Rhode Islanders uproot 'greenhouse' plan

Rhode Island voters resoundingly defeated a plan designed to give a new spark to the state's aging, industrialized economy. The proposal - a collection of industrial policies - called for modernizing factories, creating jobs, and encouraging commercial application of academic research.

Tuesday's vote attracted national attention as the debate about industrial policy - government involvement in directing economic activity - has shifted largely from the federal level to the states. Wisconsin, Washington, and others were closely watching the vote because they are considering industrial policies of their own.

Proponents of the Greenhouse Compact, as it is called, say the plan was voted down because of public distrust in government, not because the plan lacked merit. Compact opponents, however, say the $250 million plan would have been very expensive to the state, and would not have accomplished much of what it set out to do.

The Greenhouse Compact received broad support from influential groups across the state, including labor leaders, educators, and many businessmen. After considerable debate and a few changes, the General Assembly approved the compact - but its passage was subject to Tuesday's ratification by voters.

Ira C. Magaziner, a consultant to the commission that drew up the compact, says organized opposition to the compact was not the cause of the defeat. Economic criticism was easy to confront, he says.

But Mr. Magaziner says government corruption at state and local levels has recently bubbled to the surface in Rhode Island. This, along with the assault conviction and subsequent resignation of Providence Mayor Vincent A. Cianci Jr., cast a pall over the compact vote, he says.

''People have become turned off to government involvement,'' Magaziner says. ''It's an underlying cynicism we've been fighting, and it has not been easy to confront,'' he says.

Allan M. Feldman, an economist at Brown University, opposed the compact and offers another rationale for the defeat. He says it was not economically sound, and would ''offer very little to taxpayers. The average voter is very skeptical about a new government program set up to spend $250 million,'' he says.

Most business leaders and state officials agree something needs to be done to revitalize the state's economy, which relies heavily on textile manufacturing and the jewelry industry. Although the state unemployment rate is below the national average, over half of the manufacturing jobs are in industries that will decline in the next decade, says J. Terrence Murray, chairman of the Fleet Financial Group, the state's largest banking company.

Mr. Murray, chairman of the compact commission, notes that wages of industrial workers in the state are the third lowest in the nation.

The compact proposal was released last October and outlined in two books (each the size of a city telephone directory). It proposes modernizing and broadening the state's economic base, and encourages businesses to pioneer new products and markets.

For instance, jewelry manufacturers, facing stiff overseas competition, could easily apply some of their processes to the booming semiconductor industry, says Arthur Markos, the compact's director of operations.

The compact took its name from a recommendation to set up four ''greenhouses'' that Magaziner describes as ''halfway houses between business and industry.'' They would promote research at universities and medical institutions, which could then spawn new commercial products, he says. Robotics and underwater technology research now under way in Rhode Island would be good greenhouse candidates, Murray says.

The compact included provisions to promote job training and grant tax incentives to some investors. It would have provided financing or new management to viable firms that ''temporarily fall on hard times.'' And its authors claim it would have created 60,000 jobs during the next seven years.

The 4-to-1 margin of defeat surprised many. Recent polls had shown the vote split almost evenly between proponents and opponents.