I was recently in Providence, Rhode Island, where unemployment has just topped 10%. It has the worst (or close to the worst) unemployment rate in the nation. The problems with Rhode Island are multiple: 1) it's been a "blue" state for almost its entire history, and therefore, since manufacturing jobs have moved on to other states and countries, it has left very few jobs for the lower and middle class. 2) Rhode Island has historically benefited largely from a small percentage of wealthy people who have chosen to make the beautiful state their home. For many years, large companies would pay extra to host and staff offices there for the benefit of corporate executives who essentially had blank checks written for their own enjoyment. 3) The always democratic-leaning Rhode Island legislature has enjoyed decades of excessive taxation on income producing companies and individuals to fund and exhorbinant amount of social programs to support the majority percentage of low-income earners.
Today, Rhode Islanders are seeing the "perfect storm" they thought (or hoped) would never come.
What few companies that are left in Rhode Island are leaving, due to the toxicity of business and the alarmingly high rate of taxes. Wealthy people are moving out, because they can't (or aren't interested) in supporting the rest of the state with their own tax dollars. Industry has disappeared, and now there is a state with virtually no economic identity, no draw whatsoever.
Not long ago, in a State of the State address, Governer Carcieri announced to the State Assembly that taxes must be cut in order to stimulate economic activity, but it would result in temporary and permanent budget cuts, which would remove some programs from service. Democratic legislators essentially booed him out of the chamber. They called for his resignation, claiming he was "out of touch" with the average Rhode Islander, and didn't have the vision it takes to operate government effectively in an unstable economy.
So, much like the rest of the country, we have a state in an economic tailspin. The more people that get laid off, the more people move from the state, the less tax revenue is produced, etc. So, you might ask, what is the democrat's brilliant idea to solve this problem? Why, raise taxes of course! But only on the wealthy. Nevermind that there won't be any wealthy families left in Rhode Island by the end of middle of the next decade, having moved to other places like North Carolina. Nevermind that they won't attract any new industry (biotech, energy innovation, or otherwise), because they do not offer any kind of incentive. In the meantime, government projects such as road & bridge maintenance, environmental protection and education are taking a back seat due to severe lack of funding.
I reflect on Rhode Island because it's the smallest state in the union, and it is the smallest example of the largest problem we are facing. When you boil it down, do we want to dig ourselves out of this? Or should we stand by and allow our elected leaders to dig us deeper?
Sad thing is in most places, people are voting for the latter.
