An Incomplete Diagnosis of Rhode Island

Some diagnoses of Rhode Island are akin to a doctor explaining to a patient that his vital organs are being squeezed without noting that a cancerous tumor is doing the squeezing. Such is the case with Benjamin Gedan and Philip Marcelo’s lengthy piece on the front cover of Sunday’s Providence Journal:

Having based its economy on old factories and thousands of small, low-technology businesses, Rhode Island was blissfully undisturbed by the toppling of Web-based businesses from Silicon Valley to Route 128 in Massachusetts.
But by failing to build and attract innovative, science and technology-driven companies, Rhode Island finds itself with little support in a blue collar recession that is battering the construction, manufacturing and hospitality industries.

Companies are fleeing:

Ravaged by the recession, more than one in 10 companies in Rhode Island closed or moved away last year.

Citizens have low disposable income:

Even before the recession, Rhode Islanders did not have much buying power. The 2007 average annual salary here was $39,827, below the national average ($44,355) and trailing Connecticut ($59,174), Massachusetts ($55,819) and New Hampshire ($44,308).

During the housing boom, folks might have lived here, but they worked elsewhere:

“There was the reputation that you could get more for your money in Rhode Island than anywhere else in New England,” Paul Leys, president of the Rhode Island Association of Realtors, said.

Vulnerable groups, namely immigrants and the poor, are to be found in abundance:

But [subprime lending] really took off in the boom years, in part because mortgage brokers targeted Rhode Island’s large immigrant population, including low-income residents with only a basic grasp of personal finance, according to Edward M. Mazze, dean of the College of Business Administration at the University of Rhode Island.

As the print edition (but not the online version) points out, our collegiate imports quickly become educated exports, and our public schools have a high rate of dropouts.
But it isn’t sufficient to note these problems and attribute it to “a combination of bad luck and bad planning.” There are specific causes:

  • Taxes are too high and government too intrusive.
  • Our policies attract immigrants and other low-end workers.
  • Unions are driving up costs and strangling our public education system.
  • Regulations and mandates make it too difficult to succeed.
  • And so on.

Businesses, while they’ll form if there’s sufficient demand, see no reason to tough it out and regroup in the state when circumstances change. Graduates have no opportunity to stay. Workers have little opportunity to advance. And nobody in power is taking the drastic steps that really must be taken to turn things around.

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