But don’t take my word for it, watch this video that explains how the real job creators are the middle class:

Businesses (not even necessarily rich people in general) create jobs when it will help them make more money … not when they have extra money. Most smart people spend their money because it is in their best interest to do so, not simply because they happen to have more of it in their pockets.

Businesses will create more jobs when consumers want or have the ability to consume more of their goods and services.  Simply giving the affluent more money, either in guaranteed loans or tax breaks, doesn’t seem to be working for Rhode Island. Hopefully, our elected leaders will realize this before things get any worse here.

(via Wikipedia)

With all of the financial trouble coming out of Curt Schilling’s 38 Studios, quite a number of Rhode Islanders are probably justified in saying “I told you so.” And probably another bunch aren’t justified, but are saying it anyways. But here’s the thing, beyond the “things worked out the way I said they would” factor, do you actually feel good?

I don’t. I can’t rejoice in this turn of events. I certainly doubted the feasibility of it, but I wanted those doubts to be proven wrong. Was anyone truly hoping that 38 Studios would fail? They shouldn’t have been. Success would’ve been sweet.

But the problem remains that this was approved in the first place. It shouldn’t have been. You can practically hear the thoughts that were running through our politicians’ heads; World of Warcraft makes gazillions of dollars. Imagine if we could get in on it. You can see how easily that temptation could sway people to advocate for this sort thing, especially if they’re almost entirely unfamiliar with the world of video games except that it makes a ton of money. Notice that the national press rarely plays up the gaming industry’s flops, instead focusing on the amazing successes of games like World of Warcraft and Call of Duty. Does anyone but gaming media focus on failures of titles like Sonic Unleashed?

What’s becoming increasingly apparent in all this is that large swathes of our government are suckers. It’s bad when they get swindled by the Institute for International Sport, or when a Major League Baseball pitcher comes along offering to create a World of Warcraft-killer. It’s bad not only because it costs the state tons of money, but also because it undermines the credibility of our government.

It’s surprising how much incompetence a credible government can get away with (acquisitions by the U.S. Defense Department come to mind). Rhode Island doesn’t have the luxury of having a highly-credible government. We’re perceived (wrongly) by even our own citizens as being exceedingly corrupt. Know-a-guyism remains a powerful tool for success. And then you see our politicians fall for prestige projects like the Institute for International Sport or 38 Studios.

What remains astounding to me is just how little of the beauty of Rhode Island our politicians see. Take our small business community. These are some of the most vibrant, interesting, and truly dynamic businesses in our state. And yet, they face a hostile business climate almost completely aimed at cutting them off at the knees. They’ve received almost none of the help that GTECH and 38 Studios got.

That’s a huge issue here. Our politicians are overly focused on luring outsiders to the state through sweetheart deals, instead of focusing on what actually attracts people to Rhode Island; its culture and people. People are truly enamored with Rhode Island, how much art per square mile we pack into it; how much food we create. Our quirky small businesses are the ones doing all the work to find new economic niches, and they get nothing for it; not even recognition. Instead of focusing on making Rhode Island function for the people who already live here, we’re attempting to forcibly graft large outside businesses onto it. We can’t compete with the lumbering bulls.

Instead of playing to our strengths; our small size, our access to the ocean, our cultural dominance, and even our agricultural production; the economic “plan” for Rhode Island seems to be find big company and lure big company to move here. We must work to create a better climate; some of that will mean attacking laws that stifle innovation, such as the ones that make Rhode Island one of the most hostile states towards cooperatives. And occasionally, this will mean guaranteeing loans for businesses. Some have criticized this as “picking winners and losers.” But perhaps that would be all right, if the winners weren’t always outsiders, and the losers weren’t always Rhode Islanders.

Some pretty intelligent political and business types came up with the idea of giving the hard throwing Mr. Schilling $75 million to move his video game business to Rhode Island. Initially, a number of folk questioned this move but eventually their doubts were set aside and it was full speed ahead for 38 Studios.

Well, we all know what happened. The 38 Studios project appears to have fallen on hard times. Many in R.I. are asking why? Others are pointing fingers and assigning blame. I think all of this is a waste of time. The real question that needs answering is this: what did you think was going to happen?

You’re telling me that a bunch of business types got together and the best they could come up with was – let’s try the retired baseball star with little or no real business experience. How did this ever get by the Board Room? The equivalent would be having the highly respected business leader Gary Sasse being selected to start the 7^th game of the World Series. Not gonna happen.

I’m hoping that somehow we will be able to sort all of this out. R.I. (and the country) is in the midst of a difficult financial crisis. We’ll need smart people making sound business decisions to help navigate us through this mess.

I’m wondering if the ghost of George Herman Ruth is trying to get back at the Red Sox. Basically, the Curse Of The Bambino R.I. style. The Sox got off to a difficult start this year and now 38 Studios. This possible explanation makes as much sense as anything else we’ve been hearing.

Curt Schilling is obviously a pretty bright guy. He is an insightful baseball analyst. But maybe not an astute business leader. While he extolled the virtues of 38 Studios it was a number of local politicians and business leaders who bought into the concept. Now it appears as if the Ocean State has its own ‘Green Monster’ – only this one is financial.

I recently read that gambling revenue is our state’s third highest source of income. Did you ever think that this and supporting 38 Studios would be among our best bets? I am sure we can do better than this. I am sure we can find ways to support our schools, promote real economic development and create an atmosphere of trust and cooperation amongst our political leaders. Right now its nothing but goose eggs. Not only are we experiencing a major financial problem we are also experiencing a leadership crisis as well.

The Democrat from Providence submitted on Thursday “a joint resolution of the House and Senate on Thursday rejecting the order’s assertion,” according to the Projo.

Marriage Equality Rhode Island responded to the filing with a press release saying:

“Gov. Chafee’s executive order sent a powerful message that all Rhode Island families should be valued, respected and treated equally under the law. It’s a sad day for our state when members of the Senate would introduce a resolution whose ultimate purpose is to strip Rhode Island citizens of their civil rights. Sen. Ciccone’s position is indefensible, and we urge the members of the General Assembly to reject this outrageous assalut on equality, common sense and fundamental decency.”

A bill that would legalize marriage equality has not yet been heard by a Senate committee yet this year, and its chances are looking increasingly grim with some hoping to be done with the session by June 1.

Chairman of the Judiciary Committee Sen. Michael McCaffrey does not support the bill, but I haven’t yet asked him if it would at least have a hearing.

Ray Sullivan, of Marriage Equality Rhode Island said he hasn’t heard if there will be a hearing.

We haven’t been told officially or definitively whether or not we’ll receive a hearing on our legislation,” he said in an email. “That being said, we would not be surprised if the Senate did not schedule hearings.”

“Cities that make a commitment to walkable and bikeable living are healthier cities, with a more dynamic and engaged quality of life,” Taveras said. “The Bicycle and Pedestrian Advisory Commission will move Providence forward in our efforts to make biking and walking more regular modes of transportation for more of our neighbors.”

The five-member Commission, who will be appointed by the mayor, will study:

• Changes in laws concerning bicycles and pedestrians
• Coordinate cooperation on bicycle and pedestrian matters
• Advise the public and the City on matters affecting the relationship between bicycle and pedestrian transportation and parks, schools, transit stops, and other major facilities
• Incorporate bicycle and pedestrian planning in the City’s Sustainability Action Plan.

The Department of Planning and Development will provide administrative support to the Commission.

The CEO governor billed himself as having the business background necessary to boost the economy and create new jobs. But as it turned out, Carcieri was the worst steward of the state’s fiscal situation in a generation or more.

He’ll now be forever remembered as the one who wanted the now-infamous guaranteed gamble/guaranteed loan to 38 Studios which seems almost guaranteed to fail. And this comes on the heels of Rhode Island finally recognizing that his aid cuts to cities and towns simply pushed the burden onto local property taxes, an added expense that the poorest cities in the state couldn’t withstand.

Carcieri’s credibility is literally vanishing before Rhode Island’s eyes.

Almost as soon as mayors and media pundits started to blame Carcieri’s cuts for the financial struggles of our highly distressed cities, his swan song and biggest economic achievement, the dreaded 38 Studios deal, seems likely to enter the annals of fiduciary disasters.

The last guy to cause Rhode Island so much fiscal pain was Joe Mollicone, and he only made off with $13 million. Carcieri’s got that beat more than five times over. In fact, Carcieri’s ill-fated decision to invest nearly $100 million in an ex-baseball player’s ability to develop video games could cost the state about a quarter of what it saved on pension reform this year.

Speaking of which, there are those who blame Carcieri for exacerbating the pension problems in Rhode Island, too. When he laid off state workers, he drastically reduced the number of people paying into the retirement system while more people were retiring than ever.

One has to wonder what Carcieri was thinking – I mean, I can’t imagine he would have made this loan when he was working in the private sector at Old Stone Bank so why did he do so when he was working for the public sector? Was he star struck by Schilling? Is he a secret video game junkie? Did he actually think this was a good deal for the state? Of course hindsight is 20/20, but it seems the only thing that makes sense is that Schilling sold him snake oil.

Ironically enough, prior to the 38 Studios debacle, Carcieri’s biggest public blunder was having the Narragansett Indians beat up for not paying taxes on cigarettes they were selling while opposing their efforts to develop a casino. But a casino would have generated twice the number of jobs as 38 Studios and the taxes the smoke shop owed paled in comparison to what Carcieri invested in 38 Studios.

It’s all evidence that CEO’s don’t necessarily make for good government leaders. The two jobs just aren’t the same. Carcieri was a great executive (and he’s a really nice guy) but he was a disaster as a governor. It will be interesting to see if he remains a visible part of Mitt Romney’s presidential campaign. Romney, another CEO governor, had the good sense to at least act like a moderate while he was the governor of Massachusetts. Carcieri never seemed to realize that politics is the art of the possible, not of the ideological.

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. When the Navy pulled out of Quonset, the Authority’s authority expanded there. Then, in 1995, when Governor Almond decided that the state’s economic development apparatus should no longer be a department of the state, he laid off the entire department, and transformed the Port Authority into EDC.

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.

In a post this morning, RI Future predicted this would happen.

Here’s the statement from Governor Chafee:

Yesterday, Keith Stokes offered his resignation as Executive Director of the Rhode Island Economic Development Corporation (RIEDC), which I accepted.

I thank Keith for his service to Rhode Island, not only at the helm of the EDC, but also as a former Board member of that agency and as the long-time Executive Director of the Newport County Chamber of Commerce.

Keith is committed to seeing Rhode Island succeed and I am confident that he will continue to be very involved in the state he loves.

He pushed for the hugely risky deal and even begged at least one lawmaker not to propose legislation that would have protected taxpayers from the exact danger they are faced with today.

According to the Providence Journal this morning, Rep. Larry Ehrhardt, a North Kingstown Republican, was all set to introduce a bill that would cap the guaranteed loan program that Schilling and 38 Studios benefited from at $10 million per company. 38 Studios got a now-infamous $75 million loan from the program.

“He pleaded with me not to submit the amendment,” Ehrhardt is quoted as saying in the Projo this morning. “He basically said it would upset — and he did not name 38 Studios because none of us or very few of us knew about 38 Studios at the time. His words were something to the effect that it would upset a transaction they were working on …, and I said to him, as a gesture of good faith and trust, I will withdraw the amendment.”

In fact, initially the loan program was only supposed to be for $50 million, but Stokes lobbied to increase it to $125 million. In a fantastic 2010 Projo article, that details how the deal was put together, Stokes is quoted as saying that 38 Studios “shared with us that their capital need was approaching about $75 million. As we started to feel 38 had some legs I went to the leadership and said ‘Why not look at the $50 million and add $75 million’?”

Stokes also seemingly misled Rhode Islanders about the viability of the deal. In 2010, he wrote, “Independent industry and financial experts performed an extensive analysis of the interactive entertainment sector and 38 Studios. Based on months of due diligence, the board then crafted an agreement that includes strict performance milestones 38 Studios must meet and that goes to great lengths to safeguard taxpayers and ensure economic performance. It was the right call at the right time…”

But according to the 2010 Projo article, it was – at best – risky. Here’s an excerpt from that article that speaks to the “due diligence Stokes was referring to:

Strategy Analytics, one of two companies Stokes hired to do the work, said in a letter to the EDC it could do the work within three weeks, a timeline it considered “aggressive.”

In their reports, Strategy Analytics and Perimeter Partners each noted the difficulties of pulling off Stokes’ plan to use one company –– 38 Studios –– as the “anchor” to attract other similar businesses.

The analysts pointed out that Schilling’s company had no sales yet and planned the release of its first game in 2011 and a major multiplayer online game some time after that. “One major difference with Rhode Island’s effort, as we discussed, is that most clusters that bring in ‘anchor’ tenants are established revenue-bearing entities that are producing titles,” wrote Barry Gilbert, of Strategy Analytics.

Many states are trying to create clusters of video-game companies, the reports said. And the cluster strategy takes time –– a decade or longer to develop, Gilbert noted.

Also, there will be competition in the marketplace when 38 Studios releases its multiplayer game, the report stated. Five other companies plan major video-game releases between the end of 2010 and 2012, when 38 Studios plans the release of its multiplayer game, the analysts said. Among the new games will be World of Warcraft: Cataclysm –– a sequel to the dominant multiplayer game, and another based on the “Star Wars” movie series.

“With a large single focus, [the multiplayer game] 38 Studios will have little wiggle room upon release –– this is analogous to an ‘all in’ hand in poker,” stated in the analysts report.

The EDC also was aware of a separate study by Economists Incorporated, commissioned by the video-game industry trade group Entertainment Software, that showed more than 32,000 people directly employed by video-game publishers and developers in 34 states. The study estimated the video-game industry added $4.5 billion to the U.S. economy in 2009.

Keith Stokes is a good man and a good public official. But he pushed too hard for this deal that was too fraught with risk. And as the old saying goes, those who live by the sword should be willing to die by it.