Ian Donnis had an article in the Globe yesterday, outlining some of his perspective on the RI malaise. A conclusion that I think most of us can agree with:
Every state wants to land such big employers as Fidelity Investments. That’s understandable. But as a friend notes, expecting to fix Rhode Island’s longstanding economic problems by luring a few mega-companies is like treating obesity with gastric-bypass surgery.
Rhode Island needs to pursue the complicated long-term equivalent of exercising and eating right: simultaneously pursuing a broad variety of small efforts that capitalize on the good things already happening in the state.
A pretty strong indictment against the state’s tax policy of cuts for big biz and the wealthiest. (Property taxes account for the majority of taxes paid by smaller businesses.)
The question isn’t where the company comes from but where the workers come from. A company that moves substantial new workers to RI from elsewhere could potentially represent a net gain in income tax for the state. Except, if the people move to nearby MA, RI only gets part of that income tax.
But there’s a huge hole in that thinking that is as described in the BoGlo piece: odds are pretty good that the state would offer “tax stabilization” or some such thing to the target company mostly or entirely nullifying the net income tax gain.
Current/modern econ-dev thinking is that you create a more resilient, dynamic economy by nurturing (growing) what already exists and making it easy/desirable to start new ventures. The latter is really the holy grail of econ dev, and it requires more broad-based work, including incubators (RICIE, Betaspring), angel/pre-angel funding (Slater Fund) and an overall culture that attracts and holds dynamic, creative people (lotsa ethnic food and non-entrepreneurial artsy peeps).
It may sound counter-intuitive, but – at the city level – there is a great symbiosis between the arts/creative sector and overall econ dev. Hence, one of the point of the cultural plan is to align Arts, Culture and Tourism with Planning and Redev as well as the Econ Dev Partnership. In fact, they may all co-locate before too long.
As to growing the consumer base, our best bet is to do pretty much whatever it takes to keep our college grads in the region. Brown, RISD, PC, URI, Bryant, JWU are all engines of the economy.
The reality of the RI economy is that we’re between two big phases, the high-school educated, factory-working, union-wage-earning phase that ended, oh, two decades ago; and the graduate-degree-holding, hi-tech, start-up-centric, cultural creative economy that started, oh, two decades ago. Yes, RI is late to the party, but not as late as some others. And we have a true, organic, local, creative/artistic core of “true believers”.
May seem out of context, but my previous is awaiting moderation. Anyway, as if on cue, EDC Exec Dir search committee has 2 finalists and could recommend a candidate by month’s end.
http://newsblog.projo.com/2009/09/finalists-selec.html
Is there any net gain resulting from the income tax applied to employees of newly lured large corps or sales tax from the resulting larger consumer base? I’m pretty ignorant about such things, so I thought I’d toss that out there for folks more in the know to speak to.
Why no mention of “the big shake up” at EDC last spring? Super-wonks may want to read my analysis on the New Commons blog.