RI Innovates as the State Economic Development Sham

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The RI Center for Freedom & Prosperity just sent out a press release promising blistering criticism from CEO Mike Stenhouse at General Assembly hearings concerning the report from the Brookings Institution that Democrat Governor Gina Raimondo’s economic development council adopted as the state’s economic development plan immediately upon the report’s release.

According to a state law introduced a few years ago requiring such a plan, the House and Senate have to hold hearings before the governor can grant “final approval.  Inasmuch as Raimondo arguably had begun implementing the plan well before the private RI Foundation and a bunch of Raimondo’s political donors gave Brookings $1.3 million to develop it, it isn’t clear what additional steps “final approval” will allow.  The typical practice, with this governor, has become that all of the important decisions are made behind closed doors — even behind the walls of private organizations outside of government — and “transparency” and due process are limited to  pro forma events to check boxes in the written law.

As a matter of law, if she chooses, the governor can declare the plan “final” the moment the House and Senate Finance committees drop their gavels on the hearings.  And considering that the agendas give no indication of an intent to introduce legislation to change the plan, there doesn’t appear to be any political pressure coming from the legislature that might force her to wait and give time for the people’s representatives to offer their feedback.

That’s a shame, because it seems to me that real questions exist concerning the Brookings plan.  For example, when Bruce Katz made his sales pitch for the Brookings approach back in 2013, he projected that by 2023, the federal government will have “left the state,” yet the Brookings report relies heavily on the federal presence, particularly the Naval Undersea Warfare Center (NUWC).

From the outside, one might wonder whether that reliance was reluctant, for lack of other bright spots in Rhode Island.  After all, the Brookings report indicates that its initial strategy didn’t work:

Rhode Island lacks industries that are large enough and competitive enough to warrant narrowly focused industrial policy. Instead, the analysis shows that Rhode Island’s intricate webs of smaller interconnected industries, when aligned with core competencies, add up to a finite set of legitimate broader growth opportunities. (p. 8)

That’s a well dressed way to say the Ocean State has no core industries around which government investment can fertilize more growth.  As the report goes on to explain:

Thirty-three detailed industry groupings are far too many for pursuing targeted economic development efforts. Indeed many of the state’s industry clusters lack the scale needed to drive major growth in the economy. Twenty-four of the 33 groups employ fewer than 5,000 workers. This scale problem is particularly pronounced in Rhode Island’s advanced industry groups.  … close examination of the fundamental characteristics of the 33 detailed clusters, when combined with consultations with Rhode Island industry associations and business leaders, prompted a novel solution: The 33 detailed industry groups were rolled up into eight broader industry clusters. (p. 40)

In other words, for the top-down, government-centric approach that Brookings advocates to work the state needs a limited, targeted area (making it easier for government elites to get the necessary corporate elites in line), but Rhode Island’s tax and regulatory regime has undermined that hope.  Because government-centricity is the one irreducible principle for progressives, Brookings fabricated eight “clusters” that kinda-sorta have enough common aspects to create a pretense that they’re economic hot spots.  A cynic might suggest that they’ve only really identified a few small operations that have managed to stay alive within RI’s “know a guy” system.

The next page of the report validates this interpretation by noting that the “industry clusters” aren’t really anything special in Rhode Island, at all:

Even still, only two of the state’s broad industry clusters have outpaced national growth rates and gained market share since the economic recovery began—Marine, Materials, and Machinery and Advanced Business Services. Among the other growing industry clusters in Rhode Island, only Transportation, Distribution, and Logistics kept pace with national growth. Software Systems, and Internet Services and Arts, Education, Hospitality, and Tourism both recorded job gains in Rhode Island, but their pace of growth was well off the national average. Similarly, Health and Life Sciences, which remained flat in Rhode Island, grew nationally. The remaining two industry clusters—Instruments, Electronics, and Defense and Design, Consumer Products, and Food Processing—declined sharply in Rhode Island compared to more moderate declines at the national level. (p. 41)

If this is a case, one might ask whether the Brookings study found anything important at all.  Adding the word “advanced” to the notion of socialistic economic development isn’t much of an innovation.

What Rhode Island needs is a Great Backing Off, with government withdrawing its heavy hand from Rhode Islanders’ pockets and throats to allow the proliferation of broad growth and real business-by-business, individual-by-individual innovation and private investment.  But that’s the one thing that the progressives at Brookings, in the Raimondo administration, and in the General Assembly can never allow.  So, they fall back to the promise that things will improve if only we give them more money and leverage.

They’re just dressing it up with some “novel” details so it seems a little bit more like they’ve got a plan and know what they’re doing, while insisting that they’re going to make great, really fantastic decisions and very exceptional deals to make Rhode Island great again.  (Sound familiar?)



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