Appeared in Providence Journal, May 1999
What, precisely, is the rationale for imagining that Rhode Island's economic woes can be cured by selling real estate? Since when are economic development and land development synonymous? This may sound odd, but it's the religion that guides our state's economic policy.
Kip Bergstrom, Governor Almond's Economic Policy Council director, has said he will concentrate that agency's activities on promoting three areas: Providence, Quonset, and something called ``the Gap,'' in South County. Well, to whom is he promoting them and why is he bothering at all? Wouldn't we be better off promoting Rhode Island businesses rather than Rhode Island regions?
Rhode Island's economy continues to be more sluggish than our neighbors', and our leaders have no idea at all about what to do about it beside lure companies from elsewhere. Vacant, flat land appears to them to be the best way to do that. So we buy billboards in Boston, and advertise in Forbes to tell people who own businesses that they should consider moving to Quonset, where there is a lot of flat land.
Vacant flat land, in fact, appears to be the key to Quonset's appeal. Yes, it is said that Quonset is an economic development ``jewel'' mainly because it has access by rail, road, water, and air. Except that we need a third rail, the road really ought to be a highway, the port needs dredging and filling, and the airstrip isn't close enough to Providence for the air freight companies to consider moving from TF Green. We are going to spend $200- 300 million to repair the first two deficiencies, and who knows how much on the port. Can you imagine the economic impact of $300 million spent on URI?
Here's what EDC's Quonset report (Parsons Brinckerhoff, 1997) says: a port at Quonset could bring 22,428 new jobs to the area. Here's how they got that number: 3,752 of the jobs are attributed to the port (ignore for the moment that larger ports, like in Charlestown, employ fewer people). What about the rest? Believe it or not, those 18,676 jobs were found by multiplying the number of available acres of land at Quonset (not counting the swamp and the Superfund sites slated for parks and ``open space'') by the average number of jobs per acre at industrial parks around the country (Table 4.5). Is there a plan to get us there? You bet! We find people to buy the land, and sell it to them.
This is not industrial policy. This is what real estate developers do. Japan didn't become the world's second largest economy because there was a lot of vacant land around. Computer companies don't sprout in Silicon Valley because land is cheap there. And ``For Sale'' signs on industrial land are not going to add a jot to Rhode Island's long-term economic health. (In fact, almost all the new tenants at Quonset moved there from somewhere else in Rhode Island. This may help North Kingstown, but at the expense of Cranston, Warwick, and Woonsocket, all of whom also voted for Governor.)
For the sake of fantasy, let's imagine what might happen if Rhode Island had an actual industrial policy. Just for fun, let's think about the plastic industry. Many of Rhode Island's plastic companies are small shops. Many were originally set up to do out- sourcing from Hasbro, years ago, before that company took its business to China. That customer is long gone, but the small companies are not. Maybe the state would lead the way in setting up marketing cooperatives among the plastic companies, the way that Oregon has helped small secondary wood product companies organize. Or maybe the state could help identify manufacturing niches that need filling and recruiting local companies and investors to fill them--say in packaging, marketing, machining, rebuilding old machinery or whatever. Maybe the state could help some of these manufacturers begin to take advantage of the new marketing opportunities provided by the internet. There are any number of aspects to a creative economic policy: things the state could do to help our businesses thrive and grow--and hire new employees. And we simply don't do most of them. The few that we do take on we do badly, half-heartedly, since the minds of our leaders are distracted by the real estate market.
There are people in the state government and the EDC who are supposedly responsible for initiating actions like these. Like the software ``account executive'' who is based in Cranston while most of the state's software concerns are on Aquidneck Island. Like the manufacturing account executive who is alone responsible for helping all of Rhode Island's 2,500+ manufacturers. Like the Samuel Slater Partnerships the Governor takes credit for, but which has to lobby him and the legislature to be fully funded. The Governor and EDC need a port at Quonset, simply because they need a success at Quonset. Otherwise we are liable to notice how few clothes this emperor is wearing.
I propose the state retire from the land development business, and concentrate on helping the businesses that are already in Rhode Island to thrive and grow. We should be helping startups, not looking for saviors. There are a lot of smart and energetic business owners here. Why can't we spend some effort trying to take advantage of that natural resource?