Welcome to Rhode island

Some years ago I had the opportunity to be working in the middle east on a USAID funded agricultural development program in what is today Yemen (then it was North Yemen.)

Trying to understand the complexities of the area, I asked a Yemeni counter-part to explain why his people were allowing themselves to be caught up in the global and regional power struggles when there were so many other more immediate issues there in Yemen.

He said, "Let me tell you a story -The Story of the donkey and the scorpion."

Once there was donkey who was walking along a path when he came to a rushing stream. The stream was wide but fairly shallow. The path the donkey was following lead across the stream and up the side of the small canyon. As he stepped into the water a small voice called out,

"Hey Donkey!"

The Donkey turn in the direction of the voice but saw nothing.

"Hey Donkey, can you give me a ride?"

The Donkey turned and looked until his eyes fell upon a scorpion standing in the path.

"Hello!?" responded the Donkey.

"Hello! I see you are going to cross the stream. Can I ride on your back and get across? asked the scorpion.

"No," answer the Donkey. "I don't trust you. I'm afraid that you'll sting me."

Waving his hook tail with the sharp poisonous spike, the scorpion replied, "No I won't. Why would I?"

"I don't know. I just don't trust you. Your sting can kill me."

"Why," said the scorpion, "would I want to kill you if you are carrying me across the stream? I would drown."

"True," said the Donkey. "Ok! Climb up and get on my back! I'll take you across."

The scorpion climbed up the donkey's leg and position himself on the donkey's back just above the shoulders.

"Are you ready?" the donkey asked.

"Yes!"

The donkey started out into the stream, the scorpion comfortably seated between the donkey's shoulders. They were in the middle of the stream when suddenly the donkey felt a sharp pain in the base of his neck.

"You stung me!" cried the donkey. "Now we are will both die. Why? WHY DID YOU STING ME?"

The scorpion chuckled. "Because that's what I do. WELCOME TO THE MIDDLE EAST."

I thought at the time, how appropriate. The Arab/Israeli war had been going on for decades blowing hot and cold. Yet when you look at the region you see tremendous potential. Just think, the financial power of Saudi Arabia, the technological and entrepreneurial power of Israel, and the untapped labor potential of the Palestinians working together, what a global powerhouse. Instead they are engaged in a suicidal dance that threatens the world.

Today, I would change the ending. In light of the level of discourse here in Rhode Island between the Unions and the Governor, I would say, “Welcome to Rhode Island."

Operation Boot Straps??????

Here is an editorial focusing on the never ending battle within the Rhode Island political and business community about the economic planning goals for the state. The real problem it seems to me to be defining the ROLE of economic planning. When I returned to RI in the mid-1980's, the argument was being made that all we needed was to attract one or two big employers and everything be great. This point of view -- steal businesses from other states is a third world approach to development which major corporations might enjoy. But today we are not competing with our neighboring states. we are competing with the world.

The most practical approach to economic development is "self development." By that I mean, Rhode Island government should focus more on the human and creative talents of those here in the state as the engine for development than trying to manipulate the physical, fiscal, and political resources to attract outsiders.

Support for a larger number of small investments in start-ups and local growth companies have a greater probability of producing positive results than the same amount spent on one firm in the form of tax breaks and advantages. Even if the investment in the start-up and growth companies is in tax breaks and advantages, Rhode Island would be better off. Rhode Island would take part in the growth rather than buying into established mature firms with limited growth potential.

Providence Journal Editorial: Bigger than the EDC

01:00 AM EDT on Monday, May 4, 2009

In an impressively blunt report, a panel headed by Hasbro Chairman Alfred Verrecchia lit into the Rhode Island Economic Development Corporation, calling its performance “fragmented, disjointed and without focus.” Mr. Verrecchia likened the state operation, which oversees a $5 million budget and employs 43 people, to a “basket of frogs,” exploding with energy but without direction.

True enough. Under Governor Carcieri’s helmsmanship, its last director, Saul Kaplan, spouted fashionable buzzwords while the state’s economy collapsed.

The panel recommended recruiting a new director (through a nationwide search) and creating a new private-public partnership to lure business to the state. These are good ideas. The EDC could perform a valuable role spreading the word about Rhode Island and making it easier for people to do business here, such as by speeding permit approvals when possible.

But, as many experts have pointed out, the big problem with Rhode Island’s economy is not something even a perfectly re-engineered EDC could fix. The Ocean State is a great place in many ways, with a superb location between Boston and New York, a strong quality of life (if you have a good job and/or a private income) and a hard-working private sector. But the state faces more than a marketing challenge, and until it solves some basic problems, the best economic development team in the world will not find much luck turning things around.

Rhode Island needs progress quickly in three areas:

•  Competitive taxes. The state will be hamstrung in attracting business while its taxes on businesses and executives remain higher than those in its neighboring states, never mind most of the rest of America. Federal taxes will have to rise to pay for new programs; indeed, fiscal prudence dictates that. But tiny Rhode Island is too small to go its own way. Businesses can fairly easily move to neighboring states. Making the state more competitive in taxes will require getting a handle on out-of-control public pensions, among other things.

•  Education reform. Rhode Island’s public schools are more expensive and perform worse than those of most states. For too long, they have been run too much for the benefit of such groups as teachers unions, and students have gotten short shrift. To attract businesses looking for a well-educated workforce, the Ocean State must reform its schools, encouraging innovation, accountability, management freedom to pursue best practices and greater choice for parents. The state’s public higher education has also gotten short shrift, even as administrative duplication among its three public colleges raises its inefficiencies and costs.

• Exploiting the state’s natural advantages. Rhode Island should be working vigorously to develop its maritime ports, which would create jobs and help businesses thrive by making it cheaper to transport goods. In addition, it should stop its foot-dragging on expanding the runway at T.F. Green Airport to permit European and West Coast flights. Politicians must develop the backbone to challenge the NIMBY forces that oppose job development and improved infrastructure.

Ultimately, these changes would make the state dramatically more attractive to job creators and even turn Rhode Island into a regional powerhouse. For too long politicians and their appointees have concluded that phrasemaking is enough — combined with tax and other incentives for favored industries, to be paid for by unfavored industries and individuals.

In truth, the economy is far too complex and innovation too quick for politicians to effectively choose winners and losers in the world marketplace. What a reformed EDC could do best is to show the rest of the world the Ocean State’s comparative advantages and urge policymakers to adopt programs that improve the state’s overall economic attractiveness.