During Rhode Island’s last two televised gubernatorial debates, Democratic candidate Gina Raimondo has repeatedly stated that not paying off the 38 Studios moral obligation bonds would cost a significant amount of money. At the WPRI-TV (CBS 12) she said “the experts have told us that if we don’t repay it, it’s going to cost us twice as much”.

Why such a steep increase is certain to occur has never been adequately explained by Treasurer Raimondo, or any other supporter of paying back the 38 Studios bonds. Most Rhode Island citizens are able to distinguish between moral obligation and general obligation bonds. General obligation bonds are directly approved by the people, as specified in the state constitution, as a condition of state backing. Moral obligation bonds aren’t directly approved by the people, and are expressly not backed by the state. Why aren’t the geniuses on Wall Street expected to take this well-defined and understandable distinction into their future lending decisions, and why wouldn’t a few potential lenders be expected to take the new opportunity that would arise, if a few others stepped away from the market because of an unreasonable skittishness?

Gina Raimondo could stand with the people of Rhode Island on this matter and, with her venture capitalist background, be an especially forceful advocate for the principle that the laws apply to everyone, from big bondholders to regular citizens. Instead, she has chosen to stand with big finance against the people of Rhode Island, taking the cavalier attitude towards representative democracy and the rule of law that has become the hallmark of Rhode Island’s political establishment.

The alternative to classical-liberal governance that Rhode Island’s political establishment seems determined to drag the state into was described, back in the first half of the last century, by Walter Lippmann; apparently some version of it remains popular with certain political elites today…

[The State] establishes partnerships in more and more fields between the government and certain selected interests. The government has, therefore, to decide continually with which interests it will go into partnership and on what terms.

In such a system, instead of impartially executing the law as the head of a government that’s supposed to be neutral referee amongst other organizations in society, the priority of public officials becomes enforcing the terms of selected government “partnerships”, even when it means sometimes taking the side of the “partners” outside of the law, against the people.

This reimagining of the role of government explains how candidates for Governor — or Attorney General, or state Treasurer, or legislature — can believe that financiers will universally agree amongst themselves to raise Rhode Island’s borrowing rates in an act of punishment, but not believe that this would be an illegal act of collusion, because they are ready to accept that laws can be treated as negotiable items which government can waive as part of the process of creating its partnerships with “selected interests” like big finance.

If this doesn’t describe the attitude that Gina Raimondo would bring to the Governor’s office — and the attitude that representatives who voted to repay the 38 Studios bonds have already brought to the legislature — then how is it that Rhode Island’s leaders can be so certain that every possible lender to the state will agree to leave low-risk money on the table in order to punish Rhode Island, but that collusive action of this kind should not be a major concern of state government?