Due Diligence with Other People’s Money

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The specific controversies of a particular corporate welfare applicant are of little significance compared with the disturbing details about the Commerce RI process revealed in a GoLocal article, today:

GoLocalProv.com has learned from multiple sources that Rhode Island Commerce Corporation board members — and Board Chair, Governor Gina Raimondo — were not fully briefed on the past track record of California developer Lance Robbins, when they were asked to vote on $3.6 million in tax credits at the Board meeting on September 26.

In fact, only two documents [] were handed out to the Board prior to the vote, according to Commerce — a GoLocalProv.com article, and what was presented as an “internal review” — which proved to be from the grant recipient, Urban Smart Growth. …

GoLocal has received confirmation that besides the initial article by GoLocal about the House race and the memo from the member of Gazdacko’s team, no independent review was conducted by Early or his team.

Early is Darin Early, the $170,000 president and COO of the quasi-governmental Commerce Corporation.  The article does not list the names or salaries of his “team,” but its total cost is surely much greater.  Note, too, that Early “oversaw the selection of the vendors for the failed RI tourism campaign.”

The clear and predictable lesson, here, is that when bureaucrats are handing out massive amounts of other people’s money in an environment of limited accountability (i.e., the state government of Rhode Island), due diligence is apt to consist of not much more than a quick Google search and a phone call, maybe with a conversation over lunch.  Moreover, an organization called “Urban Smart Growth” is like a taste morsel to serve up on a list of grant recipients for the sorts of people whom Commerce RI functionaries are seeking to please, perhaps worth a relatively small portion of a massive program on that basis alone.

This is not the way to pull our state out of its death spiral.  We need huge reforms in taxation and regulation that leave people more free to invest their own money, willing to take the risks associated with such investments, and able to devote their own energy to economic development.  Otherwise, we’re just spinning wheels and wasting money while politicians and bureaucrats hope for economic winds to blow some chance improvement our way for which they can take credit.

For example, the $80 million that the state is spending on Commerce RI every year is actually 60% larger than the $50 million that the RI Center for Freedom & Prosperity estimated it would wind up costing the state to reduce the sales tax to 3%.  Such a reform would produce real and lasting economic development, as compared with the Raimondo, Commerce RI, Brookings, RI Foundation approach of picking winners and giving out money.  Even if the latter produces some benefit, it’ll be only empty calories that leave us all less nourished in the long run.



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