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Obama, Garrahy, and the quest for an economy “built to last”

January 26, 2012

The death Tuesday of former governor J. Joseph Garrahy — the same day that President Obama sounded a call for a more robust manufacturing sector — is a blunt reminder of Rhode Island’s long-running struggle for economic relevance.

It was Garrahy who championed 1984’s Greenhouse Compact, an effort to use the then-lofty sum of $250 million to seed the high-wage jobs of the future. Garrahy was the trustworthy everyman who had shepherded the state through the Blizzard of ’78. He invested himself in backing the job-creation plan after announcing in 1983 he wouldn’t seek reelection. Yet Rhode Islanders, skeptical about their government’s stewardship ability, overwhelmingly voted the concept down.

 More than 25 years later, the Ocean State remains plagued by high unemployment and serial rants about the state’s toxic business climate.

Give Garrahy credit at least for trying something bold and ambitious — the kind of thinking we don’t much see from public officials of late. (Last year’s pension overhaul has won plaudits far and wide, but it happened because the state’s back was firmly against the wall.)

Garrahy offered this reflection on the demise of the Greenhouse Compact, in a 1984 column by the Providence Journal’s M. Charles Bakst:

Garrahy now believes the plan, with its $250-million price tag and its intricate economic strategies, might have been too expensive and too bold for the electorate to grasp.

And, he said, politics – the wrangling over whether to raise taxes to pay for it, the furor over political appointments to the panel that would have run the program – ultimately helped shoot the plan down.

“Opponents seized on the political aspects,” he said.

Fast forward to President Obama’s latest State of the Union address, particularly its emphasis on economic populism and the goal of creating an economy “built to last.” The president took a number of shots at China, suggesting that American manufacturing can rebound if given the proper conditions.

Yet whenever Obama sounded that note, it was hard not to think about last Sunday’s eye-opening New York Times’ story on why iPhones get made in China. Costs are far cheaper there, yes. But there are other significant factors, including the ability of Chinese manufacturers to roll out thousands of semi-skilled workers on very short notice.

Ted Nesi offered this observation:

Rhode Island’s congressional delegation talks a lot about bringing manufacturing back to the U.S., and each of its members will find some evidence for their views. Senator Whitehouse says China pursues unfair trade practices; that’s part of it. Congressman Langevin says Rhode Islanders aren’t being educated and trained properly; that’s part of it. Congressman Cicilline says the federal government doesn’t support its manufacturing sector the same way China does; that’s part of it.

But reading The Times piece – which you should do – makes their proposals seem awfully inadequate to the scale of the challenge.

I spoke with House Speaker Gordon Fox last Friday about the latest glum news of an uptick in Rhode Island’s unemployment rate. He expressed frustration, of course, but also held out hope that steps “to change the long-term conditions of Rhode Island” will eventually bear fruit. Governor Lincoln Chafee has offered a similar view.

Still, as Rhode Island prepares to lay Governor Garrahy to rest, it’s worth wondering why the state still struggles with a fundamental problem that he attempted to ameliorate 28 years ago.

4 Comments leave one →
  1. January 26, 2012 4:05 pm

    Governor Garrahy was correct in his assessment of why the Greenhouse Compact failedat the polls. It was a lesson that intellectual snobs have yet to learn. As Geroge Washington Plunkitt isquoted as saying “Another thing that people won’t stand for is showin’ off your learnin’…” .

  2. Mister Guy permalink
    January 27, 2012 5:19 am

    RI’s economy is currently based mostly on fishing, textiles, health care (1st place) & educational services, tourism (2nd place), the manufacturing (3rd) of costume jewelry/fabricated metal products/electrical equipment/machinery/ships, and agriculture (like nursery stock, vegetables & dairy products). RI’s largest employers are (roughly in order) the State of RI, Lifespan Hospital Group, the U.S. federal govt., the Roman Catholic Diocese of Providence, Care New England (which is supposed to merge with Lifespan soon), CVS Caremark, Citizens Financial Group (which is owned by the Royal Bank of Scotland Group), Brown University, Stop & Shop Supermarkets, Bank of America, Fidelity Investments, RI ARC, MetLife Insurance Co., General Dynamics Corp., URI, Wal-Mart (which pays crap wages & benefits), The Jan Companies (which is part of the service industry), Shaw’s Supermarkets, St. Joseph Health Services & Hospitals of RI/CharterCARE Health Partners, and Home Depot. Textron (a military & tool manufacturing company), FM Global (a mutual insurance company), GTECH Corp. (a lottery company), Hasbro, American Power Conversion (a manufacturer of uninterruptible power supplies and electronics & data center products), Nortek & Amica Mutual Insurance are also all based in RI. RI has about as many local govt. employees as it does employees that work for the state & federal govt. *combined*, but it also apparently has more people working in the agricultural sector than it does in local government. There are also apparently more people working in the construction industry in RI than there are in state government.

    Having large numbers of employees in govt. service isn’t sustainable, and the “defense” industry is already sucking up too much money in our society. We already spend too much money (as a percentage of our economy) on health care, and the real boom in agriculture ended back in the 19th century…and it’s not coming back. Neither are many of the manufacturing jobs that have moved out of state or out of the USA…at least until other countries get the same kinds of labor & environmental protections that we have here in the USA. “Bad” weather can kill an economy that’s too dependent on tourism deader than a doornail. Most service industry jobs are not a pathway to real financial independence for many people. We’ve all seen recently what letting the financial services industry run rampant (with little real regulation) has done for us, and it wasn’t pretty.

    There could be some more jobs available in RI in alternative energy & energy efficiency, but there doesn’t appear to be the political will to make it possible to bring more of these kind of jobs to RI. The state’s infrastructure is obviously crumbling (like across much of the USA), but RI doesn’t have the dollars to fix that all by itself. I really don’t see a clear pathway out of the employment mess that RI has been in for decades now.

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