As we think about the potential debacle that
38 Studios represents, it’s worth putting a quarter into the time machine and
revisiting some great moments in EDC history.
This is from a 2009 column I wrote about EDC
(link – scroll
down to “EDC: What’s the point?”). A report had just come out scolding
EDC’s performance, and this was my review of that report.
But what of EDC itself? The
panel complained they were without focus, and alternately complained they
didn’t spend enough time working with already-existing local companies and that they don’t have a
good marketing approach to attract companies from elsewhere. So which one
should the refocused EDC take on? Both, says the panel. That will sure improve
the focus, won’t it?
Some background you might not
remember: Back in the misty dawn of time, EDC was born as the RI Port Authority
and tasked with issuing bonds to develop and preserve the Port of Providence
Why the Port Authority? Simple.
Almost alone among state agencies the Port Authority had been granted unlimited
borrowing authority when it was formed, which EDC inherited. And borrow they
have, for good and for, well, less good. They blew $30 million on Alpha-Beta, a
bio-tech flop, and EDC’s authority was a pivotal part of the deal that allowed
state debt to balloon in order to pay for the I-boondoggle rearrangement of
Route 195. There’s plenty more, including $14 million for the Masonic Temple
hotel project, and $30 million for the troubled Wyatt jail in Central Falls
What’s more, freed from the
state personnel system, EDC was free to pay its executives whatever they
please, and to conduct their business however they pleased. Their executives
could wear good suits, house their operation in first-class office space, and
generally conduct themselves just like the overpaid CEOs they spend their time
with.
This isn’t to say EDC hasn’t
done some good. I’ve written approvingly about the geek dinners they promoted
under Saul Kaplan, its last director, and there have been other networking
initiatives that bore some fruit, too.
But let’s be honest. What’s the point of
EDC at all? In large part, the best things the state can do for the state’s
economy have to do with those essential things that the private sector can’t
(or won’t) do: universal public education; maintaining roads, bridges, water
lines and the like; policing the marketplace; protecting the environment;
facilitating grant-funded research. These are the factors that
could make ours a stronger economy. What an EDC can do will only ever be a
minor effect compared to these others.
This, of course, is a political
problem for the agency because expectations are so much higher than can be
achieved.
What happens at an agency with
such an ill-defined and difficult role? Failure, that’s what. Over the years,
EDC has seen some good people come through its doors (along with the inevitable
few who only look good in a suit) but they’ve been tasked with the impossible.
Their mission has been to make our state’s economy bloom despite the fact that
we are shrinking our investments in our infrastructure, our workforce and our
environment. And what have we seen? Tremendous pressure to do something has
produced ill-considered loans, and nebulous and occasionally laughable plans.
A future EDC or something like
it could play a useful part in monitoring the state’s economy, and in
technology transfer, trying to push new technologies into the market to
advantage local businesses. They could be useful promoting networking and
centralizing some information businesses need.
But our EDC has served mostly as
an ATM for corporations, and as a state-paid corporate lobbyist, pushing tax
cuts in the legislature, oblivious to the effects these cuts have had on
permitting delays, to say nothing of education and bridge maintenance. The
agency needs to be rethought, but the changes must go a lot farther than this
panel envisions.
A correction is in order: the Alpha-Beta deal only
cost the state $4.5 million in the end, since the building was resold.
You could argue that the investment worked in that case, since Dow
Biopharmaceutical used that space, and has expanded since.
The dozen
neighbors we displaced through eminent domain on Dow’s behalf might differ, but
the real point is that the occasional winner doesn’t prove that a lottery
ticket is a good investment. There are investments that will produce a
return and investments that might. Which one would you rather bet on?