38 Studios and Economic Development in Rhode Island

38 Studios and Economic Development in Rhode Island   Greg Gerritt Aug 30, 2012
When i started writing this essay 38 Studios had just gone under.  I thought in a week or two of writing I could produce an essay about some of the lessons learned.  It turns out I needed to write a longer and more expansive piece on economic development and the future of the RI economy.  So, after several months of daily writing,  using 38 Studios as a place to start the conversation, I offer 4 things.  A very brief overview of the 38 Studios debacle,  a brief discussion of how economic development is practiced in Rhode Island and the United States, a discussion of a new economic development paradigm based on ecological healing, democracy, equality, and justice, and suggestions on how best to move forward in RI.

Rhode Island will be reeling from its latest disaster in economic development, the failure of 38 Studios, for quite a while.  The literature on why 38 Studios was not a good bet for Rhode Island is abundant.  For example:    http://news.providencejournal.com/breaking-news/2012/06/38-studios-decl.html           http://www.slate.com/articles/business/moneybox/2012/06/_38_studios_and_kingdoms_of_amalur_how_curt_schilling_s_video_game_company_duped_rhode_island_out_of_75_million_.html

The Short Story is that in the wake of the housing bubble, the financial meltdown, and the Rhode Island economic meltdown, Governor Donald Carcieri wanted to do one good deed before he left office. It would have been his first.  Carcieri always sold himself as a business man, though he was elected governor partly by selling himself as opposing the Megaport at Quonset.   For years he claimed he was really strong on allowing the private sector to do its thing, eliminating support for people, schools, and communities, while seeking to eliminate environmental, health, and safety regulations in the name of being business friendly.  But the economy was still down the tubes.  Therefore, despite his rhetoric on behalf of the private sector, he was happy to subsidize businesses owned by people who played on his team if they promised more jobs.  Curt Schilling sold Mr. Businessman Governor a bill of goods.  The Governor had stars in his eyes, not so much for the video game industry, (though in the wisdom of the day video games were supposedly a great sector to be in) but for the celebrity of Curt Schilling, a fellow conservative hypocrite.  Without due diligence, and with the connivance of all the state house insiders, the Governor and the Rhode Island Economic Development Corporation found a way to funnel all of the new EDC bond issue to this one company.  Now the people of Rhode Island are on the hook for more than $100 million.      http://www.nytimes.com/2012/05/21/us/curt-schillings-business-trouble-in-rhode-island.html    http://news.providencejournal.com/breaking-news/2010/04/house-approves-new-125-million.xml

Despite the hype and the potential, video game businesses are a risky investment, with lots of competitors and a high failure rate.  http://en.wikipedia.org/wiki/History_of_video_games    Risky enough that it is hard to justify spending the people’s money to support such a business with experienced tested leadership and successful games, let alone funding a business with no track record.  While there are many gaming companies that have used venture capital to grow, there are many successful companies that were started without big bucks venture capital, giving us no reason to believe that state money was needed in the industry.  Other than as an inside deal it is very hard to understand how anyone could have committed all of a new bond issue to just one company in a risky industry.   A classic RI case of putting all of our eggs in one glitzy basket and then dropping it.
Beyond critiquing the 38 Studios deal for its lack of research, its cronyism, and other assorted ills, a few commentators have even ventured more widespread criticism of the EDC and the state policy or lack thereof that lead to the debacle.http://www.nytimes.com/2012/05/21/us/curt-schillings-business-trouble-in-rhode-island.html    and the following for an earlier perspective.   http://thephoenix.com/boston/news/62020-cant-anybody-here-play-this-game  All well and good. I think you would be hard pressed to find anyone with knowledge of the Rhode Island economy over the last 50 years who thinks our collective economic development approach or the RIEDC have been successful.  There is great success here, many people making a living based on good ideas, but overall, not so much.
I have been reading state economic development reports for about 20 years, beginning with the Maine Economic Growth Council report back in the mid 1990s.  I not only read the report, I attended meetings and served on a sub committee. I wrote a few of the paragraphs on the ecology/economy interface.  The report is not on their website as it is a pre web report.   Two years later, right after I moved to Rhode Island, the Rhode Island Economic Policy Council came out with a Rhode Island report, “Meeting the Challenges of the New Economy”, which is also not available on the web.   The reports were nearly identical, focusing on the same sorts of things, based on the same philosophy of development, with just a few details and names changed to protect the guilty. I continue to watch and participate in the community discussion about what next for the economy, including serving as a stakeholder at the Quonset Megaport discussion at the turn of the century, participating extensively in the discussions of city planning and economic development over the last decade, and serving on the North Main St revitalization committee.   Several years ago, in a response to the previously cited article in the Phoenix I wrote a short essay https://prosperityforri.com/?page_id=111   that pointed out that many of the people in the economic development business in RI are smart and capable people (yes we also have some turkeys and inside players) and with all that brain power they should have come up with something pretty good. Unfortunately the policy prescriptions prescribed  (smash unions, taxes, regulations, and the like, foster the next big thing!), are the standard model, and have a 50 year history of failure here.
The model of economic development offered by the leadership of Rhode Island, with or without the 38 Studios debacle, is based on ecological and economic assumptions that are false.  It fosters inequality, depletes natural capital, and is faced with a climate changing faster and faster as pollution grows and forests shrink.  The most fundamental flaw in the model is the expectation of growth.  All the planning assumes infinite growth can continue infinitely on a finite planet.  The evidence is rapidly mounting that growth, actual growth and not simply pumped up funny money growth, is no longer possible on planet Earth.

http://spectrum.ieee.org/podcast/at-work/tech-careers/why-bad-jobsor-no-jobshappen-to-good-workers/

Growth is the god the oligarchy bows to, and the received wisdom is that the only way to get faster growth in post industrial Rhode Island is to make the 1% happy by implementing the ever gyrating economic development trend of the week underlain by real estate speculation.   Clearly it works for the 1%, if not for Curt Schilling and 38 Studios.   Corporate profits are at record highs http://www.nationofchange.org/story-housing-crash-recession-politicians-don-t-want-tell-1340201541  but post recession unemployment is as well.   Economic development in the 21st century needs to be community development, and we ought to remember that and acting accordingly.

Economic development, in RI and in just about any other state, is based on the global corporatism model of economic growth. Those touting the wonders of global capitalism, essentially the one percent and their drones, have a very predictable answer about what to do in Rhode Island to create prosperity.  Cut taxes, reduce wages, cut corners on safety and pollution, reduce the ability of workers to organize, export more, cronyize/privatize public services as a way to loot them and abandon those who have less, encourage sprawl, encourage real estate and investment bubbles, deregulate finance so the insiders can steal more easily, and use the government to open markets for them, often violently.  http://www.nationofchange.org/regulation-monster-1340716513  This strategy may have once worked, but it sure as heck does not work now.

Despite the hype about new industries economic development is still primarily real estate driven, with pavement and buildings appearing to be more important than what is done in the buildings.  It leaves a lot of abandoned buildings and cities unable to keep schools open as they fall further into debt.  What was once an inner city and Main Street phenomenon, empty storefronts on a massive scale, has now moved to suburbia, along with the many home foreclosures that seems to be the permanent result of allowing Wall St to run amok on real estate with toxic bonds.    More forests and farms turned into house lots, more of our food is poisoned,   I was recently in the neighborhood surrounding the Sacramento California airport and basketball arena.     Jack Rabbits by the score inhabited an area that was only recently farms and now had roads, electricity, water, and sewage in the ground, but no buildings, adjacent to a field of concrete shells propped up with rusting steel.  Buildings across the street, built just before the bust, stand half empty.

The last time RI was prime real estate for development was the 1890’s.  We had cities and industries based on rivers and waterpower, railroads, and ports that were more than adequate for the ships of the day.  By the time this infrastructure started to show its age, around World War I, changes in the use of energy, specifically the discovery of oil in great quantities and the creation of entire industries around the use of electricity following the development of the light bulb, changed the game.  All of a sudden Rhode Island was a dirty used up place with organized workers and rocky farmland based on polluted rivers generating small amounts of power and an antiquated transportation system.  Rhode Island lost out to the low cost producer in the age of oil.  We have never recovered, and are unlikely to in the age of fossil fuels no matter what we think of next.

Interestingly a number of authors recently have published articles or given talks in an effort to remind the policy makers that Henry Ford sort of had it right on some of this,    http://corporate.ford.com/news-center/press-releases-detail/677-5-dollar-a-day        Economies prosper when the working stiffs make enough money to buy the widgets and services they produce. Today we also know that when worker’s humanity is respected, and a company trends towards equality, that its odds of being profitable go up .  http://www.businessknowledgesource.com/manufacturing/cat_employees.html   Happy workers do better work.

There is also more and more of a conversation discussing how inequality gets in the way of development,  noting that places with a smaller gap between rich and poor have a greater general prosperity.   In the referenced article Nobel Prize winning economist Joseph Stieglitz is not taking into account ecological collapse and predicts a return to growth, but rightly points at how reduced inequality primes the pump for prosperity.      http://www.nationofchange.org/joseph-stiglitz-price-inequality-how-today-s-divided-society-endangers-our-future-1339343984      The happiest and most prosperous places are those which have a much smaller gap between rich and poor.  http://www.telegraph.co.uk/news/worldnews/asia/bhutan/8355028/Bhutans-Gross-National-Happiness-index.html   http://www.ft.com/intl/cms/s/0/54fd57dc-c18c-11de-b86b-00144feab49a.html#axzz1y4bBx7Di    Finland is often used as the example of a place with less of a gap between rich and poor that has moved ahead in the 21st century economically and ecologically.

Within the economic development game as currently constrained in Rhode Island there are a variety of ways to play.  Here are just a few examples.  The loudest school says that the government can do nothing right and should cut taxes, eliminate regulations, and otherwise get out of the way of business.   I will get back to the hypocrisy inherent in this school soon.  A second school offers up targeted tax breaks while also trashing the environment and community.  A third school offers programs like those of the EDC, being clear that in hard times (the permanent RI condition it seems) the government ought to invest to build upon what is successful or what is truly needed.  In addition to flavor of the week industry investments this school often focuses on what is called smart growth, the reuse of urban brownfields and the directing of development to places with infrastructure already in place.  38 Studios is exactly what this economic development strategy offers.  38 Studios was exactly the sector RI’s economic development leadership wanted to develop, a high tech sector with a little pizzaz that might bring cool people to Providence.
The  hypocrisy of the loudest school, in which they claim to be purely for free enterprise, is immense.  Essentially it is a strategy to kill the poor, pollute the planet, and line their pockets.  And because their dastardly deeds lead to resistance by the 99%, where the anti tax school really wants to see governments spend big bucks is on new ways to kill and spy on people (so they can get a defense contract). Spending billion$ on wars for oil and global warming is a hoax seems to be their response to any question and their plan for prosperity. They use the government to suppress democracy, organize wars that allow them to steal the world’s resources, give the people no recourse when polluted, and impoverish the masses. Then they claim to be for small government, as long as it protects their ill gotten gains and allows them to sue or kill people resisting their oppression.
I am a believer in industrial policy. Communities should invest in industries that contribute to community prosperity if they are industries that would not flourish without a bit of nurturing. Without government R&D money many technologies we use every day (the internet for example) and many medical advances would not have happened or would have been significantly delayed.   But we should exercise some caution as the government has also financed some disasters.     Sometimes the bureaucrats have chosen reasonably wisely, sometimes they have screwed up royally or made sure the money went to their friends.   The Slater Fund http://www.slaterfund.com/portfolio/  can be used as an example of how industrial policy can work somewhat successfully even if each of us would disagree with particular investments made with that fund.
Contrary to what the hypocritical anti government school of development says, government regulation and actions can drive investment in ways that benefit the community and the economy. How would commerce happen without infrastructure like roads, ports, electricity, water, and sewers?  The Clean Water Act, which requires private and public investment in clean water, may be more responsible for what vitality the Rhode Island economy has today than any other factor.   Could the Providence Renaissance exist without cleaner rivers? (Waterfire was not on the agenda when the Woonasquatucket River was a sewer )  The Clean Air Act keeps kids out of hospitals every day, saving millions of dollars every year just in Rhode island.  Bikepaths, Farmers Markets, and clean beaches are where people want to be and have a greater economic impact each year. All cases where investment by the government makes a positive impact in the economy but where private interests have to be dragged kicking and screaming into the 21st Century even as public expenditures help their bottom line.    A great example is how much more efficient the auto industry is after being forced to clean up its act.  http://www.epa.gov/air/sect812/   http://www.americanprogress.org/issues/2011/02/epa_businesses.html  You have to take the complaints by some of the knee jerk anti tax anti regulation factions with a grain of salt while still noting that the government is more than capable of making some very bad investments.
I exchanged some emails with Robert Whitcomb of the Providence Journal after I sent him a copy of my short essay on 38 Studios, Keith Stokes, and the EDC https://prosperityforri.com/?p=210  and he pointed out some places I might have had a detail or two wrong, but mostly expressed his understanding of the development process to be one that makes progress by satisfying the 1%.   He said the problem with RI was that we rely on the good old boys who can not get things done, which admittedly may be a big problem.  He did not say specifically how the good old boys shoot themselves and us in the foot,  but he implied it was the fault of the community that the economy was stalled rather than admitting that most of what the 1% try to pass off as economic development is a scam, most of it is not well grounded in reality, and that a truly open and public process that stops harebrained schemes is a good thing rather than something to short circuit.  Whitcomb still occasionally renews his call for a container port and really touts the expanded runway at TF Green    Expanding the runway at TF Green airport in an age of climate change and a deteriorating economy shows a complete lack of caring or understanding, with the message that what ever the 1% want (and pretty soon they are going to be the only ones flying) they should have, The propaganda that what is good for the 1% is good for America, is just a new form of the Big Lie.  The evidence is quite clear, what works for the 1% clearly does not work for the 99%.   The megabucks runway expansion at Green Airport is especially galling as the number of people using the airport continues to go down,   http://www.pvdairport.com/documents/MonthlyStats512.pdf   while Rhode Island is reducing funding for RIPTA when its ridership is going up. http://www.gcpvd.org/images/reports/2011-03-ripta-a-vision-for-the-future-of-transit-in-rhode-island.pdf   The Quonset Megaport would have contributed to genocide in Indonesia, massive deforestation in southern Asia, and the growth of shanty towns, as well as the undermining of manufacturing in RI.  Some argue that the effect of trade flows on communities around the world is irrelevant, but I ain’t buying it.   http://news.mongabay.com/2012/0628-indonewswrap.html#   What comes through your ports is important to the health of your community, even if it is just passing through.

Whitcomb is not the only purveyor of this misinformation/inappropriate framing of prosperity, the entire development establishment offers the same pablum, and Whitcomb does occasionally get how important the RI environment is.  But he and his compatriots seem to keep the economy and the ecology too separate even when they do promote environmental protection.  All the Economic Development Reports from the various states or communities remind us that investing in community infrastructure and education is good thing and is important for growth.  The reports then go through industries they consider likely prospects for creating the growth that seems to be the answer to all of our troubles regularly including communications, computers, biotech, and what were called at one time (before they melted down the whole economy) the FIRE industries, Finance, Insurance, and Real Estate. Now, without too much pondering as to what a Green economy really is they add the Green economy to the reports as they get more desperate for growth and green industries are among the healthier sectors of the economy. State economic development personnel and agencies beg and plead for more manufacturing  (and when that fails, casinos) and pledge to do anything to make themselves the low cost competitor.  They promise to gut every environmental and worker protection standard while giving away millions of dollars so that some sleaze ball with a factory will pollute their neighborhoods until someone offers a him a sweeter deal and he goes back from whence he came.  It is a constant struggle to keep the development process from being closed to ideas other than corporate globalism.  Constructive community conversation is hard to find.  With the conversation closed it is hard to determine what investments are good for our communities and our planet. Hence 38 Studios.

If you are enamored of economic growth, believe it critical for prosperity, and want to see your community prosper, the economic data is not a pretty sight, Most Americans have been getting poorer over the last 30 years, with no gain in wages  for 90% of the population, while the 1% have garnered 93% of the growth in the economy. http://www.washingtonpost.com/blogs/ezra-klein/post/in-2010-93-percent-of-income-gains-went-to-the-top-1-percent/2011/08/25/gIQA0qxhsR_blog.html    http://articles.businessinsider.com/2012-03-05/news/31123094_1_income-gains-capital-gains-uneven-recovery   In other words, other than the funny money of the economy of the rich, there is hardly any new money on Main St.  http://prorevnews.blogspot.com/2012/03/trending.html    Even in places with rapid growth, such as India and China, the growth is missing most of the people, especially rural people. http://www.wri.org/publication/content/7961  It is also starting to slow dramatically in many places as the ecological problems become more troublesome  http://www.unrisd.org/80256B3C005BCCF9/(httpAuxPages)/52B8B9CA2197847380256B65004C9CC9/$file/bp3.pdf  .   Speculative bubbles and repeated crashes seem more and more the wave of the future.
The most basic ecological number we need to focus on is that humans are currently using 135% of each years’ biological productivity on the planet.   http://www.footprintnetwork.org/en/index.php/GFN/blog/today_is_earth_overshoot_day1/       http://www.youtube.com/watch?v=4iHr9mzLEZU     As some of that productivity is being used by other living things on the planet, then the 135% of biological productivity that humans use plus what everything else is using means that world ecosystems are being massively overtaxed.  This shows up in vanishing forests, desertification, depleted soils, extinctions, and collapsing fisheries as well as more destructive disasters when they hit, such as more damage from tsunamis in places where the mangrove forests have been eliminated. http://news.mongabay.com/2012/0607-hance-planetary-collapse-tipping-points.html  Some of this ecological disaster shows in the ever more frantic efforts of the agribusiness industry to gain control of the food supply and prevent local communities from growing their own seed, http://organicconsumers.org/monsanto/index.cfm , and the extension of mining and drilling to more and more difficult arenas of exploitation like the deepest oceans and remote arctic areas  http://www.defendersblog.org/2012/02/breaking-house-passes-extreme-drill-everywhere-bill/ further threatening the climate, water, biodiversity, and food supply.
The financialization of everything http://ser.oxfordjournals.org/content/3/2/173.abstract    http://en.wikipedia.org/wiki/Financialization  is also a reflection of ecological collapse. It is harder to make a fortune actually producing anything as the resource base collapses and the earth is saturated with consumer goods. Therefore the best way for the already wealthy to continue accumulating is to steal with a pen, a computer code, or a government contract for the war machine.   Hence housing bubbles preceded by high tech bubbles in the wake of wars for oil.  Bubbles are the only thing that even presents the appearance of economic growth any more,     http://crei.eu/people/martin/EGB.pdf    and the rich seek to find a way to protect themselves in the crash.  Usually it is a government bail out that brings more pain to the people and the planet but protects those big enough to buy congressmen.
The government seems to belong to those who buy it, with the buyers taking an ever expanding share of the ever diminishing natural resources of the planet.  As the resource base disappears more and more of the economy is a financial casino in which the House always wins.   The result is the money in the US has ended up in proportionally fewer and fewer hands each year. http://endoftheamericandream.com/archives/16-signs-that-the-rich-are-getting-richer-and-the-poor-are-getting-poorer   Finance has become a greater and greater part of the global economy,  http://techcrunch.com/2011/03/26/friends-don’t-let-friends-get-into-finance/     nearly doubling its percentage of the economy in the last 30 years,   http://captaincapitalism.blogspot.com/2011/09/financial-services-as-percentage-of-gdp.html    with money flows overwhelming the actual economy.  This financialization moves money from communities and natural resources to the pockets of the few.   If communities are to participate in the development of healthy economies, there are plenty of ways to do it without promoting financialization.  One way is to build infrastructure, another is to run a community bank like North Dakota does.    http://banknd.nd.gov/    Wall St seems to have perfected the loot, crash, and get bailed out because we are too big to fail routine, and unfortunately the RI economic development establishment has never turned away from the Wall St, model.

My observations suggest that because of the many industrial diseases we are suffering from our post oil economy is going to be considerably smaller than the current economy.  Smartly shrinking the economy rather than have it collapse while we thrash about seeking growth will help us stay within the ecological limits of the planet and our neighborhood, and to heal places that have been damaged, setting the stage for a renewed prosperity. As people have filled the earth and been pushed into consumerism, the depletion of natural capital has become massive and is harming the entire society, eating up nearly all of what is called economic growth each year in China with floods and droughts and scandals.  http://www.chinadaily.com.cn/cndy/2011-06/28/content_12788944.htm .  Fixing catastrophes should not be added to the economy for purposes of reporting growth, but the accountants and bureaucrats seem to only know how to add, adding the cost of fixing the damage to the economy instead of subtracting it.  http://www.ips.org/TV/rio20/new-economic-yardstick-includes-natural-capital/      One system for accounting for these disasters is called Full Cost Accounting, where we measure the pluses and the minuses, and account for depletion of natural capital and the context of spending.  Countries around the world are starting to incorporate various forms of full cost accounting and placing much less emphasis on GDP.

 Rhode Island would be better served by a reduced emphasis on GDP and a greater emphasis on the entire range of data about how the society and ecosystem are doing. Lets stop miscounting fixing disasters and Wall St bailouts as positives for the community. 

The entire economic development community:  The EDC, the legislature, the executive departments, the business community, the non profits, almost everyone, is having a hard time getting their heads around the idea that the economy is going to shrink   http://www.pbn.com/Rhode-Island-not-likely-to-see-big-growth-for-years,62668   and therefore continue to bull headedly seek growth.  We will have an easier transition to a new prosperity if we start reimagining and transitioning to a smaller and more equal economy sooner rather than later.     Prosperity in our Rhode Island of the future will only occur if we have a much smaller gap between rich and poor, much more community influence in what type of economic development is encouraged, and the restoration of the ecosystems that we rely upon to feed us.  The economy of the future belongs to food rather than finance because no matter what, folks got to eat.
Part of the complexity of collapsing ecosystems, but also a big category of its own, is climate change, http://www.ipcc.ch/publications_and_data/publications_and_data_reports.shtml#1  Every year disasters caused by over development (like floods) interacting with climate change (hurricanes, heat waves, droughts, freak storms,  fires, crop failures) are costing us more and more. http://www.wpri.com/dpp/news/historic-flood-damage-to-exceed-200-million-in-ri      http://www.fema.gov/news/newsrelease.fema?id=51510    Major infrastructure and our communities are at greater and greater risk, while our ability to pay for it is diminished by the financialization that funnels all wealth to the 1% and puts extreme stress on ecosystems and resources.

In tropical nations, in communities where the farmers and forest people continue to have access to the forest, fisheries, and open range, the poorest people get a considerable amount of their sustenance from nature and their incomes/nutritional status are significantly better than those of villagers and farmers that have lost access to the forest or equivalent resources. http://news.mongabay.com/2012/0517-forest-people-population.html     http://www.forestpeoples.org/sites/fpp/files/publication/2012/05/forest-peoples-numbers-across-world-final_0.pdf     In the places where loss of forest or similar resources has brought hunger, what is ending hunger is rebuilding soil and forests.  http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1691986/pdf/BUGTLE1EU4CRR9ED_352_949.pdf   http://www.ipsnews.net/2012/06/climate-smart-agriculture-to-reduce-vulnerability/       Forest loss is often driven by feeding raw materials including wood, into some industrial or large scale commercial process, even if the proximate cause is small farmers clearing a bit more land.    http://news.mongabay.com/2012/0405-swf_jatene_interview.html    There is at least one school of thought, World Systems, that points out how important access to an abundance of wood products is to build a civilization, and how often civilizations have failed when their forests and soils failed. http://www.sociology.emory.edu/globalization/theories01.html   Today we know that healthy forests are critical for maintaining the climate and for sequestering carbon long term.  But forests are so important for building industrial societies that governments and corporations abuse and/or kill people immersed in traditional land management systems in order to steal forest land that is used by communities for their sustenance.   I am in conversation with activists in Cambodia struggling against a government that sells off their communities’ forests to loggers connected to Generals, who make money selling the wood into China so that Americans can have cheap furniture   https://www.youtube.com/watch?feature=player_embedded&v=zhzqisWN3f4    http://news.mongabay.com/2012/0627-hance-cambodia-land-concessions.html  

The Green Revolution industrial model of agriculture, dependent upon chemicals and imported fertilizers, has run its course even as Monsanto thrashes ever more frantically, suing farmers for saving seed and creating new superweeds for which they can patent new chemicals to apply.  http://grist.org/industrial-agriculture/a-growing-problem-notes-from-the-superweed-summit/ . Just as soil rebuilding efforts are among the leading indicators of better diets and successful development in the tropics  http://www.fao.org/docrep/009/a0100e/a0100e02.htm#TopOfPage , in Rhode Island every new farm is striving for soil building sustainability and it seems every time you look around there is another article on ecological healing in agriculture as the way to maintain farm sustainability           http://www.jswconline.org/content/67/4/100A.full.pdf    While some parts of Rhode island agriculture rely on industrial farming techniques, none of our new agriculture is using that model.  Which may just be why the number of farmers in RI increased 50% between 2002 and 2007.  http://www.dem.ri.gov/programs/bnatres/agricult/index.htm
Common sense tells us that in a world in which 135% of the biological productivity of the planet is used each year will not feed itself for long without a change of course.   At some point real soon we are going to have to use less as a global community so that the basic biological productivity of Earth can continue to feed, shelter, warm, and cloth us, while allowing the poorest among us to have more.   If access to resources was equalized around the world, essentially ending poverty and reducing incomes at the top, we would see people using fewer resources and not wasting them while having a better quality of life. We rarely see such a thing happen because those with power are not giving it away and believe that their good times should continue to roll. But the record is clear.  Communities that both protect and control access to their forests and fisheries have a higher standard of living than communities that do not, and it is most apparent for the incomes of the poor where there is community control of forests and fisheries and protection from corporate exploitation. Communities that lose control of the forest and suffer from deforestation are poorer.  http://www.nature.org/ourinitiatives/regions/africa/explore/africa-work-with-green-belt-movement.xml     Almost every local development project that is working well in the poorer countries is based on ecological healing. http://unctad.org/en/docs/ditcted200715_en.pdf   Restoring fisheries, improving soil, keeping rainforests healthy.  You occasionally see successful mega projects if you do not count the damage they do to communities, and the private sector in many places is raking in money,  but the result is greenhouse gas emissions at record levels, ever greater ecosystem disasters, less democracy, and ever greater inequality.
Some would question as to whether a model of development based on what poor communities around the world are doing to improve life applies in Rhode Island, but I would argue that it does.  While we have an industrial economy as long standing as any, for the last 100 years our economy and infrastructure have been deteriorating.  Our soil is eroded, our rivers polluted, our fisheries depleted.  Our roads and bridges are crumbling, water pipes are full of lead and decaying, railroad tracks have been removed, our transportation infrastructure is underfunded, under attack, and filled with potholes.  Homelessness is increasing and low cost housing is harder and harder to find.  Bright spots in Rhode Island’s economic fortunes have most often come about through ecological healing and the creative reuse of existing buildings. So lets build on that.
 A Rhode Island prescription for prosperity.

To achieve prosperity in Rhode Island we must heal our ecosystems, provide a greater percentage of our sustenance locally, reduce economic inequality, and have more justice in our communities.  And give up hoping for economic growth because the things we do to get “growth” harms our communities and our planet.  As cited above, the evidence is pretty clear.  The growth is gone and it ain’t coming back.  Efforts to return to growth are likely to lead to disasters.  Hunger, floods, rising sea levels, wars, and more economic bubbles that allow the rich to steal more and lead to tyranny when the people ask for a fair share and the rich circle their well armed wagons.    Conserving is going to serve us better than growth in the 21st Century.  

That said, there are plenty of sectors in the economy that will grow and plenty of communities around the world that will have larger economies, but the industrialized countries, and Rhode Island, are likely to see shrinking economies even as they have a wider prosperity.  Shrinking sectors of the economy will include the military industrial complex, the medical industrial complex, fossil fuel industries, the FIRE industries, and giant agribusinesses.   Shrinkage in these sectors will provide plenty of opportunity to grow things that are useful for communities, while still shrinking the overall economy and our ecological footprint.

What to do:
Heal ecosystems
Key ecological resources to be restored in Rhode Island include agricultural soils, forests, fish runs and populations, wetlands, rivers, coastlines, and our carbon footprint.  If you asked the public about healing the planet  they would talk about our carbon footprint.  With 393 parts per million of Carbon dioxide in the atmosphere (it was 280 ppm 300 years ago) and a worsening climate, surely we must dramatically reduce our use of fossil fuels if we are to have any chance of survival.   We must eventually build windmills, install solar panels, use mass transit, walk, bike, and make all of our buildings zero carbon buildings.
Carbon and Energy

With all that has been written about how to transform Rhode Island’s use of energy let it suffice for this essay to note that a program to generate all of Rhode Island’s energy needs from truly green power, power with no carbon footprint, is absolutely necessary .  This must be combined with using less energy, considerably less energy, as well as rebuilding natural carbon storage stocks such as forests and soils, if it is to help us move towards less climate change and a more general prosperity   I support efforts to manage some of the technological transition and ease its path, but only in so far as these efforts are based on a solid scientific perspective on how deep the crisis is and a very precise map of ecosystems so no harm is done.  Pretending to address the problem will not cut it.   One thing to do in the transportation sector as part of a transitional plan would be to use short sea shipping on barges to move most of what moves up and down the I-95 corridor.  Moving the transition faster will have a very beneficial effect on the RI economy, recycling money in the community instead of sending it up the chimney to the oil barons and desert sheiks.    Beyond strengthening the public process, so the people have a real say in the energy systems of the future, I would encourage a carbon tax that could be rebated to low income Rhode Islanders, and I intend to testify in support if a bill comes up on Smith Hill. 

While clean energy generation and conserving in buildings and transportation is important, I am much more interested in the other part of the equation for reducing carbon dioxide and other greenhouse gases in the atmosphere, and that is rebuilding natural carbon stocks like forests and soils.  Reforestation and soil carbon stock rebuilding have the ability to speed up the removal of carbon dioxide that has already been added to the atmosphere by hundreds of years.  But even more important is the role this work has in bringing prosperity to our communities. 


Food, Soil, and Compost

Grow a lot more food. Grow food everywhere from the inner city to the countryside.  Until the last 100 years cities grew a considerable proportion of their food, with agriculture the best way to recycle the organic waste of people and all the critters they used to keep the community operating.  Cities were the first places of agricultural innovation, and are returning to that role today with things like the Big Green Bronx Machine http://lornasassatlarge.wordpress.com/2011/05/20/the-pied-piper-of-the-bronx/  the wave of the future. Rhode Island, with its culinary excellence, is a great place for the local food revolution to sprout.  We are limited by a scarcity of farmland,  but we can still increase the amount of agriculture in the community significantly, and if we are to do our part in plans like those suggesting that New England will be growing half its food by 2060, we will.

The key to restoring the Rhode Island economy is to grow more food in ways that build soil health.  Agriculture is currently one of the brightest spots in the Rhode Island economy.  More farmers, more food, more markets, more restaurants serving local food.  Lots of innovative urban growers. Special attention must be given to agriculture because the arc of industrialism threatens the food supplies of our still growing global population.  Whether we like it or not Rhode Island will have more responsibility for feeding our community than we do now, especially the lower income members of our community.  Transportation systems will change, making the long distance transport of food less common than now while climate change makes harvests throughout the world more iffy, as heat waves, droughts, and floods become more common.  Poughkeepsie NY calculates that it would keep $1 Billion a year in the local economy if it grew 10% of its food in the community.    Providence is more populous,

Because Rhode Island agriculture is going forward based on rebuilding soil health (using compost) we need to rethink trash.  A smaller, more nimble, and healthy economy will move towards zero waste. The component that affects agriculture is organic matter.  Burying organic matter in the landfill is part of what creates the stench that occasionally wafts over Johnston, contributes mightily towards filling the landfill up, and releases extremely potent greenhouse gases.  Molecule for molecule methane, the result of food scrap and other organic matter breaking down underground without oxygen, traps 21 times as much heat as carbon dioxide. Composting our food scrap releases some carbon dioxide, but in the context of  recycling the CO2 into next year’s crops rather than letting it build up in the atmosphere.  Using compost improves soil health and fertility, reduces run off,  adds nutrients, and sequesters carbon.  Contrast this with current agricultural practices relying on artificial fertilizers made from natural gas, contributing to the massive rise in greenhouse gases, leaving the soil lifeless, useful for nothing except holding plants up, and being the basic source of pollutants creating dead zones in the ocean.

Bluntly, we can not grow our agriculture into something that feeds more of us if we do not have a sufficient supply of compost.  The only way we are going to create that compost is by taking all of the food scrap currently thrown away in Rhode Island and composting it.  Composting can be done at home, in community sized projects, and at a variety of large scale facilities serving entire municipalities.  It requires separating food scrap at the source from other trash streams, collecting it, and then composting it.

Rhode Island needs to follow the lead of our New England neighbors and make the separation and segregated collection of food scrap mandatory. It can easily be done both at home and in all sorts of businesses and institutions.  There are several different kinds of facilities that can be built to process food scrap into a variety of useful products including electricity, with anaerobic digesters, and large and small composting facilities being  built in VT, CT, and MA.  Rhode Island is moving very slowly on compost facilities because we have enshrined in law some ancient cost structures.  For a variety of reasons, including getting our towns to stop using old polluting dumps,  it is extremely inexpensive to throw things away in Rhode Island. Dirty deeds done dirt cheap might be one way to describe it.   A restriction on the dumping of food scrap is probably several years away, but there is already a bit of discussion on Smith Hill that Rhode Island would be well served if it would take a comprehensive look at its entire range of trash issues including recycling, plastics, tip fees, and organics.  I will be assisting that campaign.  Efforts to put into place an anaerobic digester in Johnston have run into problems, but those need to be overcome as part of a long term solution.

It is likely that the compost industry in RI will develop initially on commercial waste streams.  The cost of dumping commercial wastes in Rhode Island are higher than the tip fees for municipal solid waste, though still relatively low. The higher tipping fee provides some opportunity for the development of compost facilities and transport systems to serve food intensive businesses such as restaurants, college cafeterias, and supermarkets, but no one has been able to put together the funding.  Many have suggested Rhode Island Resource Recovery Corporation develop its compost facility into one that can compost food scrap, instead of just leaves, but it has been reluctant to take on the project.
The rest of our trash stream needs to be eliminated by eliminating various types of packaging and finding ways to remanufacture recyclables in the neighborhood.  Currently most of our recycled materials are shipped out of state to be remanufactured.  We shall reduce our carbon footprint, and create jobs here, by remanufacturing here.  RIRRC needs to be much more effective in using its lands for remanufacturing what were once considered wastes  Right now the manufacturers say that RI does not produce enough materials for remanufacturing to take place here, but as issues of carbon footprint and the cost of fossil fuels continue to play out, local manufacturing for local needs will be much more important.
Rhode Island is unlikely to grow all of its own food, it is just too densely populated.  But 20 or 30% of our food is within reason, with two thousand additional farmers and the processing and composting industries infusing life into the economy.  It would take turning a small portion of our regrown forest back into farmland as well as turning vacant lots, brownfields, and many suburban lawns into gardens.  Innovative techniques such as grow walls and vertical farms will become common, and old mills may find new life as fish farms and hydroponic farms, with fish waste fertilizing plants.  And let us not forget how revitalizing community gardens are for neighborhoods.  Community gardens may be the one most useful thing that can be placed into low income communities.  Folks got to eat, and eat well.
Fisheries
Keeping with the theme of ecological healing being a critical component of Rhode Island’s future prosperity, our fisheries need restoration.  Some aspects of the Rhode island fishery are in good shape, but for those sectors that are not doing well habitat losses, pollution ( these days especially nitrogen which sets off algae blooms that lead to dead zones and fish kills) , climate change, and bycatches are taking a toll..  It has been suggested that some fisheries, especially those of the Caribbean, had more than 500 times the standing biomass in the preindustrial age than they do now.  Whether or not the ratio is 500 to 1, it is clear that the loss of salmon, herring, shad, shellfish, and marine mammals has been huge.  We may never get back to fully stocked fisheries, but restoring fisheries through dam removal, building fish ladders, restoring habitat in salt and fresh water (eelgrass, wetlands, stream flows ) (RI has lost more than 90% of its eelgrass), and eliminating discharges of nitrogen and phosphorus would increase the productivity significantly and provide both jobs and food for the people of RI.  Many dams are being removed now, efforts to restore more natural flows of rainwater are sprouting up everywhere, sewage treatment plants are being upgraded, and road run off pollution is being tackled, but the pace of that work could be sped up.
Sectors where restored fisheries improve life for Rhode Islanders include tourism, recreation, diet and jobs.  The effects are already being seen financially and ecologically where dam removals have taken place and fish ladders have been built in the urban core. If the water was cleaner, we might be able to restore locally caught fish to urban diets.
Forests
Rhode Island has more land in forest than it did 100 years ago.  But it does not necessarily mean the forest is healthier or more productive now.  Rhode Island forest land is fragmented and a whole host of diseases and invasives threaten forest health in the climatic nightmare we are rapidly entering. Sprawl continues whenever Wall St can engineer another bubble. Stopping sprawl means reserving land for agriculture and forests and encouraging the civilized use of areas that already contain the infrastructure of a modern society.  As noted above, forests are critical to civilization.  Imagine a world without wood and wood products like paper, and you get the point.  Rhode Island is going to have to provide a much greater percentage of what we use than currently, changing our tune by using less and recycling/reusing more, while sustainably harvesting forest products.  Many forest land owners know that forests can be rejuvenated while providing a stream of commercial products.  We need to take better advantage of that and many people and programs are working on this.  Currently the destroying of forests around the world is supplying wood products to the world, but the situation will not go on much longer. Our use and production of wood will have to approach per capita global forest growth if we are to not deplete the forest of other communities. This will mean using less wood than now, but getting more benefit out of each tree cut, as well as increasing the area of healthy forests on a global scale. Rhode island is reasonably well positioned here to be a responsible player with our rejuvenated if neglected forests, though again our dense population makes it unlikely we shall be completely self sufficient.
In New England forests set the tone.  Though humans have modified the forests in New England for thousands of years, forests were/are the dominant system in the landscape covering 70% of New England today. Forests in New England will add about 3% in tree biomass each year if they are left alone.  If humans remove 2% of the growth each year for wood products and energy, the forest still grows, removing more carbon from the atmosphere, more effectively recycling water. It remains a rejuvenating part of the system. Cutting more than 3% a year eventually destroys the forest.

I emphasize the growth rate of New England forests because it gives us a pretty good idea about how much the earth can give before wearing out.  2, maybe 2.5% a year of standing biomass can be removed while still keeping the system healthy.  I take this to mean that if we try to grow our economy any faster than our forest we are likely to have to steal someone’s forest to make up for it.  And loans at interest rates above the rate at which the forest grows are likely to lead to ecosystem depletion in order to make enough money to pay back the loans.  You do not find this in the economics books, but it is clear that loan based economies in their pursuit of growth forever, always lead to ecological depletion, beginning with forests.                              To gain understanding of how this effects our community, think about pension funds.  Rhode Island public pensions have been funded ( or not) based on the proposition that the pension fund investments will generate 8% return each year.  It was big news when it was announced that the new budget will only factor in a 7.85% growth rate for pension fund investments. This was accompanied by the announcement that the pension fund has been growing by less than 6% over the last few years and taken further hits in the Great Recession.   I would suggest that the State of Rhode Island begin assuming that its pension fund investments should return the ecologically sound rate of harvest for New England, 2.5%.     Logically this means that RI should stop investing pension funds in what Wall St recommends since that only enriches Wall St, not RI, and start investing in the local economy.  2.5% returns on local investment will do much more for RI than 7.85% from Wall St. because it will generate more economic activity right here instead for the low cost producer on the other side of the world, while easing pressure on the resource base of other places to support us so their resources can benefit their communities.

More equality in the economy  

As noted above, one of the best ways to get an economy on track is to have greater equality in it.  To reduce economic inequality the first thing RI should do is raise taxes on the wealthy.  Raise the income tax on the wealthy from the current 5.5% to at least 7.7%. Tax capital gains at the same rates as income.  Tax financial transactions. Some kinds of financial transaction taxes are referred to as Tobin Taxes.  A Tobin Tax is normally a very low percentage tax (.01%) on the sales and transfers of financial instruments, transactions that are currently not taxed, and whose flows massively overwhelm and unbalance the economy.  We pay sales tax on the purchase of everything except the most basic necessities of life.  Selling financial instruments is not a critical sustainer of life and therefore some sort of appropriate sales tax seems reasonable, even if that means recognizing that these flows do not function like the real economy and can not be taxed at the same rate as other transactions.

Similarly a small tax on real estate transactions other than for a primary residence would both generate tax revenues and reduce the amount of speculation in the real estate markets, which would make housing more affordable.  Some communities in RI already use real estate transfer tax proceeds to preserve land and create affordable housing, but the practice needs to become more widespread.

Environmental Justice

Another way inequality works in our communities, that if remedied would provide an economic boost, is in the siting of industry and infrastructure.  The long time connivance of the political class with the business class has exiled low income communities and communities of color into the most toxic environments.  Remedying this is referred to as environmental justice. Often low income neighborhoods are the places that flood first,(rich folks live on the high ground)  and accumulate toxins.  Flooding is getting worse as low lands are built upon, forests disappear, and bigger storms become more common. The toxic flip side of this is that the low income neighborhoods also have the least power to protect their communities in the development process and often get the most toxic developments, such as chemical plants that are much more difficult to site where residents can afford to hire lawyers and experts. A toxic double dip.  The current resistance to this toxic legacy is part of the reason why there is such an attack on regulatory agencies like DEM and EPA by the rich, it spoils their looting if they have to follow the rules.   No facilities should be built without the actual approval of the local community, and only after a thorough review of the impacts of the facility on the community, including study of the differential impact on low income people , who may be impacted differently than wealthier people, and who may live further down the watershed, with the river picking up new pollutants all along the way to deposit on their doorstep.
Brownfields, abandoned industrial sites from Rhode Island’s manufacturing past, and lead paint filled houses, are both an impediment to economic activity in our communities, and often the only places in our communities not currently being used that are available for something new.  Here an active use of the principles of environmental justice, rather than being an impediment to prosperity, becomes the base to build from.

Several parts to the equation.  One is deciding what to do with the site, another is how to make it safe.  Can a site be developed without driving the members of the community away, pricing them out of homes in the neighborhood? Will the site provide benefits for the community, or only the “right kind’ of people  who are being imported?  Will there be an understanding of how remediation effects the community before starting construction? Will the dust be dangerous? Do these hazards present a greater risk to people with fewer resources and information?

Only a society that practices democracy, understands ecology, and strives for justice is going to answer them in a way that turns brownfields into productive places and moves the community towards prosperity in the 21st century.

Democracy

Not only is democracy critical for our well being  and for justice in our communities, democracy is also critical for the health of our economy.  This runs counter to the view that private capital and individual entrepreneurs are responsible for our prosperity and that we the people should just get out of their way and let them do anything that makes money or creates jobs.  It also runs counter to the new Chinese model in which dissent is suppressed so wealth can be chased. They call it something else and the ruling elite uses different rhetoric, but it is the same old oligarchy getting richer and accumulating power.  Both of these models leave too many people behind and foster societies of great inequality.  The inequality itself damages the economy, demand and supply rarely match up well, leading to much waste and inefficiency, as well as the ecological disasters that come about when irresistible forces (like trillionaires and governments), often well armed, decide that their economic interests take precedent over the wishes of the people who already live there and who may make their living from resources that are being expropriated to serve the desires of the powerful.
Allowing the community not only a voice, but also a vote as to what happens in a neighborhood serves the community well by preventing expensive boondoggles proposed by commercial interests such as the Quonset Megaport.  Time and again, when the community intervenes, and is accorded a vote, bad and wasteful ideas are averted.  What if their had been a full public hearing process on the efficacy of funding 38 Studios?  We know the public out cry was loud, and I guarantee that the longer it went, the more the public would have shown the boondoggle for what it was.  The founder of Waldorff Schools and Biodynamic agriculture, Rudolf Steiner, also wrote extensively on economics.  He encouraged entrepreneurs  but he knew that when communities had a say in how investment capital was doled out in the community that good things would happen.  http://www.rsarchive.org/Books/
As our politics becomes ever more corrupted by ever bigger mountains of money that are more and more removed from the economy we actually live in, we see the results both politically and economically.  All restraint on Wall St, such as Glass-Steagall, was shattered by the money machine.  That directly lead to the bubble/crash of 2007/2008, and has taken the rest of us into a deeper hole. The political power of Wall St, meant that the banks, not the homeowners got bailed out, and the economy has stayed in the doldrums.  Do you think the public would have voted for a program that allows Wall St to cheat potential homeowners, created very tight markets for housing by ending all public housing programs, used crooked investment practices that inflated prices, and saddled lower income buyers and people of color with substandard mortgages?  Would the public have voted for a program that openly declared that the public shall bail out the banks, even as more of us become bankrupt and homeless?   Would we have approved a program in which bankers who crashed the economy get multi million dollar bonuses while unemployment stays high, and the banks refuse to start lending?  These criminals are now trying to buy the next election with billions spent on ads while encouraging the Supreme Court to legalize a campaign finance system that allows the wealthy to donate anonymously.  Anyone who thinks that gives us a healthy economy, i have bridge in Brooklyn i would like to sell you.

Build in resilience 

These days everyone is starting to talk about building resilience into the system   http://spectrum.ieee.org/podcast/at-work/tech-careers/why-bad-jobsor-no-jobshappen-to-good-workers/   I personally participate in on line forums in which resilience is part of the name.  It means different things to different people, but they are all at least trending towards a culture that strengthens its ecosystems as a way of reducing the effects of global shock waves on the community.

Agriculture is one of the best examples of how doing things right builds resilience into the system.  The more you build your soil, the higher the organic matter in the soil (think compost), the better it produces in wet years and the better it holds water in the dry times, giving better crops in tougher years. Add in that the higher the organic content of soil the less it erodes and the more carbon it holds, and you have a system designed to help make the vagaries of a climate crisis planet more survivable locally and globally.  We kid ourselves if we do not think that the future will be more dangerous due to shortages and crazy weather.  We all learned a new term this summer.    “Derecho” , a storm as destructive as a hurricane that moves in a straight line rather than cyclonically.  As I write this 56% of the US is officially in drought conditions.  Can we support our bread and milk habits if the Midwest has small harvests?  Will the fires out west hit the east next year?  Will that add to our chronic asthma problems and cost us millions in medical costs?  What do food prices do when China has a crop failure?  Chinese leadership tries to avoid famine at all costs because the tradition in China is that if the people are hungry the emperor loses the mandate of heaven. Much of the Arab Spring was sparked by Bread Riots set off by the harvest failures due to drought and fire in Russia.  With their large stocks of reserve capital the Chinese can buy up grain stocks, and will out compete most of the hungry people in the world, shifting the bread riots.  Can low income Rhode Islanders compete in global food markets when their food stamps are cut?  Grow more food.  Help more people grow more food.

From a broader perspective, building resilience is among the most useful things a people can do for their economy. It turns out that nearly every thing we would do to build in resilience also reduces our carbon footprint, while creating jobs.  Food, energy, transportation, buildings, and water systems can all be made more diversified and resilient and provide for a greater percentage of what the community uses, conservation and local production substituting for export dollars  These actions may not bring the returns Wall St demands, but we need to rethink Wall St. and how it measures.

Other forms of resilience we might want to consider include local production of carbon free electricity, reforesting along rivers to reduce flooding, depaving parking lots, developing clean efficient mass transit systems, more biking and walking amenities (mostly for safety), better nutrition, keeping current on routine maintenance, insulating and adding energy generating capacity to houses, decentralizing power generation, allowing beaches and marshes room to follow the rising tide, and preparing our waterfronts with infrastructure taking rising sea level into account.,
Regulations
The constant chatter about too much regulation is a ruse.  It is just a part of the effort by the ruling class to steal more. We are constantly told we have to reduce regulations.  There is actually a simple way to reduce regulations while protecting the public and ecosystems.  Set the bar at zero pollution, depletion, damage, danger. If any emissions are produced it is too much.  If anyone gets hurt, the facility gets shut down. If erosion increases construction stops. This way we do not have to prescribe technologies or have convoluted regs.  The limit is zero.  If you can not do it safely and cleanly, you can not do it.
This will be called extreme, but this actually models the precautionary principle.  If you can not prove it is safe, you can not unleash it on the public.  It also is a source of innovation.  Do it right.  If we did that you would find the same folks calling for more regulation who now call for less.  It is not that they want simple easy to understand and follow regulations, they want a license to kill and steal.
Manufacturing
Everyone wants more manufacturing to take place in Rhode Island.  But few consider that what is manufactured is of critical importance.  We  must manufacture things the community actually needs and uses rather than things that destroy communities or add to our ecological footprint.  Our manufacturing must be zero pollution, and should focus on reprocessing things that are currently called waste.  Eco industrial parks are developments designed to dramatically reduce pollution by putting businesses that feed off of each other’s waste streams into close proximity.  Rhode Island needs to develop eco industrial parks in our cities. Primarily beginning with recycled and locally produced raw materials.  We have designers, inventors, and entrepreneurs already, but too much energy goes into producing things that create problems for our planet and communities. What you produce and how you produce it is more important than how much on a crowded planet.  That is where RI needs to lead.

Housing 

Housing is another place where the current system serves Rhode Island very poorly.  Rhode Island has the oldest housing in the US, with most of our urban housing being more than 70 years old. Much of it is inefficient as well as filled with lead.  A real jobs program in Rhode Island would use the upgrade of existing housing as a propellant towards a healthier economy.  When the real estate market is booming, the money is going into luxury housing.  When the economy grinds to a halt, and there are even more people on the street, everyone says there is no money for housing for those with less income.   If low income people in RI had good housing that was truly healthy and efficient, it would provide a large boost to our economy while saving millions in emergency room visits and other services.  We have a variety of programs and agencies working on housing, but they seem to fall further behind every year, as our record population of homeless people demonstrates. More public investment is needed.  Unions might want to invest here as well.

A developer/ruling class created shortage of housing for the working class (by pushing so hard to end rental subsidies while enhancing economic benefits for ownership) is one of the things that Wall St exploited and used to fuel the creation of ever more toxic financial instruments like credit default obligations.  The inaccessibility of rental housing pushed many people into buying houses that could not afford with mortgages designed to self destruct, giving the speculator class the opportunity to steal more.  A sufficient quantity of rental housing on transit lines may be the best bulwark we could have against the next housing bubble that Wall St tries to engineer.  (remembering that bubbles are the result of resource and ecological collapse with investment bubbles developing due to a perceived lack of productive outlets for investment in the real economy).  https://prosperityforri.com/?page_id=80    We bailed out the banks, and it made it worse.  An effort equivalent in size to bail out people forced into substandard housing, or substandard mortgages, combined with a serious effort to make all buildings in Rhode Island either carbon neutral or producing more Green energy than they use, would do much for our communities, and therefore our economy.   Finance it with a tax on banks, a tax on second homes, and a carbon tax.

The medical industrial complex

One of the industries Rhode Island is always encouraged to pursue is the medical industrial complex.  This is one of the bulwarks of the knowledge economy, but a closer examination gives us many reasons to be cautious about using the medical industrial complex as the engine of economic growth.  Over the last 50 years health care has become the largest component of our economy, now responsible for 18% of the total national income.   Medical costs have now become the largest cause of bankruptcy other than the housing bubble.  Thousands of Americans seek bankruptcy protection each year due to the burden of health care costs, with the number growing every year.  This even effects people with insurance, as often their insurance is inadequate once they actually get sick, or by virtue of being unable to work they lose their health care coverage.

Part of how Rhode Island will eventually dig out from the burden of health care costs is with single payer health care.  Many refer to this as medicare for all.  While i support single payer, very strongly support single payer, that alone will not solve the health care cost crisis.    If we continue on our current health care industry path, even with a single payer system, costs will continue to go up two to three times as fast as costs in the rest of the economy, funneling ever more money into the medical industrial complex and causing other sectors of the community to fail due to disinvestment.   There are more than a few people who want to do business in RI or start new businesses who have been stymied because of the cost of medical care and insurance.

Beyond single payer and the removal of the insurance companies from the health care field we need to do several things to stop the outrageous run away costs.  One aspect of this is prevention.  As long as our lifestyles and environment continue to be more toxic, people will demand high tech quick fixes to the problems our industrial civilization causes like asthma, heart disease, and cancer.  While magic bullets would be nice, the pursuit of magic bullets is a chimera.    Magic bullets are very expensive, which makes them much less magical for the poor, and often just perpetuate the problems rather than addressing the root causes.  While we do not directly pay for all of the research that creates drugs and procedures, ultimately every penny paying the high salaries  (the reason the economic development community wants these jobs here) of the people doing health care research comes out of the pockets of the public, either through governmental support of basic research, or in the cost of the procedures and drugs we use.  It is fabulous that we can cure people and save lives that a generation ago would have been lost, but because of the cost of this care a few get rich providing the research and the care, while more and more people enter debt and bankruptcy.  It is more of a drain on our communities than a boon, a hallucination of prosperity.
The American public may or may not be willing to shoulder the cost of the modern medical miracle.  We also know it is nearly impossible to deny folks treatments that can save lives no matter what the price.  But ultimately a lower tech approach, based on prevention (clean environment, healthy food, less stress economy) will return the resources to the communities of Rhode Island, rather than siphoning into the hands of the 1% the way the current system does,  and no longer deny folks timely health care.

An example of how far from prevention we have drifted can be found in this comparison.  60 years ago Americans spent 15% of their income on food and 5% on healthcare.  Now we spend about 13% of our income on food (the 2nd lowest percentage in the world)  and over 18% on health care (the highest percentage in the world).  A good year is one in which health care costs do not rise 8%.  The industrialization of our food supply means that we have more obesity, more heart disease, more diabetes,.  The phony trade off is that we can cure more of the cancers that the industrialized food system creates, and we have elaborate procedures that can prolong the life of the very ill for a month or two.  This trade off in the costs of health care and food has less of an effect on average life spans than basic public health expenditures like sewage treatment plants.  It also leads to a bankruptcy and governmental budget crisis, blocks 50 million Americans from basic care, and gives us the industrial world’s worst health care delivery system. I am not sure an expansion of the medical industrial complex is going to help RI attain prosperity.
Labor

One thing I always find appalling about what is said about the RI labor force is that it has the wrong set of skills.  And therefore must be changed into the one the developers want, with that particular set of skills.   This is preposterous.   RI is never going to be demographically what the developers want, so the idea has to be is to create an economy that is prosperous for the people who live in Rhode Island now.  It may not look good in the journals, it may not create a cool buzz and vibe, but trying to get the demographics you think work better is a loser. When the Secretary of  Defense started going on about going to war with the Army they have rather than the Army they want, he was talking directly to the RI economic development community.  Rather than replace the community, work with the skills it does have. If you can not, find another profession.

As the economy shrinks fewer and fewer people will have a traditional full time job.  This is already happening.  Unemployment and lack of contact with the traditional job market and career advancement is becoming the norm.  As more people lose contact with traditional job markets growing food becomes a critical component for people patching together an existence, something done by up to 40% of the population in many cities.
When a rise in minimum wage is discussed, the rich folks always say it will hurt business and reduce jobs.  They are just being greedy and need to give up a little bit.  We need to see a strengthening of unions to protect the health of workers and to set a maximum wage. An economy that is more equal is a stronger economy.
A 30 hour work week would employ more people and would return much vitality to our communities, Too many people work overtime when we would be better served if we divided the work up among more people.
Organized labor, the unions, need to play a smarter role in the economy.  First they need to understand how a shrinking economy effects them.  This is critical if they are to negotiate proper pensions, advocate for single payer health care, and help the healing of ecosystems.  Too much of what the unions seem to do is premised on a continuously growing economy that is run for the benefit of the wealthiest with them getting the crumbs.  In a shrinking economy that is becoming more equal, and ecologically sustainable, unions are going to have to figure out how to invest their own money in the new economy, becoming more like cooperatives than traditional unions.  Hotel workers should own hotels,  Construction unions will need to become brownfield developers in cooperation with local communities.   Mondragon provides a useful model for a more cooperative economy.

Education
The school systems of the US have always been designed to develop a compliant disorganized labor force to be exploited by capital interests.  The current manifestation is that of basing everything on standardized tests.  We need an education system that develops critical thinkers, but powerful capital and religious interests would prefer a compliant flock rather than an empowered flock.  We therefore underinvest in teachers and schools and abandon 1/3 of our students.  One article I read recently said that a big percentage of students who drop out do so due to failing algebra.  Most of us never use algebra in our work, and at some point other than 9th grade, anyone who needs algebra for their work can learn it, at a time in their life when paying attention is much easier.
In our attempts to pigeon hole kids early we expect them to pick schools and subjects based on what they think they want to be.  Dreams are fine, but ultimately people are going to change occupations and needed skill sets many times in their life.  Offer more flexibility in schools.  And offer life long learning.  For those too physically mobile to sit in a classroom at 14, offer other opportunities that allow them to go back to school when they are ready, while offering productive ways to use their youthful energy. Farming works. When they are actually ready to learn and have the patience to do so, give them the opportunity.  Learning is life long, to make it harder rather than easier to change careers or fill gaps in our knowledge holds back the economy and our communities.
Closing the military industrial complex
The wars in Asia, the maintenance of the empire, the US role as “policeman of the world” and guardian of the oil shipping lanes is bankrupting America.  Congressmen get reelected bringing home the military bacon, but it becomes more and more obvious every day that the USA can no longer afford to spend more then the next 15 countries combined on our military and our projection of power. It makes us enemies, setting off the cycle of ever bigger expenditures to fight the enemies we have created. And destroys the people who participate in the endeavors. Rhode Island is less dependent upon military spending than most states, but it does make up a disproportionally large percentage of our highest paid work.  As Country Joe said, “There is plenty of money to be made supplying the army with the tools of the trade”  And those tools are mostly new and better ways to kill.
Converting military madness to solar energy, affordable housing, and care for the thousands of broken human beings who come back to our communities from these wars will provide a much better underpinning for the economies of our communities than killing, and provides more jobs per dollar than the war machine. Let the manufacturers of war materiel come up with useful things instead of destructive things to make, and the government can buy them to start the transition.  Lets not put anyone out of a job, just change the jobs to something that will be less harmful to the planet and its communities while providing work that heals ecosystems.
Gazelles, picking winners, and the casino economy mentality
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At one point the economic development industry was enamored with Gazelles, not the graceful antelopes of the African savanna, but companies that grew really fast. Development professionals decided that what they would focus attention on was these fast growing companies, and would do everything to facilitate their growth.  The problem is that if anyone really knew what the secret is, they would bottle it and sell it.  No one can ever truly predict which companies will grow exponentially.  There are too many variables beyond anyone’s control.  But they keep rolling the dice. Hence 38 Studios.  We ought to be focusing on development that helps equalize incomes and heal the planet.  Not a hot new violent video game.

Trade and shipping

People have been moving goods around the world for as long as their have been goods to sell.  But we have reached the point of carrying coals to newcastle. It is making less and less sense to move things that people can make in their own communities. If we had to pay the true cost of inequitable global wages, greenhouse gas pollution, and the soot of transportation, manufacturing would be much more localized.  People and goods will never stop moving, but the scale will be reduced and its carbon footprint will shrink to zero.
Too often trade flows contribute to massive environmental degradation and the displacement of rural people around the world.  The two are inextricably linked.  First the logging companies get concessions from the corrupt bureaucrats and generals.  The most lucrative logging takes place, followed by fires.  Plantations and factories are built and the people of the once independent communities of the forest now work on tree plantations, in agricultural fields totally different from their traditional fields, as well as much more dangerous to their health, and in factories making cheap stuff for export, if they are not killed outright by the thugs and the army as the land is being stolen.
On this side of the pond it means loss of employment, the wasting of infrastructure, lower wages, and communities with no hope except that some expert will come in to revitalize them and they get lucky with the fad of the week.
One of the tools upholding this inequitable trade game is called Free Trade.  It is a scam by which the richest corporations manage to move money around the world in order to steal it and gain access to resources owned by communities.  There is only one rule in this game.  The rich can change the rules at whatever time they want in whatever way they want to allow them to get richer faster.  No one else is allowed to interfere with this practice.  No one else can challenge their interpretation of the rules, no one is allowed to protect their community in any way.  The rich get richer, the poor get children.

Fair trade is trade that allows the people doing the work to share in the benefits, and upholds justice as well as environmental, and compensation standards for workers at all parts of the supply chain.  There will be less trade over time, and more and more of it will be fair as the excesses of ecosystem destructive enterprises fall out of favor and lose access to resources. Efforts by Rhode Islanders to require goods entering the state to meet standards for justice and environmental quality will be a boon.

Conclusion
5 minutes after I post this I will think of something else that should have been in here, but the need to comment on the human condition and do something to improve it will be necessary as long as there are humans.  So no worries, next time.
Rhode Island has much work to do if it is to achieve prosperity.  The direction the powers that be proclaim at every opportunity is not working all that well, and doubling down on greenhouse gases, casinos, and the war machine is not going to bring prosperity.  We need a totally new approach.

The uproar a new approach will create is minor compared to the damage the current approach is causing.  It is important to speed the transition; the longer we wait to rein in pollution, depletion and destruction and start the healing process, the harder it is to fix the damage, and the smaller the margin of error, The economy is going to chug along on some sort of momentum for quite awhile.  Banks, manufacturers of things that cause too much damage, fossil fuel power plants, jet planes, advertising, the entertainment industry, charter schools, and standardized test companies are not going to disappear over night.  There will be some sort of phased transition away from fossil fuels.  Doctors, lawyers, accountants, will not disappear.  Fruits from California will still be available on the east coast for a few more years if the drought does not shut off the spigot.  But the slow down will continue along with the drain of the empire until that fades away.

One advantage of a slow transition is that agriculture and fisheries do not have to support everyone in RI today.  Hospitals are not shutting down immediately, even if we move rapidly towards prevention.  The old economy will persist for a while even as we move forward in new ways, and global commerce is not ending. But the economy will shrink, with different sectors responding differently to the changes. The change will be more organic than determined, but governed by the urgency of healing the planet and our communities. So what RI needs to do is start to be aware of the transition.  Start wrapping our collective minds about prosperity in a shrinking economy with a more dangerous climate.
It is a bold adventure to be embarking on, but it is easier today than it will be tomorrow.  Do you have a compost bin?

10 thoughts on “38 Studios and Economic Development in Rhode Island

  1. Thank you, Greg, for the solid digging and thinking that you have provided on this pivotal array of concerns and possibilities! The way that you have sought to tie them together in terms of foresighted socio-economic and ecological well-being is very helpful.

    It doesn’t matter if or not everyone who reads this think-piece set agrees with all your conclusions, Greg. The main thing is that you’ve provided us with good starting points for building our own respective “platforms” as RI citizens and potential leaders … or, at least, for raising red flags when questionable, unreal ideas are promoted.

    More of us in Rhode Island and elsewhere should be giving attention to issues in solid manner like this, especially as the elections approach. It doesn’t have to be a dull research project. When a politician or pundit fires people up with a questionable claim, don’t be wowed by glibness, zeal or personality. Check to see whether it can be verified via Wikipedia, hard facts, and other believable sources on your ipad or whatever is at hand. Consider carefully whether the goals and values that s/he has in mind are the same as yours.

  2. I agree with Dave, great work and it’s refreshing to see a thoughtful plan that actually considers all of these important points. It will be interesting to contrast with the crowd sourced ideas that the Rhode Island Foundation will be publishing shortly.

    Anyway, we’ve discussed this before, and I’m with you on the majority of your points. Only two things I’d like to point out:

    1) RI Forest land – Clearly a lot more work needs to be done here, but in many regards, the reforestation of RI over the past few decades is a big success story that we shouldn’t forget. Part of the reason that I started my agriculture company was to have a vehicle to insure that the work my father did personally managing the native diversity of our re-forested farmland could be maintained. At RIFCO they are very active in this work and while there are programs and grant monies out there that help conservators to do this management work, the problem as I see it is that it is very dependent on individual activists and the need is to transition this energy into a more holistic approach that relates the gains to the greater society… so, I’m not disagreeing with you at all, but just pointing out that we have a good base to start from, as opposed to some other, less fortunate states.

    2) regulations: Again, I don’t disagree with your stance here, but I still feel that this aspect needs careful consideration and a big part of success here comes down to the details in implementation. The regulations as they exist now are actually helpful to big polluters and criminal corporate organizations. To me, the most important aspect is to make the cost of adhering to regulations appropriate to the resources of the company, otherwise we only end up maintaining the pay-to-play wall that makes it hard for the little guy to compete with the big guys. I like the idea of shutting down non-compliant organizations rather than fines. This is appropriate and fair. Fines, unless they’re made relative to your tax-return, are only protections against competition for large companies. Aside from that, the administrative regulations which do not protect consumers, the environment, or anyone else, but only seek to cover the costs of filing papers and generating revenue for these government departments do need a serious overhaul. true small local businesses (a mom&pop convenience store, for example) have to pay out thousands in administrative and legal fees and minimum taxes in order to get established and this really does prevent the poor from starting legal businesses, and encourages more people to operate outside the eye of regulators.

  3. A bit of a magnum opus developing here, no? Might be nice to parse an abstract for those with a bit less stamina!

    I’m a bit surprised you don’t give a nod to the work being done by Burlington, VT’s analog to our EDC, the Community Economic Development Organization. They’re mission-bound to focus on local capabilities. And I’m sure I don’t need to mention their approach to compost or energy.
    http://www.burlingtonvt.gov/CEDO/

    Also, here’s post on an abstract of a paper (that I didn’t buy) that has a loooooong term view on economic growth. Basically, it’s zero but for the past two century’s spike driven by specific technological developments.
    http://trueeconomics.blogspot.com/2012/08/2882012-challenging-constant-growth.html

    Really hope we can implement these recos.

    Cheers.

  4. Thanks to all who have commented. There is much to continue to ponder. Mostly I hope that we bring more of an ecological consciousness, and an awareness of the large implications of what we do, to economic development in RI. As long as we chase growth, we shall create disasters. Look forward to more comments.

  5. My first comment is that I agree a lot with this essay. I often have nothing to add, and you may take that as approval.

    Speaking as a computer programmer, I’d say that the ability to throw a baseball isn’t much of a qualification for a CEO job at a video game company.

    Growth is possible if we redefine growth. If we can make a better solar heat panel with less material, that’s technological growth. If we have two societies, one a multinational confederacy dedicated to cheap exploitation of other people and the other dedicated to relative freedom for the 99%, and the second society becomes more self-sufficent as a community, cutting out some of the roots of the exploitation, that’s growth within the second society.

    I tend to examine the idea of jobs. Taking care of the grandchildren is a job, and it’s usually a good job. We live in a society where robots and machines make most of what we consume. Evan with this capability, if we were a proper community then there would still be no end to the useful jobs that we could all do. We would hand over the food, housing and other goods in exchange for people doing all of the good and useful jobs.

    Multinational corporations have a huge overhead. They must extract huge amounts of money for their services in order to survive. At some point in time, each major set of tasks that our civilization does to survive becomes well-known, the rigamarole gets published online, and then even as small communities we can do them more cost-efficiently than a corporation can do them. It remains for us, the second society, to experiment and tinker until we get the rigamarole right. Next, we need one or more small communities to prove the concept, and finally we need to publish our results. Then the world wins. Community supported agriculture is an example of a community business doing what a corporation used to do, and doing it without toxic pesticides in the food.

    The problem is getting there. We as a small community should be willing to take small risks on pilot programs that have already worked elsewhere. Moreover, we as a worldwide community ought to be willing to take larger risks on one-of-a-kind pilot programs that could help everyone worldwide. That takes courage.

    A farmer’s market is a pretty equal marketplace, but it needs to be set up to work well. If the idea of a free market works for us, then let’s form a community to set up a truly free market within the community for every service and for every item large and small. Within the community we can have our own rules and sanctions about what practices are and aren’t fair to people.

    For our own community’s economic development we don’t need to bring cool people to Providence. We need to become those cool people ourselves. We, the job-stressed, the cancer-stricken, the job-starved, the alienated, the broken-hearted, could be better off if we took care of each other’s needs directly, with vertical integration within the community.

    We should always try to repay some of our quiet gains (jobs, no pollution) to the individuals who went out and paid for those gains. When we actually reward courage, we get more people with courage. History is littered with societies that pretended to pay workers and then the workers pretended to work.

    Workers used to organize against their boss. Now there’s more money available, so they need to organize as their own company owners. Our community needs to own its economic development so that it doesn’t leave for China some night.

    In colonial days Rhode Island was stuck with a faraway king who imposed perpetual tax hikes until the people rebelled, either nonviolently at first or violently later. Until the time of T.W. Dorr’s two parallel elections Rhode Island was stuck with a government of landowners only. The landowners beat down the Dorr rebellion but soon afterwards they let everyone vote. In our day we have a tyranny of gigantic campaign cash flipping our two-candidate elections back and forth, 52% to 48% or 48% to 52%, again and again for our whole lives. This isn’t a particularly useful way for us, the nation’s owners, to control rampant political corruption, especially at the national and world levels. Perhaps we should do something.

    Energy is an obvious emerging technology market. As the cost of solar and wind drops, the thousands of dollars each of us pays every year for energy should go not to a foreign tinhorn dictator but into the local economy. I can’t imagine that energy improvements won’t involve microprocessors. Potential conflict of interest alert: I’m heavily involved in reinventing solar heat and no-heat January greenhouses.

    Wherever Rhode Islanders spend money as a society, there we would find an emerging technology market. When a new half mile of roadway costs half a billion dollars and traffic still backs up after it’s finished, perhaps there’s an emerging technology market in transit. We might expect that the Federal government won’t have much money for more roads in the future, and traffic pollution is just a hidden subsidy of autos, so maybe without motor vehicle subsidies people will want transit more.

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