Far Less Than 10.7%

Whitewater’s residents may have recently read (3.7.17) another City of Whitewater press release from the Wisconsin Economic Development Corporation (WEDC) – this time concerning more public spending on selected businesses.  (For remarks on a prior release, please see The Simplest Condition for a ‘Shovel-Ready’ Site is an Empty Lot.)

There are few better ways to argue against WEDC’s approach than by publishing press releases in full from that organization and its boosters.  (I have done so again with the latest release, at the bottom of this post.)

1. A tiny fraction of the award. On its face, there is something sadly desperate in saying Whitewater received only 10.7% of something: of the $700,000 awarded, 89.3% went elsewhere.

2. Tens of millions in public money has poured into Whitewater (state money, federal money, adding into the mix municipal bond debt) over the last decade. Even excluding the vast public sums supporting our local campus, this $75,000 is small compared to prior public spending in the city. If it’s 10.7% of the current totals, it’s far less than 1% of all that’s already come Whitewater’s way.

3. Alternative uses. These public funds are meant to be spurs to business development, but far greater sums have produced only paltry results – just about any allocation would be better than still more of the same.

4. ‘Technology-based, early stage companies.’ All of this is meant to awe and impress, but a level-headed person should be neither awed nor impressed. Public policy is more than a manufactured, unrealistic sense of astonishment.

Butterflies are amazing (truly); public allocations are practical decisions among many alternatives.

The best opportunity for a critic of these spending programs would be for the municipal government to put the full releases on giant billboards around the city. The more one hears of this, the less realistic it is.

Admittedly, we’d not be any richer for a billboard campaign…unless becoming an example of an unsound municipal economic policy somehow, itself, proved lucrative.

WEDC press release follows:

Wisconsin Economic Development Corporation Press Release: Organizations in Milwaukee, Oshkosh, Whitewater to match state’s investment in technology-based early-stage companies

MADISON, WI. March 7, 2017 – Three economic development organizations have been awarded a total of $700,000 in matching grants from the Wisconsin Economic Development Corporation (WEDC) to be used to provide seed funding for technology-based startups and early-stage companies.

The Milwaukee Development Corporation has received a $500,000 grant under WEDC’s Capital Catalyst Program for the creation of a $1 million seed fund to support companies in advanced manufacturing and other technology sectors. The fund will target seed-stage ventures, including graduates of local accelerator programs such as The BREW, WERCBench Labs, FaBCAP and Gener8tor to provide additional capital for activities leading to investment readiness or revenue generation.

The fund also aims to support growth-focused projects of existing tech companies, as well as other eligible seed-stage businesses with technologies outside the scope of existing area accelerators. The Milwaukee Development Corporation is the operating entity of the Milwaukee 7 economic development organization, which in January received a $60,000 Entrepreneurship Support Grant from WEDC to support its efforts to increase collaboration and develop common strategies to optimize Milwaukee’s entrepreneurship climate.

“Finding and filling gaps in funding for these growing companies – especially those in our most promising cluster industries – is critical to the success of individual businesses and the entire Milwaukee 7 Region,” said Pat O’Brien, Milwaukee 7 executive director. “We are grateful to WEDC for recognizing this need and providing a needed boost to these efforts.”

The Greater Oshkosh Economic Development Corporation has been awarded a $125,000 Capital Catalyst grant to fund a $250,000 program that will provide seed capital to local technology-based businesses likely to scale and grow to benefit the area workforce and economy. The seed fund will focus on sectors including aviation/aerospace, advanced manufacturing, information systems, agriculture/food processing and medical devices.

“This fund is the first of its kind in Winnebago County, the I-41 Corridor and northeastern Wisconsin,” said Jason White, CEO of the Greater Oshkosh Economic Development Corporation. “Greater Oshkosh’s economic development success is predicated on helping our existing businesses grow and showing our entrepreneurs that they are well-supported here in the Fox Valley.”

The Whitewater Community Development Authority has received a $75,000 grant for a seed fund that will provide a diversified portfolio of micro-investments and grants aimed at increasing the number of startups in the city and supporting emerging growth companies.

This marks that the fourth year that WEDC has awarded Capital Catalyst grants to the organization, which has provided capital to 21 technology-based companies to date. Those businesses have successfully raised $4.9 million in additional capital, have achieved over $2.4 million in revenue and employ more than 100 workers.

“I’d like to thank WEDC for this additional investment, which will help ensure that Whitewater continues to be a hotbed of entrepreneurial spirit,” said Jeff Knight, chairman of the Whitewater Community Development Authority. “The many startups that this program has already assisted is truly amazing. We’ve supported many new innovative businesses that would not have had a chance to get started without this very timely help.”

“These three organizations are playing a critical role in facilitating the development of high-growth business ventures in their communities,” said Aaron Hagar, WEDC’s vice president of entrepreneurship and innovation. “The Capital Catalyst Program has a proven track record of results, and we’re looking forward to continued success as we collaborate with these organizations to support next-generation companies.”

Since its inception in 2012, the Capital Catalyst Program has helped organizations and communities provide $3.5 million in seed funding to more than 100 businesses statewide that employ nearly 500 full-time workers. Those companies have generated $127 million in additional investment and revenue.

The program provides matching grants to seed funds managed by local communities or other organizations dedicated to stimulating entrepreneurship. These funds provide grants, loans and/or investments in startups or early-stage, innovative small businesses that operate in their region. Loan repayments and returns on investment stay within the fund to assist additional startups and create a supportive environment for entrepreneurs.

The Capital Catalyst Program is one component of WEDC’s suite of entrepreneurship resources, which includes support for startup accelerators, investor tax credits and technology loans. In addition, WEDC supports and engages an existing statewide network of partners that offers business training, mentorship and financing to aspiring entrepreneurs.

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About the Wisconsin Economic Development Corporation The Wisconsin Economic Development Corporation (WEDC) leads economic development efforts for the state by advancing and maximizing opportunities in Wisconsin for businesses, communities and people to thrive in a globally competitive environment. Working with more than 600 regional and local partners, WEDC develops and delivers solutions representative of a highly responsive and coordinated economic development network. Visit www.inwisconsin.com or follow WEDC on Twitter @_InWisconsin to learn more.

Via http://www.whitewater-wi.gov/residents/recent-news/3270-wedc-awards-700-000-in-grants-to-support-local-efforts-to-provide-seed-funding-for-startups.

The Simplest Condition for a ‘Shovel-Ready’ Site is an Empty Lot

Whitewater’s residents may have recently read (just yesterday) a City of Whitewater press release about a Wisconsin Economic Development Corporation (WEDC) designation for the city’s thirty-five empty acres of tech park land.

I’ve reproduced the release in full at the bottom of this post. A few key points:

1. The simplest condition for a “shovel ready” site is a vacant lot. Whitewater has (at least) thirty-five acres of vacant lot space. The city doesn’t need a ‘certified in Wisconsin’ designation to meet that condition; she only needs lots of empty space.

2. Millions upon millions of state money for businesses in this city, over so many years, and still here we are with another I-feel-it-this-time program.

3. The announcement is old news. The WEDC announced this program on December 15th, and a story about it ran in a local paper on December 16th. If this news were really so important, the municipal government wouldn’t have waited 75 days from the WEDC announcement date. (One should be fair: conservatively, it’s only been 74 days from the newspaper story.)

4. Now that the city’s raised the subject, how has Whitewater performed with the many grants and loans she’s already distributed, all these many years? Before actual performance, has the city been in compliance with even the weak standards the state has imposed on these programs?

There must be some way to determine that: what’s a five-letter word for an official inspection of an individual’s or organization’s accounts?

(If Whitewater ever came across something like that, surely they’d let the community know in full, promptly, as these are publicly-paid officials, extending publicly-funded grants and loans, and they’ve a publicly-fund funded website on which they could post that information.)

5. Where are those other “elite” locations the City of Whitewater press release mentions? Here they are: Beaver Dam, Beloit, Chippewa Falls, DeForest, Fitchburg, Green Bay, Howard, Janesville, Menomonie, Prescott, Stevens Point, Verona, West Bend, Westport and Wisconsin Rapids.

All black-tie locations, I’m sure.

6. Why is it so hard to speak in simple language (without describing everything in grandiose terms)? Whitewater has a high school and a university – is there no one in all the city who can teach officials to speak or write plainly?

City of Whitewater press release follows:

A Whitewater Site Joins the Elite List of Certified in Wisconsin Locations

Whitewater, Wis. February 28th, 2017 – The Whitewater University Technology Park joins 15 other locations statewide as a Certified in Wisconsin® site, allowing businesses and developers to have many questions answered and possible delays prevented prior to purchasing land for their growing companies.

The Certified in Wisconsin Program, offered in partnership by the Wisconsin Economic Development Corporation (WEDC) and Deloitte Consulting was created in 2012 in hopes to make the process easier in purchasing industrial “shovel ready” properties, 20 acres or larger in the state of Wisconsin. It has since seen 17 development projects completed or underway on 10 of the 16 sites, expecting to create more than 1,600 jobs and generate more than $315 million in capital investment when completed.

A site classified as Certified answers a wide range of concerns such as utility and infrastructure capacity, zoning property rights, environmental and geological factors, transportation access, and that the site is ready for industrial development. This information is already compiled and confirmed, allowing the decision process to be easier and less stressful for those in the market to build on a timeline.

The 35-acre site in Whitewater is located less than one mile from the University of Wisconsin-Whitewater. The new park will help to cultivate successful businesses and research by collaborating closely with UW-Whitewater and the City, serving as a foundation for a diversified and robust regional economy.

Lt. Governor, Rebecca Kleefisch and UW-W Chancellor Beverly Kopper have both spoken on behalf of the new site and discussed the positive opportunities that a partnership may burgeon between the university and the newly certified Whitewater University Technology Park.

“I know that property managers searching for industrial land want to minimize their risks,” says Whitewater Community Development Authority Chairman, Jeffery Knight. “They can be assured that when they look at Whitewater there is certainty, and what they get is the best the state has to offer”.

Whitewater will also have an ad in the Site Selection Magazine with details about the site and be included in the state database which allows site selectors to search for desired sites that meet their criteria in a fast and simple fashion.

To learn more about the Whitewater University Technology Park and other “shovel-ready” Wisconsin destinations, visit www.inwisconsin.com.

Via http://www.whitewater-wi.gov/residents/recent-news/3265-a-whitewater-site-joins-the-elite-list-of-certified-in-wisconsin-locations.

At Whitewater’s Planning Commission: Millions But Still a Politician’s Unsatisfied

Last night, Whitewater’s local government conducted its (mostly) monthly Planning Commission meeting.  It’s mostly because there aren’t always enough new projects each month to justify holding a meeting.   At Item 4 on the agenda, the commission held a public hearing “for consideration of a conditional use permit for an automotive shop at 113 E. Main Street.”  The commission granted wisely the permit.  (One wishes the applicant the best for his new business.

One Thirteen East Main Street, Whitewater: it’s a spot near a recently-completed two-million-dollar road improvement project, on the east side of this rural city.  Much of this work was truly road beautification, on the possible theory that if we sank enough public money into a small intersection of the town, then we’d all be putting on the Ritz.

When last night’s applicant received his approval, it came with a suggestion (from a member of the commission and also on the city’s common council): perhaps a bit of landscaping might make the area look nicer.

Oh, dearie me: were those millions not enough to transform the city?  After it all, all of it being public money, should a private businessperson have to pay another cent at government’s suggestion?  If he so chooses, of course; it’s just that having taken so much public money for a project that evidently hasn’t beautified, one might have hoped for a bit of official humility.

Nothing of the sort; instead, a suggestion for more, at private expense.

My point is not that the public project should have cost more, to add better plants; it’s that having cost what it did, it should have been plain that the cost was too much, for too little gain.  (I opposed the project, but at the time conceded that the architect’s illustrations were attractive.  Even that concession, while otherwise in opposition, too generous to the project.)

The millions were a waste in a city that could have found a hundred better uses for them.

How Much, and What Kind, of Military Spending?

Analysts from five Washington policy institutes[1] have published a joint report asking (1) what should American defense strategy be? (2) what capabilities, investments, and force structure might that strategy require? and (3) what would such a military cost?  (The five institutes are not of the same views, with the Cato Institute’s Benjamin H. Friedman notable for advocating fiscal and strategic restraint.)

Here’s the report:

Download (PDF, 4.41MB)

[1] The Center for Strategic and Budgetary Assessments (CSBA), The American Enterprise Institute (AEI), The Cato Institute, The Center for a New American Security (CNAS), and The Center for Strategic and International Studies (CSIS).

Ineffectual, Wasteful Infrastructure Ambitions

Randal O’Toole takes a look at a key part of the incoming administration’s economic policy, and sees the Trouble with Trump’s Infrastructure Ambitions.  There are, simply expressed, four problems:

  1. Not all spending of this kind is equally valuable: “Many advocates of infrastructure spending assume that all infrastructure contributes equally to economic vitality, but this is far from true. Digging a hole and filling it up may create a few jobs but no long-term economic growth. Transportation projects, for example, produce growth only if they generate new passenger and freight movement that would not have taken place without them.”
  2. New transportation infrastructure is less useful than properly-repaired, existing infrastructure: “Today, few areas need new transportation infrastructure. The nation has 2.7 million miles of paved roads, 140,000 miles of railroads, and more than 5,000 airports with paved runways…We have crumbling infrastructure because politicians would rather fund new projects than maintain existing ones. We build projects that fail to contribute to the economy because those same politicians follow fads rather than make sure taxpayers’ money is well spent.”
  3. Project spending often produces little additional revenue: “Traditionally, when a state or local government builds new infrastructure, it sells bonds, uses the revenues to pay for the infrastructure, then repays the bonds with local tax revenues. Since local tax revenues will be about the same whether the infrastructure is productive or a white elephant, officials have little reason to discriminate between good and bad projects.”
  4. The Trump plan cleverly circumvents existing, democratically-enacted debt limits to allow big spending: “Trump’s method of tax credits gets around these debt limits. Private contractors borrow money and build the infrastructure, and state or local governments would contract to pay the contractors, sometimes millions of dollars per month. Since the contractors, not the government agencies, borrowed the money, it doesn’t count against the democratically set debt limits, but local taxpayers are obligated to repay the debt anyway.”

Schemes like these don’t #DraintheSwamp; they breed stronger, and more numerous, crocodiles.

(In a small rural town like Whitewater, a full generation’s worth of big projects has not improved the community’s economic well being.  The percentage of all residents in poverty in 1999 was 27.4%, and of families was 10.6%. The percentage of all residents in poverty in 2014 was 36.7% and of families was 15.2%.)

The Local Economic Context of It All

localOver a generation, Whitewater’s big-ticket public spending (where big ticket means a million or more per project in a city of about fifteen-thousand) has come with two, often-contradictory justifications: (1) that residents needed to spend so much because Whitewater was the very center of things, or (2) that residents needed to spend so much to assure that Whitewater would keep up (something hardly necessary for a city that was already the very center of things).   Over the last thirty years’ time, the city’s residents have spent hundreds of millions on public projects.

(This tiny town might have saved up enough over the last thirty years to buy a gently-used B-2 bomber.  New ones go for $700 million each, but a used one would be less, and no one – no one – ignores a city with a genuine B-2.  Nearby towns like Palmyra or Fort Atkinson wouldn’t be laughing if Whitewater had its own strategic bomber.)

We also have a public university in town, supported with hundreds of millions in state funds spent to keep the campus going.  The claim that the state doesn’t reimburse the city for the full cost of services in a university town skirts the clear truth that the university brings more to the city than she costs.

One hears now from town officials what any reasonable person would have surmised years ago: that the City of Whitewater and Walworth County are low-growth communities (“we do not have a lot of growth like a lot of communities, like the those adjacent to Madison or Milwaukee”).    That’s disappointingly right – Whitewater is a low-growth community, as is Walworth County.

And yet, and yet, much of this spending was meant to spur growth, either to catapult Whitewater to new heights or assure her supposed position in the stratosphere.  Despite all that’s been spent, here Whitewater is – belatedly but admittedly – economically stagnant.

If proximity to Milwaukee or Madison were the key to success, and if (as is true) Whitewater’s still at the same place on the map as a generation ago, then why did anyone bother touting the city for all these years?

It’s because neither vast public spending for a small town nor proximity to Milwaukee & Madison were assurances of economic success.  It’s because public spending on whatever comes along accomplishes little, nothing, or worse than nothing (worse than nothing – that is, both stagnation and debt).   It’s because closeness to Milwaukee or Madison is not necessary for success.  (There was a time when policymakers insisted we would succeed precisely because we were relatively close to those bigger cities; now, when this town is obviously struggling, the same distance to the same destinations has become an excuse.)

We’ve reached – and we reached them long ago, really – the limits of public spending as a so-called catalyst for private growth.  It’s not impossible that such schemes might initially work elsewhere, but it’s next to impossible that more public money in a small town already saturated with public money will achieve solid, sustainable growth for residents.

American prosperity rests on private enterprise and initiative.   A useful project over the next few months will be to outline ways to liberalize Whitewater’s economy.

Local Government’s Not a Profession of Faith 

Local government, in its existence, is not a profession of faith, the way a credal religion is. 

It’s a limited delegation of popular sovereignty to produce definite, specific results.  Words alone are insufficient.

(Needless to say, that’s true of religious belief, too: the Church rightly expects that faith leads to care for the poor and disadvantaged, not mere words on their behalf.)

Love is like this.  How many times a man says he cares doesn’t justify him if he staggers home drunk and neglects his spouse and children.  Love requires practical care. 

Local officials have a lot to say.  What should officials do

Improve town-gown relations, keep costs down, provide basic services for which the many common people in this city pay taxes, stop distorting data for self-promotion, avoid flimsy public schemes, and respect that the foundation of this society’s prosperity rests on private property and private enterprise.

When they’ve done those things, they’ll have fulfilled their obligations satisfactorily; if they haven’t done those things, all the words in our language won’t be satisfaction enough. 

 

Grocery Preliminaries (Part 2)

I wrote yesterday about a grocery in town, in a post entitled, Grocery Preliminaries.  The post’s subject line used the word ‘preliminaries’ because it seems likely that Whitewater will get a new grocery, whatever one thinks of a public subsidy to entice one.  

In this way, that post presumed a deal, and so was meant to be preliminary to one.

(Needless to say, whatever the challenges of subsidizing a grocery, it’s noting like importing trash into the city as a get-revenue-quick scheme.  Waste importation is a truly bad idea, destructive to the environment, health, and development of the city.)

One of the conditions for a new grocery at the old Sentry location is that the university’s interest in the property  (as a term of art and a general desire for expansion) be satisfied.  

It’s worth noting that unpublished discussion of UW-Whitewater’s interest in the property has percolated through parts of the community for months; it’s not new information for everyone.  

This only reinforces, however, the point from an earlier post, Informed Residents, about the need for open government.

This morning, many residents are sure to be surprised  (‘the university has a connection to this property?’) and a few will be frustrated  (‘why didn’t we know?’ & ‘is the university standing in the way of a deal?’).

These are merely elements of a transaction, and they could have been disclosed sooner.  This community needs neither confusion about a project nor frustration with the university over it. 

I know that open government seems soft and starry to some, but it’s neither. Open government is both a principled (as a right) and a prudent (as a practical) approach.  It’s not in opposition to realism, but rather a higher expression of realism, embodying as it does the recognition that information typically wills out, at a higher price for the delay.

I’m sure we will get a grocery, and almost certainly with a public subsidy. That’s not what I’d advocate, but the proposal has obvious support. 

We could (and can) have one, however, more smoothly than this. 

Grocery Preliminaries

I’ve written about the possibility of a government-subsidized grocery before, but only from an open-government perspective concerning Council’s last meeting in joint session with the Community Development Authority. There have been a few press accounts of previous public meetings about a grocery, but not one of the accounts shows the challenges involved in maintaining a subsidized grocery for the long-term.

The desire for a grocery in town is undoubtedly strong, and it would likely have a value in attracting newcomers, but keeping one going depends on attracting and maintaining customers where prior efforts have failed, in a low-margin industry. The key question isn’t whether one can attract a grocery, however hard that may seem, but whether a grocery one attracts will prove desirable and sustainable.

Prior local government projects that have subsidized businesses have done so farther from the public eye, mostly without the need to attract customers from within a single community, and not for an enterprise relying on high-volume but low-margins from among those in that community.

It’s no easy feat to keep a business of those characteristics going. It’s easy to see why policymakers and residents would like a grocery; maintaining one requires attracting and retaining customers apart from a public subsidy. To do so will require both gathering consumer demand now satisfied elsewhere and, longer-term, generating new demand from within the area.

Informed Residents 

One week ago, at a Common Council meeting, one heard that Whitewater’s municipal government would use a software application to increase opportunities for residents’ input on local issues. See, Common Council meeting of 6.21.16, https://vimeo.com/171809282, beginning at 1:28:17.

Assuming that the means are reliable and accessible, more opportunities for collecting opinion are better than fewer. I’ve always supported a community of more voices over fewer.

Any number, however, needs to be informed. Surveys should mean more than merely asking people questions.

They should require, indeed reasonably must require, providing sufficient information for residents to consider a proposal knowledgeably.

One week later, this evening, the same government that seeks to reach greater numbers is itself silent about the principal terms to purchase a former supermarket building. Residents know neither the purchase amount, possible buyers after municipal purchase, or other significant terms. (See, below, the agenda for tonight’s meeting.)

This is no ordinary transaction; municipal governments don’t commonly purchase grocery buildings. Whatever one thinks of the merits of a possible deal, the residents of this community lack basic information to consider the matter.

There one finds a problem for this municipal government greater than a single purchase: in the space of a week, professions of support for residents’ input fade before closed-session deliberations. Last week it was the means of open government; this week it’s the ends of dealmaking. That’s not an enduring expression of open government and residents’ informed opinion; it’s an opportunistic picking and choosing, placing ends over means.

An ardor for open government that fades after a week is no worthy ardor. It’s as though one professed undying love for one’s spouse, unless and until someone better should come along.

There is no better.

Approve or reject, purchase or walk, yes or no: they all require a more open posture than what’s on offer.

Download (PDF, 157KB)

The Growth That Uplifts

In a recent interview, Ana Revenga, senior director of the World Bank’s Poverty and Equity Group, talks about ending extreme poverty.  See, Ending Extreme Poverty: World Bank Economist Ana Revenga @ The Christian Century.

(The World Bank defines extreme poverty as living on less than $1.90 per person per day, and the article describes how they’ve arrived at that figure.)

Revenga is focused on Third World poverty, but her insights into poverty prevention are relevant even in less dire situations. 

Consider her answers to two questions from the interview:

What is the single most important contributor to the decline in world poverty?

The biggest driver of the success is economic growth—but not any kind of economic growth. What’s needed is economic growth that improves the income-generating opportunities of the poor. This kind of growth involves either raising the value of the agricultural products that the poor are producing or generating better jobs. Anywhere between two-thirds and 80 percent of the decline in poverty rates is due to this kind of economic growth….

Are there forms of economic growth that are not good for the poor?

Absolutely. You could have a country where all the growth comes from commodity extraction or from a pipeline. Those funds might generate income, but that money does not go back into the economy to improve the lives of farmers and is rarely invested in building further infrastructure….

Needless to say, Dr. Revenga is more than capable of setting the boundaries of her own views, yet it seems fair to infer that if not all growth should be valuable, then not all spending is valuable.

Whitewater’s conditions are milder than those Ana Revenga faces in her work, yet not so mild that some who experience them would describe them as mild at all.

This leaves us with a question: is it, can it be, a solution merely to buy capital, goods, or the means of their distribution at public expense?

Assumptions on Referenda

33cscreenshotPost 11 in a weekly series.

There’s a theory – in Whitewater and other places – that good policy comes from having as many ‘adults in the room’ (that is, as many established & mature people) as possible. I’d say that’s necessary, but insufficient. Relying only on the established & mature, without specific consideration of discernment and insight, relies on too little.

One has to ask: what do you believe, and why do you believe it?

Asking what one believes, and why one believes it, should be an ongoing exercise. Circumstances change; one evaluates anew by what exists now, not on what was, or on what one thinks about oneself.

In the last Whitewater Schools referendum, I assumed (incorrectly) that the vote would be close, and that even the place of the referendum question on the ballot might prove significant.

Looking back, those assumptions were wrong: the referendum carried well enough, and ballot position probably made little if any difference.

I thought as I did because previous referenda in Whitewater had been contentious. That was, however, some time ago.

Looking at referenda results now, from across the state, it’s clear that an overwhelming number of referenda pass (74 of 76 referenda from the February 2016 elections passed).

What does this mean? A few new assumptions and questions:

1. A majority of voters will support more spending for schools, even using referenda to do so.  This must include significant numbers of voters who did (and still do) support Act 10.  It’s numerically impossible that every winning referendum came about only with the votes of those opposed to Act 10; even obviously conservative districts have supported referenda.

2. Waiting for an outcry against spending, of the kind outcry that this school district had in the past, is probably waiting for a lion who’s not there, and won’t show up.

3. Some referenda will fail, and some will only pass on a second try (still possible under our laws, mere legislation obviously notwithstanding).

4. It’s impossible that because most referenda pass, any referendum has a greater than ninety percentage chance of success.  These votes are not like drawing lots, where nine of ten are drawn, without knowledge of what the lots look like.  On the contrary, the minimum requirements of a school referendum require a stated amount sought and the purposes for it.

(Janesville not long ago proposed a municipal referendum where the city sought an amount but described no purpose for it.  It failed, of course.  By the way, the recommendation to submit a referendum without a stated purpose is an example of some of the worst municipal lawyering I can recall.)

5. There must be – in these many referenda that succeed – a successful gauging of what the community will bear.   It’s not (I’ll assume it cannot be) only by chance that referenda succeed.

6. Even in a favorable climate, requests will have to be defensible, as even a favorable climate has limits.

7. What is that defensible amount, and what are those defensible purposes?  I’m not sure.

8. Is it easier or harder to advance a referendum in a unified school district (that is, one that is made up from several towns)?  I think harder, overall, for reasons I’ll state in a future post.

So, a revised assumption: that a referendum’s more likely to pass that I thought at the time of our last referendum, but there are still critical elements that make the high success rate of February 2016’s referenda deceptively reassuring.

Next week: What Not to Do When Seeking a Referendum.

THE EDUCATION POST: Tuesdays @ 10 AM, here on FREE WHITEWATER.

(About the picture for this series – it’s a screenshot of a calculator app for Android phones that emulates a Hewlett Packard 33C.  I used an HP calculator in school, and they were amazing machines.  My phone’s calculator app pays tribute to a fine machine of yore.)

‘WEDC has been a disaster from the get-go’

After years of defending the Wisconsin Economic Development Corporation, one newspaper (out of several in the area) finally concedes the obvious:  ‘WEDC has been a disaster from the get-go.’

See, from 11.28.15, http://www.gazettextra.com/20151128/our_views_consider_two_steps_for_salvaging_state8217s_job_creation_agency, subscription req’d.

Yes, it has been a disaster, as politicized intervention in the economy, to the benefit of one’s well-fed, white-collar executive friends, will prove to be.

Only eighteen months ago, when it should have been clear to a properly read man or woman that WEDC was conceptually wrong, Whitewater’s leading officials touted a second round of WEDC funding as though it were manna from God:

“For us to have gone through that first cycle so quickly means a lot of jobs and new entrepreneur start-ups here in Whitewater, including here in the Innovation Center,” he said. “This is a recognition of a great success story. They have invested in us a second time. Our job now is to drive that to even greater success.”

– Jeff Knight, Whitewater CDA Chairman

“I am selfish,” he said. “The reason I am selfish is that I want Whitewater to be a better city and our university to be a better place. Part of what we do is try to make this a better place to live, work, play and learn. I think that is very important. For the university, my selfish thing is that I want to keep the professors here, and keep our graduates here, and whatever we can do to make that happen, we need to do.”

– Richard Telfer, Chancellor, UW-Whitewater

It feels a bit like déjà vu to be standing here before you all today,” Clapper continued. “It’s been a little over a year since our first event; today, we are celebrating the start of round two and the first grants of that round….”

“In the physical sciences, a catalyst is defined as any substance that works to accelerate a chemical reaction,” Clapper explained. “Without the help of a catalyst, the amount of energy needed to spark a particular reaction is much greater. When a catalyst is present, the energy required for the reaction is reduced, making the reaction happen more efficiently. Without the help of a catalyst, chemical reactions might never occur or take a significantly longer period of time to react.

– Cameron Clapper, Whitewater City Manager

See, from 6.9.14,
http://www.dailyunion.com/news/article_c8e49416-efe6-11e3-b1b0-0017a43b2370.html.

Knight speaks in empty platitudes, Telfer should have stopped after his first three words, and Clapper’s idea of chemistry is more like alchemy.

From the beginning, this was an empty ideology, a Third-World-style cronyism.

Whitewater deserves better.

Theranos as a Cautionary Tale

Theranos is a much-hyped biomedical start-up that’s fallen in valuation and reputation (not always the same thing) following published doubts (e.g., @ Wall Street Journal, Fortune) about its supposedly revolutionary technology.

Here’s the meaning of this story for Whitewater: Theranos had the participation (and attention) of some of the most gifted men and women in America, yet its (likely exaggerated) claims escaped serious scrutiny for years.

When Whitewater’s city government, Community Development Authority, and local university administration receive fawning stories from the Daily Union, Gazette, Register, Banner, or whatever, does anyone believe that those economic development gurus are receiving anything like the scrutiny Theranos or any American project should receive?

Theranos’s problems have not been for lack of talent (CEO Elizabeth Holmes, is undeniably intelligent, persuasive).

And yet, and yet, intelligent and persuasive do not assure successful new technologies. Doubt not how very much I and others would wish the Theranos story to have a successful outcome: a new & powerful blood-test technology, that would save lives, time, and money from a compelling American entrepreneur would be to humanity’s benefit.

Prof. of Finance Aswath Damodaran of NYU’s Stern School writes about the problems of Theranos – in part problems that are ours for believing so much in the company’s tales – in a post entitled, Runaway Stories and Fairy Tale Endings: The Cautionary Tale of Theranos @ his Musings on Markets Blog.

Here’s Prof. Damodaran:

I can offer three possible reasons that should operate as red flags on future young company narratives:
  1. The Runaway Story: If Aaron Sorkin were writing a movie about a young start up, it would be almost impossible for him to come up with one as gripping as the Theranos story: a nineteen-year old woman (that already makes it different from the typical start up founder), drops out of Stanford (the new Harvard) and disrupts a business that makes us go through a health ritual that we all dislike. Who amongst us has not sat for hours at a lab for a blood test, subjected ourselves to multiple syringe shots as the technician draw large vials of blood, waited for days to get the test back and then blanched at the bill for $1,500 for the tests? To add to its allure, the story had a missionary component to it, of a product that would change health care around the world by bringing cheap and speedy blood testing to the vast multitudes that cannot afford the status quo….
  2. The Black Turtleneck: I must confess that the one aspect of this story that has always bothered me (and I am probably being petty) is the black turtleneck that has become Ms. Holmes’s uniform. She has boasted of having dozens of black turtlenecks in her closet and while there is mention that her original model for the outfit was Sharon Stone, and that Ms. Holmes does this because it saves her time, she has never tamped down the predictable comparisons that people made to Steve Jobs. If a central ingredient of a credible narrative is authenticity, and I think it is, trying to dress like someone else (Steve Jobs, Warren Buffett or the Dalai Lama) undercuts that quality.
  3. Governance matters (even at private businesses):… Theranos illustrates the limitations of these built in governance mechanisms [that is, the desire of founders and venture capitalists to protect their investment in a way managers might not], with a board of directors in August 2015 had twelve members:
Board Member Designation Age
Henry Kissinger Former Secretary of State 92
Bill Perry Former Secretary of Defense 88
George Schultz Former Secretary of State 94
Bill Frist Former Senate Majority Leader 63
Sam Nunn Former Senator 77
Gary Roughead Former Navy Admiral 64
James Mattis Former Marine Corps General 65
Dick Kovocovich Former CEO of Wells Fargo 72
Riley Bechtel Former CEO of Bechtel 63
William Foege Epidemologist 79
Elizabeth Holmes Founder & CEO, Theranos 31
Sunny Balwani President & COO, Theranos NA
I apologize if I am hurting anyone’s feelings, but my first reaction as I was reading through the list was “Really? He is still alive?”, followed by the suspicion that Theranos was in the process of developing a biological weapon of some sort. This is a board that may have made sense (twenty years ago) for a defense contractor, but not for a company whose primary task is working through the FDA approval process and getting customers in the health care business….

So-called ‘Whitewater Advocacy’ has done a huge disservice to Whitewater by flacking wasteful ideas that have only diverted time and money from higher priorities.

It can’t last, of course, just as the outcomes of similar schemes elsewhere show.

The real question for Whitewater is who runs dry first: public schemes that divert resources to cronies’ projects or the local press that touts these projects?

They’re both destined for the ash can, but I’m not sure which one will arrive first.  As it is, I’d say it’s likely to be a close race between the two.

Boo! Scariest Things in Whitewater, 2015



Here’s the ninth annual FREE WHITEWATER list of the scariest things in Whitewater for 2015. The 2007, 2008, 2009, 2010, 2011, 2012, 2013, and 2014 editions are available for comparison.

The list runs in reverse order, from mildly frightening to truly scary.

10. The Coming Ferret Invasion. Alternative title: The Unprepared Will Be Doomed.  Earlier this year, I predicted that Whitewater would experience a massive invasion of ferrets.  Why?  Because I correctly guessed that New York City would not lift its ban on ferret ownership in that city.  In consequence, the aggrieved, hidden ferrets of the Big Apple are sure to decamp for ferret another location.

Whitewater, of course.

In my estimation, they were supposed to be here by mid-October, but perhaps they’re walking more slowly than I’d calculated.

In any event, there’s a way to protect ordinary, decent residents from the rodent takeover.  (It’s mistaken to say that this website does not offer solutions to problems.  It often does.  I would also
remind officials of Whitewater that the easiest way to avoid problems is not to take actions that cause problems.)

Here’s how to protect Whitewater against thousands of invading ferrets.  First, find a city official who has time on his hands.  That’s the easy part. Second, station that official miles from Whitewater, in a rural location between here and the ferrets’ path.  Third, as these small, voracious mammals approach, it will be the official’s job to associate a picture with food, happiness, etc., in the ferrets’ minds. That way, they will seek the location in the picture, and avoid residents’ homes and businesses.  The entire advancing horde will congregate only at the location depicted in the photograph.

I’ve just the place in mind:

WWMB

Problem solved.

9. Key People.  I heard a presentation recently where the presenter tried to reassure others that she would seek the input of key people.  There are no key people – at least not in a way that makes it worth using the term.  There are only key ideas.  All the rest is an attempt at flattery or an expression of insecurity.

A group of supposedly key people is no match for one ordinary man or woman with a key idea.

8. One’s Own Words.  They must be scary; one hears them so seldom.  There are a few who think that somehow they’re better off relying on poorly written and poorly read publications than speaking and writing on their own.   That’s a mistake.  Servile papers and websites will not prove enough, anymore; the readership dynamic in this city shifted irreversibly against their publications.

(Actual traffic measurements of various publications are nothing like how insiders or publishers want to portray them; realistic measurements show how far insiders’ publications have declined or stagnated, and how much others have gained.  One can be very confident about the future in this regard.)

Talented people – including many officials individually – are simply throwing away their opportunities when they rely on publications markedly inferior to their own abilities.

7. Potholes.  They must be scary, because we’re avoiding them, and spending more on big projects than we’d need for simple street repair.

6. Gaps.  The greatest republic in human history (ours) grew in liberty and prosperity though careful examination of projects and ideas.  We did not develop word-class technologies by believing ‘close is good enough’ on engineering or fiscal projects.  When, however, someone asks that American standards be applied to Whitewater’s projects, officials whine that identifying gaps is unfair, nitpicking, etc.

In what society do they think they live, for goodness’ sake?

America is great, in significant part, because she – unlike foul Third World autocracies, for example – expects high standards from her leaders and their proposals.

5. Open Government & Temporary Amnesia. Every public body has a website, on which they publish every big boast, but somehow these same officials can’t seem to remember how to post key public documents prominently.  They seem to forget, but only temporarily and selectively.

4. WEDC money.  Not just worthless – it is – but worse: a diversion of resources from far greater needs.  The many poor in this city get nothing from this money.

warg

 

3. Data.  Presenting scores in a realistic context is harder for Whitewater’s school administrators than facing a pack of savage wargs.

2. Filth, Scum, and the Flimsy Scheme to Bring Them to the City.  I’ve a series about this, in WHEN GREEN TURNS BROWN.  There’s a burn-the-village-to-save it quality to waste importation as a means of revenue.  (And yet, the sadness here is that the entire digester-energy project was unnecessary, and the obloquy it brings being wholly deserved for being unforced.)

1. The Ethical Indifference of Act Utilitarianism. Some of the large public institutions of this city show time and again that they care more about their reputations – and that means the reputations of their leaders – than the health and safety of their ordinary members.

The worst example of this has been the repeated downplaying of violent assaults against women on campus while touting accomplishments that cannot, ethically, matter as much as those injuries. These have been self-protective, morally empty, and ultimately futile attempts at diversion and subject-changing.

A climate like this has invited and will invite further tragedies; the worst of this, sadly, surely is not over.

Other officials who allow subject-changing are, themselves, culpable of a supportive wrong.  See, An Open Note to Leaders of the Municipal Government, the School District, and UW-Whitewater.  It’s right and fair that officials who aid in diversionary conversations should be called out directly & specifically when they make that attempt.

For it all, we’ll get to a better city, consigning these ways to the dustbin.

There’s the 2015 list.  We’re more than able to overcome these problems, for a stronger community.

Best wishes to all for a Happy Halloween.

On Big Banks, Big Businesses

In the video above, Sec. Clinton tells Steven Colbert that she’d let big banks fail. There’s something in her (briefly stated) position for a libertarian to admire, although other points to doubt. (I’d not urge breaking banks up, but would surely urge government to allow large banks or businesses to fail. Clinton, admittedly, is referring to banks alone.  No one, by the way, is talking about abandoning depositors’ insurance; that change is not needed to enforce market discipline in these cases.)

For Whitewater, there is also a huge irony in this: unlike so many proud, self-declared conservative officials in this town, it’s actually Sec. Clinton who here takes the position of (implicitly) favoring the market over government rescues.

Clinton’s not a conservative, of course, but the contrast shows that Whitewater’s conservative officials are almost uniformly big-government conservatives, flacking every last dime of spending they can.

A genuine, small-government conservative official in Whitewater has much in common with a needle in a haystack.

Worse, their idea of big-government is toadying to the biggest businesses in the community. Ignorant or indifferent to sound economics, and consequently disdainful of free markets, they’ve nothing but the buzzwords of so many striving, scheming new men.

Whitewater’s economic development officials will develop nothing more than bad ideas and stale rhetoric so long as they embrace economic manipulation on behalf of their favored establishments.

stbernardThese town squires are so lost that the leading Democratic candidate for president, the member of a party that enthuses over economic intervention, still shows a better grasp business intervention than they do.

That’s a whole new order of being lost, an extreme condition in which even the smartest St. Bernard, with the most developed senses, would be of no help.

City of Whitewater’s Proposed 2016 Budget

Embedded below readers will find the City of Whitewater’s proposed 2016 budget.

An open and confident government would embed the budget on the city’s main webpage; an inquisitive and worthy press would embed (or at least link) to the budget file.

For the city there’s still a long way to go; for the print press there’s little time left to do, at least once, the right thing.

GDE Error: Error retrieving file - if necessary turn off error checking (404:Not Found)

Gov. Thompson Rejects WEDC-Style Loans

Republican Tommy Thompson, who served for fourteen years as governor, has written in opposition to the Wisconsin Economic Development Corporation’s loan program.  It’s the right position to take, and shows that Thompson understands the problems with WEDC.  Explicitly, Gov. Thompson’s opposition to WEDC-style loans includes local communities’ doling of loans through their own programs.  (Whitewater’s Community Development Authority has been one of several cities Capital Catalyst communities making a practice of this, and seeking more money to keep doing so.)

(There’s an irony here, of course.  Some of the local development men who have claimed close ties to Tommy Thompson are also the ones so strongly tied to the loan programs Gov. Thompson rejects.)  

Here’s Tommy Thompson, from his recent essay in the Milwaukee Journal Sentinel :

My time away from public office has further convinced me of one thing: Government shouldn’t operate in the business lending space. I served our state for 14 years as governor and another 21 years in the Legislature, believing and operating under the assumption that there are few things that government does better than business. I left public service in 2004 and have spent more than a decade helping build companies in a variety of industries. I’ve repeatedly helped secure capital, meeting with successful institutional and private investors and have never once during the investment process been asked, “Why isn’t government investing in this company?”

What do all of our neighboring states have in common besides wishing they had Aaron Rodgers as their quarterback? Neither Michigan, Illinois, Minnesota nor any of the other states we share a region with provide a state-backed business loan program — and for good reason. Government — federal, state or local — shouldn’t be in the loan business; it’s neither built for the necessary rigors of the financial due diligence process nor is it best structured to withstand the political pressures that may be inserted into the process.

So very well said.  

See, in full, Tommy Thompson: Government shouldn’t be making loans @ Journal Sentinel

Thompson’s opposition, and the inquiry into state-backed loans, isn’t the end of these stories.  As I’ve mentioned, there’s a cluster of communities – including Whitewater (http://inwisconsin.com/entrepreneurs/assistance/capital-catalyst/)  – that have embraced this idea, with development gurus imagining themselves bankers of the highest order.  

Significantly, even the dodgy WEDC provides no oversight of these loans (“WEDC does not provide direct funding to businesses or review business applications under the program.”)  It’s all in hands of the men who have styled themselves development gurus, public relations experts, business lobbyists, etc. 

Having watched these same men make significant mistakes, pick the wrong priorities, and declare all of it a floral bouquet, one should not expect something different now. 

No matter, they’ve embraced the wrong policy, and the consensus (of policy and politics) against their efforts grows stronger each day.  

Fog Lifts

Whitewater started the day with fog, but there has never been a place, anywhere or ever, in which the fog did not lift.

There’s reason for confidence that even befogged places see, in the course of events, clear skies.

I’d guess, though, that most policymakers in town (such as they are) don’t believe that policy follows underlying social forces or structural limits the way, for example, weather develops in accordance with natural forces (that people can explain and predict).

Just the opposite is probably true, actually: to listen to economic development officials at the Community Development Authority or in the city administration is to hear something closer to stream-of-consciousness fiction than social science, let alone meteorology.

In this sort of befogged environment, it makes sense that self-styled public relations men, incurious and servile reporters, avaricious big-business interests, mendacious officials, academics who distort data, administrators who discard individuals and individuals’ injuries for the sake of their own undeserved reputations, etc., would play an outsized role.

These few of overweening ambition and underwhelming results have one thing, at least, in common: they think that accomplishment – and even truth – is found simply in the declaring, in the insisting, of it.

The people of this beautiful city are far more capable, far more clear-sighted, than the town’s political leaders and economic policymakers.

Good policy, like meteorology, is more than hoping the day will be sunny; it requires understanding what makes a day cloudy or bright.

Cold Fusion Research Wasn’t Bad Because It Was a Budget Buster

There’s a brief discussion at the end of Whitewater City Manager Clapper’s state of the city address from 9.17.15 that comes to mind this morning. (I’ll get to the substance of his specific remarks about a digester-energy project another time.)

For today, I’ve a different perspective to offer. Consider this question: was cold fusion a mistake because that kind of research was budgetarily expensive?

I don’t think so; expense wasn’t the key problem with thinking that one might be able to produce bountiful amounts of fusion-reaction energy at room temperatures. It’s a mistake to waste money, but there was a bigger problem than budget allocations – much bigger – with cold-fusion research.

The much bigger problem was that the supposed positive results were irreproducible – what Fleishmann and Pons did wasn’t sound science, as it could not be confirmed, and grand claims were the result of obvious errors and wishful thinking. (See, along these lines, The Cold Fusion Problem.)

That sort of error is far greater than wasting hundreds of thousands or even millions – it’s the error of inferior standards that cost more than any line-item allocation ever could. Continuing support for that research is support for magic, fairy tales, etc. There is an immediate budgetary waste, but there is a much bigger loss to rational policy and planning (and so, an expense that ripples beyond budgets to the whole society).

It’s also false – and oddly anachronistic – to contend that a community needs to ‘experiment’ with digester-energy projects, as though that has not been done for generations and found wanting. It’s not a new idea, just as leeches, tea leaves, bleeding patients, or cold fusion are not new ideas.

I’m sure we’ll hear again someday that cold fusion might solve all our energy needs, or leeches might be good for curing myriad maladies, but those are neither new ideas nor ideas whose principal deficiency is only one of dollars and cents.