Ugh, Another Crony Enterprise Born

When I read this in our local paper, alarm bells immediately went off:

A friendship cemented while working together on the state’s economic development efforts has led to a new partnership linking Roy Vallee, the former Avnet Inc. chairman and chief executive officer, with private developer Don Cardon.

Great, two folks who have focused on bringing crony corporatist benefits to selected local businesses and business relocations are going into business together.  I don't know these guys, I am sure they are fine folks, but my first thought was a business that leveraged their connections with government to create private profits.

Reading further, this seems like a good guess:

The two metro Phoenix business leaders say they will collaborate on large commercial developments, including those with a special public-interest focus and those with special complexities....

Cardon spent three years at the Arizona Commerce Authority, a public-private partnership, and the predecessor Arizona Commerce Department. Aside from that, he perhaps is best-known as a driving force behind CityScape, the three-block, $1.2 billion mixed-use development in downtown Phoenix. He cites as a strength his ability to bring private and public interests together on a project.

Yep, I definitely think I am on to something:

The firm will strive to encourage a “collective vision” and “make sure projects are worthy of investment and will be successful,” Cardon said. “Everything we do will involve public value, enriching the quality of life.”

You know the type of project -- the ones where the city / state / Feds justify investing millions of taxpayer money into private projects because "they create jobs" (like those at Solyndra).  In fact, the two partners are already polishing up this mantra, which I am sure we will hear over and over:

Deals typically will exceed $100 million and will create hundreds of jobs, both in the development stage and when complete, he said. The company , however, will maintain a fairly lean staff.

“We’re not a big employer, but we’ll be a job creator,” he said.

I want to make a couple of quick points:

  • Investments whose primary return is "jobs" are not investments, because jobs are a cost, not an income stream.  Investing public money to create jobs means that one is investing money now so that it incurs costs later. 
  • All successful capitalist enterprises that make  a profit by definition create "public value" and "enrich the quality of life."  Otherwise no one would buy their product or service and they would fail.  In fact, only publicly-funded projects can evade this sort of accountability.  When it is said that these projects deliver "public value," what is meant is that they deliver benefits that a few self-selected people have defined as somehow interesting to the public, but which it turns out the public (when given a choice) is unwilling to pay for.  Which is how we get the local town of Glendale continuing to subsidize an ice hockey team for $25 million or so a year.
  • DrTorch

    What were there names? Eugene Lawson and Kip Chalmers?

  • NL7

    Walgreens and Safeway/Dominick's have done more for my quality of life than urban renewal and downtown development plans ever did.

    St. Louis just passed a tax to pay for bike paths and to redesign the federal grounds around the Arch to make it more pedestrian friendly (and less driver friendly). If they really wanted to attract people back to the city and out of the suburbs, they could try getting a 24-hour drug store downtown. There's currently no CVS, Walgreens or anything else in the downtown neighborhood that's open nights and weekends. You have to go to small convenience stores or the only supermarket in downtown (which is actually really nice). Meanwhile, given the abundance of abandoned buildings downtown, there are more acres in downtown STL dedicated to public parks, convention centers, and stadiums than to actively occupied business and retail locations. And as a pedestrian I have to walk past useless parks and a 98% unused convention center just to get to retail and restaurants. Then the politicians wonder why so many businesses in the metro area re-located to the suburbs just a few miles west of the city limit.

    What gives me "public value" and "quality of life" is being able to obtain the things I need and want to live my life. In downtown Chicago, I'm within ten blocks of dozens of Walgreens, Starbucks, and supermarkets; a hundred substantial shopping destinations are within a mile or two (which I consider walking distance) or a 10-minute bus ride. Politicians and developers like snazzy buildings and pretty parks, and I'll admit those can be nice, but what really improves my life is easy access to the things that businesses sell me. But it's hard for a politician to take credit for me being located close to drug and grocery stores, so instead they build too many monuments to themselves and call them things like "riverwalk" or "public recreation space."

  • SamWah

    Collective vision = We're going to collect a bundle!

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Gee, I hope their collective vision is to put up more vacant office park space.

    We don’t have enough of those now, especially ones which enhance the quality of life.