RI Progress Report: Why Do Businesses Move to RI

Happy Easter! Sen. Sheldon Whitehouse, who has become one of the hottest politicians in the country as Congress begins to debate income inequality and corporate control, was on Newsmakers this morning.

Forget about why people leave Rhode Island for a moment and consider why they come here. The Providence Journal reports this morning that even though government still tries to lure new businesses to the Ocean State by lowering taxes and offering financial incentives, these are rarely the reasons that new commerce comes here.

Some really great writing here:

While Rhode Island promotes its tax-rate reductions as an inducement to move here, business owners say such incentives are not uppermost in their minds. Their reasons for choosing a location are complex and multifaceted. Factors include proximity to customers and pools of skilled workers, the existence of good schools and efficient transportation networks, and perceptions about a region’s business climate and quality of life, as well as state and municipal taxes.

Contrast that with decades ago, when the manufacturers who dominated the U.S. economy built factories at the intersection of cheap transportation and cheap labor. Cheap power was a bonus.  That was good for Rhode Island back when water wheels powered factories, when supplies and finished goods came and went by sailing ships, or when an immigration boom made labor cheap.

Cities and states offer tax breaks, loans, free land, job-training grants and all types of financial incentives to woo corporate leaders. They proffer economic rankings they believe reflect kindly on their state –– and poorly on competitive locales. But too often, the efforts of government leaders are wedded to what business owners needed in the past, and not what drives business decisions now.

Trayvon Martin certainly wasn’t the first African American in Sanford, Florida to run into trouble because of his race. So did Jackie Robinson.

“It was 1946 and Robinson arrived in this picturesque town in central Florida for spring training with a Brooklyn Dodgers farm team,” reports Reuters. “He didn’t stay long. Robinson was forced to leave Sanford twice, according to Chris Lamb, a professor at the College of Charleston in South Carolina, who wrote a graphic account of Robinson’s brush with 100 angry locals in a 2004 book.”

Was education consultant Stephen Hernandez, recently hired by Providence for $5 million, responsible for the improvements in Palm Beach County school system? Politifact says he wasn’t.

Another reason for the increase in income inequality and decrease in socio-economic mobility is the Clinton-era repeal of welfare protection laws. But fear not, the New York Times reports that many who would have received government benefits are now turning to the free market:

Several women said the loss of aid had left them more dependent on troubled boyfriends. One woman said she sold her child’s Social Security number so a relative could collect a tax credit worth $3,000.

“I tried to sell blood, but they told me I was anemic,” she said.

Several women acknowledged that they had resorted to shoplifting, including one who took orders for brand-name clothes and sold them for half-price. Asked how she got cash, one woman said flatly, “We rob wetbacks” — illegal immigrants, who tend to carry cash and avoid the police. At least nine times, she said, she has flirted with men and led them toward her home, where accomplices robbed them.

“I felt bad afterwards,” she said. But she added, “There were times when we didn’t have nothing to eat.”