Will these deals raise economic 'animal spirits'

  “The Proposition,’’ by William-Adolphe Bougureau (1825-1905).

 

“The Proposition,’’ by William-Adolphe Bougureau (1825-1905).

From Robert Whitcomb's Dec. 22 "Digital Diary'' column in GoLocal24.com.

I admire the very hard and patient labor of Rhode Island Gov. Gina Raimondo and her colleagues (presumably working with Providence Mayor Jorge Elorza’s administration) to bring some highly respected companies and quite a few jobs to Rhode Island.

The biggest recent employee hauls, all slated for Providence, will be hundreds of jobs (to start) coming to Wexford Science & Technology’s project in the 195 relocation area; 300 at Virgin Pulse (maybe in the Providence Journal Building); 100 at General Electric, and 75  at Johnson & Johnson. The hope is that those well-paid employees will be just the beginning of thousands of well-paying ones arriving over the next couple of years. (City and state official are apparently still working to bring in some Pay Pal operations, too.

We’ll see.

It was gratifying that J&J cited the presence of Brown and RISD as a reason for the project. The state hasn’t gotten nearly enough leverage from its higher-education establishments, or from its proximity to(and lower costs than) the brainiac center of Greater Boston.

A lovely change from  the 38 Studios approach.

Of course, the new arrivals will each get millions of dollars in “tax incentives’’ to come to Rhode Island -- incentives that everyone else must pay for. Such incentives are the rule in every state to varying degrees. Two big recent examples – Indiana (pressed by Donald Trump) bribing the Carrier Corp. to not send 800 jobs to Mexico and Massachusetts giving many millions of dollars in goodies to General Electric to move its headquarters to Boston’s waterfront.

Companies that have loyally stayed in their states and paid taxes there without special favors must be irritated. But life is indeed unfair – and probably getting more so. The rich get richer and the poor get…. Get used to it, especially over the next four years.

 

The idea behind the legal bribery is that not only will these big, rich companies bring in new jobs in themselves but they’ll give many  local vendors a lot of work and thus incentives to hire more people. That means not only vendors already in the area but also new ones coming in to serve the big shots.  The old “multiplier effect’’.

And just by having such prestigious enterprises in Rhode Island as the ones lured by the Raimondo administration, it is argued, will boost the “animal spirits’’ of  local and other business people and investors about Rhode Island.  The hope is that such optimism/local pride will then help create, or lead to the  import of, more enterprises, in a virtuous circle.

Will this work enough in all too cynical and negative Rhode Island to turn around the state for the long term? Who knows for sure, but I give a lot of credit to Ms. Raimondo and her staff for their labors while being denounced from all sides by those who provide few if any practical alternatives.