Rhode Island Buying the Economic Development Stock at a High

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This recent unsigned editorial in the Providence Journal about economic development and innovation is telling:

Another lesson, just as important: Massachusetts has been at this for decades. Its success didn’t just happen overnight. Which suggests that Rhode Island must steer itself in this direction and pursue the policies that foster innovation as part of a long-term plan. Only over the long haul can such a strategy succeed.

The editorial board is, sadly, in the don’t-disrupt-anything, “government first,” insider crowd, but its musings do inadvertently raise an important point: The Massachusetts approach worked through some decades of growing national debt, wild market speculation, and the early explosion of IT.  In emulating the Massachusetts model, Rhode Island is “buying in” to the trend late.  As we’re seeing with the price tag for corporate cronyism, the price of this particular investment is currently high.

A question none of the big-government central planners are asking is whether the next few decades will continue the last few in the key ways that have worked for states like Massachusetts.  Personally, I think not.  I think the next few decades are going to favor (even more) states that get back to basics and allow individuals to experiment with technology, business models, employee compensation and schedules, and so forth.

But the uncertainty is one reason politicians shouldn’t be planning in this way.  The incentives for people who translate votes into favors are all wrong.  Their personal investment is minimal.

More importantly, they aren’t that smart.



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