Saturday, March 18, 2006

Why the Oregonian Doesn't Get It: Missing the Big Story

Friday, the Oregonian stumbled onto the big story of why Portland’s style of government is not working, and true to form, the newspaper missed it. First, if you think your St Patrick's Day hangover is bad, wait till you see the hangover from the South Waterfront deal. The city still hasn't faced the true nightmare: We’ll be asked many times in the future for more money for this project, if these plans are going to be fully realized. It’s a case of, “Help us now, in exchange for promises we can’t keep, and then help us with those, too.” The tram budget gap is chump change compared to the rest of the budget shortfalls, and guess who they’re lining up to be the chumps?
So where is the big story? How did the Oregonian bury the lead here?
I believe it’s halfway through Friday’s piece about the tram deal when this paragraph shows up:

“While no additional cash would come from North Macadam Investors, the company would promise to pay the city if the property taxes didn't materialize. But with condos selling swiftly and land values rising, some commissioners said they don't feel the guarantees are worth much. But Williams disagrees. If the interest rates spike and the condo market tanks, he could be forced to give up his land to the Portland Development Commission.”

Did you notice what’s refreshing in that? There’s an actual reference to market factors here. See, with these commissioners, there is no real connection to the marketplace. When one of their plans goes wrong, they’re not driven out of business. They just merrily move onto the next boondoggle. Do you see how the commissioners react to the warning of a downturn? Not with the fear of a businessman worrying about all contingencies, but with the relaxed confidence of someone who can’t lose.
That’s what’s wrong with city government in Portland. You have a bunch of politicians making decisions about private businesses but they don’t face any business consequences. The marketplace does not apply to them, so they are free to inflict their visions, no matter how awful they turn out to be. Meanwhile the Oregonian thinks the basic city-business partnership model works. This current drama in South Waterfrnot is just an abberation from a winning style. Do you know why the Oregonian can afford to think that? They don't face the consequences of these bad ideas, either. This tram story has been nothing but gold for them. It's good copy and there's no competing daily to challenge their version of reality.
Wait, it gets worse: Not only is the city council unaffected if some terrible financial idea like PGE Park blows up on them, but their intrusion into the marketplace is actively distorting true business realities and hurting everyone else. Shouldn’t hospitals compete without the government siding with one of them, on a massive level? Maybe a more worthy effort could have thrived without the unfair competition. That’s the big story of what’s wrong with Portland. We’ve got commissioners playing in the sandbox of the marketplace, and when they do something wrong, we’re the ones who have to stay after school. That is, if the school hasn’t already been shut down.

13 Comments:

At 12:35 PM, Blogger Torrid said...

once again, to say that "Portland's style of government isn't working" is so absurd as to render the entire rest of your post thoroughly in-credible. It works better than any other major city government I've ever been affiliated with or witnessed, and the amount of interest and leverage in getting private enterprise to commit to working within publicly favorable scenarios is something many city governments simply don't do. The alternative used in many other cities, is blank checks for developers to use as they wish, however they wish.

Further, reaching the conclusion you did based on the section you quoted is strange to me. What the Council is saying there is that the developer's promise is an easy one, and therefore insufficient as grounds for not putting up more money for the tram. Isn't getting the benificiaries of the tram to pony up the extra money, what we WANT Council to do?

Being vigilant for the possibility they might later cave and kick in more City money is a good thing. I'm sure you'll help us keep an eye on that. But taking them to task so vigorously for trying to get more money out of the SoWa developers...that I don't get.

 
At 2:11 PM, Anonymous gorok said...

Bill:

Pay no attention to torrid. He's probably on the take. (teehee)

In general, American gov't at all levels is power and authority with little to no accountability and responsibility. The lobby, expense of getting elected, and sheeple's willingness to swallow propaganda perpetuate the problem.

I say bring back the guillotine.

 
At 2:22 PM, Blogger Bill McDonald said...

I pointed out the paragraph as the first mention I've seen lately of market forces. The commissioners never seem worried about these missing funds the way someone whose economic future depends on them would. Try reading it again now that you know that part.
I'd also like an example of a city government giving a developer a check - let's say for 250 million -
and saying they can use it "as they wish, however they wish." What city did that happen in?

 
At 3:39 PM, Anonymous Anonymous said...

Good post. Very tame.

I think torrid's argument is consistent with government authority to go through the yellow pages and arbitrarily line out a big list of individual businesses, on the whim of the then-elected officials in government. It is a belief that knows no limits beyond whim . . . it is by definition support for arbitrariness.

It is exactly the same reasoning that company X would need to maintain a government sanctioned monopoly. It is not competitive-capitalism that is the problem here but the arbitrary exercise of government power that is the problem.

I sure hope torrid is not in a position to actually act on his beliefs. He seems to believe that all ownership and control of any enterprise should be through government, thus political chummineess and back patting would fully replace private responsibility for errors in business judgment.

His hyperbole is surely candid.

--pdxnag

 
At 9:25 PM, Blogger Torrid said...

"I sure hope torrid is not in a position to actually act on his beliefs. He seems to believe that all ownership and control of any enterprise should be through government, thus political chummineess and back patting would fully replace private responsibility for errors in business judgment."

I beg your pardon? Talk about a strawman out of left field!

As for handing out checks--the DC government just ponied up as much as 500 million to build a stadium. I have no confidence in their concern for the citizens of Anacostia, overwhelmingly poor and tenants of buildings ripe for condemnation. Refer to the development of Chavez Ravine for a classic historical example.

On your view of the commissioner's comments: what were they doing when they discussed the market forces driving over half of the budget estimation failure--steel prices? It's magnificiently ironic to be labeled hyperbolic, when you're the one saying things like the City doesn't work and the commissioners don't consider market forces. It simply doesn't hold up under scrutiny, and it makes you a ranter instead of a critic, IMO.

 
At 10:04 PM, Blogger Bill McDonald said...

Torrid,
Your comment for the blank checks was "as they wish, however they wish." Obviously, the money was earmarked for a stadium. They didn't say here's 500 million, do whatever you want with it. That, by the way, is the exact figure I've heard that Portland is really investing in the South Waterfront district, when you add all the tax breaks, etc... As with the stadium, the arguement is that the whole city will benefit from the small faction of the city who gets these handouts. It actually sounds quite similar to what we're doing.
I can't believe you don't get my point about the commissioners not being in the same position as a private business owner whose decisions can mean going out of business. I'll have to let that one slide.

 
At 11:01 PM, Anonymous Anonymous said...

torrid,

I can handle a more complex rebuttal than the useless claim of strawman.

Go take a course on Comparative Economic Systems. There are various analytical tools for comparing economic systems, among them are dynamic efficiency, equity, etc. Each of them, as part of the process of enabling comparison, involve isolating out the naming that someone may slap onto their belief.

Go take a series of courses on economic development from the perspective of lesser industrialized countries. Then try applying the lessons to local politics here and you will find some fun stuff to compare and contrast.

I have already gone through the phase of thinking that all things capitalist are somehow evil. This was many years ago. I think it is safe to say that you could and should continue your inquiry further so as to try to understand the interplay between government and citizen. If you have ended your inquiry, then that leaves you at a disadvantage in presenting your case.

Please retreat from the abyss. The single most defining difference between government ownership and control and that of private ownership and control, isolating out free market stuff, is that of the sovereign power to criminalize activities and impose taxes by force of law. The partnership of government and business can be linked in two ways. A local private outfit can corruptly take over a local government to suit their private interests. Or, a local government can take over of local private outfit and redirect the benefits of that outfit to someone else. The result is much the same, in destroying the public purposes of government, even if the list of winners and losers may be different. Both interfere too with the simple economic calculations of one private person trying to meet the needs of individuals, based on the notion of consumer sovereignty.

I vigorously oppose monopoly. I will not buy any argument that private monopoly somehow becomes good if it is the government that is the monopolist. This is just a simple principle.

Please try to make an argument that is intended to persuade. The original post here was so tame that your indignation stands out as rather odd. The thing that interests me is why you might take offense that the argument was made. I am ready to glean your arguments for clues that fit within the battery of arguments that I have exhaustively explored in my study and experience.

It was the O that tried to preserve the model of public-private partnership. That model and its' validity and failings is the issue, as presented by the O.

--pdxnag

 
At 11:48 PM, Blogger terrance said...

You're right that the City doesn't worry about failure.

Look at the Water Bureau billing. If a private utility screwed up billing like that the Public Utilities Commissioner would require an immediate fix of the system and compensation to those who were unfairly billed. But, not the City. It can do whatever it wants because either ratepayers or taxpayers will be forced to fill in the hole sooner or later. And neither the Public Utilities Commissioner nor anyone else can force them do differently. Imagine what the City Council would be demanding if it had been PGE which had screwed up its billing system. But since it is the City that screwed up, this is just another Oops!

Or how about not caring for basic sewage pipe repairs so that 660,000 gallons of sewage spill into the Willamette last September alone. Another Oops! Oregon DEQ has levied a fine of almost $550,000--which the City has appealed. If it wins the appeal, the only loser is the public which has had hundreds of thousands of gallons of sewage soiling the Willamette and other area waterways. If it loses, the ratepayers or taxpayers will pony up.

If you have sources of information who actually work in City government (which I do), it's amazing to hear what goes on.

 
At 11:51 PM, Blogger terrance said...

Sorry about the typo. It was nearly $450,000 in fines--not $550,000.

 
At 1:38 PM, Blogger Torrid said...

terrence, private industry messes stuff like that up all the time. And then they often cover it up. Accountability for behavior of private organizations is invariably much lower than for public institutions.

As for anon--you persist in overlaying some kind of Marxist perspective for me, and then arguing with that. It's a strawman as I said; your response as if talking to a child ("I went through my anti-capitalist phase") suggests you're more arguing with yourself now than anything you might possibly know about me.

It's true that it isn't a fresh comment from me that Bill vastly overstates things in his writing. So that's why it may seem more insistent than warranted on face. But he's done it before, recently, on the same subject.

 
At 1:56 PM, Anonymous Anonymous said...

torrid,

"Accountability for behavior of private organizations is invariably much lower than for public institutions."

Oh My God. Please explain?

A private person suffers the risk of their own poor judgment. This is a self-defining truism. They are "accountable" to themselves, and by definition to absolutely no one else. You cannot get any more accountable than that.

The classic method for a private person to escape risk, and accountability themselves for their own actions, is to deflect it to the public though some sort of governmental action. The governmental action is not to enhance the personal risk, and accountability, but to reduce that personal risk.

Your argument is itself upside down.

--pdxnag

 
At 2:57 PM, Blogger Bill McDonald said...

You know these "publicly favorable scenarios" you describe, Torrid, that our local government works so well at dreaming up? Do they include the tram, and if the public doesn't want the tram and we'd have to pay millions to get out of it, would you call that a publicly favorable scenario"?
Was PGE Park a publicly favorable scenario or some politicians who could spend our money playing sports entrepreneur but not be driven out of the game?
Torrid, was the water billing system that screwed up so many of the public's water bills...was that a "publicly favorable scenario"? Did the man in charge of that lose his job over it? I mean even FEMA fired the head guy, when their Katrina-related water problems weren't handled right.

 
At 7:39 PM, Blogger MAX Redline said...

"to say that "Portland's style of government isn't working" is so absurd as to render the entire rest of your post thoroughly in-credible. It works better than any other major city government I've ever been affiliated with or witnessed..."

Wow. Mr. Serling, I thought you were dead! Do you have new episodes of "The Twilight Zone" in prep?

 

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