It depends. Although the impending deficit means that things will get worse before they get better, the view of the future divides into two camps.
The optimists think the state’s short-term woes obscure positive changes that are setting the stage for a brighter future. Like the Greenhouse Compact before it, the EDC’s Economic Growth Plan 2008 targets the creation of more high-wage jobs and a strategic repositioning of the local economy.
Skeptics, however, think the state continues to nibble around the edges of real change, and that Rhode Island’s longtime status as the economic sick man of New England will persist without more dramatic action.
The making of a mess
Helped by a boom in housing and construction, Rhode Island was faring relatively well when Republican Donald L. Carcieri, a retired businessman-turned-politician, vaulted into the governor’s office in 2003, touting an upbeat vision of making the state a jewel among the New England states.
According to URI’s Lardaro, however, the seeds of the state’s current woes were planted when Rhode Island transitioned in the late ’80s from a manufacturing-based economy to one focused on services and information.
Because of a lack of local high-tech expansion in the ’90s, the state was hit relatively lightly by the dot.com bust, but the bill has finally come due, Lardaro says, for an imposing triple-whammy: a lack of long-term economic vision; high government spending; and a nationally uncompetitive cost-and-tax structure.
Due in part to the national economic slowdown, which has exacted a harsh local toll through the housing slump and the foreclosure crisis, Rhode Island’s economy deteriorated though 2007.
Judging by Lardaro’s Current Conditions Index (in which a rating of 50 is neutral), the state’s economic activity measured a nightmarish 8 for each of the first three months of this year — the first such span since the index was created in 1983. By way of comparison, the CCI’s top annual value in recent history was an 81 in 1997, compared with a 66 in 2003, 63 in 2004, 57 in 2005, 54 in 2006, and 40 in 2007.
Brown University political science professor Darrell West offers a similar view in explaining Rhode Island’s economic problems.
“The state never came up with a coherent long-term economic development strategy,” West says. “The Greenhouse Compact attempted to, but it was overwhelmingly rejected by voters. Since then, most of the economic development plans have been piecemeal.” And though the state has tried at times to nurture a particular industry or to focus on other areas of economic development, “there hasn’t been a lot of follow-through.”
Divided by their sparring stances on such issues as taxation and the appropriate level of social spending, liberals and conservatives in Rhode Island are united by a growing and palpable sense of frustration.
Writing last week on the conservative blog Anchor Rising (anchorrising.com), for example, Donald B. Hawthorne said, “As someone who had led corporate turnarounds for nearly 20 years and has read extensively on what it takes to lead successful change initiatives, it is appalling how little progress has been made to effect real change in the face of the current crisis here in RI. It’s not like these structural problems are a new development!”