Contradictions in RI Economic Development Policy

This week the news was how great the startup culture in Rhode Island is.  We have the infrastructure to help new businesses get off the ground, and there is lots of success.  This is contrasted with the continual drumbeat about how bad the business climate is and how hard it is to grow businesses in RI.  Which is it guys????

 

Maybe a simplistic question, but one that goes to the heart of the misinformation about the RI economy that the media and the wealthy persist in stating.   The biggest misinformation is what a business climate is.  The exact definition is how much a state, community, or national government is willing to kowtow to the rich and allow them to run roughshod over the health and safety of the community and how little the rich have to pay in taxes to maintain the health and prosperity of the community.

 

Business climates are one of the tools the rich have used to beat all of us around the head by telling us that we shall have nirvana if only taxes on the rich are low enough and there are no onerous regulations on business.  There are a couple of things wrong with this model, one of which is that we are constantly told how important the place of Rhode Island is to our competitive advantage.  People love our beaches, farms, rivers, and old cities, but the only way to make money is to redevelop real estate, and for that we need to undo wetland regulations.

 
Another of our contradictions is that we see on a daily basis is that the rent is too damn high, but falling real estate prices are anathema to our future.  Which is it guys??  Do we want more homeless folks, more people who can not afford a place to live?  Or is rewarding speculation and too big to fail banks by creating more bubbles in real estate?

 

Which is going to do more for our economy, affordable housing for everyone or speculative bubbles for the banks to profit from?  The rent is still too damn high and ought to come down a lot seems much more important for our future.

 

The list goes on and on, but I will offer one more example and call it a day.  Current policy in RI favors the rich.  Incomes for the rich are skyrocketing while the rest of us fall further behind (see the rent is too damn high).  Nearly all of the growth in income has gone to less than 10% of the population.  But in the consumer society we live in rising inequality slows the economy as most folks do not have more money to spend.  The more unequal an economy gets, the less well it works.  So why does policy in RI flow in that direction?

 

Is Rhode Island ready to openly talk of its contradictions?

Response to Gary Reber essay

The flaw in this essay is that it assumes that economic growth is possible and desirable, when the reality is that the economy is already shrinking in western industrial economies due to ecological collapse, and that efforts to restart growth in the west are unlikely to succeed. We are seeing wages around the world move towards the mean, which means 90% of the folks in the west will be poorer. It still allows for growth in those places that are desperately poor, mostly because the only way any of this works is if the west gives up the right to steal the resources of the poor countries. As currently constituted, the global economy is rigged to help 1% maintain their wealth and power, which they do mostly with weapons and the ever growing police state.

 

 

Beyond ecological collapse in the ever more desperate thrashing for growth, the rigged economy generates ever greater inequality. The result of inequality is a deteriorating economy, which defeats much of the purpose of those who tout the greater power of the wealthy and their greater influence on policy. It is supposed to be able to at least create the illusion of growth during the bubbles, but even the bubbles look pretty strange when the only thing they are founded on is weird mortgages.

 

 

Tax the rich, feed the poor, heal the ecosystems. Put ecological healing and economic justice together, understand how the economy has to shrink in order to keep the planet livable, remember that community can substitute for a great deal of money, and that economic democracy is as important these days for community prosperity as political democracy.

RhodeMap

 

I have been participating in the Rhode Map process and have been somewhat troubled by its approach.  The most troubling is that it is mostly focused on economic growth with the other factors that sustain communities relegated to the second tier, subservient to growth.  The reason this troubles me so much is that economic growth, the kind that lifts all ships as productivity rises, has disappeared from the industrial world and is not coming back.  While many people scoff at the end of growth, the literature describing why this is happening, and how, is large.  The concept is still under observation, and there are ways to get a little growth in the short term, but to put all of our marbles in the growth basket is naive under conditions on planet Earth in the 21st Century.
The ecological collapse/global weirding that we are observing in the loss of forests, extreme storms, and food insecurity is deeply connected to the growing inequality that has overrun the global and American economies as the wealthy look for speculative investment rather than steady productivity gains.   The casino economy and our obsession with the business climate as opposed to the changes in the actual climate are clearly related to the end of growth as the wealthy can not find actually productive investments that return what they expect and have resorted to rent seeking and buying the political process.  Real estate speculation and the financialization of the economy are what they turn to when there is nothing else.  They have figured out how to profit from bubbles.  While the rest of us get poorer.  And the rest of us getting poorer is exactly why we know we are at the end of growth.
RhodeMap with its emphasis on growth centers it almost entirely a real estate speculation oriented program.  It merely seeks to move the real estate speculation to specific places rather than question why real estate speculation is our major economic indicator and how it relates to the further impoverishment of the people of Rhode Island.
While paying lip service to ecology, biodiversity, equity,  it is clear Rhode Map is driven by the desires of the rich, and is therefore likely to produce little of what really benefits the people of Rhode Island.  We would be much better served by a program that put ecology and equity first with the direction of investment coming after that, and that was also based on an understanding that the economy of Rhode Island will shrink over the next generation and we would be best served if we managed the shrinkage in a way that reduced the power of the rich and shared the income more equally.