The Koch-ie Monster Strikes Again

Local economies are propelled by politicians and city officials and not by economists.

If politicians and city officials paid more attention to economists, cities wouldn't be throwing incentives at firms and proposed hotel and convention centers would die a quick death.

That is the message from Old Dominion University economist James Koch, co-author of the just released 2014 State of the RegionReport, a compendium of economic commonsense.

In the chapter, Economic Development Incentives: Competing Against Ourselves?, Koch surgically dissects the prevailing notion that economic development incentives actually work.

In The Answer Is Always “Yes”: How Our Cities Repeatedly Ignore The Evidence And Choose To Construct Unprofitable And Unneeded New Convention And Hotel Capacity, Koch scoffs at the rush to build more hotel and convention centers.

Koch, former president of ODU, scans the horizon with a keen and careful eye. He evaluates and analyzes and lards his narrative with tables, charts and illustrations. His conclusions are often irrefutable. Yet Koch has this bothersome tendency to contradict and refute many monuments to monstrous self-aggrandizement.

The impotency of economic development incentives is a foregone conclusion and studies have proved as such for decades: they don't sustain a city's economy.

Hotel and convention centers are Hollywood sets with Internet models in cool and sublime poses; they sell a lifestyle that is false and misleading.

In his analysis, Koch shows that cities spend more time and money competing against each other for fame and fortune rather than cooperating. 

Which points out that each city is a political island, connected precariously to every other city in the region. Yet each city depends upon other cities, more or less, for its economy. Some are robust and some are anemic.

Each city has its own incentives. Each city has its own image to promote and protect. And each city has its own political machine. In other words, each city is egocentric and self-centered.

Koch on economic development incentives.

Too often, our economic development agencies and elected officials persist in looking for quick fixes that somehow will catapult our region forward to fame and fortune. Absent the next Microsoft fortuitously being invented by an enterprising student in the Frank Batten College of Engineering at Old Dominion University, it isn’t going to happen.

Koch on hotel and convention center madness.

Unfortunately, most (though not all) investments governments make in convention venues, arenas and attached hotel capacity fall into this latter, suspect category. Such investments usually do little more than redistribute existing sales and do not actually produce any incremental tax revenue. Further, they favor some firms and entrepreneurs over others, and therefore often do not pass the proverbial smell test.

All of this occurs in city after city, year after year, despite the accumulated negative empirical evidence. Some elected officials in our region appear to be seduced by their own flashy announcements of large projects that falsely promise economic growth.

“Our city is on the move!”

Unfortunately, in the wrong direction.

Read a Newspaper. Boost Profits

We have Transit Week, Flower Power Week, Troll Week and Help the Hobbits Week, so why not “Read a Newspaper Week”?

Put down your phone, turn off the laptop or iPad and pick up a newspaper, any newspaper, and thoroughly read it, digest the contents and the flavor of what your are reading. For once, just read and stop briefing your brain with snippets of information.

Stop, look and read.

It's very simple.

Someone on the Left Coast dubbed it slow news or slow reading or something terribly Californish. But the message is simple: take your time to read a newspaper.

But then the news hit and then I decided that no amount of newspaper reading will curtail the devolution of the newspaper industry, an absurd attempt to re-capture profits instead of readers.

The news is this: more employees will be cut, retired and disappeared at The Virginian-Pilot between now and the end of the year.

The estimate is 20 to 40 people.

This isn't extraordinary. It's happening in the newsrooms nationwide, in television, newspapers and radio.

Turner Broadcasting to cut staff by 10 percent; CNN to shed 300 jobs

Turner Broadcasting, the parent company of CNN, TBS, TNT and several other channels, plans to cut its total workforce by 10 percent in the weeks ahead, eliminating nearly 1,500 positions, sources at the company confirmed Monday, according to Politico reporter Dylan Byers, Oct. 6.

CNN alone will shed 8 percent of its staff, resulting in the elimination of roughly 300 jobs either through buyouts or layoffs, the sources said, Byers wrote. The cuts will affect all CNN channels, including domestic, international and HLN.

The news isn't the cuts; the news is what news will be cut. 

Will the channels cut these chatty talk shows discussing everything from George Clooney's wedding to salacious gossip about celebrities and politicians and food shows showing overweight chefs telling us how to cook and eat food? Will they claw back the blowhard political mouths that tell us what we want to hear rather than what we need to hear?

It's not that journalists are an endangered species. It's that coverage of the real issues and topics will wane. It's that politicians and government officials will feel exempt even more so from public scrutiny and public scorn.

They will feel even more empowered and will take greater risks knowing that fewer journalists are sticking their nose in their business.

Issues such as civil rights, corruption and self-righteous proclamations will prevail, because, as you know, that's what politicians and government officials are prone to do.

Who's watching the watcher isn't the catchphrase today.

In fact, no phrase can describe today's preening news. In a world of gazillion voices, journalists have suddenly turned into talking heads and advocates.

Politicians, government officials and corporate chieftains love it and they duly toss dollars at these media machines.

So, let the money flow, and if you are so inclined, take a slow read this week or next. 

Create Portsmouth Now!

I can tell you what it is and I can tell you what it isn't.

It is a movement in Portsmouth. It was created on High Street in Portsmouth on a Sunday morning among a group of people just talking about the future of Portsmouth.

Design by Niki Park 

It is about people, neighborhoods and community.

It is about a city that dwells in the shadow of its sister city across the water.

It is about a city whose future is in the hands of the young, the old and the concerned. It is about everyone in Portsmouth, in every neighborhood, from Olde Towne and Port Norfolk to Churchland and Cradock.

It is not exclusive; it is inclusive.

It is not just about Olde Towne; it is about all of Portsmouth.

No consultant created this message, this brand or this movement. No one was paid buckets of money to start this discussion or create this feeling.

It isn't about a collaboratory. It isn't about a trend. It isn't fancy illustrations or figures showered upon politicians and city officials.

It is about a community. It is about and for people and started by people in the community, beginning at a coffee shop in the dead of summer.

It evolved.

Create Portsmouth Now! Isn't so much a tag line and a brand as it is about a feeling, as it should be. Rather than copy and paste a brand on Portsmouth, a group of people created something new.

Create Portsmouth Now! Is Michael and Melissa Hill, Nicole, Ava and John Park, Patrice Beale and others...

Create Portsmouth Now! Is not one person; it is many, willing and able to make a change where change is needed.

Portsmouth City Council should take note. They should listen to these people because these people have ideas and concepts that could propel Portsmouth forward into a future of its own instead of a future modeled on another city.

Will City Council listen? Will they consider the ideas and changes proposed by this group, which is growing and evolving?

Portsmouth City Officials took one step forward: they hired Chuck Rigney, the assistant director of Development for the city of Norfolk.

Rigney will bring with him experience, a willingness to listen and a capacity to try new ideas within the parameters of city government.

Perhaps he will help Create Portsmouth Now!

It's time.

Portsmouth Gains, Norfolk Loses

Maybe Chuck Rigney can do for Portsmouth what Portsmouth couldn't do for itself. This isn't a criticism of Portsmouth. This is really a note of praise for Portsmouth city officials who chose Rigney to head the city's economic development department.

Rigney is the right choice for the right time.

 Norfolk's loss is Portsmouth's gain. But then Norfolk officials never saw Rigney as a gain; by their actions, it seemed he was more of a loss, or maybe they were at a loss at what to do with him. Rigney, the assistant director of Development for Norfolk, announced his new position on Facebook last Friday.

For whatever reason, FB not willing to accept that I have, in fact, accepted the job as Economic Development Director in Portsmouth, VA, effective 11/3/14. Everyone knows how much I love Norfolk, where I have had the honor and good fortune to work for over 17 years. To move over to Portsmouth is an incredible opportunity; I am looking forward to working with John Rowe and my new teammates in Portsmouth very much. Thank you all for your good wishes and support - can't even begin to tell all how excited I am to be working with John Rowe and the Portsmouth team!

When Norfolk's previous director, Steven Anderson, left quite hastily after a prosaic eight-month tenure as the city's development director, Norfolk was left once again without someone directing the city's economy.

Norfolk city officials and leaders have struggled to find a replacement for Rod Woolard, a steely-eyed civil servant with the demeanor of a CEO. Woolard, secretive and cagy, was a relic of a past steeped in backroom deals. Yet Woolard was a symbol of efficient government dictated by commercial interests while maintaining a precarious balance with the public.

Rigney, his assistant director, stood in his position for 2 ½ years. Rigney, a former banker and real estate guy, is a good soldier and a solid steady sales guy, and he knows the game inside and out.

But in the in final analysis he was bypassed in favor of Anderson, an unknown whose last assignment was in St. Mary's, Maryland, known more for its past than for its present.

When Anderson departed, Assistant City Manager Ron Williams took control of the city's economic development initiatives. Williams, a VMI graduate, is a policy wonk; he's more comfortable executing policy than enacting economic change.

Rigney was bypassed – again.

And again.

Enter Peter Chapman, who has been hired as Norfolk's deputy city manager. Chapman, the former deputy chief administrative officer for Economic Development and Planning for the city of Richmond, will start Nov. 3.

Chapman will oversee Norfolk's Economic Development, Workforce Development and the Norfolk Economic Development Authority and serve as liaison to Norfolk Redevelopment and Housing Authority, according to a statement issued by the city. Chapman will manage the city's Development Dept. until he decides if the department needs a director.

Rigney got the message: despite his loyalty and persistence, he was no longer considered an asset for Norfolk.

So he did the next best thing: he exited for a town that wants his talent, his skills and experience.  

Charity Inc.

Billboards of hungry faces line the highways.

Television ads flicker with images of the tired, the hungry and the hopeless.

Ads in the newspaper extoll readers to give, give, give.

They want your sympathy and they want your money. Donate a dollar. Feed the poor on a dollar. Feel good. Give money. Feel good again when you get a tax break. (Where can you feed anyone for a $1.00?)

It’s that time of year when charities launch their advertising blitz to collect donations of food, clothes and, most importantly, money.

For every dollar charities collect, think how much they spend in advertising on billboards, newspaper ads and television commercials. I doubt that they spend 50 cents on advertising for every dollar they collect; I suspect the reverse is true. I suspect charities spend more on advertising to collect money than they collect in money.

Charities have always enjoyed a certain soft spot in the American mind. We pride ourselves on our selfless and generous character. We are generous people, we say to ourselves. But charities are a sub-culture of an American culture consumed with consumerism, especially with those special tax breaks.

This isn’t new, but the explosion in charities asking for your heart and soul and pocket book has exploded in recent years.

If a stock exchange for charities existed, it might edge the New York Stock Exchange for daily trading volume.

The Urban Institute, a Washington DC fish tank, found that the number of nonprofits grew by 25 percent between 2001 and 2011, from 1.26 million to 1.6 million.

“The growth rate of the nonprofit sector has surpassed the rate of both the business and government sectors,” the Institute said.

In 2010, nonprofits contributed products and services that added $779 billion to the nation’s gross domestic product or 5.4 percent of GDP, the Institute said.

According to the National Center for Charitable statistics, there are 931 registered public charities, private foundations and other tax exempt organizations in Norfolk while Virginia Beach is home to a 1,000.

Reference List for those seeking more information.  

Urban Institute
National Center for Charitable Statistics  

Charity Navigator

Urban Institute Center on Nonprofits and Philanthropy 


News to Use

America’sTop 50 charities: How do they rate?

Christian Science Monitor  

America’s Worst Charities
Tampa Bay Times