RIPEC’s EDC Report Another Indication of the Question Not Asked

Yesterday, the Rhode Island Public Expenditure Council (RIPEC), a venerable Rhode Island policy “voice and catalyst” founded in 1932, released a report analyzing the structure of the state’s quasi-public Economic Development Corporation (EDC) and suggesting a reorganization.  Governor Lincoln Chafee requested the report in May, following the scandalous collapse of 38 Studios, a fledgling video game company that had been the major basket in which the EDC had placed $75 million in bond-sale eggs.

Fortunately, Chafee Spokeswoman Christine Hunsinger confirms, for the Ocean State Current, that the state did not pay for the report.  That’s fortunate because — despite its 62 pages of text and 73 pages of organizational charts, definitions, and other appendices — the document does little to justify any particular new economic development structure and nothing to answer the more fundamental questions about the state’s worst-in-the-nation employment situation.

The first deficiency is most evident in RIPEC’s treatment of other states’ strategies for organizing government economic development.  Specifically, the report gives one-paragraph blurbs on a number of states’ approaches. Executive Director John Simmons has said that officials in some of those states were among the 100 people interviewed for the study, but there is no analysis at all of whose experiences most closely align with Rhode Island’s.

Such an analysis might have investigated examples of large-scale projects or even economic turnarounds enabled based on particular approaches at the state level.  One step back, it might have charted changes in economic development policies in the various states against their economic activity.  Even more broadly — but still not done — it could have sought patterns between economic growth and general state policies for development.

At one point, the authors note that “states like Michigan and Utah outline their performance metrics in their annual economic development organization report,” which is interesting to know, but consider the states: In recent months, Utah has been one of the few (if not the only) state adding employment, according to Bureau of Labor Statistics (BLS) surveys.  Meanwhile, Michigan has been competing with Rhode Island for worst recovery. Knowing that they have similar metrics outlines is ultimately useless knowledge.

To be sure, there are various ways to approach such numbers, but at the very least, a study of advisable economic development policy should assess what states have situations resembling Rhode Island’s and determine whether any approaches have any track record, positive or negative.

That gets to the larger problem.  RIPEC’s report does not address the very basic question of whether an EDC-type agency is the answer to our state’s economic problems.  And if it is not, then the question is whether it should be the subject of so much of our mental energy.  This point comes into stark, yet unstated, relief early on, with the following sentence: “Effective expansion of [government economic development] services will require improved, enhanced marketing and more effective information dissemination.”

As one reads the report, the impression is that the entire exercise is premised on the assumption of an expanding economy. If anything, reorganizing the EDC is a project for managing growth, and Rhode Island’s problem is that it has no growth.  And the reasons for that are well beyond the authority of economic development bureaucrats, whether public or quasi-public, whether guided by a secretary, secretariat, czar, or commissar.

Repeatedly, RIPEC writes of a need for a “common vision,” in government, for the type of economy that the state should have.  Since the beginning of the recession, over fifty thousand fewer Rhode Islanders are employed; nearly twenty thousand more have completely exited the job market, including those who once said that they’d take a job if one came their way.  That’s over seven percent of the population.

The common vision that ought to permeate Rhode Island government is simple: “Go for it, Rhode Islanders!”  The operative question should be, What can we do to get out of the way of whatever our neighbors want to do?

In the big scheme of things, the EDC is not a costly agency, especially excluding the cleanup costs for multimillion-dollar failures.  What is most costly about it may be the degree to which it provides cover for those who ought to be under fire every single day for Rhode Island’s sinking economy.

In that regard, even though it was free to the taxpayers, RIPEC’s report may do more harm than good, as elected officials in the legislature and the executive take up its thumb-twiddling as if that were the same thing as taking on the problems that we all know to be at the root of our suffering.

  • Wonder why tourism is not considered in piece. AS I understand it, tourism accounts for 4.6 billion dollars on an annual basis. EDC has a budget in this area of under $500,000. Quite an investment return in a state that lags almost every other in efforts to promote tourism.

    More interesting is a little mentioned concept of the Multiplier Effect which as a rule of thumb is roughly three times. So that $4.6 BILLION Dollars would circulate 3 times and, if accurate, would equal almost $14.5 Billion.

    So the bottom line is that perhaps Governor Chafee and his associates should look at Tourism Investment increases which accrue to the RIEDC Division of Tourism. Under funded, under paid, maybe those who work the front lines should be rewarded and have a budget more in line with other states that rely so heavily on the tourist trade! The investment clearly has paid the State handsomely over the years. Just think what a realistic competitively (as measured by other states) funded budget could do.

  • justinkatz

    An alternative interpretation would be that a sparsely funded, "understaffed" tourism division has very little to do with the relative success of that industry in a state with so much waterfront, history, and collegiate activity.