A Rhode Island Treasure

COGGESHALL  FARM MUSEUM is a working late 18th Century farm located Bristol, Rhode Island next to Colt State Park.

38 Studio - The Blame game begins

I find it interesting but again not unpredictable that the blame game has begun. Having been in the position of being an interim director of several organizations in my life time -- the present situation seems all to familiar.

Gov. Chafee, like President Obama, will get the blame for the sins of their predecessor. The public and the press (media) operating on a short term memory basis will blame the individual who is closest to the victim when they (the media) arrive on the scene. That is, we were and are facing an economic crisis both here in Rhode Island and nationally. It is a crisis brought on by our own actions in the current culture of greed. Our elected leaders are showing their true courage and in some other cases their lack there of.

To be the Governor of ALL the people or President of ALL the people, is like a being a the first Trauma Doctor at the scene on 9/11. You have to jump in do your job the best you can and make choices about which victims to treat and which can wait. Regardless of what you do, somebody will blame you for those you did not treat.

Chafee was constrained in his role with the EDC and by the crony capitalist deal by the baseball player, the former Big Audit Governor (does anyone remember that campaign pledge) and the incompetent Leadership in the State House who love to pass those sweetheart deals. While Chafee opposed the deal before he was elected, he was saddled with it and the personnel who oversaw it. The Executive Director of EDC was in on the deal in the beginning with the former Governor. One would expect he would be most knowledgeable about the details and immediately responsible for monitoring and managing the loan guarantees on a day to day basis.

Governor Chafee came into office inheriting the credit rating cut, the pension problem, state and local revenue short falls, a Republican, --WHOOOPS!! I got the Congress and the State Legislature mixed up here -- a Democrat Legislature, and a Press fueled by the Tea Party mentality that would neven consider the revenue side of fixing these problems, etc. We all concentrated on the BIG issues and expected that those in-charge of the specific programs would do their job as PUBLIC SERVANTS in the tax payer's and citizens' interests.

I know from experience that when you find yourself in this situation you set priorities. Then you move ahead putting trust in the people you have inherited as well as those you hire. Some of the people you inherit turn out to be either incompetent and/or part of the problem. They will bale out the moment things get uncomfortable, leaving behind their own failures as well as the failure of those over whom you entrusted them to oversee or regulate. But haven't we seen this before in reference to Wall Street?

The point here is simple, Chafee's job from today forward is to try to solve the problem as best as he can and with the sincere help and support of those who care about the present and future interest of the State, the taxpayers, and the former employees of 38 Studios

38 Studio is a local case of the larger problem we face. It brings to mind Socrates' age old question, "Who will guard the Guardians?"

38 Studios - Crony Capitalism is alive and well in Rhode Island

The crisis at EDC and 38 Studio reflect the problem of crony capitalism at its best. Having written about this while the deal was being negotiated, I can't say that this comes as surprise.

The public's money should never be invested in a start-up in a mature market. All one is doing is buying out the original investors (the capitalist who are cashing in their investment) and replacing it with public money. This is what an IPO, such a Facebook, is supposed to do.

From an economic development perspective public investment should go to infrastructure improvements that will have a longer term value and benefit for the taxpayers and improve the environment into which private investors might decide to locate.

If anyone has been watching the market for video games, it has been shifting. As a start-up, it would make more sense if 38studio had been creating Game APPS for smart phones to reach a wider audience, quicker, at lower risk and cost and used the experience to work out the problems that come to all start-ups. Instead they went for the Big Hit with its high risk, high cost and, untested team.

The video game business is not a new business. It is a variation on the movie business as 38 Studios has claimed as the rationale for applying for the movie tax credits. The movie business isolates the product from the company by creating a corporation for the movie placing the risk in that company and still controlling the upside.

In 38 Studios we had a company with no product at the time of the deal. Today it seems that we may have a product without a company. Is the state considering putting a lien on the box game, to guarantee our investment?

 

Arlene Violet has her take on the situation  She points out that “As reported by Ted Nesi of Nest’s Notes on WPRI’s website, 38 Studios was removed from the list of companies scheduled to present at next month’s Electronic Entertainment Expo, a sort of World Series of offerings in the electronic game industry.” Such cut back in marketing effort is another sure sign that things are not right.

As for the tax credits if granted, they can be sold to raise cash, as the Projo’s story pointed out. But for the tax payers, those credits mean less tax revenue from whom ever buys and uses them. In turn, it means an additional RI tax payer contribution to 38 Studios on top the $ 75M loan guarantee.

Another problem is the potential loss of the human capital that we, as tax payers, have invested in to staff and provide the talent for 38Studios. Now that the wounded animal has left blood in the water, the sharks have gathered to bite off the prime cuts (top talent). Will there be enough talent left if the funding situation can be resolved to have a company? And if not, can we still keep that talent here or will we be exporting it to Massachusetts?

38Studios is NOT GM. Its success or failure is NOT going to destroy the economy. One hopes that some investors will be found to refinance and restructure the company so that it is a success. Governor Chafee is to be commended for getting on top of the problem as quickly as he has in an attempt to protect tax payer interests and by being an active participant in the effort to find a solution to the problems.

But one also hopes that the blind, star struck, politicians in this state have learned something from this. And that lesson is that we, the tax payer, are paying them do their due diligence before throwing tax payer money at deals that no self respecting or even greedy bank would turn down.

Crony Capitalism and Sweetheart Union deals are the cause of our economic problems. I, for one, am happy to see that something is now being done to move us in a sane direction.

Is Rhode Island TOO SMALL TO SUCCEED?

 Once Rhode Island lead the Today it follows.

"Another credit agency drops Providence's rating closer to junk-bond status"

This is the heading appeared on the Providence Journal Website today 3/27/2012. It is just one more in a long series of stories that appear in the local press chronicling the economic decline of Rhode Island.  The question is, "Has the economic conditions of a global economy made Rhode Island's political structure of cities and towns TOO SMALL TO SUCCEED?"

 The Independent Man

For years, those in power first the Republican establishment mill owners and later the Democrat controlled labor unions have feed off of the fractured political structure of independently incorporated towns and villages that have made up the state and representation in the state legislature.In the process they created a system of fractured government that first gave power to the Mill Owners and later to the unions to create an inefficient public finance and service system. A sense of entitlement has created a system of waste and duplication of public services. Nepotism have been ingrained into the body politic.

The small scale of government that this structure creates has been pointed to as an asset. "Where else," I have heard it said, "can one go directly to your representative and talk to them about your concerns and problems and get results?"

    Rhode Island's national image has become a laughing stock and a liability in efforts to attract industry and investment. The image is one of a mismanaged mess. At the center of the problem is the small scale of local     

 

Public pension programs are the big problem facing tax payers, municipalities, and the very quality of life here in the Ocean State

Rhode Island preparating for Bankruptcy? The New Legislative District Maps

Today's Providence Journal online carries a map of the proposed redistricting maps for the Rhode Island U.S Congressional districts based on the 2010 census. There is something very interesting in these maps. Click on the above link. What do you see?

   Given the threat of more city and town bankruptcies and the narrow minded greed of the special interests who can't see the bigger picture, here are some thoughts about the maps and what they might mean for the Lively Experiment.

  Can you see the potential if Rhode Island goes bankrupt?


The current (2/2012) district lines

Proposals F & E both, would move the district line to the east and make for a division that more closely aligns with the natural boundaries created by the Blackstone River and Narragansett Bay

Proposal F

Proposal E

   What would it mean, if Rhode Island were to be the first state to go bankrupt?  Because the population balance is fairly even, just think how easy it would be to use Proposal E to simply divide the Districts equally between Massachusetts (District 1) and Connecticut (District 2). 

   The boundaries are almost perfectly aligned with the natural boundaries created by the river and the bay. Woonsocket and Pawtucket might have to become the twin cities, Woon, CT and Socket, MA and Paw, CT and Tucket, MA, for example. Or maybe West Woonsocket (CT) and East Woonsocket (MA) and East Pawtucker (MA) and West Pawtucket (CT).

   In the case of State Bankruptcy, this would make sense. Just like a failed bank, the Federal government might have to step in and force a merger. There might be a contest between CT and MA over the assets. Just think of the potential!  

First of all, there would be two seats in Congress (a major asset) at stake. What would happen to them?

For Connecticut, the South County beaches would certainly benefit its tourism business as well as the privately held Twin River Gambling facilities in Lincoln. Meanwhile, Massachusetts would gain Newport's attraction as a tourist center, and the gambling facilities at Newport Grand.

   The economic value of Narragansett Bay would benefit  for both states.

  CT would get the west shore with Quonset Point thus bringing in the whole of Electric Boat's Sub operation under the state's tax system (maybe they could do a better job than Rhode Island has with this gem). In addition they would get the Port of Providence and a second Ivy League university, as well as RISD, J&W, PC, and most of the Rhode Island University system.

   MA would get control of the east passage in the Bay. It would get Roger Williams University and Salve Regina and the Naval War College. It would also gain Raytheon and its subcontractors The merger would bring the eastern side of Narragansett Bay (Aquidnick Island and Bristol Co, RI) under the same state jurisdiction and unite it with Mount Hope Bay (Fall River, MA) and the Taunton River watershed (Taunton, MA). This would have the potential of creating a single, integrated economic development district in southeastern MA with direct access to the sea.

By the way, it would also lead to County government!!!

Such mergers might create something that might be TOO BIG TO FAIL. And if they did fail in the future, it would set the stage for another merger --  the Super State of Southern New England.  In any case, Rhode Island's bankruptcy would mark the end of the Lively Experiment.You can see all there in the maps.

Providence Mayor Discusses Occupy and the Plutocracy of America

An interview from November 2011 which appeared in Channel 12

 

 A plutocracy is any form of government in which the wealthy exercise the preponderance of political power, whether directly or indirectly.