. . . because much of the content relates both to Washington, D.C., and "outside the beltway" -- the heartland, specifically Iowa -- and because after going from Iowa to Washington via Texas and California I subsequently returned, From DC 2 Iowa.
"Network" was always one of my favorite films. Not only is it an entertaining two hours with the screen, a great story, well acted and directed, but there's always been a little Howard Beale in me, and Paddy Chayefsky really nailed what television was to become from his creative view in the 1970s. We're lucky to have the script from this 1976 film, and its availability still today. And here is Tim Dirks review of this multiple-award-winning film.
But this morning it is with sorrow that I'm feeling like the cabbie in the story told by the movie's character Max Schumacher a couple times in the film (available in the video starting at 1:00 minute in through 2:10):
. . . anyway, they were building the lower level of the George Washington Bridge.
We were doing a remote from there...and nobody told me!
A minute after 7:00 a.m. I get a call.
"Where the hell are you? You're supposed to be at the George Washington Bridge."
I jump outta bed, throw my raincoat over my pajamas. I run downstairs. I run out in the street, hail a cab, and I say to the cabbie "Take me to the middle of the George Washington Bridge."
And the cabbie turns around and he says... he says, "Don't do it, buddy! You're a young man. You got your whole life ahead of you!"
Didn't I ever tell you that one before?
So that's what I have to say to State29: "Don't do it, buddy!" All your fans have their whole lives ahead of them (as do you), and those lives will be a lot less rich once devoid of the "insightfully vulgar" education and entertainment you provide us on a regular basis.
At a minimum, why "delete" the blog? It's an important bit of Americana at this point. Deleting it would be like book burning -- or like a deceased brother-in-law of mine who, upon discovering that what he had been painting had become popular and was worth a lot of money, chose that moment to burn all his canvasses rather than be viewed as a commercial popularizer.
The crooks and creeps and cronies are hoping it's true, saying that soon there will be no one watching and commenting on their doings.
But what I'm saying is, "Don't do it, buddy!" Don't do it my anonymous friend and inspiration.
Even if we had never suffered the losses from flooding in the past, and would never have another flood in the future, we should promote the idea of a Greenbelt around the Iowa City-Cedar Rapids Coridor, and Greenways and filters along Iowa's Rivers.
There are hundreds of ways of setting aside land for conservation besides purchase or gifts -- and no need to recite them all now. Uses such as golf courses and farming can continue -- along with forests, prairies and wetlands. The benefits include recreational uses, hunting and fishing, wildlife habitats, "smart growth" for urban areas, with increased real estate values.
But the values also include cleaner water, less soil erosion -- and reduced impact, or elimination of damage from, flooding."
This morning I was pleased to see Jim Throgmorton -- who knows more about this stuff than I do -- hit a similar theme. Jim Throgmorton, "Looking for Sound Flood Alternatives,"Iowa City Press-Citizen, June 18, 2008, p. A15 ("eliminate existing structures in the floodplain and . . . use the land only in ways that can accommodate future flooding. As parkland, for example. . . . [T]he long-term conversion of tall grass prairie and wetlands into corn and soybean fields has (when coupled with increased coverage of land with concrete and asphalt) had the effect of reducing the soil's ability to absorb rainfall and slow runoff.")
Catching Up With State29
The past six weeks has involved a variety of semester's-end tasks, along with meeting a goal of creating another book. The former is completed; the latter nearly so.
Not only was I not blogging much during that time, I was also not tracking State29's blog as closely as usual. It turns out that I missed a lot of what he self-describes as "insightfully vulgar" commentary on events and issues we both care about -- even though he often takes me to task for my positions on one of the many matters about which we disagree. Here are a very few selections from the dozens of blog entries he's provided during May and this much of June.
And perhaps our most closely shared sense of outrage -- Corporate Welfare -- and its commonly linked relationship to campaign "contributions"
State29, "The Roosevelt Corporate Welfare Hotel in Cedar Rapids," May 28, 2008; State29, "Cedar Rapids Approves $775,000 Corporate Welfare Loan," May 30, 2008 ("Sherman Associates owns and manages nearly 5000 rental units, yet somehow they had to ask the taxpayers of Cedar Rapids for a $775,000 loan [to buy the Roosevelt Hotel]. Why can't they go to a bank? Or, better yet, why can't they self-finance that loan? Also questionable are the nearly $4 million in Federal and State tax breaks that Sherman will get for supposedly fixing up the joint, . . ..").
State29, "Tom 'Electric Bus' Harkin," May 29, 2008 ("I'm surprised that absolutely nobody has picked up the story of Tom Harkin's $10 million+ electric bus program for Cedar Rapids, Iowa, which was recently scrapped and sold at auction for a grand total of $30,000.").
State29, "Congratulations, Bettendorf!" May 28, 2008 ("This [Bettendorf revising TIF policy] is good news. Business owners need to get wise about what sort of politicians are in charge of their own city. . . . Would they allow tax credits for a direct competitor? You business owners really should be asking these questions of your local elected flunkies and trumpeting the results far and wide.").
State29, "Well Well Wells," May 21, 2008 ("Several years ago, the State of Iowa funded the Iowa Agricultural Finance Corp, which was supposed to be this venture capital-like fund exclusively for Iowa businesses that had ties to agricultural-related businesses. It should have been a hit, right? It has been a disaster. Take a look at this PDF and see what it "invested" in:
* Rudi's Organic Bakery. $13 million. Failed and moved to Colorado.
* Wildwood Harvest. $7.1 million. The company has never generated a profit.
* ProdiGene. $6 million. No employees in Iowa. "Struggled" and was fined by the USDA.
* Sioux-Preme Packing Company. $5 million. Profitable. Acquired in 2006 by Hilco Equity, a company out of Chicago, Illinois.
* Iowa Quality Beef. $3 million. Shut down in 2004 and 540 employees laid off.
* Ag Waste Recovery Systems. $150,000. No sales, no employees, and is considered an "idle corporation".)
State29, "Why Does Iowa Have A Brain Drain? Let Me Count Thee Ways," May 8, 2008 ("'Businesses must be willing to pay more competitive salaries, too. A January report from the Generation Iowa Commission blamed lagging wages as a key reason young professionals leave. Even adjusted for cost of living, Iowa salaries often compare poorly, such as management occupations paying last in the region, the commission reported.' [From a Register editorial. And a suggestion from State29:] . . . End taxpayer-financed corporate welfare. Quit subsidizing politically-connected companies and people at the expense of competition that's already here in Iowa. The State has a bad track record at doing this.").
Iowa Constitution
Although I don't mean to make a legal argument that the Iowa Constitution forbids corporate welfare being provided by the state or its cities, it does seem to me that the following provisions (kindly brought to my attention by Jeff Cox) do rather suggest a general anti-fascist, anti-corporatism spirit of the drafters:
"STATE DEBTS. Credit not to be loaned. SECTION 1. The credit of the state shall not, in any manner, be given or loaned to, or in aid of, any individual, association, or corporation; and the state shall never assume, or become responsible for, the debts or liabilities of any individual, association, or corporation, unless incurred in time of war for the benefit of the state." Iowa Constitution, Art. VII, Sec. 1.
"State not to be a stockholder. SECTION 3. The state shall not become a stockholder in any corporation, nor shall it assume or pay the debt or liability of any corporation, unless incurred in time of war for the benefit of the state." Iowa Constitution, Art. VIII, Sec. 3.
And finally . . .
My thanks to State29 for carrying the entire burden of taxpayer protection during my absence, and making it possible to take a break for other tasks knowing that he would more than adequately do so.
"As many of you know, the new owners of the Sheraton have approached the economic development committee to talk about support for their efforts to revitalize the property. I have heard from many of you already and I know that many are simply philosophically opposed to city’s providing financial support to corporations.
"I’d be interested in hearing from you about how we should approach our dropping market share in visitors in downtown Iowa City, which I would contend is linked to the poor condition of the hotel. As you may have read in the downtown market study, visitors are significant to the retail businesses in our downtown. I see a City interest here in capturing more of the conference and visitor market. I know from my work on the Iowa City/Coralville Convention and Visitors Bureau board that we are bringing fewer conferences to downtown Iowa City. I am interested in your thoughts about how we should approach this challenge."
Regenia Bailey, "Economic Development and the Sheraton downtown," Update From Regenia Bailey (e-mail list), April 23, 2008.
How insulting! "[M]any are simply philosophically opposed to city’s providing financial support to corporations," indeed! How dismissive! How presumptuous that the only possible position of right-thinking citizens and officials is to assume that there is, of course, "a City interest here in capturing more of the conference and visitor market" -- or any other market. A "city" interest, yes; but a "City" (i.e., a governmental) interest? No.
Having made her assumptions, she moves immediately to "how we should approach this challenge" -- that is, what would be the best way for City government to get involved, the most effective way to turn taxpayers' money over to for-profit businesses.
Since she says she is "interested in your thoughts," here are mine:
I don't see the "challenge" as one of how we can get more taxpayer money transferred to for-profit enterprises, or how the City can best go about improving their "markets." No, the "challenge," in my view, is how we can get elected officials to concentrate on doing well those things that are within the appropriate role of government -- when it is so much more fun and prestigious for them to be able to play "business" with our money and their corporate playmates.
You want to know how best to expand "markets"? Leave the "challenge" to the free market -- individual local businesses, the Downtown Merchants Association, the Chamber of Commerce, the Iowa City/Coralville Convention and Visitors Bureau (on whose board you've served).
As for the philosophical opposition, it is you, Madam Mayor, who ought to be philosophically opposed, not I. The philosophical opposition, the ideological opposition, ought to come from those who champion the virtues of business, competition, and the free private enterprise system; those who want to "cut taxes" for the rich and then the programs for the poor; those who want to "privatize" everything from schools to prisons. Those are the folks who ought to rise up in righteous ideological indignation and philosophical opposition at the first whisper of "corporate welfare."
My objections are far more practical than philosophical.
In my open letter to the Iowa City City Council the last time a whiff of a TIF was in the air, I listed 11 categories of reasons (each of which could contain many examples) why corporate welfare in general, and TIFs in particular, simply don't make practical, good business, sense -- both anywhere at any time, and especially in Iowa City, Iowa. Nicholas Johnson, "Courage, Councilors,"Iowa City Press-Citizen, October 3, 2007, p. A12.
Those categories included such things as opportunity costs, numerous past failures of various kinds, inability to verify "need," lack of transparency, officials' poor business judgment, better alternatives -- read the column if you're interested in more.
Ironically -- because I never anticipated a proposal as totally bonkers and corrupt as the Sheraton proposal to come along so quickly -- I've just concluded an 8-part series about the role of money and lobbyists in politics and government generally (which, if you're interested in this stuff, you might also enjoy taking a look at). See Nicholas Johnson, "Golden Rules & Revolutions: A Series - VIII," April 19, 2008 (the last in the series, but with links to the prior seven).
Looks like I'm going to have to get back into the subject, for this scandalous Sheraton proposal is only one of many current corporate welfare disasters -- as recent reports are documenting.
But for today, as a concession to the limits on the time you have to read and I have to write, I'm going to let a local business person speak for me.
One of my categories of concern about corporate welfare in that Press-Citizen column, but that I did not itemize above, read as follows:
"Corporate welfare tilts the playing field. It’s fundamentally unfair to ask businesses to compete against a favored few funded by government. It upsets a smoothly working free market to no one’s benefit – except the lucky recipient."
It's always been a mystery to me why more members of the business community don't speak up about this -- especially when their own business is dealt a blow as a result of the corporate welfare that keeps dropping to their competitors' bottom line.
As of this morning [April 24] that story had 23 posted comments from readers -- virtually all very negative (regarding the proposal, not Ms. Fiegen's story).
State29, with his usual insight, has contributed a blog entry of his own to the dialog which you will want to read. State29, "Er, Then Why Did You Buy It?" April 23, 2008. It is that blog entry which brought the following comment to my attention.
Indeed, State29 raises an issue that deserves much more media attention. Why did the new corporation buy this property? Sadly, I can only see two possibilities.
(1) The principals are really dumb business people (unlikely, given their very successful multi-billion-dollar operation), who bought a property they knew would lose money without taxpayers' contributions, without getting an assurance from the City in advance that the money would be forthcoming -- in which case they have assumed potential liability in a shareholders' suit.
Or, (2) They did get prior assurances from the pro-TIF wing of the City Council that TIFs and other benefits could be delivered, before those applications had run through channels -- in which case Iowa City voters have equally serious complaints about their City Council.
Here, then, is the take of a real, honest-to-God, successful and unsubsidized business person on the subject of corporate welfare:
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Please, not again!
Posted by: jjhoneck on Wed Apr 23, 2008 6:23 pm
In 2002 my wife and I bought the old Alexis Park Inn next to Iowa City's airport. It was in bad shape, with a checkered reputation, but we knew a diamond in the rough when we saw it.
Since then we have spent these last six years remodeling and refining our service, until we now have the top-rated hotel in Iowa City. We have seen double-digit increases in both revenue and occupancy throughout that period -- a result few would have predicted.
The lesson? Offer a great lodging experience at a fair price, and you will prosper.
During those six years we never applied for nor accepted government assistance. We did not incur any debt, choosing to fund the renovations with the cash flow from the business. This is MUCH harder to do, and takes much longer -- but, in the end, it's the only way to assure success in a business with razor-thin margins.
Also during those six years we have sat idly by as our own Gummint became our #1 competitor in the market. You probably don't know it, but since 2002 YOU, the taxpayer, have funded the addition of over 500 hotel rooms to this already saturated hotel market, including:
- The Marriott, built with $60+ million in taxpayer dollars - The Riverside Casino, built by an unholy alliance of gummint and organized crime - The Hotel Vetro, built with yet another TIF
Despite this, we have prospered, while the Sheraton has declined. Why?
The Sheraton is a bloated, top-heavy chain that provides little value for what it charges. Most of the rate they charge goes to national advertising campaigns, with little devoted to the local property.
And what IS spent locally is spent in the wrong ways. When the original Sheraton franchisee bought the property (which was then a ramshackle Holiday Inn) their main focus was on remodeling the lobby, gobbing marble and brass everywhere. The end result was that Sheraton guests paid $179/night for a tiny Holiday Inn room, and a really nice lobby. In addition, sleep was optional, because for that absurd rate they were forced to listen to the ped mall cacophony all night long.
In contrast, our smallest suite is bigger than their largest suite, costs just $70 bucks a night -- and includes a delivered breakfast in the morning.
There is no mystery behind their failure. If you don't provide good value for the dollar, you will fail. It's "Economics 101".
Now we're supposed to believe that the Sheraton's new owners need corporate welfare to survive? The purchase price has already been adjusted dramatically downward to take into account the diminished value of this property. There is NO WAY they (or any other private business, for that matter) should receive city aid.
I suggest that the Sheraton owners follow our example. Roll up their sleeves, get to work, one floor at a time, one room at a time, and fix up their OWN business. Who knows, in 5 or 6 years they might have a nice place down there.
November 26, 2007, 5:30 p.m.; November 27, 2007, 7:25 a.m., 7:15 p.m.; November 28, 2007, 6:45 a.m.; November 29, 2007, 6:40 a.m.; November 30, 2007, 6:00 a.m. (questions for Senator Grassley); December 2, 2007, 8:00 a.m.; December 4, 2007, 7;00 p.m.; December 6, 2007, 3:10 p.m., 5:30 p.m.; December 7, 2007, 8:00 a.m.
[Dec. 7] Only because this blog entry is now pushing lengths becoming unwieldy, I'm starting a new one later this morning -- while continuing to "incorporate by reference" the material that remains very much relevant that is here. It's now (10:00 a.m.) available as Nicholas Johnson, "Earthpark: Grassley's the Story," December 7, 2007.
There's a Des Moines Register story yesterday that requires commentary. Like the UI presidential search that I blogged about (rather than creating a Web page for) under the assumption it would, of course, be wound up by the end of December 2005 -- only to experience it extending another six months -- the DOE said it would arrive at a decision in "a couple of days" (i.e., by last Tuesday (this now being Friday)). It now appears that, Senator Grassley's protestations to the contrary notwithstanding, Earthpark has been granted an "extension." It's outrageous!! [To be continued in the next blog entry later this morning.]
[Dec. 2-6] Earthpark Refuses to Make Public Document Available to Media
How Long? Oh, How Long Must We Wait to Know?
Which Iowa Media Will Be the First to Report Its Contents?
"Blogger Malpractice" concludes with a personal challenge of sorts from State29 to me: "I can see it now - Nick Johnson calling up, getting a copy, and scanning the thing into his archive for all to see. Well, I hope he does. I certainly don't expect him to do it."
How could I fail to oblige? My email to Brian J. Quirke went off this morning:
Dear Mr. Quirke:
As you are probably aware, there is a great deal of interest here in Iowa regarding the Earthpark application for the remainder of the $50 million Senator Chuck Grassley has made available to David Oman and his associates.
I have a number of questions to which I would appreciate your response.
1. Who (name and email) has the initial DOE responsibility for a judgment as to whether, or not, the conditions of the match have been met?
2. Who (name and email) has the final sign-off responsibility?
3. Because your indicated title is “Office of the Manager – Communications” are you a part of this decision making process, or are you primarily the public and media relations person for the Chicago office?
4. The local press reported that the application was timely filed by Earthpark (sent November 30, and received on December 1). I am assuming this is correct. Is it? It also quoted you as saying that document, and the DOE decisions regarding it, would be available within “a couple of days.” That would have been sometime between last Monday and Wednesday, depending on what days are counted. What is the current status of the decision making process and when do you now expect your decision will be made public?
5. Given the degree of interest in this matter, it would seem to me both more efficient for DOE, and certainly more efficient for citizens and media, if you would be willing to put the Earthpark document up on the DOE Web site. Agencies, including your own, often do this as you know. While the FOIA enables citizens to file formal requests, and even sue agencies if necessary, to get access to public documents, it certainly does not contemplate that this will be the required process in every case. Question: Are you willing to make the Earthpark application available via the Web (either in the electronic form in which it was provided to the Chicago Office, or if it only came in hard copy, as a scanned document)?
6. Can you refer me to the statutory, or DOE regulatory, or directions from Senator Grassley’s office, or other written standards that will be applied by your office in determining whether whatever Earthpark has or has not provided should be considered to constitute a “match”?
Respectfully,
Nicholas Johnson
If the email is answered I'll share that with readers of this blog. If it is not, I'll share that fact with you a week from now.
Following a brief news clip on television this morning, we called Mayor Dobernecker for his take on the report that funding for the Earthpark project proposed for Pella had been secured.
The Mayor said he had been informed by David Oman, chairman of the project, that funding had been secured and the necessary paperwork submitted November 30 to the Department of Energy. Some felt it might be a matter of days, some felt a matter of months, before the Department of Energy reviewed the submitted documents and agreed that the funding met Departmental guidelines.
Further, the mayor stated that "The City of Pella has not committed one dime towards this project. The reality is that of course, if the project is to be completed, the City will incur some infrastructure expenses,," but that none of the funding that the project had to match in order to receive for the Department of Energy grant was from the City of Pella.
"Of course the City has done some preliminary estimates, but the appropriate time for the City to review and begin planning for what this project might actually mean for the City and what funds to commit where is after we are certain the project is actually taking place, that is, after the Department of Energy rules on the submission from Oman," the Mayor added.
Originally, Earthpark plans included condominiums near a new marina, but the Army Corps of Engineers rejected the marina proposal.
Developers of Earthpark, the planned $150 million environmental and educational center near Pella, are waiting for the U.S. Department of Energy to pass judgment on a critical grant for the project.
The project planned for the north shore of Lake Red Rock had until Dec. 1 to come up with $48 million in matching money required for the project to keep a $48 million federal grant. Without the grant, the project would have to be retooled or scrapped.
There was no reference to the inside information Oman provided the Pella mayor, that prompted the Town Crier to report: "The Mayor said he had been informed by David Oman, chairman of the project, that funding had been secured . . .."
While I'm happy to help out with the above email to the DOE, I really think this story is the media's -- primarily the Des Moines Register, The Gazette, Iowa City Press-Citizen and Daily Iowan -- responsibility to (1) demand the document from Oman and the DOE, suing for it under FOIA if necessary, and then (2) question Senator Grassley along the lines I've indicated below.
Let's face it: This has been a major Iowa (and national) story for ten years; it's now come to a head; it's either dead or dying (i.e., it either is flat broke, or it has been granted $47 million toward the $300 million it needs -- with a decade long track record of being unable to raise one dime in cash). In either case it is a big, big story. And while I appreciate the Register at least reporting that it has done nothing, and knows nothing about it -- which is more than the other three papers have bothered to tell us -- that's scarcely what I think we have a right to expect from one of America's largest newspaper chains at a time when they're trying to convince us of the wisdom of permitting them to own TV stations in the same markets they dominate with their newspapers.
_______________
[Dec. 4] A week ago the Associated Press reported that Department of Energy spokesperson "[Brian] Quirke said a decision on the application could come within a couple of days after it's received." Associated Press, "Deadline for Earthpark matching funds is Saturday," wcco.com/Iowa Wire, November 28, 2007.
Given that it was received by DOE last Friday (Nov. 30) or Saturday (Dec. 1) I'd say it's been "a couple of days." But there's no word yet as to how many tons of blue smoke and mirrors it takes to make what Senator Grassley would accept as a match for the $50 million of taxpayers' money.
So a big "Hat's Off" to the Press-Citizen for what is an excellent start.
But I ask again: Who will be the first assignment editor to send a reporter out to ask Senator Grassley personally to respond to the questions I've laid out for him below, and then either tell us what he says, or report that he was too embarrassed to respond?
This is not just an "Earthpark story." It's not even just a "Senator Chuck Grassley story" -- although his former chairmanship of the Senate Finance Committee, and continued efforts to build the illusion he is a fiscal conservative, are certainly a part of the story. As an oft-cited example of one of the worst of Congress' "earmarks" excesses, Earthpark is, during this pre-caucus presidential candidates' season, a major politics and money story: What is the relationship between special interest campaign "contributions" and Congressional action -- or inaction? How is Congress handling our money, and what are these presidential candidates proposing to do about it? It is -- as most signs indicate that the light at the end of the financial tunnel is an oncoming recession -- a useful illustration of why we're in the financial trouble we're in. In short, this unmonitored giveaway is a big and multifaceted story.
For the media to ignore the lessons in this Earthpark disaster is doing no one a favor -- least of all their audience and readers.
[Dec. 2] Earthpark promoters, having built a reputation for themselves over the past decade as a no-transparency, wagons-in-a-circle bunch, have now outdone themselves.
As State29 reported Friday, State29, "Earthpork Deadline Tomorrow," November 30, 2007, Earthpark's application for Senator Chuck Grassley's generous $50 million of taxpayers' money was yesterday.
Their application was reportedly timely filed and is one day old today. It is, therefore, a public document, legally available to media and public alike -- and, if obstinately withheld, obtainable with a Freedom of Information Act (FOIA) request.
And yet The Gazette reported yesterday, "Earthpark spokeswoman Kristin Sunde . . . declined to provide The Gazette a copy of the application." "Rain Forest Officials Submit Application,"The Gazette, December 1, 2007, p. B7. What on Earth-park is this about? And why aren't The Gazette and the other Iowa media, normally our staunch defenders of public access, screaming bloody murder?
And who do we find pictured on the Des Moines Register's front page this morning? Well, a half-dozen presidential candidates. But I mean at the top of the far right column? None other than Earthpark founder Ted Townsend, featured in what I will call "a flattering feature story." (State29 may well come up with a characterization more befitting that blog's motto: "Keeping Track Of All Those Iowa Scandals While Remaining Insightfully Vulgar." Later: Well, I was wrong, but he does write about it; see State29, "Earthpork: The Day After the Deadline," December 2, 2007. ) Perry Beeman, "Big ideas, passion motivate Ape Trust founder,"Des Moines Register, December 2, 2007, p. A1.
Over the past five years or more, I have endeavored to provide helpful suggestions for, as well as criticism of, Earthpark -- with little success at either. Because I've always thought that Townsend's "Great Ape Trust" made a lot more sense than his Iowa rain forest project, one suggestion was that -- so long as Senator Grassley was so stubbornly insistent on giving $50 million of our money to his friends and campaign contributors -- there at least be an effort to redirect the money away from a rain forest doomed to economic and other failures and into Townsend's Great Ape Trust, a science project with enormous potential.
With some tinkering, that might still be possible -- providing additional space for the great apes, a visitor center, or housing and offices for researchers.
Oman doesn't have $50 million cash on hand, and isn't about to get it. To do the rain forest right would require something closer to $300 million than the $150-140 million to which he's now scaled it back. Even if Senator Grassley does decide that Oman's received promises of unspecified, and over-valued "in-kind services" at some undesignated time in the future meet the terms of the required "match" of $50 million (less the $3 million Oman took and spent before he was caught and stopped), given that he has failed to raise a single dime over the past 10 years -- let me repeat that, with a full-bore effort at fund raising over a decade the promoters of this project have been unable to raise a dime -- that means, once he gets the $50 million from taxpayers, he will still only have that $50 million in hand to build what even Oman thinks needs $140-150 million (and I think needs twice that).
So -- even with Grassley's $50 million of taxpayers' money -- where is Oman now suddenly going to be able to come up with the additional $100 million, given the record of no contributions whatsoever over the past ten years?
For more on this failed proposal, see below, and my 200-page Earthpark Web site.
_______________
And in other news: FromDC2Iowa is going to be a running blog entry this week [November 26 until . . .], tracking last rites for Earthpark in this one entry until Senator Grassley finally rules on whether smoke and mirrors constitute his definition of a $50 million "match."
Hawkeye football's good news. [Nov. 29] Isn't it about time for some good news from the football program? With 10% of the team having been in trouble with the law, three more under investigation for sexual assault, the December 3 trial of a 2005 player charged with major drug dealing coming up next week, Jennifer Hemmingsen, "Former UI athlete faces six felony drug charges,"The Gazette, November 21, 2007, and the trial of one of this season's players one week later (December 10), Rob Daniel, "Football Player Going to Trial,"Iowa City Press-Citizen, November 30, 2007, p. A1 (theft of credit cards, and subsequently theft of DVDs), and see Lee Hermiston, "Douglas reaches plea deal,"Iowa City Press-Citizen, December 4, 2007, it might be a good time for the program to showcase some of its more outstanding graduates.
One day later [Nov. 30] I'm pleased to note that both the Press-Citizen ("Klinkenborg, Shada Honored for Grades," p. B1) and The Gazette ("Klinkenborg, Shada Academic All-Americans," p. C1) carry the news this morning that Hawkeye football players Mike Klinkenborg and Adam Shada have been named "academic all-Americans" by the College Sports Information Directors for having earned a 3.95 and 4.00 GPA in elementary education and finance, respectively.
While I think it well worthwhile to document that there are, indeed, at least some players who really are student-athletes, what I was really looking for was something more along the line of what John Barleykorn contributed in a comment (11/29 9:11 a.m.) on this blog entry yesterday -- what football players have done after graduation. I don't mean those who are playing with pro teams; rather, those who are attending (or have graduated from) professional graduate schools, are doing community organizing or otherwise working with non-profits, are serving on school boards or in other elective or appointed positions -- though I don't mean to suggest it should be limited to those options.
How about it? Any more nominations? I think now would be a good time for a little more balance here.
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Earthpark Teeters on Grave's Edge Staying Alive? "Hmm, maybe if I change the name again & hit it some more"
[See the end of this blog entry for the credits and background on this editorial cartoon, created and copyright by Joe Sharpnack.]
[Nov. 30] Senator Chuck Grassley Has Explaining to Do
Senator Grassley must -- and ultimately will have to -- explain his $50 million earmark to the taxpayers of Iowa and the nation.
Politically, earmarks have come out of the closet and into the sunshine. They are a subject of the rhetoric surrounding the current run up to the 2008 presidential election. They are talked about on the floor of the House and Senate and in the editorial pages of the nation's newspapers.
And as critics look for examples, the "Iowa Rain Forest" has become the poster child of earmarks for many.
It's not going away -- even if Senator Grassley says they haven't met the terms of the grant. But it's really going to blow up if he says they have.
It looks like (see the content following the sub-heading below) Grassley-Ray-Townsend-Oman are gearing up an effort to pass the blame for this giveaway onto the Department of Energy (which was given the clerical job of administering the matching grant).
That dog won't hunt.
The media must get some answers from the Senator. This may have been our $50 million of money, but it was his project, his use of his power as a U.S. Senator on behalf of Ray-Townsend-Oman, his sneaking through an earmark with no debate, that brings us to where we are today.
The basic question for the Senator is: Knowing of the project's inability to raise money, knowing that it does not have $50 million cash on hand, knowing that even if it did it would still need to raise an additional $50 million to go ahead with construction (when it has not been able to raise a dime in 10 years), therefore knowing that even if you give them the $50 million it still won't be enough to insure the project will be built, knowing that its own consultants told the promoters they would need at a minimum a structure more than 50% larger than what they've now scaled their plans down to if they were even to have a problematical prayer of breaking even, knowing that most independent economists believe the project cannot produce sufficient cash flow to sustain itself (thus leaving it to either never get constructed, or having been constructed quickly close, or perpetually draw upon public funds for subsidy), why do you believe, today, that your $50 million earmark of taxpayers' money for this project is a wise use of taxpayers' dollars?
Subsidiary questions are: (1) Do you personally agree with and support the judgment that the project has met the terms of what you had in mind as a "matching grant" -- especially given the facts detailed above? If the project has neither $50 million in cash on hand, or pledges for that amount of cash that can be immediately called, what is the rationale for concluding they have "matched" your grant? You can't buy materials and construct a structure on the basis of promises of some ill-defined "in-kind services" to be provided at some undesignated time in the future. Where do you think the additional $100 million (and preferably more) is going to come from? Do you agree that this judgment call is your responsibility, or are you washing your hands of the decision and taking the position that it is solely up to the Department of Energy? If so, how do you justify that stance?
(2) What is your position with regard to the "missing" roughly $3 million? Was it your intention that the initial $50 million grant was to be used for construction, or did you intend it as a gift that Oman could draw on whenever he wanted for whatever he wanted -- even though all signs pointed to a substantial likelihood the project would never be completed as originally proposed (indeed, your original earmark assumed it would be built in Coralville -- one of many Iowa cities that ended up rejecting it)? If it is concluded that the terms of the "match" have not been met will that $3 million be returned to the U.S. Treasury or do you consider it just a $3 million gift to a friend? If you conclude that the terms of the match have been met, do they need to match $50 million (since they will have received that amount: $3 million plus an additional $47 million), or do they only need to match the $47 million and we'll just forget about the $3 million?
Only Iowa's media can put these questions to Senator Grassley and then report his answers -- or his refusal to answer. Let's hope and pray they do this for us.
November 27/28 EXTRA: Oman Claims $50 Million Cash on Hand. David Oman, CEO and and CPO (chief publicity officer) of what State29 persists in calling "Earthpork," announced November 27 that "an array of sources coming together as a confluence" -- like this week's line-up of Saturn, Venus and Mercury -- is going to occur in time to make the deadline for this "very complex project" -- although "He would not provide specifics about where the $48 million matching funds are coming from." (Nor, apparently, would he provide specifics about why a "$50 million match" is satisfied with $48 million -- given that the only reason there is only $47 or 48 million left is because he started to consume the $50 million before the terms of the grant had been met -- and, so far as is known, has no plan (nor demand from Senator Grassley) to pay that money back.) "Earthpark to Meet Funding Deadline," KCCI-TV8, November 27, 2007.
Of course, if he doesn't have $50 million cash on hand, if after you blow away the smoke there's nothing but mirrors, promises, loans, "in-kind future services," already-planned roads, and so forth, Senator Grassley is going to have to come up with an even more imaginative explanation for why he is turning this $50 million sow's ear (mark) into a $100 million silk purse.
It's also necessary to note five other financial details.
1. This was originally a $300 million project. When it was reduced to $225 million, the project's own consultants warned that there were virtually no possibilities of economic viability unless it could market itself as "the world's largest" -- something that could not be accomplished with anything less than a $225 million structure. The plan has subsequently been reduced to a $180 million structure, and now to $150 million.
2. Even at $300 million -- twice the present plan -- there were serious questions raised by independent economists regarding the financial viability of such a project if it was located in a major population center such as Des Moines with easy access to both Interstates 80 and 35. Now it is proposed for the small town of Pella (population under 10,000), located 36 miles away from Des Moines and about as far from Interstate 80.
3. Aside from the original $10 million pledge from Ted Townsend, and the $50 million match from Senator Grassley, so far as is known the project has been unable to raise a single dime over the course of the last 10 years -- notwithstanding the network of contacts made possible by Iowa's present senator, and former Governor Bob Ray, among corporations, foundations and wealthy donors.
4. Thus, even if Oman does come up with $50 million cash on hand, and even with the match, and even if the $300 million project is thought to be acceptable as one-half that size, he will still need to find another $50 million from somewhere -- notwithstanding the extraordinarily failed record of fund raising during the past decade.
5. Finally, as serious as these up-front financing problems may be, they pale by comparison to the future, on-going financial problems in operating such a facility. If -- as many predict -- an adequate revenue stream is not forthcoming, who will pick up the slack, or what would be done with the project once it is closed.
There are, of course, many other categories of problems with Earthpark, but since the focus is on the financials this week, it is useful to keep these five points in mind.
# # #
Is there anyone left in America who is not aware of the decade-long dream of Ted Townsend and David Oman -- with the financial encouragement of a $50-million earmark from grateful federal taxpayers provided by Iowa Senator Chuck Grassley -- to build a tropical rain forest under glass on Iowa's otherwise-unused, snow-covered corn fields in winter?
For those of us who have been blogging about, and otherwise following, this public relations spectacular and economic disaster over the past ten years, this is going to be a big week.
Why? Because the revised terms of Senator Grassley's generosity require that Oman come up with a matching $50 million grant by December 1, 2007, or lose the taxpayers' contribution. (Left unanswered is whether he will have to repay the two or three million he took from the fund to, in part, pay a generous salary to himself, before Grassley realized the spigot was open and closed it.)
State29, one of the most dedicated followers, bloggers and debunkers of this folly, is also counting the days. State29, "Earthpork: 7 Days Left," November 24, 2007.
Since that time I've published some 14 or more op ed columns along with another 15 lecture texts or other online pieces. The Web site now prints out at over 200 pages, and has links to the full text of hundreds of newspaper articles and other printed resources. It is presumably the most complete collection of material -- pro and con -- available anywhere on the Internet at a single site.
If this thing is new to you, and you're not inclined to research a couple hundred pages of Web site, here's one of those op ed columns, one that briefly mentions at least some of the history and problems associated with the project:
Time to Learn From What Works
Nicholas Johnson
Iowa City Press-Citizen
January 20, 2006
The Press-Citizen thinks "Towns Should Take it Slow with Rain Forest" (Jan. 14). Most Iowans are taking the editorial board's advice.
Rain forest promoters may still make it somehow, somewhere in Iowa. Regardless, Ted Townsend, Bob Ray and David Oman have helped open Iowans' eyes to the possibilities, and pitfalls, of such attractions.
Will we learn from their mistakes? Only if we search the Internet for the formula and details of success stories, for "what works." In Iowa: Dubuque's National Mississippi River Museum & Aquarium, Adventureland, Living History Farms, Ted Townsend's Great Ape Trust. Outside Iowa: Omaha's zoo, Atlanta's aquarium, Colonial Williamsburg, Disneyland.
Focus. Like a business emphasizing its "core competency," successful ventures usually have a focus, like the Great Ape Trust. The rain forest kept shifting focus from tourist attraction to school to research facility. (As blogger State 29 put it, "It's a floor wax. It's a dessert topping. It's whatever they want it to be.")
Community-based. Successful ventures grow bottom up, like Omaha's zoo, the Englert theater renovation, and Dubuque's "Envision 2010," rather than being imposed top down like the rain forest.
Logical location. Aquariums do best near oceans; Colonial Williamsburg in Williamsburg, Va. The Living History Farms, or Dubuque's Mississippi museum on the banks of that great river, gain significance from their location in Iowa. A rain forest does not.
Up-front financing. Home Depot's Bernard Marcus gave $200 million for Atlanta's aquarium. Omaha's zoo and Dubuque's museum are locally funded. Neither uses the debt financing that's caused other projects' downfall. Rain forest promoters went public without money in hand, had none from Iowa City-Coralville donors, and now talk of borrowing their matching grant.
Business plans. Entrepreneurs dream of success and fear failure. Venture capitalists and loan officers avoid losses by demanding details. Even so, one-third of each year's 800,000 new businesses fail within four years. Imagine the risks when promoters play with public money instead of their own. Without rain forest focus there couldn't be business plans. Without plans there couldn't be sufficiently detailed construction and operating budgets. Without details no one could evaluate the project's practicality, and deadlines kept slipping -- for nine years.
Cost overruns. Over-runs are common. Boston's "Big Dig" ran five times budget. So did the Englert ($1 million budget, $5 million cost). The Iraq war may end up 10 times projections ($2 trillion vs. $200 billion). How would rain forest overruns have been financed? Omaha zoo projects are completed ahead of schedule and under budget.
Revenue streams. Construction costs are relatively easy. Operating costs five and ten years later are the problem. Successful Iowa attractions know attendance will range from 65,000 a year (Hoover Library) to 500,000 (Adventureland), and budget realistically. Disneyland may get 10 to 15 million, Colonial Williamsburg almost one million. But such numbers are mostly limited to multi-million-population urban centers. Many failing projects start with overly optimistic attendance projections -- like the rain forest's estimated 1.3 million annual visitors.
Realistic evaluation. The rain forest's fundamental problems have been obvious for four years. So why did so many public officials and mass media continue to emphasize "the 'Wow!' and the wonderful," virtually ignoring risks and realism? A skeptical venture capitalist asks questions and is called "a smart businessperson." Why, when citizens ask the same questions about the rain forest, are they called "naysayers" who "lack vision"?
Iowa has plenty of successful attractions throughout the state. There's no reason it can't have many more. But only if we remember the lesson of the Laser Center: "build it and they will come" only works in the movies. Only if we build solid financial foundations under our dreams. Only if we give more attention to revenue streams and operating costs than construction costs.
Iowa needs bold vision. Naysaying doesn't help; but rational analysis does. And when "the emperor has no clothes" we ignore the difference at our peril.
Hopefully, a week from today at least some of the evaporated $2-3 million will have been repaid, this project will be behind us, and the lessons it has provided will be put to good use by those with realistic plans for Iowa's future economic development.
Or . . . Will Oman be able to pull a $50 million rabbit from his dilapidated hat during Earthpark's last week on death row?
Watch this space and see.
# # #
Joe Sharpnack editorial cartoon credits and background.
The following is excerpted from my entry in my Rain Forest Web site from the time when the project's public relations efforts warranted weekly Web site entries. This one is for "The Week Prior to May 15 [2006]."
The Week Prior to May 15 . . .
was an opportunity for David Oman to demonstrate, once again, the true public relations genius that he has brought to the rain forest project from the beginning. He managed to get newspapers to make front page news -- literally page one, column one, above the fold -- out of the name of the project.
There are much more serious challenges confronting the project. Moreover, it has gone through numerous name changes during the nine years of its existence, seemingly without the ability of its board and management to settle on one: Iowa Child, Iowa Environmental/Education Project, Iowa Environmental Project and the Environmental Project. Thus, the following news story would have involved questionable news judgment even if the announcement had involved the long-awaited "permanent name."
But it did not. The "news" was that, like a UFO siting, Oman had discovered "names rolling around [and] floating through the air." However, none of these have even been passed upon by the board, and only one was revealed at this time: "Earth Park."
"We've always said the Environmental Project is a placeholder, pending decisions such as financing and selecting a site," project director David Oman said Monday. "It has always been our intention to brand the project with a permanent name." Oman said a decision on a permanent name hasn't been made yet, but the name Earth Park has surfaced among officials whose communities are in the running for the project. "There are several names that people have suggested, and they are being tested," Oman said. "There are scientific ways of testing and less formal ways."
Board member Richard Johnson of Sheldahl said the Earth Park name was "put forward" within the past six months. "But the board hasn't gone forward with it yet," he said. . . . The board of directors will select a final site in mid-May or June, depending on when a meeting can be arranged, Oman said.
"We are working on a (few) major fronts: a site front, financing front and name front. It would be helpful to pull these fronts together at some point," he said. He did not say if a name would be announced when the site was selected. "There are names rolling around. There are names floating through the air. There are some very interesting ones. We are looking how to best package this up," Oman said.
Joe Sharpnack, http://www.sharptoons.com, who holds the copyright on this editorial cartoon, captured the significance of the "floating" alternative name with his usual sharp wit and insight. The cartoon appeared in the Iowa City Press-Citizen on May 11, 2006.
For it was only in the last sentence of the story that we were to learn, "The project remains contingent on selecting a site and financing." Given the project's current three-front challenge -- what Oman calls "a site front, financing front and name front" -- it would seem that "the greatest of these" (to borrow a Biblical triage) remains, as it has been for the past nine years, the "financing front." Brian Morelli, "Yet Another New Name? Earth Park Floating Around,"Iowa City Press-Citizen, May 9, 2006. (As the reader can tell from these excerpts, Morelli is a skilled, professional reporter who cannot be held responsible for either the assignments he receives, or the content of the interviews and handouts he has to turn into journalism. And yet he manages -- at least for the careful reader -- to get the story told.)
Fortunately, it was at the end of a bicycle ride, coming into the gravel driveway at our home, that my bicycle simply disintegrated the other evening. No telling how old that bike was -- or how old I would have lived to be had it chosen to leave me in traffic on a busy road instead of on my front lawn.
Have you heard of the wonderful one-hoss shay, That was built in such a logical way It ran a hundred years to a day, . . . [then] went to pieces all at once, All at once, and nothing first, Just as bubbles when they burst.
For starters, the bicycle had been assembled, like Johnny Cash's "One Piece at a Time" automobile ("I got it one piece at a time/And it didn't cost me a dime"), with parts from prior bikes.
After all, I was brought up at a time when "built-in obsolescence" had not yet been invented and "conspicuous consumption" would have produced more social ostracism than admiration and envy -- even if anyone could have afforded it. Our approach to material things was governed by a little rhyme, said to have originated in New England, though it may have been brought over from old England, a rhyme that was an oft-quoted bit of advice during the Great Depression, and on the home front during the World War II that followed:
Use it up Wear it out Make it do Or do without
Why do I tell this story? Because I don't want to risk someone interpreting what I'm about to say as carrying an overlay of "Now I never would have made a mistake like that." With all my emphasis on logic, analysis and John Carver's approach to board governance, I make all kinds of mistakes -- like continuing to ride an old bicycle long beyond the years when it's still safe -- and might well have been a party to the County Auditor's Office miscount last night had I been in charge.
Having said that . . .
How the hell do you overlook a 2000 vote margin on the "Take a drinking break at 10:00 p.m." ordinance vote? If the vote count on any community's controversial referendum would warrant a check and a double-check before reporting results it would have been this one.
The evening, and the reports of the vote, kind of reminded me of an election some 60 years ago:
"According to the Texas Election Bureau, an unofficial election agency run by Texas newspapers, Stevenson led at midnight by 2,119 votes out of 939,468 counted. 'Well, it looks like we've lost,' Lady Bird told Dorothy Nichols on the phone."
Or so it seemed. The votes kept coming in and the results went back and forth; victory was now declared for Stevenson, now for Johnson, now for Stevenson. After most of the tallies, the governor held a slight advantage. Then, six days after the election, a funny thing happened: 203 votes turned up in Box 13 from the pint-sized town of Alice, Texas. Even funnier: 202 of those votes were for Lyndon Johnson.
Johnson was ultimately declared the winner of that election -- by 89 votes. [There are many sources for this bit of history; this was just the first on Google's list, AskGleves.]
It only took a switch of 89 votes to make these election results an italicized and bold footnote to American history.
What are we to make of a late-hour, 2000-vote swing in the vote count on behalf of the Iowa City's City-Council-backed, illegal-drug dispensing, election-manipulating, irresponsible and greedy bar owners?
[How can I call the bar owners "illegal drug dealers"? Because . . .
1. Alcohol is our nation's number one hard drug by any and all measures: numbers of people involved and affected (alcoholics, alcohol abusers, binge drinkers; plus family, friends and co-workers), percentage of crimes involving alcohol and numbers of persons in prison with alcohol problems, economic impact from absenteeism to property damage, and permanence of adverse health effects -- among others.
2. Alcohol cannot legally be sold or consumed (outside of a family home) by those under the age of 21.
3. Bar owners are operating establishments the sole purpose of which is to profit from the sale and consumption of alcohol, knowing that a significant proportion of the consumption of alcohol from which they are profiting is being done by those who are doing so illegally.
4. Therefore, I contend, they are illegal drug dealers -- with a political and economic power, not unlike the MedellÃn Drug Cartel in Colombia, to control our City Council and University.]
Kind of reminds me of CitiGroup's failing to notice an $11 billion loss as it was occurring. How do those things happen? Wouldn't somebody notice after the first billion was missing from the petty cash drawer? [See, e.g., Eric Dash, "For Citigroup’s New Head, Focus Is Subprime Tangle,"New York Times, November 7, 2007.]
This is one election fiasco that's going to have to be explained in excruciating detail.
We know of the multi-hundred-thousand-dollar benefit the defeat of the ordinance will bring to the bar owners. For the benefits it will bring to the UI's binge-drinking students -- helped along by the silence on this ballot proposition from their self-censored, see-no-evil-hear-no-evil-speak-no-evil, pro-all-business administrators and faculty -- see this morning's video offered by State29, "Cheers!" November 7, 2007.
Earthpark may be dead, but it's not yet buried under a tulip bed in Pella. There's a family member and at least one U.S. Senator who swear they saw it smile. Perry Beeman, "Georgia Company to Aid Earthpark,"Des Moines Register, September 27, 2007.
I have been publishing newspaper columns (14) and other written analyses (15) of this ill-conceived, misrepresented, mismanaged, failed earmarked $50 million pork project since January 2001. Since February 2004 I have been maintaining what I believe to be the single most thorough Web site of commentary on the developments (probably well in excess of 100 pages if printed out), with links to the full text of dozens (if not hundreds) of newspaper stories, studies and reports. See, Nicholas Johnson, "Earthpark/Iowa Environmental Project/I.O.W.A. Child Project."
State29, whose very slug explains that he is "Keeping Track Of All Those Iowa Scandals While Remaining Insightfully Vulgar" (so don't say I didn't warn you parents that his commentaries usually have an "R" rating at best) has been tracking what he calls "Earthpork" as long or longer than I have. There's nothing I need add at this time to the investigative journalism he has done on this latest story -- far and away, above and beyond, anything the mainstream media has even attempted, let alone accomplished:
A Register reader provided this comment to Beeman's story early this morning:
First, Maxon is giving "in-lind" support which means this may not count towards the $50 million goal. Nice job in talking ANYONE into donating even time, but that's not what the intent of the matching FUND meant.
Second, I read that Maxon is a shell company owned by Ted Townsend...one of the Earthpark supporters. Why doesn't Oman start a company and donate $50 million of "in-kind" support, too? HA!
Third, Ebay didn't "partner in a nation project based in Iowa"...it is simply a fund raising arm of Ebay that nearly anyone can participate in. My fantasy league commissioner also links to Ebay and gets a dollar to help pay for website costs when the owners click a link to buy something on Amazon - same thing in essence.
Fourth, I'm tired of hearing that 1 million people might attend each year. Those are the numbers in England. But England has a few other lures besides a dome and a slightly larger population base then Pella has. Oh, yeah, and Europe is just a chunnel away. So unless Earthpark people think that folks will visit because Missouri is nearby, welll...
I've had it with the Iowa City City Council and TIFs. I'm going to do my best to see to it that anyone running for council who persists in continuing to take Iowa City taxpayers' money and give it to wealthy, supposedly "free private enterprise" for-profit corporations -- while denying it to their competitors, not to mention needed social programs -- is prevented from serving on the City Council.
Nick Johnson . . . says he's going to campaign against every city council candidate there who supports TIFs . . .. Good luck with that uphill battle. Unless Ron Paul is planning to run for political office in Iowa City, I think Nick is going to be rather busy. TIF-supporting candidates (regardless of political affiliation) tend to be "connected" and "experienced", something which voters eat up, even if it takes money out of their own wallets.
The best I've been able to get out of them is that some recognize that Iowa City and Coralville have gone too far with TIFs, or an admission that, yes, some of them have not worked out. But all insist that there are some cases -- perhaps with start-up entrepreneurs -- where they make sense.
So, I hear you say, "We understand what you're against. But does that include any and everything that benefits business -- especially new entrepreneurial start-up businesses? And if not, what are you for?"
This entry is an effort to explain what I'm for: (1) "state-qualified community seed funds" and (2) micro-credit programs.
Community Seed Funds
At the end of "The Terrible TIFs" entry July 26, among my suggestions was: "The business community could create its own venture capital fund to invest in, or loan to, business developments they thought worthy."
Since I know that 90% of my ideas are going to be rejected out of hand (and that many of them deserve to be) I just spin them off and forget them until I'm reminded.
It turns out that Iowa has something called community seed funds, and that Corridor banks and private investors have put together a $1.25 million one already.
The approach has many advantages over TIFs.
It's an investment, not a gift -- let alone a gift of the taxpayers' money without their permission.
"An investment committee of seasoned investors" makes the decisions -- rather than a bunch of public officials who have no financial stake in the project and, whatever their strengths may be, are for the most part not "seasoned investors."
Moreover, The Entrepreneurial Development Center President Curt Nelson also says, "We will continue to work closely with these entrepreneurs, monitoring the company and the fund's investment."
I need to find out more about this undertaking, and whether there are some downsides of which I am unaware. But it's always fun for me when it turns out that something that is spurred by my imagination and intuition, and comes out of the depths of my ignorance of a subject, turns out to have been proposed, and put in motion, by folks who really do know what they're talking about.
Micro-Credit Programs
You may know the name Muhammad Yunus. He and his Grameen Bank were awarded the Nobel Peace Prize for 2006.
For the world's truly poor a small loan can make a big difference.
The results were impressive -- both in terms of what the borrowers were able to do with the money and their honorable approach to repaying the loans.
The idea quickly spread. Among other things, this approach removes the opportunity for tempted government officials to take a slice of a multi-billion-dollar loan to their country and send it off to a personal Swiss bank account.
When I served on the board of Volunteers in Technical Assistance some years ago it was one of the categories of projects in which VITA was engaged.
Now, it turns out, you no longer need to own a bank, or be managing funds from USAID, to get into the micro-credit business. You, like Muhammad Yunus, can provide a $25 loan directly to a third world entrepreneur with a face and a name.
You can do it through an organization called Kiva, which you reach at http://kiva.org.
It humanizes and provides a personal story regarding the loan applicants. By joining with Kiva, their third-world "field partners" that administer the program locally (funded by the interest on the loans), and other Kiva members, your $25 (or more) contributions can quickly total the $450 or $1100 requested. As the loans are paid back (and they almost always are in full and on time) your philanthropy becomes a revolving fund that can go on helping more and more entrepreneurs.
There's no reason why micro-credit won't work for entrepreneurs here in Iowa as well as abroad -- even if the "micro" is going to have to be a little bigger.
"Community seed funds" and "micro-credit" are but two of the ways that Iowa can help business grow in the right way.
They draw upon the strengths of the free private enterprise market system -- rather than tax revenues.
Moreover, because an investor, or a creditor, has a personal financial stake in the venture it's more likely the business plan will be well thought through, and reviewed, by people with the incentive -- and skill -- to be of real help in avoiding preventable disasters.
They are more fair to the new venture's competitors -- all of whom have a shot at the funds; all of whom will be judged by the same standards -- than the now-you-see-it-now-you-don't, inexplicable, random allocation of TIF benefits.
They are devoid of the internal ideological inconsistency and hypocrisy of cutting the budgets of legitimate public projects and transferring taxpayers' money directly to a wealthy, for-profit owner's bottom line.
Want to know what I'm for? That's what I'm for. You already know what I'm against.
You have no idea how lonesome it can get trying to protect the taxpayers from public officials' gifts of our money, ostensibly collected for public projects, being given away to the wealthy owners of for-profit private enterprises (or, like the rain forest, for contributors' pet projects). I've already announced my intention to campaign against the election or re-election of any Iowa City City Council candidates who have voted for such giveaways, or who indicate they intend to persist in this practice. Nicholas Johnson, "They're Back: The Terrible TIFs" in "The Terrible TIFs," July 26, 2007.
For the past month, while State29 was taking a well-deserved breather from this tough life we lead as bloggers, I was going it alone. Now he (or she?; "he's" still anonymous) is back at it. Check it out: http://state29.blogspot.com.
Yesterday I suggested that one of the reasons for paying CEOs some 450 times what is paid their employees is that we are hiring their valuable ability to anticipate risks and rewards long before they arrive. Under the category of employee and customer "safety" comes the exploration, in advance, of the range of imaginable harms. It's not enough that they wait for the damage to occur first and then appoint a committee, or otherwise then decide to address the problem. When an institution is blindsided with unanticipated damage it is, in my judgment, a reflection of the CEO's failure to earn his or her pay. They haven't done what they were hired to do.
I contrasted this with a CEO's failure to act, to remove a safety hazard, once the damage has already once occurred. And I used as examples the Utah coal miners (in a stretch of the mine that had already once collapsed), the bridge in Minneapolis (identified as having problems over 10 years ago), and the broken tiles on the NASA shuttle (following a prior occurrence of similar damage that led to the death of seven astronauts). As a friend suggested to me after that blog entry, that's not just nonfeasance, that should be treated as criminal behavior.
"Quality control" is not a new concept. Manufacturers use it in all their factories, wherever they are. It's especially important in the toy business -- for precisely the reasons the industry is now confronting: wary parents may be more reluctant to buy toys this coming holiday season. It's a double psychological whammy when you spend more than you should for a toy for your kid -- because you love and care for him or her and are hoping to increase their happiness (or education) -- and it ends up killing or injuring him or her.
You've got to hand it to Mattel. Their public relations firms are really doing a job for them -- up to and including pro-Mattel statements from the negligent, pro-business "Consumer Product Safety Commission." Few tell the story without adding what a wonderful company Mattel is and how confident parents can be when they continue to buy Mattel's toys. (Even the Times story quotes S. Prakash Sethi, a professor at Baruch College, “If Mattel, with all of its emphasis on quality and testing, found such a widespread problem, what do you think is happening in the rest of the toy industry. . .?")
Mattel's CEO, Robert A. Eckert, should have had procedures in place to check for such problems long before there were toy recalls on toys from China. At some point, it was a new source of supply. Any business, but especially a toy company, using a new source of supply would want to give special attention not only to costs, and consistency of quality, but also the safety of the products. Why did Mattel not do so?
Nor did the inspections need to rely on really creative brainstorming as to possible problems to look for (although that also should have been done). The dangers to children from lead, and the presence of lead in paints, has long been known. The dangers to children from small objects in toys (in this case small magnets, which are even worse -- especially when a child swallows two that hold together in the intestine) are also well known.
The publicists are pushing this as a "China" story -- clearly suggesting there is something immoral or unethical about their manufacturing processes. Mattel -- and other American corporations -- can't get off that easily.
1. As the Times also quotes Professor Sethi as saying, “there is something to be said about the pressure that American and European and multinational companies put on Chinese companies to supply cheap products. The operating margins are razor thin, so you really should not be surprised that there is pressure to cut corners.”
2. The Times reports that "About 65 percent of Mattel’s toys are made in China, some in five factories the company owns and operates there." Clearly, if Mattel "owns and operates" the factories -- regardless of where they are located -- it cannot blame "the Chinese" for defective and dangerous toys. I can't imagine Toyota excusing some defect in its cars because they were manufactured in an auto plant which, though owned by the Japanese firm, was located in the United States.
3. As for the hazardous little magnets, as the the Times reports, yes "The magnetized toys were also made in China, but they followed a Mattel design specification." The firm sure can't blame the Chinese for dangerous hazards to children from toys designed by Mattel and manufactured by a Chinese firm strictly complying with those designs and directions. That's one that Mattel sure should have caught -- right here in the good old U.S. of A.
Knowing that 80 percent or more of the world's toys are manufactured in China (65 percent of those sold by Mattel) American toy wholesalers and retailers should have taken, at a minimum, the same proactive, preventative steps they would have applied to a new American manufacturing plant. Given that this was a supply from another country, operating under a different culture, laws and regulations, those efforts should have been at least doubled.
But in fact this did not require any really creative thinking prior to any warnings.
We have already had case after case of problems with the safety of products imported from China: tires, pet food, human food and drugs. But that's not all. There were prior cases of unsafe toys as well.
And so it is that, alas, we must consider the possibility that the CEO's failure in this instance is not mere nonfeasance -- a failure to do the anticipation for which he is being paid the big bucks -- but a criminal malfeasance, a failure to act, knowing of the potential safety risks, after having been put on notice of the risk. It is, in short, another example to be listed along with the Minneapolis bridge, Utah coal mine, and NASA's defective heat shield tiles.
But there are bigger issues here as well involving foreign trade and offshore operations.
One of the objections raised to the WTO and NAFTA is that while they take very good care of American corporations' opportunities for ever-greater profits, they did so while ignoring the rights and needs of employees (e.g., low wages, long hours, abusive conditions, child labor, and so forth) -- abroad as well as here -- and the adverse impact on the environment in other countries (ultimately affecting us as well) of their use of practices that would have violated U.S. law.
Offshore corporations and banking enabled them to avoid U.S. taxes (not that corporate taxes amounted to much after their lobbyists had worked over Congress). Offshore manufacturing enabled them to avoid U.S. labor and environmental laws.
And now, it turns out, offshore manufacturing has also enabled them to avoid U.S. consumer protection standards (in this case for rather small and defenseless consumers).
In the case of the Mattel toys, many were manufactured in plants in China owned by Mattel. Clearly, the company should be responsible for the quality of the products manufactured in their own plants and then marketed to American children (fully capable of manipulating their parents into purchasing them).
But I think we should look behind mere ownership. Whether you call it "ownership," "outsourcing" or Tom Friedman's "in-sourcing," in practical effect these Chinese manufacturing firms -- of whatever product -- are essentially subsidiary corporations of American corporations and should be treated as such for purposes of complying with American law.
Talk all you want about "marketplace regulation" and "self-regulation," the responsibilities of parents, and caveat emptor, we are now talking about dangers to American children for which virtually no American parent, however much they apply a caveat, can test and prevent. There are some points at which ever-escalating profits must stop and public responsibility must start. This is one of them.
I haven't even had time to go through the last ten days' newspapers, let alone reflect on what happened during that time. I'll try to spread some of that out during the next week or so. Meanwhile, here are some random items.
UI's Stealth Presidential Search Continues
If you are one of the presidential candidates who is tracking this blog, hopefully you are better informed than I about where things in general -- and you in particular -- stand at the moment. But, if not, it looks like, from the stories of May 12, that interviews were held on May 13 and 14 (at an undisclosed location) with those ("less than 20") characterized as finalists as of Search Committee II's Friday meeting on May 11. So, I guess if you don't recall being interviewed last weekend you might want to give Dean Dave Johnsen a call and find out why not.
The on-again-off-again debate about transparency in Search II has continued. The position of Search Committee II is "we will only comply with Iowa's open meetings law if our candidates are willing to be law abiding -- but a few of what we think are our best candidates are scofflaws and we feel we need to accommodate them." I addressed this position before I took my blog break. My position was, in effect, "if you want to violate the law at least make a stab at coming up with a legal argument as to why all of its provisions are inapplicable to what you're doing." See Nicholas Johnson, "But Before I Do . . ." in "UI Held Hostage Day 472 - Beagle's Landing; More Secrecy," May 8, 2007.
What Search Committee II decided it would do -- over the objections of Iowa's governor and the President of the Board of Regents -- was that it would comply with a part of the notice provisions, but not all: they would reveal when they would be interviewing candidates but not where. As anyone, especially a group of academics, ought to know, the coordinates on any space-time event require both (a) a date and time (according to some agreed upon calendar and time zone (UTC or CDT)), and (b) a place (which, if on Earth, can be either "address" or latitude and longitude).
As of yesterday, the Committee had decided to have some on-campus interviews of finalists, but wasn't yet sure exactly what that would mean -- in terms of how long they will be here, or who will know, let alone have an opportunity to meet and question them. Hey, folks, this is day 484; June 1 is just around the corner, and July 1 (by which the Regents are to have selected the ultimate winner in this marathon) is not far behind. We really need some decisions about this process (as we have needed them since last January). Kathryn Fiegen, "UI finalists will interview on campus; Search group decision unanimous,"Iowa City Press-Citizen, May 19, 2007, p. 1A.
There was a significant clause in a story in The Daily Iowan's last issue of the academic year.
The story involved Regents' President Michael Gartner's statement that Search Committee II ought to comply with Iowa's open meetings law. There are those who've belittled what they characterize as a convenient conversion by Gartner from a practice of secrecy to a preaching of openness. I say give the guy some credit: for creating the policy that emails among Regents will be posted to the Board's Web page, and for this statement solidly supporting compliance with Iowa's law. (My position is that if the law needs to be changed, as may be the case, that's something to be done by the Legislature, not by the boards and agencies on a case-by-case basis as they find it convenient to do so.)
But far more significant than any of that, in my view, is the following sentence from Matt Nelson's story in The Daily Iowan: "Gartner asked the committee to reconsider its decision to hold the meetings at an undisclosed site based on the history of the presidential search but emphasized that he spoke only for himself and not the entire board." (emphasis supplied) Matt Nelson, "Panel to secretly interview UI president semifinalists,"The Daily Iowan, May 11, 2007. This is, to my knowledge, the first time that President Gartner has ever acknowledged the very basic governance principle that only "the Board" speaks for "the Board" and that individual Board members -- including the President of the Board of Regents -- have a governance obligation to make very clear when they are speaking for the Board and when they are just speaking in their individual capacity.
It could have just been an off-hand comment, but I am hoping that it may be a first step toward the establishment of a full-blown set of governance standards regarding: (1) measurable goals (what John Carver calls "ends policies"), (2) relationships between the Board and Regents institutions' presidents and faculties (taking into account the academy's tradition of "shared governance" -- and the need to provide an operational definition of just what that means), (3) what Carver calls "executive limitations," and (4) the Board members' own relationships, and self-imposed restrictions on their own behavior.
But before you get too hopeful about this, read State 29, "This Ought to Make Nicholas Johnson Laugh," May 18, 2007. It did. (The Board of Regents has apparently hired a public relations firm. There may be more on this later.) But it was bitter sweet because of its implications for governance: Apparently Regent Bob Downer was not even informed of this "Board of Regents decision," let alone given an opportunity to participate in it.
Wondering where the "UI Held Hostage" came from? Click here. (As of January 25 the count has run from January 21, 2006, rather than last November.)
For any given entry, links to the prior 10 will be found in the left-most column. Going directly to FromDC2Iowa.Blogspot.com will take you to the latest. Each contains links to the full text of virtually all known media stories and commentary, including mine, since the last blog entry. Together they represent what The Chronicle of Higher Education has called "one of the most comprehensive analyses of the controversy." The last time there was an entry containing the summary of prior entries' commentary (with the heading "This Blog's Focus on Regents' Presidential Search") is Nicholas Johnson, "UI President Search XIII -- Last Week," December 11, 2006.
Searching: the fullest collection of basic documents related to the search is contained in Nicholas Johnson, "UI President Search - Dec. 21-25," December 21, 2006 (and updated thereafter), at the bottom of that blog entry under "References." A Blog Index of entries on all subjects since June 2006 is also available. And note that if you know (or can guess at) a word to search on, the "Blogger" bar near the top of your browser has a blank, followed by "SEARCH THIS BLOG," that enables you to search all entries in this Blog since June 2006.]
