June 11, 2012, 6:40 a.m. p.m.
Brief Intro:
Businesses, governments and taxpayers across Iowa's 99 counties and hundreds of cities and towns (indeed throughout America) are confronting three challenges from e-commerce in a global economy.
(1) Iowa's nationally and locally owned retail outlets, newspapers, and bookstores are struggling to find business models that will carry them from small town virtual monopoly storefronts into the highly competitive global marketplace of Web pages and social media.
(2) State, county and local governments are trying to figure out what they can best do to help the economies and communities of constituents for which they feel some responsibility.
(3) Taxpayers are questioning the wisdom of a "solution" that involves transferring their tax dollars from legitimate government projects to the bottom line of a handful of politically favored for-profit enterprises. Especially do they question the transfers when the money is used for business plans that appear to be pretty unimaginative responses to "e-commerce."
These issues were recently explored in depth here in "Big Boxes, Little Bookstores and Taxpayers; We'll Leave the Prairie Lights on For You," June 6, 2012.
That blog entry provided the research and source material, with links, for what ultimately became a column in this morning's Press-Citizen, below. If this is a subject that interests you that earlier blog entry is worth your exploration. Otherwise, this lighthearted 644-word column will provide a quick-read, summary view of these deadly serious issues.
Maybe Taxpayers Should Buy Wal-Mart a Gift Shop
Nicholas Johnson
Iowa City Press-Citizen
June 11, 2012, p. A7
The Iowa City Council, at least three members, recently leapfrogged over their colleagues to rule that local taxpayers should pay for a local business’s “museum quality gift shop” and café.
To “speed things up a little bit” they delegated the matter to the discretion of the city manager.
The grant is not even a TIF. It’s a $27,500 gift, plus a possible $15,000 1 percent loan.
Why do it? They want to “educate the public about eCommerce.”
The lucky beneficiary of this largesse? Iowa City’s Prairie Lights — widely beloved, and by no one more than me. But our love is not the issue.
The issue? Whether taxpayers really support the council handing over taxpayers’ money, without their approval, to favored for-profit businesses.
Clearly, the council is not interested in the answer.
Confronted with a petition to put public review of one of its latest controversial TIFs on the ballot, the council’s response is to suggest using a legal technicality to make the payment anyway, using a bond that citizens’ petitions can’t challenge.
This council switch would cost taxpayers an additional $300,000. The council thinks it’s worth the money to keep citizens at bay.
If it’s legally required we vote on the bonds to fund legitimate governmental projects, like the proposed county justice center, isn’t it even more appropriate the public be involved in taxpayer funding of private, for-profit businesses?
Capitalism means owners provide the capital, sometimes profit handsomely, but also bear all risks.
Socialism means governments own and provide traditional governmental services like police, fire, parks, schools, roads, libraries — and smoldering landfills.
What we’re doing — in Washington, Des Moines and Iowa City — is corporatism, the intertwining of business power and government largesse.
During World War II, in Benito Mussolini’s Italy, we called it fascism. Owners take the profits; taxpayers take the risks.
If that’s what local taxpayers truly want, there’s probably a way it can be provided constitutionally. But is that really what we want?
E-commerce? Aside from the café and gift shop, the city says this is the store’s “attempt to adapt to the ever-changing traditional and electronic market.”
That raises some issues.
According to the store’s website, it’s already in that business. Moreover, the owner concedes, “there’s no overhead.”
Every business confronts the “ever-changing traditional and electronic market,” including this newspaper.
Change can put a business out of business. However, this is the capitalist’s challenge, not the taxpayer’s responsibility.
Swiss watchmakers respond to digital watches, slide rule firms to calculators, mainframe computers to desktops, cellphones to smartphones — the examples are endless.
Bookstores are challenged with online sales, e-books, online self-publishing, Wal-Mart (40 percent of all best-seller sales), the cornucopia of Internet resources, the decline in discretionary time for reading.
Convenience, as well as savings, motivates e-book readers. If they can download a book to their Kindle while in bed and get advice from the Internet, why would they get out of bed and come to Prairie Lights for “a staff member to assist customers in e-book sales”?
Moreover, the city’s solution, adding a gift shop, is a way of getting out of the book business, it’s not a creative 21st-century e-commerce business model for staying in it. It’s like a pharmacist — also online and Wal-Mart challenged — adding groceries to the drug store merchandise.
In the greater Iowa City-Coralville area, every retail outlet must respond to the opportunities as well as the challenges offered by change.
Does the council intend to give our tax money to all of them? If not, why Prairie Lights?
Want to know which stores are suffering the greatest e-commerce impact? The Big Box stores, like Best Buy, Sears and Wal-Mart. Shoppers come to look, then order online from elsewhere. The companies are closing stores; their common stocks have declined.
Want to save those jobs, council?
Maybe local taxpayers should buy Wal-Mart a “museum quality gift shop.”
__________
Nicholas Johnson, another satisfied Prairie Lights customer, teaches at the University of Iowa College of Law and maintains http://FromDC2Iowa.blogspot.com.
# # #
August 27, 2008, 8:14 a.m.
Currently Most Popular Blog Entries
"It's Biden -- for 'Experience'?" August 23, 2008.
"Jails: 'Overcrowding' Not the Issue," August 21, 2008.
"How to Build an Indoor Rain Forest," July 10, 2008.
"UI Sexual Assault Update" is now embodied in, and being updated as, a Web page, "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present; although the original blog entry (July 19-August 9) has not been removed,"UI Sexual Assault Update," July 19-August 9. Both remain among "most popular."
"Random Thoughts on Law School Rankings," April 29, 2008.
"Earthpark: 'Pretty Quiet Phase; No Timetable to Speak of,'" August 14, 2008.
"Abolish Bar Exams?" August 22, 2008.
"Solving Illegal Behavior Problems by Making It Legal," August 20, 2008.
And see, Database Index of 500-plus blog entries
The Fallacy of the "Revenue is Needed" Rationale
Looks like it's time to bring out the "revenue is needed" blog entry once again.
Although the decision before the Iowa City Council involves whether to permit or prevent another 180,000 square-foot Wal-Mart in Iowa City, you'll find nothing in this blog entry regarding the case for or against Wal-Mart.
What this blog entry deals with is the Council members' analysis, their decision making process and rationale -- specifically, that at least a couple of them (two, not incidentally, for whom I have great respect and appreciation for their willingness to serve) are willing to articulate that the reason they are willing to do something that clearly has a down side, that was once successfully opposed and is still opposed by a significant number of the citizens of the community, is because, in effect, "revenue is needed."
Councilor Connie Champion said she supports the project because the city needs the tax revenue.
"This is a business decision -- a city business decision," she said.
Councilor Matt Hayek also favored the project for tax revenue reasons.
He said the budget already is tight for this year.
"We need growth in Iowa City. We especially need to expand our commercial tax base," he said.
Chris Rhatigan, "Smoking ban, Wal-Mart pass first hurdles; Proposals need two more votes to be enacted," Iowa City Press-Citizen, August 27, 2008, p. A1. The Gazette's report is comparable. Gregg Hennigan, "I.C. council votes for Wal-Mart; Proposal to expand retailer passes on the first of 3 votes," The Gazette, August 27, 2008, p. B2 ("'My business mind tells me the city needs this tax revenue,' said council member Connie Champion.")
(1) Goodness knows, no one should complain about a government trying to be fiscally responsible. Governments do need to balance the books -- unless it's the federal government, running up what is now over $50 trillion in unfunded future obligations and debt that we have all decided, by default, to just put on our great-grandchildren's credit cards.
(2) But fiscal responsibility can also involve cost cutting and increased efficiencies; refusing to transfer taxpayers' money to for-profit corporations bottom lines with TIFs and other devices; it need not always require higher taxes. In fact, sometimes innovative alternative approaches can simultaneously both (a) cost less, and (b) deliver more. See, for example, the analytical approach described and illustrated in Nicholas Johnson, "Jails: 'Overcrowding' Not the Issue," August 21, 2008.
(3) Nor does it necessarily follow that if worthwhile City projects (for example, proactive efforts that will return to the community in the future far more than they will cost today -- such as transforming flood plains into greenways) do require more money that the City should seize upon the first tax opportunity that comes down the road as the way to fund them. There's more than property taxes on businesses and homeowners. Cities should push for more opportunity to fund through an income tax surcharge. There's revenue from services, special assessments, user fees, and sales taxes. There are grants from federal and state agencies, foundations and corporations. This is not my normal line of work, but I do know enough to know that property taxes paid by Wal-Mart are not the only way to fund the City of Iowa City.
(4) So long as there is a free and open competitive market, there's nothing wrong with a corporation focusing on maximizing profit, whether through efficiencies, or the higher prices earned through better quality goods and services. Profit is, after all, a kind of important element of a "for-profit" corporation's mission. However, I find that kind of thinking very troubling when it comes to a city government; "increasing revenue" is not the mission of any unit of government, especially when the revenue is going to be increased by increasing taxes. The City's mission is, or ought to be, it ought to start with, (a) "what is in the best long-term interest of this community and its citizens?" -- separate and apart from whatever impact the answer to that question may have on the City government's revenue streams. It can then address, (b) what is the fairest, least intrusive, most administratively efficient way to raise the money necessary to accomplish those goals?
For example, urban sprawl, recruiting new businesses, transforming farms into suburban tracts, preferring commercial to residential building, rebuilding in flood plains instead of turning them into flood-preventing recreational greenways -- and making more land available for big box stores opposed by local residents -- might all be seen by some city governments as ways to increase City revenue. But such decisions would be thought by many to be diametrically opposed to the best long-term needs and interests of the community and its residents.
I cannot know for sure, of course, but "We need growth in Iowa City. We especially need to expand our commercial tax base" sounds to me like an analysis driven entirely by a "revenue is needed" approach rather than what is otherwise best for the area. The "growth" may or may not bring added revenue (after the subsidies, TIFs and other enticements are taken into consideration), but it may also involve at a minimum additional costs for the City (e.g., our $100 million water plant, roads, sewers, police and fire protection), as well as zoning variations, aesthetic problems, increased runoff and flooding, the "opportunity cost" of preventing a higher social use for the land, and many other consequences one would not have favored had one not been focusing on "growth" and the "commercial tax base."
(5) However, what troubles me most about this kind of thinking is a moral and ethical question. Because once "we need the revenue" becomes an acceptable rationale for one's decisions, and especially when its use by government officials goes unchallenged by everyone in the community, it can be used to justify virtually any unwise decision -- as it has been in our very community.
I have written about this before, and will simply repeat some of that here this morning.
As I have written before, "Once 'revenue is needed' is the Polestar for a university's financial decisions its moral compass begins to spin as if it was located on the North Pole." Nicholas Johnson, "UI Loves Gambling" in "UI Held Hostage Day 410 - March 7," March 7, 2007.
"Revenue is needed" is why politicians accept the bribes called "campaign contributions;" why "non-commercial" educational radio stations run commercials; why K-12 schools subscribed to "Channel One" and continue to sell sugared soft drinks to their students, knowing they will increase obesity, dental caries, and diabetes; why the UI's athletic program becomes a partner with the organized gambling industry's casino in Riverside; and why universities provide advertising on their buildings, and in naming their colleges, that promotes their corporate "donors."
Nicholas Johnson, "The Good News and the Bad News/The Bad News" in "UI Rips-Off Students Because . . . 'Revenue is Needed,'" September 25, 2007.
Indeed, Willie Sutton robbed banks, not just "because that's where the money is," but because "revenue is needed."
As I explained at the outset, I am not discussing, let alone arguing, in this piece for or against putting another Super-Wal-Mart in our metropolitan area. Those arguments have been, and will be, laid out for the Council to consider. There is a wealth of literature and data on the Internet regarding the issue and how it has been addressed elsewhere, and with what consequences. I would hope that that experience of others would be known to, and brought to bear by, our Council members in the case before them.
There are many valid -- as well as erroneous -- reasons for doing one thing or another with regard to Wal-Mart's proposal. "Revenue is needed" should not be among them.
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May 23, 2008, 11:30 a.m.
I've been working on a book the last few days -- with many more to go. It might actually be something you'd be interested in once I get it done. In any event, that's where my blog energies have been going recently. I'm saving them up for real "blog emergencies." Today isn't one, but I couldn't resist. -- Nick
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Founder of Major Early Religion Returns; Appears With Mother at Wal-Mart
Clerk Asks, "Paper, Plastic or Cloth?" Wonders Why Jesus Chose Plastic
Supercenter Opponents Charge "No Coincidence"
With all the people waiting for Jesus' return, who'd have guessed he'd show up in a Wal-Mart plastic bag with his Mom? Rachel Gallegos, "Man captures image of Wal-Mart bag resembling Virgin Mary," Iowa City Press-Citizen, May 23, 2008, p. A1 (John Wasendorf believes "on the right it is almost the head-to-toe image of the Virgin Mary. To the left, he sees the face of Jesus.").
This is more bizarre than George Burns' portrayal of God in the 1977 movie with John Denver, "Oh, God!"
Wouldn't Jesus use a returnable cloth bag? Just when you think you understand somebody they go and prove you wrong.
But the greatest mystery surrounds why he would choose Wal-Mart rather than, say, Target.
Wal-Mart, which faced a storm of local protest at its last attempt to establish its second "Super-Wal-Mart" in the area, has brought the idea back for a second time at bat. Chris Rhatigan, "Wal-Mart plans new supercenter; Store should be completed by early 2011," Iowa City Press-Citizen, May 21, 2008.
Gary Sanders, chairman of Iowa City Stop Wal-Mart, said he continues to oppose a new supercenter because of Wal-Mart's poor track record on labor and the environment.
However, he said even if a new supercenter is constructed, his group's efforts were not in vain.
"I think our organization should be very proud that we kept Wal-Mart from building a supercenter on public land that included a floodplain," he said, referring to the company's previous plans.
Sanders added that if Wal-Mart is seeking any zoning special exceptions for the new store, as they did the first time, "citizen action" would be necessary.
"If they need zoning or any special exceptions, we'll be there," he said.
Now I haven't talked to Gary about this, but is it really just a coincidence that if the Iowa City City Council -- a public body that seldom if ever saw a corporate subsidy it didn't like -- did not have the power to bring off Wal-Mart's deal that the company would have thought up a publicity stunt like this as a way of appealing to a higher power?
Wal-Mart using Jesus?! The only phrase that comes to mind is what the Army's lawyer, Joseph Welch -- whose autographed photo hangs proudly on my law school office wall -- said to Senator Joseph McCarthy, following one of McCarthy's attacks during the Army-McCarthy hearings on June 9, 1954, while I watched the live televised hearings, "Have you no sense of decency?"
Really? A coincidence? I think not.
Current Controversies in the Academy
The latest dust-up on the Iowa City campus -- not unlike the rest of the nation (though with a much better health insurance coverage) -- involves revisions in the health plan created by something called FRIC.
These are issues everyone can get their teeth into -- if they have dental care coverage.
And the whole fracas just provides one more illustration of the Management 101 principle that when you want to change policies -- especially those that will be perceived as affecting employees' benefits -- there's no substitute for keeping everyone affected in the loop, informed, step by step.
Brian Morelli's headline and sub-head tell the story (although his full report tells it better). Brian Morelli, "UI waiting for benefit details; Opposition petition has 1,100 names," Iowa City Press-Citizen, May 22, 2008.
Duncan Stewart thinks the "Process Was Secretive, Divisive," Iowa City Press-Citizen, May 21, 2008.
The Press-Citizen editorializes, Editorial, "UI Needs to Put All Its Cards on the Table," Iowa City Press-Citizen, May 23, 2008.
University of Iowa law professor Sheldon F. Kurtz, co-chairman of the UI Funded Retirement and Insurance Committee (or "FRIC"), thinks that the "Benefit Proposal is Sound," Iowa City Press-Citizen, May 23, 2008.
I am simply reminded of George Carlin's observation: "Some say the glass is half full. Others say the glass is half empty. I say the glass is too big." (Just kidding.)
But wait, there's more . . .
Since last fall the Press-Citizen has been trying to get access to the public records that might reveal at least something about how University administrators handled the aftermath of whatever the hell happened in a student dorm the night of October 14, 2008.
Apparently frustrated as the paper has watched October turn to November, December, January, February, March, April, May -- and now, soon, June -- the Press-Citizen's Lee Hermiston reports the paper has apparently abandoned the hope of ever getting any actual information and has now retreated to simply asking for an index of what the University is never going to give them -- which apparently they aren't getting either:
In the motion filed in Johnson County District Court, the Press-Citizen is arguing UI should be required to produce the index of withheld documents or disclose redacted versions of the documents.
According to the motion and case law, UI's "blanket claim" of withholding all of the documents creates problems for the Press-Citizen and the courts. The motion states that without knowing what UI is keeping, the Press-Citizen is unable to determine whether the confidentiality of the documents is appropriate.
"What happened at Hillcrest Hall seven months ago and what public officials have done since is a public issue," said Press-Citizen managing editor Jim Lewers. "We Iowans -- the people who own and fund the University of Iowa -- deserve to know about student safety, the athletic department and accountability and openness. It's absurd that we can't even find out how many pages of documents the university is denying us access to."
Lee Hermiston, "P-C files motion in lawsuit against UI," Iowa City Press-Citizen, May 22, 2008.
The lucky beneficiary of this largesse? Iowa City’s Prairie Lights — widely beloved, and by no one more than me. But our love is not the issue.
