August 31, 2012

All of Us Are the Job Generators

Justin Katz

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.

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I think it well known that the idea of the government picking winners is ridiculous. Government is, by nature, a follower. Generals always want to fight the last war.

How about investigating what businesses are enjoying some success and fanning the flames. How about establishing a system for "micro loans" for truly small businesses? I would think that state wide Wi-Fi would be very doable.

Way back in the age of "de-regulation", I had a friend who worked for Olympia & York, then the largest real estate owner in the world. They were very interested in Providence when state border limits on business were declining. They saw RI as a "hub". Can we re-capture some of that?

One might study the lack of activity in obvious areas for development auch as Quonset and the large swaths of formerly industrial areas of Providence. Why don't we have a "port"?

For 100 years, or more, manufacturing was the mainstay of RI's economy. Can we re-assess policies instituted in that era which made RI undesireable?

Posted by: Warrington Faust at August 31, 2012 9:12 AM

Governments, especially in Rhode Island, do not have a good track record of choosing or even predicting the next job growth industry. "Let's make Rhode Island a shipping state, no wait, let's make it a video game hub, no wait, let's attract bio-medical companies, no wait..." All the while hurting the very economy they seek to improve by creating an uneven and constantly morphing political and regulatory landscape. Isn't this something that companies and consumers will be choosing for themselves? The embarrassing failures of the EDC underscore the well-established concept in the economics field that central economic expert planning doesn't work.

Posted by: Dan at August 31, 2012 9:37 AM

Why not go right to the CNBC list of why it sucks to do business in Rhode Island and fix it. Maybe you can't fix all of it but who's fixing any of it? Rhode Island should be able to throw open the doors for any type of business and be welcoming but instead we keep doing the same thing over and over expecting different results.

Posted by: Max D at August 31, 2012 12:07 PM

"Governments, especially in Rhode Island, do not have a good track record of choosing or even predicting the next job growth industry"

I wonder who can! If business analysts could do it, there would be a large number of funds out there returning 20%.

Maybe we should give up on the prediction business and simply establish a good business climate,then coddle what comes.

Posted by: Warrington Faust at August 31, 2012 1:30 PM

I see that arrogant loudmouth, John Speck, is running his mouth on RIFuture again about the 38 Studios loan. After openly supporting the loan as an RIFuture contributor, puffing himself up as a "consultant" to the EDC, insulting the venture capitalists who passed on the company, and declaring that the EDC would have been "fools" to pass on the deal, he now has the nerve to blame Carcieri for lack of adequate oversight of the company. I seriously hope somebody here will take him to task on this.

Read this article and then tell me that 38 Studios was anything but a disaster waiting to happen from the outset:

Posted by: Dan at September 2, 2012 11:26 AM
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