In a Drought, Open the Floodgates
For a moment, I thought I might have my first strong agreement with Anthony DiBella:
It’s nice that EDC can spend some time attracting new or fashionable companies and industries, but it behooves our economic planners to be cognizant of our competencies and competitive advantages. Courting high-tech firms to come to Rhode Island may feel glamorous, but it makes little sense to compete for companies whose requirements are far better met elsewhere. Rhode Island has nothing comparable to an MIT or CalTech so competing for jobs in the computer industry (hardware or soft) is energy better spent elsewhere. …
The approach is related to that which I decried this morning in school committees: beginning with what one wants to do, in the public sphere, and then trying to make reality conform with the desire. But then DiBella proceeds to slip into the same waters:
… Our jobs-growth strategy should be based on the premise that it’s far easier to expand or grow an existing business than it is to import one.
Of course that begs the question: does Rhode Island have any intrinsic advantages due to its size, location or history? If we consider domains in which Rhode Island has done well historically, that list would include defense, graphic and fine arts (including jewelry), marine trades, medical, textiles, and tourism. Economic planners and forecasters must consider the trajectory of societal trends and where they will intersect with our state’s relative advantages. As Joe Biden stated during his debate with Sarah Palin: “Past is prologue.”
We spend too much time, in this state, imagining the economy that we’d like to have. That’s a luxury for thriving regions that want to solidify their positions or change their directioins. In our predicament, we ought to be making the state universally attractive and then allowing private industry to decide what our natural advantages are, for them.
That doesn’t mean that officials shouldn’t do promotional tours, but it does mean that we’re not in a position to target policies. As a state, we haven’t proven effective enough to presume to do that.
Those are good points. What’s sad is that I was recently in Erie, PA, a city one tenth the size of Rhode Island, with only lake (but no ocean) access, and they appeared to have a number of large companies with busy operations there. I was astounded by how many more jobs were in that relatively tiny city, and how strangely low the rents were. The questions I have are: 1) Why are the rents so relatively high in RI? 2) Will cutting business taxes exacerbate our already massive budget deficit… at least in the short run, until some companies relocate here? 3) What happens if we build it, but no one comes? In other words, what happens if we lower business taxes and create a more business friendly environment, but no companies relocate here? I hate to sound defeatist or pessimistic, but after reading the following column by Pat Buchanan on the near catastrophic state of American manufacturing, I’m not feeling too hopeful right now: http://www.humanevents.com/article.php?id=29586 What’s disturbing is that the same contempt for Detroit exhibited by our elite in the 1950’s is still in existence today, as evidenced by the recent reports of Democratic lawmakers on Capitol Hill being more concerned with grilling auto execs on their flying habits, than on the catastrophic state of the auto manufacturing industry. Our leaders are just fools and buffoons, and I tremble at the thought of what this once great nation is being reduced to. I have to believe, that with all the natural and educational advantages that Rhode Island has in it’s favor, that some company will want to establish operations here, but with the world economic situation deteriorating the way it is, I’m beginning to think we may soon be returning to a more traditional, agricultural way of life.… Read more »
1. I’d suggest that there are a number of factors affecting the cost of housing in RI. We’ve got limited space in a prime location (by the water, between two metropolises, etc.). We’ve got a relatively high percentage of temporary higher-ed residents, as well as housing space that’s used up in the tourism industry. We’ve got groups that buy up large swaths of land to prevent development and a constitutional NIMBYism. And we’ve got a generous social assistance network. So we pinch our housing from the high end and the low end. 2. Of course, we have to account for tax cuts in our budgeting, but I don’t think we have a choice. If we don’t make the climate more conducive to economic activity, we’ve locked ourselves in a downward spiral. In the long run, I have to believe that more economic activity will result in higher revenue for the state. 3. I’d say that there’s no real loss to improving the business environment. The social programs and such aren’t the kinds of things with growing investments; they’re continual needs. In other words, some folks will find life more difficult for a while, and some might have to look elsewhere for support from states that can afford it, but whether businesses come or don’t, we can return easily to the current regime, if we wish. But businesses will come, if we’re bold enough, and anyway, there’s no alternative: trying keep ahold of what little sand we’ve got left in our hands will only cause it to slip more quickly through our fingers. The “what if they don’t come” question applies in amply to plans for targeted growth, though. If the government picks a particular industry to woo and invests in policy changes and infrastructure specific thereto, then we’ve expended resources… Read more »
Those are good points. I didn’t realize the depth of the disaster until reading more columns here.
It looks like we’ve got to create a pro business climate, or this state will sink and never come back.
I didn’t realize how severe the problems are, so maybe other people are similarly unaware.