38 Studios Shoe Drops


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This afternoon, Governor Chafee announced the state would be pursuing legal action against not only the officers of 38 Studios, but also the financial advisors and the EDC staff who put the deal together.  I highly recommend reading the actual complaint, but here is the part that stands out for me:

The undisclosed risks included the express admission, made by 38 Studios’ directors and chief executives directly to these Advisors, and by 38 Studios’ own financial projections that were disclosed to the Advisors, that, even with the loan from the EDC, 38 Studios was undercapitalized by many millions of dollars and would not have nearly enough money to relocate to Rhode Island and complete Copernicus, and that, as a result of this cash shortfall, 38 Studios was likely to run out of money in 2012. The EDC Board understood that 38 Studios’ capital requirements to complete Copernicus were approximately $75 million, and that the net proceeds to be lent to 38 Studios would be less than $75 million.  Nevertheless, the EDC Board was also told that the net proceeds 38 Studios would receive, along with other sources of funds set forth in 38 Studios’ financial projections, “would provide necessary financing to relocate 38 Studios to Rhode Island, complete production of Copernicus, and capitalize the company’s growth and expansion in Rhode Island.” In fact, the Advisors knew or should have known that this was untrue, and that even if all of 38 Studios’ financial projections proved true, the net proceeds would not be sufficient to fund 38 Studios’ relocation to Rhode Island and completion of Copernicus.

According to the complaint, the deal was put together against the advice of lower-level EDC staff, according to projections that guaranteed failure by last summer, pretty much exactly what happened.  The complaint also points out all the ways in which the EDC top brass and the deal-makers prevented the EDC board from hearing data to contradict them.  The complaint says the EDC analyst who threw cold water on the proposal was un-asked to prepare his economic analysis, the agendas were manipulated to keep damaging information out of board discussions (most famously by preventing then-candidate Lincoln Chafee from speaking to it, but there are other incidents in the complaint).

So we learn that Governor Chafee was not the cause that sent 38 down the drain.  The cause was wishful thinking by powerful people, who thought that ignoring the lowly analysts was the right thing to do.  By 38 Studios own projections, $75 million wasn’t going to be enough to do the job, and when they found out they weren’t even going to get that much, due to deductions for debt reserve funds, they forged ahead anyway.

The complaint is, of course, just that: a complaint, a set of allegations.  The facts in it remain to be proven, but it seems possible there will be a trial to come out of it.  If so, it will be a spectacular look at how deals are made around here and how illusions of good times ahead can drive sensible people to do silly things.  Having looked at the complaint, I have no doubt that the misfeasance alleged in it was motivated by a desire to see something cool happen for Rhode Island.  (Well, most of it, anyway.)   But purity of motive is no excuse for sloppiness of analysis, a message that is as applicable to debates about polls, climate change, economics, or business projections for a video game company.  It’s a real world out there, and real numbers have a way of biting you in tender parts when you ignore them.

Dems Unite Around GOP Smear Campaigns


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Brendan Doherty demonstrating uncommon integrity

I’m glad the Rhode Island Democratic party is finally coming together to renounce the incredibly negative campaigning the Republicans have been resorting to. Let’s hope the media picks up on this story.

In my biased opinion, it’s the biggest meta-narrative of the local campaign this year, but I think it has a lot of merit for my brothers and sisters in the unbiased side of the industry as well.

Today at 1pm at Slater Mill all the Democratic heavyweights in the state – Sheldon, Jack Reed, Cicilline, Elizabeth Roberts, Gina Raimondo, Mayor Taveras and Ed Pacheco, among others (Langevin will be taping the WJAR debate) to call upon their Republican counterparts to stop slinging mud and start talking about issues.

It seems like every day either Brendan Doherty, Barry Hinckley or their operatives release a new dirty and misleading advertisement. Hinckley was just given a Pants on Fire by Politifact today for an untrue ad. Doherty’s ads make a pants on fire rating seem like a gold star though. They have literally been among the most atrocious I’ve ever seen. AP writer Michelle Smith does a nice job of summing up the ad here. She writes:

House Republicans are airing a TV ad in Rhode Island linking freshman Democratic Rep. David Cicilline to a child molester and a murderer he defended when he was a lawyer two decades ago.

A Doherty spokesman told Ian Donnis of RIPR earlier in the week that the campaign decided to go negative because Cicilline did first. Tim White chided Doherty when he offered this same flawed logic during a WPRI debate, saying, “you’re basically saying he started it.”

I think it’s laughable that Brendan Doherty calls himself a man of uncommon integrity and then runs this kind of dirty campaign. There’s no reason unbiased political reporters shouldn’t be calling out a candidate for such an obvious contradiction.

This kind of gutter campaigning isn’t good for anybody and Republicans should be held accountable for resorting to such dirty tactics. But, I suppose if they had a message that would resonate with Rhode Islanders, they’d be ringing that bell instead.

I Endorse Rhode Island


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Political polemical cartoon in support of the imprisoned Thomas Dorr

I feel unjustified endorsing any particular candidate. But I will endorse a set of principles.

I endorse the principle that the primary notion of government is to carry out tasks that people cannot accomplish on their own. That government success should be measured by the number of people it assists to success (whatever that may be for a specific individual), not the number of people it prevents from participating in its services. The candidates who should be elected to office should be committed to government success, not invested in hampering its effectiveness.

I endorse the principle that holding hostage legislation which would improve the lives of countless thousands to enforce votes on unrelated issues is an ill and a reprehensible evil; not merely hardball parliamentary tactics. As the great Dr. King said, “the time is always right to do what’s right.”

The candidates who should be elected to office should be committed to the abolition of demonstrations of power that endanger our citizens’ well-being and the economic health of our state, and committed instead to the swift legislation of what is right.

Lyndon Johnson Signs Civil Rights Act. July 2, 1964

I endorse the principle that there can be no liberty without equality, and no equality without liberty. They are inextricably linked, in the battle cries of revolutions across the centuries, from those long past to our own to those of the present day. To deny the one is to deny the other. The candidates who should be elected should be committed to improving both, together, not choosing to anoint one over the other.

I endorse the principle that just because we cannot achieve perfection does not mean we should not try. Our government should always strive to be more open, more participatory, more ethical. The General Assembly may never please everyone, but they will not please anyone if what happens inside the State House’s halls remains clouded and cloaked in rumor.

I endorse the principle that every eligible citizen should be able to be elected to government, regardless of their station in life. Government officials should be paid enough to take care of themselves and their families in a prudent manner and they should be undivided in their attention to the work of governing. Likewise all candidates should not fear economic ruin for taking up the civic duty of contesting elections. The health of our democracy is directly related to its openness to all without care of circumstance. Stifle the ability to participate, and you stifle democracy itself.

I endorse the principle that those who make decisions should be held held accountable for the consequences of their actions. If you believe that the resignation of almost all of the Economic Development Council members, the financial ruin of Curt Schilling, and the layoffs of the workers of 38 Studios has rendered all those responsible for the 38 Studios debacle accountable, then so be it. But if you believe there are those who as of yet have not suffered consequences for the results of their actions, then do everything in your power to hold them accountable. We should elect candidates who not only hold our leaders accountable, but also themselves accountable. When they realize they’ve done wrong, politicians should find the fortitude and strength to publicly admit to it and apologize.

Political polemical cartoon in support of the imprisoned Thomas Dorr

I endorse the principle that Rhode Island’s best days are not yet behind it. I endorse the principle that those who take pleasure in our state’s failing are committed to its failure. Those who have no faith in the people of Rhode Island’s collective abilities to succeed are dead weight preventing the rest of us from succeeding. I endorse throwing aside the opinions of such fair-weather residents to unburden the strength of our dedicated citizenry. We are better than the worst of us.

I endorse the principle that no policy or program is sacred or cannot be criticized. All that we do should be reviewed and measured and debated about to ensure we are doing what we intend to do, and not merely living with the status quo because we don’t know if it’s working or not. I endorse electing candidates that value introspection and constructive criticism, especially that of themselves.

I endorse the principle that political participation is a privilege that took centuries to be won for all. It does not end on November 7th. Your phone does not stop working, email does not stop being sent, you do not lose your voice. Politics is not a bloodsport for a few spectators who understand the rules, it is a struggle that encompasses everyone regardless of their comprehension of its tactics or their willingness to participate. You may not be a “happy warrior”, you may be weary of the fight, but your weariness does not make the fight less important. To try and fail is better than never having tried at all.

Battle of Bunker Hill, John Trumbull

Virtually everyone who reads this was born with feet. They can be used to bring you face to face with you problems, to apply swift kicks to asses, and to march and demonstrate when all else fails. Never forget, when you get enough feet in a single place, you can move mountains. This, to me, is the spirit of Rhode Island. Relentless optimism in the face of despair, bravery when one should cower in fear, and hope when all is hopeless. I endorse that.

Progress Report: Gordon Fox Gets Kicked; Gina’s Coffers; Comparing Pay Grades; Pirate Party, Lawrence Lessig


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Gordon Fox’s reelection battle has become one of the most watched contests in Rhode Island, and Ian Donnis yesterday busted out what I think is the best local campaign journalism of the year summarizing his race against Mark Binder.

“Fewer than 9,000 voters will decide one of Rhode Island’s most important elections on November 6,” reports Donnis. He does a great job of laying out both Mark Binder and Fox’s talking points, but the real gem is the audio he gets of Fox going door-to-door.

A voter says to Gordon Fox: “Do you deserve a good, swift kick in the ass?” Fox responds, “To keep me focused, we all do. We all do from time to time.”

The ProJo’s cleanup hitter Mike Stanton follows that up this morning with a pretty good front page overview of his own.

Here’s why Lawrence Lessig is so prophetic: “The real corruption isn’t the total amount of money raised; it’s the total amount of time spent raising money — not from all of us — but from the tiniest slice of the 1 percent,” he tells the ProJo’s Ed Fitzpatrick. Lessig, a Harvard professor, will speak at Common Cause RI’s annual dinner tonight. Hope to see you there!

Speaking of the inherent issue with political fundraising from the 1 percent, Gina Raimondo already has more than $1 million in her campaign account. It isn’t middle class Rhode Islanders who couldn’t afford to to pay for public sector pensions who are making this big donations … it’s the uber rich who know how good Raimondo’s pension reforms have been for Wall Street and the finance industry.

And speaking of the 1 percent, Tim White takes his annual look at highest paid state workers in Rhode Island. It seems as if for the first time in many moons URI’s head basketball coach won’t be the highest paid public sector employee in the state … not that new coach Dan Hurley doesn’t deserve it. The Hurley Bros are gonna turn our program around!! He’s also a lot of fun to follow on Twitter.

And speaking of the highest paid local folks, we looked into the highest paid CEO’s in Rhode Island back in April. Compare their salaries to the highest paid state workers and then consider which jobs are more important to our society. Then compare both sets of salaries to what you might earn, or what the fire fighter or public works employee who saved your ass during Hurricane Sandy might earn. The reality is one of the biggest problems with the way our economy functions is the utter lack of any relationship between pay grade and job importance. This is ridiculously obvious when you consider what the richest Rhode Islanders “earn” compared to the rest of us. But, according to the laws of corporate-controlled capitalism, those who serve the stock market best get the most money…

As I’ve argued before, farmers should be the highest paid sector of an economy that serves the people … and supporting local agriculture should be the most bipartisan issue in America. It’s great for the economy, the environment, health and wellness, real estate values, even local taxing capacity … to that end, support ballot question 6 on Tuesday.

The ProJo editorial board applauds URI for moving its MBA program to the Capital City, and endorses the idea of partnering with CCRI and move its nursing program to the I-195 land to be closer to Brown. I concur.

I have no idea why, but I thought GoLocal’s look at what local pols gave out for Halloween candy was great journalism.

American Pirate Party, anyone? Sounds pretty good to me…

Cicilline’s Big Advantage: He’s Not a Republican


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Yes, the polls show a tighter race than ever. And sure conventional wisdom has it that undecideds this late in the game tend to break for the challenger. Add to that the fact that David Cicilline’s detractors continue to throw almost every accusation in the book at him. But the progressive incumbent still has one big advantage with less than a week to go before the election.

At least he isn’t a Republican.

University of Wisconsin political science professor Tom Holbrook postulates in this post that the reason Mitt Romney isn’t faring better despite what he sees as favorable political and economic conditions for taking on an incumbent is because the Republican brand is so badly damaged.

He writes:

One thing that may be benefiting Obama could have little to do with the standard indicators of national conditions and may have even less to do with either of the candidates or their campaigns. Simply put, I think a case can be made that the Republican brand name is acting as a drag on Mitt Romney’s candidacy.

Is this what’s keeping a president with tepid approval numbers and a still-sluggish economy afloat?  If so, would there be any payoff for Obama to run not just against Mitt Romney but also against the Republican Party in the closing days of the campaign?

Certainly this has been Cicilline’s strategy all along – and why not; us Rhode Islanders don’t generally like Republicans.

If this dynamic is playing out in the Ocean State as Holbrook says it is nationally, then it would likely be reflected in the “wafer thin lead” Cicilline still enjoys … but it might mean that remaining 8 percent of undecideds might break for the Democrat – or the non-Republican – rather than the challenger, as might more typically be the case.