 2013

Turned out to be a different kind of meeting, so I do not need these, but feel well prepared, and think I need to turn these into the next essay to use in inviting folks to the October 12 conference, just a few more things to line up.  greg


Notes for Sustainable communities hearing  5/23/13


We all agree the RI economy could be better.  The issue I have with these reports is what it would take to achieve prosperity.  It is my strong belief, backed up by observations from around the world, that the approach offered to the people of RI by  Fourth Economy Consulting is the wrong one, and that the approach they offered does not work and should be replaced by a bottom up approach that begins with ecological healing and economic justice.  I will present a few critiques of these reports and just a hint of where we might go knowing that this is just the beginning of this process.  I am glad to participate in all appropriate ways throughout the process.



I have been reading reports like this for 20 years.   They say the same thing all the time using different buzz words for a different day or place, but the concepts have not changed.   If this stuff worked, it would have been done years ago.



A variety of issues to talk about in both reports I will start with Business climate since y’all did.


Business climate   Refer them to Good Jobs First Report   Grading Places  What do Business Climate Rankings really tell us.


Analysis from Good Jobs first


The most serious problem with BHI’s indices is that they mix causal and outcome variables indiscriminately. They claim that their index measures the “policies and conditions” in a state that make it more likely to compete successfully for economic growth, and their validity test is how well it predicts increases in per capita income. Yet a number of BHI’s variables are in fact measures of the outcomes or components of economic growth, not the causes of it, such as the share of adults in the labor force, budget surpluses, initial public offerings, exports, and firm births.


Similarly, a number of the variables are simply correlates of high income: the percent of households with cell phones or high-speed broadband, bank deposits per capita, and the prevalence of high-paid workers (scientists and engineers, high- tech workers). Not surprisingly, where people earn more money, they have more money in the bank.


The inclusion of variables that measure outcomes, or results of high or low income rather than causes, “…is profoundly circular logic and is equivalent to saying ‘we measure things that indicate how well off you are, therefore if you increase these things you will be better off.


THE TAX Foundation



The Tax Foundation here remains true

to the overriding principle governing the SBTCI: lower taxes are better no matter what. The Unemployment Insurance Tax Index rewards states for lower UI tax rates regardless of the condition of the state’s UI trust fund. States with trust funds teetering towards insolvency would be rewarded with a higher ranking for pushing the fund over the brink by imprudently lowering taxes. Such a move would, of course, necessitate higher tax rates in the future, but no matter. Fiscal responsibility does not really enter into this sub index



KEY concept  Business climates measure effects and call them causes, which makes them extremely biased.  AND


There is NO correlation between rankings in Business climate and the health of the economy.  NONE


For example


From the Mississippi Development Authority

According to an independent study by a major American manufacturer, Mississippi’s business climate ranked number one among 23 states in which it has manufacturing operations. Factors weighed included taxes, unemployment compensation, workers’ compensation, labor, transportation, energy, health care, job growth and quality of life. Mississippi’s diverse manufacturing sector produces ships, furniture, automobiles and parts, food, defense weapons, computer chips and electronics.




Mississippi is highest in teen pregnancies, infant mortality,  lowest in per capita income


Why is this the model we seek?





More on business climate:  Taxes make very little difference to start ups with no profits or low profits, so they are not an obstacle to start tying businesses, and despite everything y’all say, you admit that RI ranks high in business  start ups, so what are the obstacles?  Only in your mind.


How efficient the bureaucracy is about licensing may be an issue, but it would be a hell of a lot easier if businesses always held themselves to the highest standards of ecological and community participation.



Concept 2  following on your beginning.


Conditions have changed


The age of economic growth is gone.  Conditions for growth do not exist and efforts to bring it back do more harm than good such as austerity, roll backs of environmental standards, low taxes and the national insecurity state.  the global race to the climate nightmare is predicated in old models.  But there is no there there.


conditions for rapid growth:  Lots of immigrants from rural to urban willing to work for low wages.  Forests that can be stolen.  World is already half urban, US 80%, No new forests to exploit, or easy oil or easy iron or coal, just stuff that is harder to get, more expensive, and more polluting.


We have already run out of growth for most of the people in the west, the economies are already shrinking, if not for everyone, then for nearly everyone.  What we call growth is mostly bad news for communities.

And funny money financial manipulations.  Exactly what crashed the economy when they ran out of productive investments on this overcrowded trashed planet. Play real estate games.  Steal for their masters.


These more and more desperate efforts like Representative Melo’s ridiculous proposal to place DEM regulators under the Commerce Secretary so that there will be incentive to weaken regulation are exactly backwards for what RI needs,.  We need more ecosystem healing.  I call such efforts thrashing around for growth in which the rich skate and the poor get crushed  or poisoned.


We need both economic justice and democracy.  Listen to the world bank for a bit describing forest communities which are essentially equivalent  to our EJ communities.


The World Bank report on forest lending

WB   1.4  page 2    ”Poor forest  governance stems from the fact that forests often have a combination of capturable wealth but poor, isolated, and powerless residents. Powerful interest groups can seize this wealth, depriving poor people of access to forest resources, and sometimes contributing to corruption and poor governance … this contributes  also to environmental damage.


WB  2.82  page 57   Across the World Bank forest-related projects in the Sahel, the failure to explicitly address asymmetrical power relationships between decentralized bodies and forestry agents is likely to reduce the ability of local groups to actually exercise decision-making power in forest management.


When that happens communities suffer.



This is exactly what our low income and environmental justice communities face.  If the work on equity does not specifically address asymmetrical power in economic decision making it unlikely to help reduce or eliminate poverty.  You talk about economic equity, but it does not happen without political will to make sure the benefits  of economic development stay with the people in the community and that they NOT be displaced or gentrified out.


Full Cost accounting:  too much of your program seems to ignore the externalization of costs.  Public cost, private profit.


We pay for the development nightmares like building malls in the flood plain.  Or bulldozing beaches for luxury homes.


So I think you need a rethink of what sustainable development in communities looks like under the new conditions of the world.




Just few quick examples, focusing on some of the RI favorites for development this year. And the paradoxes involved.



Meds And Eds


this is one I talked about at an SBA conference a few years ago and was reminded of yesterday when I ran into someone who had attended at the state house where we are fighting building schools on toxic vapor sites (more economic development?)


Question how do you reconcile growing the medical industrial complex with keeping the cost of health care in check?


Would we not be better served by practicing prevention and community health rather than spending gazillions on high tech medicine that does not improve the length of life.  Biggest increases in life span are sewers and vaccinations for kids, not heart transplants or genetic research.  What are the benefits versus the costs looking like?


Eds,  How does the cost of college skyrocketing significantly faster than the cost of living work for us?  Fewer can afford to go, or more come out massively in debt.  Is this just another way to trap folks in the debt cycle.  And since there are no jobs , why? 42% of recent grads have jobs that do not require a degree.   Law schools are saying do not come, there are no lawyer jobs.



Green Economy:  Numbers on farms are wrong, and the focus on strictly energy for the Green economy shows a lack of understanding of what is going on in RI.


Housing:  RI rents are high, too high for workers to afford  50% of income or so.  But everyone in authority is always saying house prices going up is a good thing.

Complete hypocrisy.


Economies that run on debt are guaranteed ecological collapse.

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