Archive for January 18th, 2010

September 21, 2009

Valley of denial

ASU’s Morrison Institute has always labored under two Sisyphean tasks. First, its public-policy scholarship necessarily antagonized the state’s ruling elites — hence, it was forced to pull its punches to avoid losing funding, and, even then, the elites wouldn’t accept its work. Second, it was treated in the media as the “liberal” equivalent of the (Bob) Goldwater Institute. This, even though the “Goldwater” Institute is an arm of the national right-wing advocacy machine, not a genuine think tank that engages in open-minded, peer-reviewed research. With the loss a few years ago of my sometime collaborator Mary Jo Waits, author of Morrison’s most prescient and important works (Five Shoes, Meds and Eds), the institute became even more marginalized. Now Morrison is trying once again to become part of the conversation under the leadership of Sue Clark-Johnson, retired Arizona Republic publisher and close friend of ASU President Michael Crow.

Good luck. Unfortunately, the first effort, Forum 411, seems destined for the dustbin of forgotten, well-intended reports at an even faster speed than its predecessors. It is brief, as to be expected from an entity now headed by a former Gannett executive, and strives to be inoffensive. Think of a pep talk. Anthony Robbins on economic development. It states two broad themes: the obvious (Arizona needs to diversify its economy) and the untrue (which I will deal with momentarily). Worst of all, it leaves critical information entirely out. The loss of Waits’ intellectual heft is obvious. So, too, is the continued bowing before the Real Estate Industrial Complex (the report’s sponsor is the suburban mall developer, Westcor).

(Some disclosure: For years, Clark-Johnson rebuffed efforts by the powerful developers and house builders to fire me as a columnist for the Republic (until the economic collapse made the need to please advertisers paramount). Even though I pulled my own punches for self-preservation, her protection allowed me to tell the truth about Arizona and Phoenix’s dire situation, including predicting the current depression there, as well as supporting a variety of good civic causes, such as light rail. At her behest, I accepted a Morrison fellowship in 2003-2004, although I declined any compensation and did not write about Morrison or its work in my column during that time.)

This first “411″ is entitled, The Road to Recovery: Lessons from Arizona’s First Economy. Its conceit is that Arizona today can learn from the state’s rebound from the Great Depression. Clever, but bad history. As happens with much of the Information Center’s “journalism,” the state of Arizona is misleadingly conflated with metro Phoenix. In fact, the Depression was very hard on the copper-mining districts of the state. Its effects were much less severe in the capital city. The Great Depression did not damage Arizona in the same way as this Great Recession.

Unlike what metro Phoenix had become in the 2000s, the old agricultural-ranching economy was relatively sustainable; even mining in the state was more “real” than the housing bubble. In addition, the initial diversification beyond the “Five Cs” was not undertaken by Arizona — where state officials were as reactionary then as now, although not insane — but by forward-leaning leaders of Phoenix. Arizona was a large, diverse state that did not move in lockstep with Phoenix and had very different issues and challenges.

The report goes on to examine the state’s “cluster” strategy in the 1990s without stating the essential truth: the attempt to build such a tech economy failed because of lack of focus and funding. Some semiconductor manufacturing and a few other legacies of the 1950s-1960s economic efforts remained; Tucson was somewhat successful with optics. But compared with the leaps made by rival cities in that decade, Arizona metros turned in abysmal performance. No major companies were created. No major high-wage industries cornered. Unlike in India, call centers did not prove to be gateways into higher-skill technology jobs and sectors. Hundreds of tech companies were lost and Motorola began its long retreat. I recall an anecdote from the early 2000s, when I was hell-raising in the paper three times a week. The Greater Phoenix Economic Council undertook a confidential study: Did the clusters work, and what was the truth about metro Phoenix’s wages compared with its peers? At one meeting, as the results were discussed, a participant gasped aloud, “My God, Talton is right.”

The reality is that the Phoenix leaders from the late 1940s through the 1960s achieved much: developing tech and aerospace sectors, while Phoenix continued to be a major agricultural player (something that allowed the region to export and have some food self-sufficiency, not to mention cooler nights). That was diversification. Indeed, until the 1980s, wages and incomes in Phoenix tracked or exceeded the nation and peer cities, before beginning to fall behind thereafter. Another local effort came after the 1990 S&L crash, when GPEC was formed under the dynamic leadership of Ioanna Morfessis. It succeeded for a time, but Phoenix lost its key corporate engines, especially Dial and Valley National Bank. Economic development efforts faded — and things seemed “good.” The economy was “growing.” Yet this growth was in population and construction, rather than incomes, venture capital, initial public offerings, educational improvements and other measures of competitiveness and social good. The sometime successes, whether Intel’s new fab or Amazon’s distribution centers, were not enough to create a diverse economy and sustainable prosperity for a metro area of this size. Still, the Growth Machine made the elites wildly rich and any reform efforts provoked stout resistance.

When the economy crashed in 1929 (and much of the agriculture economy had been ailing through the 1920s), Arizona’s Five Cs remained viable awaiting a broader revival. And, critically, the state had a very small population: 436,000 in 1930. When the economy crashed in 2007, metro Phoenix’s tech sector was smaller as a proportion of the total economy than at any time since probably 1950. All the “Cs” were gone, except for (rapidly warming) climate. The entire state was dangerously dependent on the intertwined sectors of housing, real estate, home-improvement, low-wage service jobs. All were a Ponzi scheme, not only because of the national financial frauds but also because they were contingent on continued large, unsustainable rises in population. Now metro Phoenix has 4 million people, which brings huge “carrying costs” just to keep the economy afloat and handle the bare infrastructure needs and urban problems of such a huge metro.

So a look back to the Depression is largely unhelpful. So, too, are the anodyne suggestions that mark the report’s conclusion. All fine. I love Science Foundation Arizona, too (Ironic that Ireland, its model, crashed in a Phoenix-style real-estate bubble). Too bad the Legislature stabbed it, and the universities, in the back. But the report is very 2003, when the hopes of Napolitano, TGen, etc. were still fresh. It avoids a hard look at where Phoenix and the state (still distinct entities) really stand today.

The realities now are far different:

1. Intense population growth, and the huge debt bubble, to support the old sprawl of the Real Estate Industrial Complex, may not come back.

2. State finances are a disaster, making funding for leap-frog initiatives difficult and even making it impossible to catch up on the infrastructure needs of the past, that were pushed forward to allow quick profits for the land barons. Phoenix and Tucson are the largest close metros in the nation with no passenger rail service, to take but one example. The state has been badly wounded by years of tax cutting, and worse, a tax structure totally incompatible with the needs of a populous, highly urbanized state.

3. Arizona is paralyzed by political extremists and bigots, a crazy show that conveniently perpetuates the status quo. On the national and world stage, it turns stomachs. Top scientists and engineers will not come to a place in significant numbers when a hostile Legislature is always cutting funding for research while the dominant political party fires up its “base” by attacking people who aren’t white, straight and suburban. Arizona can’t understand that in today’s economy, government must do some things very well — from education to infrastructure, etc. It’s true from China to North Carolina. The nihilistic reactionaries of Arizona are one of its biggest impediments. Unfortunately, they’re in charge. For years they have underfunded or not funded key investments for real economic growth, such as the universities. They have refused to employ the economic-development best practices used successfully by such communist regimes as Georgia, Alabama and the Carolinas.

4. The “good years” were squandered. This is especially true with the Phoenix Biomedical Campus, which by this time should have been built out with hospital(s), medical, nursing and pharma schools, more research operations and for-profit pharma and biomed manufacturing all on one site, with the critical mass the creates breakthroughs. Now there seems no will to move ahead, even as Arizona has been left even further behind by its rivals.

5. The competitive landscape is changing even more than before the crash. China will become more of an economic force than ever, yet Arizona is doing nothing to attract foreign direct investment or build trade. China and Europe are making leaps ahead of America in renewable energy, and Arizona is not on the radar even within the backward U.S. Neither Arizona nor Phoenix even have a strategy to recruit companies from the LA area.

6. Suburban sprawl and political Balkanization continue to kill Phoenix. They prevent even a coherent “brand” in the world economy — what the hell is “the Valley?”; nothing they know about in Shanghai. Metro areas, not states, are the new competitive units of the world economy. It’s city vs. city — but not Chandler against Gilbert for sales taxes. Yet the little mandarins of the suburbs would rather fight to keep the magical name “Phoenix” from even being uttered.

7. Degradation of quality of life and the environment continue apace. Phoenix lacks the attractive city assets of its rivals — even though those rivals have lookalike suburbs, too. This is a particular disadvantage when dealing with such a populous place; Phoenix is not Santa Fe, or even Fresno. Phoenix is too much one flavor. And there’s no Plan B: to retrofit suburbia for the future; create high-quality density and walkable town centers with transit, etc. Hot weather and endless driving from the subdivision to a Westcor mall may attract retirees and a self-selecting cohort of Midwestern and inland California suburbanites. Those “assets” and Arizona intolerance won’t attract the world’s most talented workers. Combined with the state’s backwardness and political extremism, they will continue to repel capital for anything but, maybe, real estate.

8. The underclass time bomb continues to tick. Millions are cut off from the economic mainstream and a ladder up, stuck in a horrible school system, segregated in linear slums. It’s a tragic waste of human capital, a moral crime and a social explosion waiting to happen.

9. Arizona is less prepared than ever for the realities of the 21st century, including climate change and peak oil. It is among the most vulnerable states to the consequences. It is unwilling even to acknowledge its own water situation and take the aggressive land-use steps to address it.

None of this is in the Morrison report, which concludes: “We have matured as a state in economic terms and dynamics, and now is the time to put that maturity and knowledge to work…” Not really. The elites are just waiting for the Growth Machine to sputter to life — Please, God, give me one more bubble… The reigning boosterism, delusion and denial prevent discussion, much less action, on the huge issues that will affect Phoenix and Arizona, whether they want it or not.

I can’t wait for the “Goldwater” Institute and its sock puppet on the Information Center’s editorial page to strike back at this socialist Morrison manifesto.

Excuse me: I should have said it in Kook: SOCIALIST MANIFESTO!!!

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The phone rings. The executive director of one of our prestigious economic development organizations is on the line.  “Would you like to serve on our board?”

Your heart’s all aflutter and you feel honored. And you should be.

“Yes,” you say. At that moment you have entered a whole new world of responsibility and accountability. Print this story
Being asked to serve on a nonprofit or association board is a rite of passage for many local professionals. Board service builds your résumé, is a great way to network your business, and you can spend an hour a week giving back to the community. Agencies, bureaus, chambers and nonprofits rely on the business community’s leadership and dollars to steward them into the future.

We don’t want to throw the baby out with the bathwater but it’s important to draw some lines and point out that serving on a board is a big responsibility. The members of that association — or if they receive tax dollars, the taxpayers and elected officials — are counting on you to make sure the director and staff are operating in an effective and legal manner. That’s an important job.

Believe it or not there are boards in Tucson that really don’t want or care about outspoken opinions. Shocking but true, some boards might select you because you can’t spend that much time, or you won’t rock the boat. Besides, lighting the world on fire isn’t your cup of tea. In these instances you’ve been invited to be on the board to maintain the status quo. A board made of status quo keepers and poker buddies of the director are sure to lead that organization into the swamp of indifference.

Here are some tipoffs that you are serving on a board that isn’t really looking to have your voice heard:

• If the paid executive director identifies and invites you to the board there may be a problem.

• If you look around at other board members and see mid-level managers from unrelated industries it means the movers and shakers aren’t involved.

• If there are more than 20 board members there may be a problem.

• If the executive director withholds financial data or ignores your request for information, there might be a problem.

• If you’re wined and dined more than you’re asked to roll up your sleeves, there might be a problem.

• If the organization’s revenues are shrinking, customer base is evaporating and effectiveness is diminishing all the while the staff is getting raises, there might be a problem.

• If your board meetings revolve around golf, travel or lavish meals, there might be a problem.

• If your board meets once a quarter, once a year or regularly misses its quorum, there might be a problem.

• If the ability to bring in fresh blood on the board isn’t there, there may be a problem. Some boards recycle the director’s old friends again and again.

• If you look around and see the same 10 or so people on every other board you’re on, there might be a problem.

• If your board comes with free parking for life and there are over 70 members there might be a problem.

A note of wisdom from two self-proclaimed wise guys, think long and hard before you say yes to joining the swanky new board of the week. Be prepared to learn the market of the organization you are volunteering for. Take the time visit with staff and customers. Do your homework. Look to competitive organizations to see what the management is doing right and what they are doing wrong. Speak up, ask the tough questions and hold the staff of the chamber, bureau or nonprofit accountable for decisions.

There are people within the organization or in the community that depend on you doing your part to ensure things are on the up-and-up. Ask yourself: Are my actions on this board serving the least of the my members? If they are, then you’re on the right track.

If you take your role for granted we all lose. Do the right thing, we are all depending on you.

Contact Joe Higgins at joe@joehigginsinc.com or Chris DeSimone at provenpartners@comcast.net. They’re the hosts of “Wake Up Tucson,” which airs 6 – 8 a.m. weekdays on The Voice KVOI 1030-AM. Check out their blog at www.TucsonChoices.com.

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