July 12, 2012
CNBC Rankings Shouldn't be Ignored
In light of the recent CNBC report that ranks Rhode Island last, #50, in the U.S. for being "business friendly", Bob Plain wrote this morning--under the heading of "Making Sense of the CNBC Report"--that we should "get ready for the conservative barrage that because Rhode Island ranked as the least business-friendly state we should adjust policy to appease the good editors at CNBC." Well, since I don't want Bob to be wrong (any more than usual ;), I'll confirm his prediction--and I'll start with something Bob wrote.
He continued his foray into "making sense of the CNBC report" by comparing CNBC's top two business friendly states (Texas and Utah) to the bottom two (Rhode Island and Hawaii) and asking, "Where would you rather move your business to?" And that was it. As if it is obvious that the bottom two are better places to live than the former. Well, that is pretty much a matter of taste, isn't it? But it's also beside the point.
The real question that should be posed isn't where Bob or I or just anyone would rather move to, it's where they or we would rather move a business to. Clearly, as the CNBC data shows--and they aren't exactly some little-known outlier here--Texas and Utah are two of the states whose economies and population have continued to grow throughout the decade, recession or not. Clearly, many people would rather move themselves and their businesses to these places instead of Hawaii (which is kind of a special case, isn't it?) or Rhode Island. To put it another way, people in every other state in the country can take solace in the fact that, "Hey, at least we're not Rhode Island."
Take a look at the main page of the story on CNBC's website where it lists the Top 5 and Bottom 5 plain as day. And we're sitting at the bottom for the second year in a row. Like it or not, these reports make national news and affect the perception of our state. Especially when it's a well-respected outlet like CNBC, which business leaders and decision-makers across the country rely upon for financial news and the like and whose findings will be propagated across the country (particularly in the business community and their local and national publications).
Maybe "denial" is a river in Rhode Island. We Rhode Islanders don't do ourselves any favors by continually sticking our collective heads in the sands of our beautiful beaches and believing that everyone else has it wrong when the evidence continually shows that Rhode Island is the one with a problem.
Any Rhode Islander who pooh-pooh's the CNBC story is displaying an all-too typical sort of myopic insularity endemic to the state. Newsflash, folks: Rhode Island doesn't have it all figured out while the rest of the country is crazy. But believing it, or at least telling ourselves we believe it, does serve to mitigate the need for the hard work it would take to actually change things. Including the perceptions of others.
Regardless, for those of us who really do want to change the national perception and, more importantly, the actual economic climate in the Ocean State, things like the CNBC rankings need to be taken seriously. So let's take a closer look at them:
50th in Infrastructure and Transportation - CNBC "measured the vitality of each state’s transportation system by the value of goods shipped by air, land and water. We looked at the availability of air travel in each state, and the quality of the roads." It would seem road quality killed us here.
49th in Business Friendliness - "Regulation and litigation are the bane of business. Sure, some of each is inevitable. But we graded the states on the perceived 'friendliness' of their legal and regulatory frameworks to business." No surprise.
49th in Economy - "We looked at basic indicators of economic health and growth." This is a case where our own personal, anecdotal experiences can confirm a study's findings. Right?
46th in Workforce - "We rated states based on the education level of their workforce, as well as the numbers of available workers. We also considered union membership. While organized labor contends that a union workforce is a quality workforce, that argument, more often than not, doesn’t resonate with business. We also looked at the relative success of each state’s worker training programs in placing their participants in jobs."
45th in Cost of Doing Business - "We looked at the tax burden, including individual income and property taxes, as well as business taxes, particularly as they apply to new investments. Utility costs can add up to a huge expense for business, and they vary widely by state. We also looked at the cost of wages, as well as rental costs for office and industrial space..."
44th in Cost of Living - "From housing to food and energy, wages go further when the cost of living is low."
37th in Technology and Innovation - "We evaluated the states on their support for innovation, the number of patents issued to their residents, and the deployment of broadband services. We also considered federal health and science research grants to the states."
23rd in Education - "Not only do companies want to draw from an educated pool of workers, they want to offer their employees a great place to raise a family. Higher education institutions offer companies a source to recruit new talent, as well as a partner in research and development. We looked at traditional measures of K-12 education including test scores, class size and spending. We also considered the number of higher education institutions in each state." Now we're getting to places where Rhode Island has some possible strengths to build on. My guess is that Rhode Island was boosted by high education spending per pupil and relatively lower student/teacher ratios. Another guess: they must have indexed number of higher ed institutions to population, giving RI a good mark. Test scores were most likely a drag.
23rd in Quality of Life - "The best places to do business are also the best places to live. We scored the states on several factors, including local attractions, the crime rate, health care, as well as air and water quality." A la Dan Yorke: Water. Here's where Bob Plain is shown to be partially correct. But whereas Bob seems to base the entirety of his analysis on quality of life (and living in East Greenwich cove certainly adds to one's good vibes!), CNBC only considers this as 1/10th of the overall picture.
10th - Access to Capital - "Companies go where the money is, and venture capital flows to some states more than others." While it's nice to be in the Top 10 for something, methinks that in the wake of 38 Studios we will see a lower number next year.
Instead of dealing with issues that would directly address some of the above concerns, we had a General Assembly that spent time maintaining the status quo, at best. Right now, the status quo is being the worst in the nation. Is that really where we want to be? Unfortunately, I think too many Rhode Islanders would respond, "Whatever."
Well, at least we've got the beaches and Downcity and Waterfire and Newport....
"50th in Infrastructure and Transportation - CNBC 'measured the vitality of each state’s transportation system by the value of goods shipped by air, land and water. We looked at the availability of air travel in each state, and the quality of the roads.' It would seem road quality killed us here."
And not mass transit? Kind of a curious omission and maybe reflective of the bias in these kind of generalizations.
My personal take, this is an interesting ranking but not all that relevant. RI would be better compared to metro-regions that to a state the size of Utah or Texas. We don't need to be business "friendly" across the board, we just need to compete well in a good niche (or a couple fo them).
Posted by: Russ at July 12, 2012 1:43 PM"My personal take, this is an interesting ranking but not all that relevant. RI would be better compared to metro-regions that to a state the size of Utah or Texas. We don't need to be business "friendly" across the board, we just need to compete well in a good niche (or a couple fo them)."
Marc should thank you Russ for making his point. As to your point on comparisons, unfortunately a highly respected national media outlet specializing in business (CNBC) sets the ground rules not you. As to its relavency, need I repeat, a highly respected national media outlet specializing in business (CNBC)...
Posted by: Max D. at July 12, 2012 1:54 PMBob is clever in his attempt to preemptively poison the well, but we have nothing to feel shame about in fulfilling his predictions. If your argument is predictable, then that's a good sign - it means that your logic is consistent and your message is being heard. This isn't a game of subterfuge in which we should be constantly surprising the other side - it's a public policy discussion that should be about getting to the truth of the matter.
I find it interesting how progressives will claim that Rhode Island is a "conservative" state for the purpose of explaining why it has certain undeniable problems, such as high unemployment and a low median income for the area, but they will then turn around and defend how wonderful the state is and take full credit based on its "progressive" policies. Is the state conservative, or is it progressive? I don't know any conservatives or libertarians who play this back-and-forth word game - we have no problem identifying the state as far left. The reason, of course, is there isn't much in Rhode Island worth taking credit for, and there are so few free-market-oriented public policies that there is little for us to defend.
Posted by: Dan at July 12, 2012 2:14 PM"a highly respected national media outlet specializing in business (CNBC) sets the ground rules not you."
Ah, yes, the appeal to authority. Look, my point is only that it matters little that certain businesses don't want to locate here. Our real estate and fuel costs are high, so one would be surprised to see certain businesses here.
For instance, New York ranked 34th. That's possibly a concern for the a state that large, but for the New York City metro area? Puh-lease. Business will continue to locate in NYC and the ranking won't enter in the decision. New Jersey comes in at 41st, but pharma business is still heavily concentrated there.
Posted by: Russ at July 12, 2012 4:55 PMThese are hard times to make many judgments. I went to an auction today, just over the line in Massachusetts. It was for the assets of a company with a new idea in air compressors. Basically , they were 40% more efficient than screw compressors and were to be driven off windmills. This is a fairly good idea, unlike electricity, compressed air can be stored to do work later. A number of the manufacturing people there were well aware that the trouble with electric wind farms is irregualr operation and storage.
I met the former owner, but decided not to rub salt in a wound. Seemed like a good idea they had. I could surmise some from the nature of the sale, but wonder where it really went wrong.
A lot of the stuff went for 20 cents on the dollar. Maybe someone can pick up the idea and run with it. It is sad to watch the death of manufacturing. While passing time between items, I noticed that someone with too much money had arrived in a "convertible" Japanese SUV. More, I noticed that there were three curves in the gas cap door. That is "high tech". We cannot do that efficiently. Look at the gas cap doors on an American car, they will only rarely have two curves. Mercedes are usually flat. Corollas will regularly do it. That significantly effects the design of a car (safety regulations for gas tank placement).
RI native and lived there for 35 yrs. Lived on Maui for 4 yrs and Texas (DFW) for the last 4. There is no mystery why RI is #50 and Texas is #1. Lets start with state income tax....zero in TX. Visited RI on 6/22/12. Gasoline was .32 a gal. higher than in TX for regular. Our real estate prices are reasonable. The economy is much more diverse and you don't have to join a union to find a job. It's not just an oil and gas state. The winters are mild and the summer is hot. A vibrant arts and college/education infrastructure. Pro sports in all the majors (like Boston-Foxboro). College and HS football par excellence. Corruption...yes (like everywhere) but not on the level of RI. There IS opportunity here. Statistics are only part of the story. The framework of RI is broken. Check with the future (the striving 20 somethings). They are leaving.
Posted by: ANTHONY at July 12, 2012 7:10 PMWhat is it about RI that has these out of staters like ANTHONY, Dan and all his aliases , Ken from HI constantly commenting on all things RI? If the place is so terrible why haven't they put it in their rear view mirrors and gotten on with their oh so productive lives?
Posted by: Phil at July 13, 2012 5:09 AMPhil..."If the place is so terrible why haven't they put it in their rear view mirrors and gotten on with their oh so productive lives?"
It is because I have a loyalty and a fondness for my birthplace (and home) for many years. I am not going to give up on RI. It is a gifted state with it's coastline and proximity to NYC,Boston, the mountains,etc. AR is an outlet to communicate and I show my support by being a monthly contributor. So Phil what is it about you that you do not understand the free exchange of ideas?
Posted by: ANTHONY at July 13, 2012 12:32 PMPhil - I exclusively post under this name on this website, which is not an "alias." I'm not sure why you believe otherwise.
Most of my lifelong friends have similarly fled Rhode Island for greener pastures, but I still have family in the state, and I am actively working on convincing them to leave for their financial well-being. I lived in Rhode Island for over two decades, and I continue to visit several times a year - it remains a part of my life. More importantly, I consider Rhode Island an important case study in how progressive/union/corrupt economic policies can wreck a local economy if left unchecked by an electorate and proper rule of law.
It may surprise you to learn that I never *wanted* to leave the state in which I was born and raised, and I planned to return to Providence to start a family after finishing my higher education. I was robbed of this opportunity by the irresponsible and misguided public policies of the state and was all but forced to make a life elsewhere. I continue to follow the state's decline with concern, just as so many Iranian, Russian, and Egyptian exiles continue to follow the troubling events in their countries of origin.
Posted by: Dan at July 13, 2012 2:33 PMI do not mind hearing from former Rhode Islanders here. It lends a perspective and the opportunity for factual/anecdotal comparisons.
Remember when "anecdotal evidence" was the buzz word of the Clinton administration? I think it has been replaced by "nuance". It seems one cannot be an accomplished political speaker without constant reference to "nuance" and "nuanced statements". Sometimes they are even "heavily nuanced". In my entire life, I have never knowingly committed a "nuance". Perhaps a "veiled threat", here, or there.
Posted by: Warrington Faust at July 13, 2012 8:43 PMSorry that I got back to you so late but this is a very busy time of year for me. I take ANTHONY at his word. As to your comment about the free exchange of ideas, I thought that is what we are doing now. Dan has let us all know that he is also using the name Right to Work on another RI based site so who knows how many names this writer uses. Both of your politically motivated views of the state in which I live and work strikes me as an exercise that is pointless. Unless you are engaged as a resident and voter the comments you offer are pointless. Direct your energy towards your communities. Act and be responsible as stakeholders or butt out.
Posted by: Phil at July 13, 2012 10:15 PMPhil - I use a single name on this blog, which is not an alias, and I use a single name on "the other blog." The only reason the two are not identical is because the other blog's handle-selection process didn't allow it. There is nothing sinister about this, I have never denied any of it, and you are the only person to raise it as an issue in my 5 years of commenting on either site. We could raise the same concern about any commenter: "Who knows how many aliases commenter Phil has?" The fact that you are resorting to such distractions and nonsense is only evidence that you have nothing of substance to offer.
Perhaps, instead of your economically suicidal "good riddance" attitude toward anyone who questions the progressive narrative or leaves the state, you should give some thought to why so many skilled and highly educated young people, such as me and others, have decided to move to states with lower taxes, cleaner politics, and more enlightened policies toward business.
Posted by: Dan at July 13, 2012 10:52 PM"Direct your energy towards your communities. Act and be responsible as stakeholders or butt out."
Hey Phil...I tried...it didn't work..I left.
"Butt out" not spoken here.....except maybe for "open" minded tolerant liberals (as long as you agree with them).
Posted by: ANTHONY at July 14, 2012 4:23 AMI don't care why you left. If your many, many, many comments here and elsewhere is any indication of your talents, then we may just survive after all. I'm here in RI dealing with life on this soil while you are in your dream state wasting your precious time and talents writing comments very few people read or care about. You'll always be the smartest guy in the room though.
ANTHONY
Are you going to watch and listen to the televised Presidential debates before you make your decision as to who to vote for, or if you are going to vote at all?
Posted by: Phil at July 14, 2012 9:00 AM"Dan has let us all know that he is also using the name Right to Work on another RI based site so who knows how many names this writer uses."
And who cares how many names are used? The "nom de guerre" is an old and honored device. Does simply using a first name prove rectitude?
Posted by: Warrington Faust at July 14, 2012 9:13 AMPHIL
"Are you going to watch and listen to the televised Presidential debates before you make your decision as to who to vote for, or if you are going to vote at all?"
Yes always watch the debates. I was amused in 2000 when all the pundits predicted Ozone Gore to draw and quarter Bush. Ozone came off sweating and petty while the Harvard graduate (Bush) with a BA bested the Harvard dropout (Ozone). As for making up my mind I would vote for a cantaloupe over Hussein. At least a when a cantaloupe goes rotten it decays. Hussein just gets more rotten. Witness his power grab this week. Hooray...no work required!
dailycaller.com/2012/07/13/hhs-to-offer-waivers-for-tanf-work-requirement/
Posted by: ANTHONY at July 14, 2012 12:12 PMThat would be MBA for Bush.
Posted by: ANTHONY at July 14, 2012 12:14 PMANTHONY
I agree with you that Bush was effective as a debater and did not deviate from his script. I find it interesting that you do not mention Romney at all.
Posted by: Phil at July 14, 2012 7:00 PMPhil....haven't really seen Romney as a debater to be honest. The Rep. primary debates were so trite I watched Pawn Stars instead. Truth be told Romney was not even my 3rd favorite candidate.
Posted by: ANTHONY at July 14, 2012 7:11 PM"There is no mystery why RI is #50 and Texas is #1..."
Texas ranks last in delivery of healthcare
www.star-telegram.com/2012/07/05/4081744/texas-ranks-last-in-delivery-of.html
Truss... and you're dead last in blog commenters.
Posted by: ANTHONY at July 16, 2012 3:35 PM