“Those who pay the bills, make the decisions.”
Rhode Island’s political leadership yet again endows itself with more power to control, buy, and politicize nearly every business in Rhode Island. The new Ocean State WAVE ‘economic development’ plan empowers politicians with more rights than ever before to use taxpayer money to advance those businesses willing to play ball with politicians, while putting at a huge disadvantage those who will not.
Rhode Island is the Crony Capital of America
In order to avoid the inconvenient process of getting voter approval to hand taxpayer money to those businesses politically connected in Rhode Island, the leadership of the Ocean State has for years, and continues to this day to push moral obligation bonds for companies such as 38 Studios. These bonds conveniently obligate Rhode Island taxpayers to the risks taken by millionaires like Kurt Schilling, without the legal hurtle of asking permission first.
Apparently the political leadership in Rhode Island believes 38 Studios and the debt it placed on every man, woman, and child in the state for decades was a good idea, and the Ocean State WAVE program brings more of the same for generations to come. The intent of these programs is to subjugate as many businesses as possible to the whims of politicians by attempting to make cronies of every business leader in RI.
Why Cronyism is Extremely Dangerous
Successful businesses do one thing well – make money. Successful politicians do one thing well – acquire power. In a free and proper society, these two competencies are not embodied in the same entity because they are ethically and operationally opposites.
For a business to effectively make money in a fair society, it must earn the trust of consumers and offer something of value that others will voluntarily purchase. Conversely, for a politician to effectively acquire power, he or she must exchange what they possess of value, which is not a product or service but coercion. A politician focused on acquiring power is most successful when they apply a fraction of the truth to favor the needs of the special interests that support them, and as opposed to voluntary interaction, the politicians lease to their ‘consumers’ their exclusive right to initiate force against citizens.
Either entity; the business owner or politician, cannot do much to control free people as long as one does not combine competencies with the other. Therefore, the more government coercion is separated from corporate interests and money, the less opportunity both entities have to force the risk and burden of investment on consumers.
Cronyism is extremely dangerous because it combines the coercive power of government with the money making power of business. The result is what Rhode Islanders are seeing today with 38 Studios, in which the financial loss taken by millionaires is shifted to families and the poor, made possible only by government and its exclusive right to initiate force against anyone who they do not favor.
The Ocean State WAVE Plan is 38 Studios on Steroids
When politicians and businesses combine power, the result is corporatism. As opposed to only occasionally placing the risk of doing business on Rhode Island families as was done with 38 Studios, Gina Raimondo and her disciples in the RI General Assembly are seeking full corporatism with The Ocean State WAVE initiative. Corporatism is defined by the Merriam-Webster dictionary as, “The organization of a society into industrial and professional corporations serving as organs of political representation and exercising control over persons and activities within their jurisdiction.”
Corporatism apparently is the goal of the RI political leadership.
Gina Raimondo and those in the Rhode Island General Assembly who support the Ocean State WAVE program are corporatists seeking to make cronies of as many businesses as possible in RI. To understand why this is the case, it is necessary to look at the different elements embodied in the plan:
The Ocean State WAVE Small Business Cronyism
The easiest way to create dependency is to influence people when they are most vulnerable. In business, this is of course at the onset of operations. Rhode Island politicians want small businesses to understand who they owe as they mature in the market. By using tax payer dollars and a plan such as the Ocean State WAVE, politicians immediately buy influence with any company just starting out in a simple exchange of taxpayer dollars for a debt to be paid off later.
As stated in the WAVE plan, Rhode Island politicians are to create “a Small Business Assistance Program and an Innovation Initiative to expand access to capital so that small and growing businesses can thrive in Rhode Island.”
Consider this. Rhode Island politicians wish to “expand access to capital” to small businesses with whose money? Taxpayer money.
There is no lack of people willing to invest in a business that truly has potential. Every day venture capitalists, angel investors, banks, individuals, and the myriad of online funding resources invest capital into those businesses and ideas deemed worthy. Those people take the risk knowing the potential reward and loss.
Politicians are not investors; they are brokers of influence and power funded not by their money, but the earnings of taxpayers. Taxpayers who must simply have faith the dealings are both wise and devoid of corruption . . . in Rhode Island - one of the most corrupt states in the Union.
Sound like a recipe for disaster? It is.
Small businesses need help, most will fail after a few years. It is un-American and wrong to force anyone to share in this risk, particularly taxpayers in one of the highest taxed, worst economies in the country. Small businesses that succeed have a solid business plan that convinces investors to voluntarily risk their money and capital on an idea. A politician empowered with other people’s money will never have the intelligence, caution, or knowledge of an industry and market to make such decisions, particularly in Rhode Island where trust in politicians is rightfully absent.
The Ocean State WAVE Small to Medium Business Cronyism
If a business is somewhat established, the ownership may resist an exchange of taxpayer money for influence in their business practices. What is a politician to do? These business people are the hardest to break. They worked hard, likely risked it all at least once, and made something more of their lives. They have nothing to gain and everything to lose each time a politician attempts to regulate and control their business and industry.
Yet if a business is to grow, it must innovate in some fashion. To innovate, business leaders must risk capital, and many innovations, like many small businesses, fail. Enter the Ocean State WAVE “Small Business Assistance Program” and the ”Innovation Initiative” intended to expand small to medium size businesses’ access to capital with Rhode Island taxpayer earnings.
Again, it is wrong and in conflict with the principles America was founded to place this burden and risk of innovation on taxpayers. If an innovation is worth making an investment, one of the thousands of investors locally, nationally, or online would take the risk. Not only is it wrong to place this burden on taxpaying families and endow politicians with this power, it isn’t even necessary when a case can be made for investing in an idea simply by typing it out on a website such as GoFundMe, Kickstarter.com, and IndieGoGo.
The Ocean State WAVE Large Business Cronyism
Large businesses are slow to innovate and are often starved for cash. This of course is a huge opportunity Gina Raimondo and those who follow her in the RI General Assembly cannot pass up. Enter the Ocean State WAVE taxpayer handout to these organizations by way of “Competitive Sector Grants” and “Anchor Tax Credits.” These grants and credits of course are the bulk purchase of influence by politicians endowed with the power of billions of taxpayer dollars.
Not only do these grants and credits put other large businesses in our state at a financial disadvantage, it strongly discourages smaller competitors from continuing to operate or enter the market in the first place. The result is the expansion of the anti-competitive, anti-consumer environment that is so prevalent in Rhode Island.
There is no room in the Rhode Island budget to give tax breaks and handouts to anyone, particularly some of the largest payers. There is also, and obviously, no real desire in the RI General Assembly to cut spending. Therefore, any tax credit given to the politically connected in Rhode Island, shifts that burden to the taxpayer including those families struggling to make ends meet.
If these large businesses supply Rhode Islanders with goods or services needed, RI consumers will buy them. If they do not, they won’t. The choice should be the citizens, not politicians. The Gaspee Business Network understands people do not need to be forced to pay the tax bill of any business. If the tax burden is too high, the only fair policy is to lower it for all businesses, which is the ONLY way to maintain a non-political, level playing field.
Allowing Rhode Island politicians to pick winners and losers in the market will only result in more corruption and waste in RI.
The GBN is Fighting Back
The Gaspee Business Network advocates for an incorruptible business and political process in Rhode Island. The Ocean State WAVE plan creates a purely political economy in Rhode Island in which consumers suffer, jobs are scarce, and good businesses flee. We are the incorruptible voice of business in Rhode Island, but we will not succeed to save RI from a purely political economy until all businesses look at the big picture and the type of world they want to leave their children. We as business owners have a responsibility to know our value system and to act upon it. We are the pillars of a prosperous and free society.
To do this, we must ask:
Do we hold the value of “free” money over control of our future?
Do we hold the idea of a level playing field for us and future generations over a favorable playing field today that may or may not exist tomorrow?
Do we want the same freedom for our children to take an idea and turn it into something they love as we did in our career?
From the smallest of businesses to the greatest of conglomerates, people make businesses what they are. Leaders must act according to the principles they know and understand. “There is no such thing as a free lunch” is no less true today than it was a hundred years ago.
It is imperative that businesses join the GBN and pledge support for a prosperous and fair tomorrow for everyone.