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Can RI economic development focus on investment instead of cronyism?

May 25, 2012

The Curt Schilling 38 Studios fiasco is a symbol of what’s deeply wrong with Rhode Island’s political culture. RIPR political analyst Scott MacKay explains.

The cliché about Rhode Island is that you can put the decision-makers all in one room. In our cozy state, it’s easy to gather everyone who matters together and hammer out a decision, goes this theory.

If  that’s the case, it begs the question: Why is our political culture so dysfunctional? The latest example of this, of course, is the deal that gave Curt Schilling, a washed up Red Sox pitcher, $75 million in state loan guarantees so he could follow his retirement dream of creating a video game company in Providence.

Now, Schilling’s company, 38 Studios, is on the rocks. And taxpayers are on the hook for as much as $102 million.

It doesn’t have to be this way. We got into this swamp because of the way the General Assembly works, or doesn’t, and the whims of  then-Gov. Donald Carcieri, who turned the state’s economic development checkbook over to a ballplayer with no discernible business track record.

That’s because the beauty of Rhode Island is also its bane. Sometimes getting all the decision-makers in a room yields benefits – the drive to lure Fidelity Investments to our state and the construction of the Providence Place Mall are two good examples.

Yet far too often, this you `gotta-know-a-guy’ way of doing business makes our state a national joke. Remember the insider State House dealing that led to the 1991 banking crisis? Or the doomed Alpha-Beta bio tech foray.? How about the look-the-other-way Smith Hill culture that gave us the Institute for International Sport at the University of Rhode Island?

Someday we will figure out how Schilling was handed this crony capitalism plum. We’ll follow the money and find out which law firms benefitted, which p.r. firms got business and maybe even whose brother got to sit in the Fenway Park box seats with Big Schill. We don’t call Rhode Island a theme park for federal agents and reporters for nothing. The reporters get their prizes, the feds get their collars and our state will shuffle on to the next scam.

And someday, Thanks Don Carcieri, House Speaker Gordon Fox, D-Providence and Senate President Teresa Paiva Weed, D-Newport will emerge from their take-no-questions bunkers and try to justify the actions that foisted this mess on our state. For way too long, Rhode Island economic development efforts have focused on the Silver Bullet theory: That it is worth spending government money on a glitzy project that will make our state a big player in whatever industry is the flavor of the month.

The `smallest state with biggest egos’ syndrome is also at work here. Why do we always have to be the `I, me’ state and not the `we’ state? Wouldn’t it have been nice if General Treasurer Gina Raimondo, who has a strong private sector record in venture capital, had picked up the phone and offered to help Governor Lincoln Chafee cope with the 38 Studios fiasco. Instead, she went on talk radio to say basically that she really didn’t know anything specific about the video-game company. Can’t the 2014 election cycle wait until we at least get through the 2012 campaign?

There has been a role for government in economic development since John Adams built the lighthouses along the New England coast in the 1790s. Remember that government subsidies built the transcontinental railroads, the interstate highways and the Internet. It was government that created the state universities that gave the ordinary a chance at accomplishing the extraordinary.

Governments can be effective at creating the conditions- good schools and infrastructure –  for economic growth. But politicians and bureaucrats, either state or federal, aren’t so good at picking winners and losers in the free marketplace.

You only have to jump on one of those government-subsidized commuter rails to Boston to see how smart job growth works. Remember that Massachusetts Gov. Deval Patrick  raised sales taxes to support schools ( those Massachusetts teachers are also union members) and communities when Rhode Island’s Governor Carcieri was cutting taxes for the rich and slashing aid to communities and URI..

Now, the Massachusetts unemployment rate is about 6 percent and Rhode Island’s is more than 11 percent. Education is the fulcrum to economic success is the global, knowledge-based economy. These investments have paid off; a 2011 report shows that the Bay State has the highest per capita venture capital, patents and technology licensing of 10 leading high-technology states. And Massachusetts has the second-highest per capita personal income among the 50 states.

And let’s not forget which state passed on the Schilling deal because it was too risky an investment for taxpayers and which rube state gave him the money. Patrick is a smart, liberal Democrat with a 61 percent approval rating. And yes, Bishop Thomas Tobin, Massachusetts was the first state to embrace same-sex marriage. The result: Massachusetts, the nation’s most Roman Catholic state, also has the lowest, or one of the lowest, heterosexual divorce rates among states. So much for  marriage equality undermining traditional marriage.

Massachusetts political history is littered with as many rouges, florid pols, petty corruption and ethnic rivalry as Rhode Island. The Bay State has talk show idiots. Yet, Boston is much more of a what-you-know city than Providence, where all too often it is all about who you know.

It’s time for Governor Lincoln Chafee and our business and educational leaders to stop traveling to Pittsburgh and Texas to view how economic development investments work. Boston is a lot closer. They could even take in a game at Schilling’s old stage, the emerald lawn at Fenway.

Boston is trying very hard to keep the well-educated young from leaving the state. For example, the Greater Boston Chamber of Commerce last year started a website for members to list internships. The Massachusetts Life Sciences Center, a quasi-public agency, pays interns a $7,200 stipend and places them at small companies that might not otherwise be able to recruit or afford them, according to the Boston Globe. Why don’t we do this in Rhode Island?

Rhode Islanders would be approvingly startled if our state embraced the investment model of economic development instead of the cronyism model. Why not try it at McKim, Mead and White’s majestic State House?

This we know: Whatever we have been doing, it isn’t working.

It’s well past the time for Rhode Island politicians to heed the words of that great philosopher Sam Clemens. “Do the right thing. It will gratify some people and astonish the rest.’’

Scott MacKay’s commentary can be heard every Monday on Morning Edition at 6:40 and 8:40. You can also follow his political reporting and analysis at the `On Politics’ blog at RIPR.org

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9 Comments leave one →
  1. Mister Guy permalink
    May 25, 2012 9:12 pm

    “The Bay State has talk show idiots”

    …and RI has unfortunately imported some of them down here…ugh…

    • scott mackay permalink
      May 25, 2012 9:32 pm

      Right U are Mister Guy!

  2. tim1999 permalink
    May 25, 2012 10:27 pm

    Scotso, why won’t you ask your crony George Nee why he voted for the Schilling deal?? There were no union jobs to be had with 38 Studios and Nee was an enemy of Carcieri so why did your crony George union hack Nee vote for this deal Scotso??
    What did your crony get in return for his support?

    Scotso the fact that you have access to an EDC board member and have NOT posted an interview with him or voiced a single note of criticism towards him is why you have zero credibility.

    You are a fraud Scotso.

  3. May 26, 2012 10:33 am

    Thanks for pointintg out the political grandstanding of raimondo. She seems to see this as an opportunity to lay the foundation for a gubernatorial run instead of offering constructive ideas for how to move forward. She didn’t know anything about 38 Studios? Did she ever think to ask?

  4. trudy permalink
    May 27, 2012 7:47 am

    You’re trying to blame Gina for this? She had nothing to do with it! And she’s (1) trying to fix the union/pension mess. You don’t think that keeps her busy? (2) She can’t rescue a rotten apple. You act like there’s anything in 38 Studios that’s salvageable.

    • Mister Guy permalink
      May 28, 2012 12:38 am

      “She had nothing to do with it!”

      Ummmmm, that’s kind of the point here…she’s the RI General Treasurer, and she’s the one that’s tried to interject herself into a situation to assign blame when she hasn’t been doing one, single, solitary thing to help the situation out.

      “And she’s (1) trying to fix the union/pension mess.”

      No, she isn’t. She had her “reform” package rammed through the state legislature last year, and now she’s been intentionally sitting on her hands with respect to the whole local pension problem(s).

      “(2) She can’t rescue a rotten apple”

      …then she should just shut her mouth, period. Either you’re part of the solution, or you’re part of the problem.

  5. Justin Tyme permalink
    May 28, 2012 2:34 pm

    Mister Guy,
    You said it so eloquently….The general ASSembly is just enamored with Ms Raimondo just as theyw ere enamored by Deborah Gist…Both need to go!

  6. May 28, 2012 5:36 pm

    “Yet, Boston is much more of a what-you-know city than Providence, where all too often it is all about who you know.” Great line and clear definition of the difference between CAPITALISM and crony capitalism. Merit, intelligence and competence verses sucking up, blowing smoke, and greed.

  7. Lovely permalink
    May 30, 2012 4:45 pm

    Greetings, excellent site you’ve gotten at this time there.

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