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There’s a lot to be learned from economic bubbles. Have you ever stopped to think about who it is that actually blows the bubble in the first place?

Whenever there’s money to be made the ‘used car salesmen’ show up trying to get their mitts on some of the cash that’s floating around. Since they’re seldom able to add any real value to what’s happening (no real business skills, no tech skills, etc.) they find places to apply what little skill they do have.

The skill I’m talking about is a combination of emotionally manipulative banter and a lack of scruples. It’s the skills that created the stereotype that comes to mind when used car salesmen are mentioned.

Unfortunately, people with that ’skill’ aren’t restricted to peddling cars for a living. They’ll push any wares that are attractive to or needed by a large and ignorant audience. You’ll find them anywhere that you can find a lot of people willing to buy something that they don’t completely understand.
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Union workers shut down the Port of Tacoma today for an illegal protest of the war in Iraq.

What do unions have to do with foreign policy? The short answer is nothing. So why do they think they can protest on company time and the taxpayer’s nickel?

In case you weren’t aware, it’s illegal for public employees in the state of Washington to strike. Unions do it all the time, but just because public officials and judges don’t do anything about it doesn’t change the law. These people should be put on trial for breaking the law. Not that it would do any good. The union would hire their lawyers (and probably get money from other unions to support their cause… exploiting employers and members) and the judges would likely dismiss the charges or suits after lengthy and costly appeals. But I wouldn’t mind my tax dollars going to strike a blow against these union thugs and in support of the rule of law in our state.

They claim they’re supporting the troops in this protest but that’s just double-talk. Nothing about what they’re doing is supportive of the troops. You can’t support the troops without supporting their mission, you can’t support the troops when you’re wasting money for the businesses that hire our troops when they’re not deployed and you’re not supporting the troops when you waste taxpayer dollars to do something that won’t do a bit of good for anyone.
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Dino Rossi, once again running against Queen Christine to take back the election that he won in ‘04, has unveiled his transportation plan for Washington state.

Funding for the plan comes from several sources:

• Less than half of revenue from vehicle sales taxes [goes to funding roads] ($7.7 billion)
• Stop charging state sales tax on transportation projects ($2.4 billion)
• Half of the current and future eastside subarea equity Sound Transit surplus ($690 million)
• Reasonable tolling ($ ?)

The plan:

• Congestion relief - nine projects given the highest priority (other than safety, stated in a video)
• Other Transportation Initiatives - Alaskan Way Viaduct, our state ferry system, and addressing the funding gap for projects statewide
• Green Initiatives - promotes the use of hybrid and plug-in electric vehicles, and provides funding to repair salmon blocking culverts owned by the WSDOT
• Transit - Transit has always been planned, and managed, at the local level. The state should not meddle in local transit decisions.

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A summary of the reasons that I think Tacoma’s offer to Russell is bad for the city:

• It’s too expensive - Keeping one company in town for $140 million ($65 million of which has to come from a city struggling to rebuild its downtown) is just too much to pay.
• There was no apparent consideration of alternatives - That money could be used to attract a number of smaller businesses to downtown Tacoma.
• It was poorly negotiated - Public showmanship is not how you negotiate this type of deal when your competitors are keeping quiet.
• It appears to be politically motivated - None of the current city council members want to be the next Gary Locke.
• Building a financial district around Russell has already failed - There’s nothing to indicate that this deal can change it. Tacoma’s problems are systemic and need a systemic solution, not a flowery trim and better drainage in this imaginary ‘International Financial Services Area’ (IFSA).
• The decision was made while consultants were still gathering data that would be used to help determine if it was the best course of action (that is, assuming there was ever any question in their minds when they hired the consultants).
• The deal came from a policy that wasn’t discussed openly by the city council, nor was there a public vote of a quorum of council members. According to this thread at a TNT blog, there was only a ‘tacit approval’ by city council members, whatever that means in this situation.
• The deal depends on some money that is set aside for an Empowerment Zone, but will be used in an area that is being set aside for wealthy financial services companies (the IFSA).
• The financial district pipe-dream is probably responsible for the rejection (or hindering) of numerous viable companies that might have moved in downtown. I think it’s time for its proponents wake up from that dream and smell the coffee roasting (if they allow roasting in Tacoma).
• There’s no guarantee that all Russell employees will choose to relocate to be nearer to a Seattle or Federal Way Russell headquarters. Employees who choose to stay and commute to the new HQ would keep their personal portion of their ‘economic impact’ where it currently is, in Tacoma and environs.
• The B&O portion of Russell’s economic impact, as I understand it, is under $10 million, yet the city will spend many times that to keep them here.
• The deal includes a targeted tax cut for Russell for the city’s B&O which is being justified by saying, ‘if they leave we’ll lose it anyway’. But that doesn’t change the fact that it’s nothing more than corporate welfare. The city should consider a broader cut or even a repeal of that tax to help bolster smaller businesses, including those who relocate downtown.
• Russell’s desire to relocate isn’t a big surprise. They’ve considered it at least once before (in the 90’s) and they have already revised their leases to expire in the same year. Even this huge deal might be too little, too late.
• Most anyone who is honest about it will admit that Russell and Tacoma are not exactly a good match (for Russell). There are many other companies that are a good fit with Tacoma that could use a boost from the sources cobbled together into this Russell deal.
• I think that it’s time for Tacoma to rethink its goals for downtown. I believe that the current plan has become more of a problem than it’s worth. Maybe some of the people who won’t let go of it need to step aside, or be voted aside, so that something new and viable can come together in our city.

My personal opinion is that this offer should be withdrawn and revised to exclude the IFSA and the goal of building a financial district downtown. It should be done in such a way that it doesn’t damage the Haub or Ilahie proposals.

Keeping Russell here is a good idea as long as the price isn’t too high and the offer to keep them here is above-board in all aspects, including the motivation behind it.  This offer doesn’t even pass the smell test.

Feel free to check back.  I might think of some more reasons.

I just got back from the presentation by a consulting firms hired by the city of Tacoma to (supposedly) help them figure out what to do about the floundering downtown area. I was encouraged by a few things, discouraged by some others and I can still smell Freighthouse Square on my clothes.

There were two basic parts to the discussion: Survey results and economic impacts. Both were on slide shows and the economic impact portion had a flier at the door. Oh, and there were some average grits for snackin’.

Here’s my bullet points.

On the upside:
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A TNT article reveals details about the meeting between the ‘Tacoma Partnership’ and Russell consultants regarding their potential move in five years. The title of the article is telling,”Will Russell catch Tacoma’s Hail Mary pass?”

The first thing I noticed in the article is that the writer, Dan Voelpel, is probably shilling for the local politicians, comparing them to the heroes of an old western movie:

This Magnificent Seven, led by U.S. Rep. Norm Dicks, D-Belfair, represented a new affiliation that calls itself the Tacoma Partnership. They arrived early on this crisp morning for a 9 a.m. meeting.

The Magnificent Seven of the 1960 motion picture of the same name came together as underdog gunslingers aiming to save a poor Mexican farming village from 100 banditos who wanted to steal its food stocks.

Aside for the blatent butt-kissing by the writer, I think he tried to reverse the roles. He’s putting Russell and their consultants in the role of the banditos and making these politicians the heroes. But Russell isn’t robbing anyone. They have a business decision to make.

In my view, it’s the politicians who are stealing from the poor farming village by using our tax dollars, to the tune of $140 million or more (not all coming from local taxes), to fulfill their pie-in-the-sky pipe-dream of an ‘International Financial Services Area’ (IFSA) in downtown Tacoma.

Now the part that gave me a chuckle:
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As usual, the Tacoma News Tribune comes out on the side of tax and spend politicians in University Place with this headline: City cuts traffic fees, but developers still complain.

Toward the bottom of the article the writer states the real issue:

The city continues to struggle to get its Town Center project up and running.

The background:
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Dan Gainor in Investors Business Daily shows more evidence that negative talk in the media about the economy can actually convince people to hold of spending and cause a downturn in the economy.

Major downturns aren’t just caused by economic circumstances anymore. The news media will have done their best to help it along with years of negativity.

They’ve succeeded in part already. The March 18 USA Today reported a Gallup poll showing that 59% of Americans think a depression “lasting several years” is “likely,” and 79% are worried about the possibility.

Did the media get it right?
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And there’s the pitch…

Project Destiny, now known as the Tacoma Partnership, unveiled their sales pitch to Russell Investments Group to keep them in Tacoma. How much will it cost taxpayers? $140 million. That’s right. $140,000,000. Just to keep one company from moving down the road a pace or two, probably close enough that most of their employees might commute instead of move.

Those making the pitch included Congressman Norm Dicks, City Manager Eric Anderson and Bruce Kendall, CEO of the Economic Development Board of Tacoma. And I’m sure they had the blessing of the City Council as well.

Did it work? They don’t know. And they don’t know when they’ll know.

But let’s be honest. That money isn’t about influencing one company. It’s about keeping a political pipe-dream alive. A pipe-dream that has has been failing since it was first dreamed up. A pipe-dream that has shaped downtown Tacoma into what it is today: an Economic Empowerment Zone.
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I guess I’m not the only one concerned about the media’s portrayal of economic news. I was first impacted by it a decade and a half ago.

Since then I’ve watched a clear pattern of the media misreporting economic news based on the party of the current administration. Under a Democrat they report negative economic news as somehow positive and under a Republican they report positive economic news as negative. To put it another way if it seems to favor an administration they don’t like they won’t report good news or will spin it as bad, and vice-versa.
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