A letter to governor Raimondo on economic development

Dear Governor Raimondo, I am writing about several different, but connected, topics relating to the Rhode Island economy.

The trigger for this letter is the effort by the new owners to move the Pawtucket Red Sox to the Providence waterfront. Personally I think it is a very bad idea, and that seems to be the statewide consensus based on letters to the paper and comments sent to the Summit neighborhood email list as well as conversations I have had. My request on this is that there be public hearings on this before anything happens. My guess is that if there are public hearings the outcry will be overwhelming and no board that had any public consciousness would give a permit. Then there is the issue of the richest men in the state asking for a subsidy for their hobby. Please publicly state that before anything happens you would like to see a full public airing of this topic. I have talked to various agencies in RI and the CRMC, the I-195 Commission, and the City of Providence all agreed that public hearings seemed a good thing, though all were constrained by the lack of any formal proposal in front of them. You do not need to be so constrained, and calling for a public airing at a time when another politician has admitted corruption around real estate development, would feed into a move towards better ethics legislation. A full public discussion sooner rather than later helps us all figure this out, one way or the other, at an earlier time with less overall cost.

Given the recent record of the political leadership of Rhode Island on major economic development projects, and Rhode Islanders well founded fear and dislike of the inside baseball politics of economic development, the proposal to move the Paw Sox just seems so Rhode Island. You and I are both familiar with the disaster of 38 Studios, a disaster that likely would not have happened if the decisions had been made after public hearings. You may not be as familiar with the public discussion of the proposed container port at Quonset. I was a stakeholder and participated in every public meeting from a seat at the table. If the governor and the legislature had had their way, 38 Studios would look like a child sized disaster compared to the billion dollar price tag of a port that would have opened as the recession hit. It was the public outcry and resolve that finally allowed the outing of the con men who had conned the leaders of the State with visions of dollar signs dancing in their heads.

I will come back to this last point shortly but first I want to flag the issue of what is the appropriate use of the land in the knowledge district given our current placing of meds and eds at the heart of our economic development strategy.

The evidence is pretty clear that baseball stadiums are not big economy boosters. Building a baseball stadium on the waterfront, in addition to depriving the public of waterfront access (which in and of itself is a major issue with large financial implications for the taxpayers)) brings into question the entire meds and eds strategy as it relates to the use of the I-195 land. Devoting that much land to baseball and parking, especially on the waterfront, is probably not a smart move. Baseball creates few well paying jobs, few full time jobs.

I have serious problems with the strategy of placing meds and eds at the heart of economic development. Both industries are at about the limits of what the American public can pay for, and are leading causes of bankruptcies and stunted asset acquisition, but that is a discussion for another day. The question today is does the baseball stadium fit in with the best way to use the land to enhance the city? If we are betting on a Knowledge District, then this is not the way to do it.

Beyond the immediate question of a baseball stadium, economic development strategy in RI needs to be better adapted to the changing world economy, but not in the ways most folks talk about. What Rhode Island needs to adapt to is slowing growth rates globally and an understanding that our growth rate is going to be generally below average. Our growth rate will be below average not because of our business climate (though the inside baseball audacity of Mr. Skeffinton astounds, and these types of subsidies do not reflect well in the rankings) but primarily because most of the economic growth that does occur globally and in the US will end up in the few places that are global financial centers, the places that are rapidly industrializing low wage countries with rural populations to urbanize, and places with short lived natural resource booms. Rhode Island has none of these advantages and our growth rate is therefore going to be slightly below the slowing global and US growth rates even if we were the perfect business climate groupie.

Many people question the idea that growth is slowing, and politicians are extremely reluctant to even think about it, but more and more reputable experts are recognizing it. Even the global consulting firm McKinsey sent out a recent report noting that it is going to be very difficult to maintain current growth rates in the medium to long term due to changes in the economy and in planetary ecosystems. Planning for a slower growth rate, and understanding how to achieve maximum prosperity with slow growth, does not appear to be on the agenda, but it ought to be along with Full Cost Accounting. The current political climate calls for a “good business climate” despite the fact that business climates are remarkably persistent over time despite years of political rhetoric and legislative action, that business climates have very little overall effect on state economies (less than 5% of the growth rate is attributable to tax rates and transparency of bureaucracies) , and that it is clear that a good business climate creates greater inequality and that greater inequality is one of the things that hold back economies. Again a much larger discussion but one I would be willing to have with you and your advisers at your convenience.

In summation, I do not know if we can convince the new ownership of the Triple A Red Sox to return to Pawtucket, but we can make sure that any attempt to move to Providence gets a full public hearing. You should insist on the public hearing and then turn attention to what all of this reveals about the new world of economic development in post industrial Rhode Island.

Sincerely,

Greg Gerritt Research Director ProsperityForRI.com

8 thoughts on “A letter to governor Raimondo on economic development

  1. Excellent letter, moderate in tone, no hyperbole! Let us know if sny responses.
    Going back further in RI history, I can say if not for public hearings and public opposition we’d have a white elephant nuclear power plant at Rome Point or at Ninigret Park instead of 2 wonderful waterfront parks and natural areas.

  2. Amen. I have a name for the team if they are moved to Providence. The Providence “Shorts”. As in, taking it in the …. The owners will benefit, the food concession will benefit and the parking concession will benefit. Everyone else involved will be working a part time non-benefits minimum wage job. And the publically financed stadium will sit idle 7-8 months of the year. Go Shorts!

  3. Bravo, Greg. I hope the people of all stripes opposed to this proposal make their voices heard beyond the Internet/social media over the next few days, as you have with this letter.

    -EG

  4. This is what happens when you don’t have real penalties and investigations of public ripoff’s like 38 Studio’s- no one learns any lesson except next time you can get away with taking more money. What ever happened to civic pride? Why can’t the fortunate few who made a fortune contribute by giving back? If this is such a great business boom for the city and he cares about RI, why won’t he start an non-profit business development program to help develop the jobs and offset the economic trauma to already struggling Pawtucket? Finally, has anyone looked at the rapidly changing flood maps of RI due to climate change. What will happen when the overdue Hurricane of ’38 type comes rolling up the bay supercharged with Global Warming energy? The owners will keep the flood insurance and keep collecting the 120mil if if the site is not suitable to rebuild? This is poorly though out and rushing to move this ahead because a wealthy businessman is excited about his hobby is not a prudent way to protect the public interest.

  5. Excellent summation of where we are and what needs to happen next, ideally to stop the growth of the institutionalization of state government/union/private business collusion to defraud and steal from taxpayers. It is time to reduce and ultimately eliminate the bribery (aka lobbying) and grand larceny of our elected officials and the coterie of un-elected second fiddles.

  6. here are some good quotes about major league stadiums impact on the economy, so a minor league would have even less impact: A study done by economists Dennis Coates and Brad Humphreys writing for Econ Journal Watch in 2008, here are some important points:

    1. Much of the consumer spending associated with professional sports
    comes out of the entertainment budgets of local residents. When a
    new sports franchise appears in a city, local entertainment spending on
    sports increases and local entertainment spending on other activities
    like movies, bowling, etc. decreases. The effective “local spending multiplier”
    on activities like bowling and attending plays or concerts is higher
    than the multiplier on professional sporting events because the owners
    of bowling alleys, theatres, and restaurants, as well as the employees
    of these establishments, live in the community while the owners and
    highly paid players (who receive a majority of team’s expenditures) on
    professional sports teams generally do not. Since spending on professional
    sports teams substitutes for other local consumer entertainment
    spending and has a lower local spending multiplier, professional sports
    can reduce local income rather than increase it.

    2. No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.

  7. Excellent letter – well said. I messaged (off of the 195 Commission’s Facebook page) the Commission around 3pm to express strong concerns about relocating the PawSox to Providence. On Fenway’s Wikipedia page, there is a paragraph about the 1999 opposition of the community to building a new Park taking away some of the (housing and small businesses) of the tight-knit neighborhood that has supported Fenway. As we know, the owners then ‘found’ a way to expand the existing (built in 1912) stadium that will remain until c. 2060!

    Greg, let’s hope that the powers that be in RI can be wise…

    Peace & Justice, Carol –

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