It’s not the EDC, it’s the political leadership that lacks

Guest Column:
Lawrence A. Girouard
I think that, in many ways, the R.I. Economic Development Corporation is getting a bad rap. We, as taxpayers, look to the EDC to help jump-start our economy, and it always seems to come up short. More

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It’s not the EDC, it’s the political leadership that lacks

Guest Column:
Lawrence A. Girouard
Posted 4/1/13

I think that, in many ways, the R.I. Economic Development Corporation is getting a bad rap. We, as taxpayers, look to the EDC to help jump-start our economy, and it always seems to come up short.

Some blame the EDC leadership, quickly pointing out that it changes directors every two to three years. Others point to its lack of strategic planning as Rhode Island competes with other states to both retain and attract business.

While the 38 Studios LLC deal may be an example of a poor decision that will cost the state dearly, I would like to take that off the table for a moment.

The question I would like to pose is, “What does Rhode Island have to sell to attract and retain business?” The EDC is in many ways the sales department for the state of Rhode Island, and the Rhode Island product offering the EDC is chartered to sell is severely flawed.

Perhaps we can rightly state that EDC leadership has not been vocal enough in stressing to our state leaders that we need to fundamentally change the way we run our state if we are to be competitive, and offer several suggestions. But rhetoric of this nature might not be politically prudent. In the end, the lack of this input just exacerbates the situation.

It is not news that our state has been ranked last in business friendliness in each of the last two years, according to one national study. Many other studies place Rhode Island last, or near the bottom in the pro-business categories.

How can our state’s sales department be successful when we are last, or near the bottom, in almost every category that is important to a business?

When you are near the bottom, and losing the game, your options are severely limited, and you end up swinging for the fences, like with 38 Studios.

More recently we learned that the demographics of our state’s population are changing as higher-income jobs, and the citizens who occupy those jobs, have been moving out of Rhode Island. This lowers the tax base.

While the governor’s fiscal 2014 budget proposed a modest 0.8 percent increase in spending, the big issue is the fact that there are fewer high-taxable, income-producing jobs to meet the financial demand this current budget requires. The result has to mean higher taxes or fees for those of us who remain.

Our political leaders must scramble to find new sources of income, such as the toll on the Sakonnet Bridge, or some other new tax or fee to pay for the costly expansion of Medicaid in order to balance the budget.

These types of actions add a greater burden to our state’s business community, and undermine any proactive initiative that the EDC might implement to attract or sustain business.

With Rhode Island being last in business friendliness, taxpayers need not look at the EDC for the answer, or the blame. The Rhode Island culture is a direct result of how we have been politically led over the last 30-plus years. We have been led to “last place,” and anyone can lead to last.

If the Rhode Island value proposition is to improve enough to make a difference on the national stage, our leaders will need to make some dramatic and courageous changes soon or Rhode Island will continue to be last in the key issues that are fundamental for a strong economy.

When you look at the financial crisis that many of our municipalities are facing (Woonsocket, West Warwick, East Providence and Cranston, etc.) under the weight of high levels of unfunded pension liabilities and the like, it is becoming clear that Rhode Island is quickly heading toward its own fiscal cliff.

Our political leaders must provide the EDC with something to sell. Our taxpayers, being one of the highest-taxed electorates in the country, deserve a better return on their invested tax dollars than being last. If history is any barometer, our leaders will not be willing to step up to the plate and Rhode Island will become the poster child of Einstein’s definition of insanity ... doing the same thing over and over again and expecting different results.

We need leaders to lead change and not blame EDC for Rhode Island’s lack of economic development. In fact, a cynic might conclude that the EDC’s primary function is to provide a convenient scapegoat for shifting responsibility and blame away from our state’s political leadership.

The health of our business community is critical if Rhode Island ever expects to be relevant on the national stage. We need real change, and calamari being the “official” state appetizer is just not going to get us there. •

Lawrence A. Girouard is the CEO of The Business Avionix Co. LLC, a business consultancy focusing on strategic approaches to business challenges.

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