Hasbro and the Definition of Cronyism
Following Rhode Island’s mainstream news media gives one the impression that everybody’s falling all over each other to express concern about the possibility that toy company Hasbro might move its headquarters out of the state. The three most-powerful politicians in the state pledge to work toward a solution. The mayors of Pawtucket and Central Falls are on the case. The Providence Journal editorial page is stressing the importance of retention.
I say we’re looking at this all the wrong way.
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If Hasbro’s changing business model just doesn’t work in Rhode Island, then the company should move. To avoid that outcome, the state should eliminate the insider system of its governance and ease the burden of regulations and taxes so that the company’s business model works here — not because state leaders are cutting special deals to help one company overcome the burden, but because the state is more friendly to all economic activity.
Instead, Hasbro may actually affirm the state’s unhealthy political system if it stays. A quick look at Rhode Island’s campaign finance database shows that Hasbro’s CEO, Brian Goldner and (presumably) his wife have each given Democrat Governor Gina Raimondo the maximum contribution of $1,000 every year since she took office. This year, another Goldner at the same address threw in an additional thousand, and Brian added $11,000 in donations to the Democratic State Committee. Additionally, 18 Hasbro employees contributed the maximum to Raimondo over the past year.
This unusual wave of money clouds the direction of the influence, but it is suggestive of the insider nature of the transaction. Hasbro employees are especially supportive of a particular politician, and that politician is going to strive to keep their company in the state. At the end of the day, it isn’t clear whether anybody with power has an interest in improving the state if it means reducing the power of a mutually supportive elite.