Although with regret, I have to opine that former East Providence city councilman Robert Cusack misses the target in his op-ed, yesterday, suggesting a way for Rhode Island to rejuvenate its sputtering economy:
We need to identify a job generator, make the changes needed to attract those jobs and then promote Rhode Island to execute the strategy. Which job generator? The initiative that brought Fidelity to the state has worked. Financial services remains a good candidate. Now we hear of bio-science in a new “Knowledge District.” Other ideas have been put forward that capitalize on our strengths. Whichever one or two job generators we target, that decision for once should be data-driven and fully vetted, and not a hipshot. Our future as a state is at stake.
The frame of mind that presents a policy prescription of what “we” (ultimately having to mean the government) need to do is fundamentally built around a trap in logic. Government officials — elected, appointed, or bureaucratic — have no competence in predicting the future bends of the marketplace. Just as the stock market is ultimately a gamble, wagering the state’s economic well-being on the probability that the companies that happen to be in Rhode Island will happen to compete well in an industry that happens to take off is a high-stakes bet at best.
Furthermore, those who might have a little more competence to judge the economy from their perches in the private sector — and who might therefore advise the government — are inevitably too much interested in their own activities to be reliable guides. This is true even for the most selfless, altruistic among them; they chose particular industries based on interest and perceived promise, and in a diverse society, it is not likely that many people will share those qualities.
This puzzle lies behind the frequent proclamations that Rhode Island’s economic development requires our centralized planners in and around government to pick a direction and then command the entire population to change its interests and redirect its education and skill set to accommodate the decision. That is a strategy doomed to failure.
Plainly put, the only adequate “job generator” for the purposes of government planning is the individual. Nobody knows better what sorts of careers to pursue (and has more incentive to be right) than the people for whom every day will be a consequence. Nobody will wring the maximum value out of every dollar in the state’s economy better than those who must attract income through their activities and who must plan for their own lives. And to accommodate the varying decisions of every Rhode Islander, the unbiased role for government is to step aside.
Cusack suggests that austerity is not the answer, but we tend to see that word in statist terms. Austerity for state and local governments is inherently profit to those from whom it confiscates its revenue. (Recall Congressman David Cicilline’s insisting vehemently in debate that lowering taxes is a government “expenditure.”)
Cusack suggests that “if the answer were obvious, it would already be in place.” He misses the second requirement that must apply for a policy to become reality in a government-heavy system: It must be obvious and conform with the interests of people in power, as well as the organizations that manipulate them.
He is correct, however, that austerity is not sufficient of itself. It is a step, not a strategy. Rhode Island’s government must ease the chains that it wraps around economic activity, and it must leave more money in the people’s pockets.
As a consequence, yes, those who eat from the government buffet will face what to them is austerity. But the most obvious of banal observations is that the resources of Rhode Island are not currently well allocated. They are not fueling the correct engine.
The solution is not to give the very people who’ve burnt so much wealth already more wealth and authority to guess at another monstrous vehicle to drag us all forward; it’s to allow those who move by their own power to get moving.