Wednesday, October 22, 2008

Is the Board on board with the Bond?

Open letter to SAISD Board:

Is this Board on board the good ship School Bond? I'm seriously starting to wonder.

When I was in opposition to the last bond, I always 'fessed up, I knew the district needed that amount of money, but I could not go along with the direction of that bond. Closing, consolidating and moving elementary schools out of their neighbohoods, moving Central across town, I knew that was not what the voters wanted. The voters agreed with that assessment, 2/1.

I suggested, and offered published material from people who had more experience than any of us, that a critical element to passing a school bond was "polling, polling, and polling". in short, before we formulate a package, find out what the community wants and how much the voters will be willing to spend. Then track response and either amend the bond or target voters as needed. As I reminded Board, most of whom were not on deck for the last sucessful bond in '96, that bond had to be amended between presentation and passage.

Then, again referring to those successful bonds, select an election date where your bond is the headliner. Last November, with no candidates running would have been great. Last May, even with a hot Police Chief race, the bond would have gotten at least second billing.

As it is, the bond is almost lost in the political noise. Every office from tax assessor to President is up, we are so awash in political ads the voters start to tune them out, vast sums are being spent and one has to scream to be heard at all. The SAISD response; not nearly what was put out for the failed bond. No newspaper insert, a few 5x10 newspaper ads, a little radio from the PAC, I'm told there is some TV, but I haven't seen it, and I am a solid political junkie.

Most voters assume this is the last bond with a fresh coat of paint. The message that this bond is 180 degrees from the last is not getting out there. I was discussing election preparations with my Democrat compatriot in this precinct and the bond came up. This is someone with enough political motivation to serve on election days, and she was under the impression we were selling the same Edsel we put out 18 months ago! It only took me 10 minutes to convince her to vote for the bond, and talk to her friends, but she had been under the misapprehension this was the last bond redux.

There is no polling, but my political antennae tell me we are at this moment going to lose by over 10%, possibly a replay of last bond. The promised "media blitz" is underwhelming to say the least. More effort was put into the last bond at this point in the election run-up than has been this time, and we are lost in the background noise this time. Last bond, the only competition for attention was a mayoral race so pre-determined that Lown won every precinct in town, his challenger's neighborhood included.

Another bit of my advice the Board discounted; If we are to have a good chance, get the message out before early voting. THIS IS NOT THE LAST BOND! It is a dead-lock certainty this election will set turnout records. IF SAISD gets its message on high enough volume to be heard, over 2,000 voters have already voted and can't change their minds. I'm holding with a turnout over/under of 36,000, 40% of whom will have already voted by Nov. 4.

It pains me to say this, but this bond is all but dead. Without a serious effort by SAISD and the PAC, I could safely order a funeral wreath without fear of wasting the money. I have shown up and offered my promotion as a former opponent to as many presentations as my job allowed. I wouldn't use all the fingers on one hand to count the Board members I have seen at these meetings.

If there is any prayer of passage, it will be in your collective AND individual full-throated support to every elective demographic you have a connection to. Inflation has already reduced the physical results of a $150 million bond by at least 10% from last Nov., and that figure isn't going to improve as it ages.

The last bond that failed was the first ever to go down in SAISD. The voters are not uncaring, but at least on this bond, too many are un-informed or mis-informed They confuse this bond with the failed measure and most of the fault for that lies with SAISD Board. Last bond, SAISD pushed the envelope as to "informational" advertizing. Well, we don't have to fret that this time, nobody is likely to accuse you of crossing the line in your enthuisasm.

Editorial letters and comments of late show that many voters do not understand that A) SAISD and City of San Angelo are distinct governmental entities; and B) this bond is diametrically opposite of that which we defeated 18 months ago. A&B are points that must be made to the voters. Quickly folks, we are "burning daylight".

That 18 month gap between losing and new issue is regrettable and expensive. A point that I have tried to hammer home, this bond is not just "for the children", a trite phrase too many politicians have used. We cannot have a first-rate city with a second-rate school system. Quality schools are every bit as important to a city's prospects as the streets you drive on or the pipes your water comes through.

This is truly a "pay me now or pay me later" moment, and paying later will not be the less expensive option.

Sunday, October 12, 2008

Brush fires & Economics

The more I read and hear about our current economic problems, the more the forest analogy fits.

We are seeing articles such as this one that compare our economy to our forest management. Prior to the settling of this country, forest and brush fires were a frequent part of forest ecosystems. Every few years, lightning would start a fire that normally burned a few hundred acres before dying out. Because they happened relatively frequently there was little dead brush to fuel real intense fires, and the indigenous animals had developed successful survival strategies. The ash returned nutrients to the soil, and the fires cleared out plants and insects that were a threat to the long term health of the forest. We started meddling in these ecosystems that we poorly understand and the results have been massive changes in the character of these forests. We can't prevent all forest fires, so when one happens now, there are huge amounts of dead brush to fuel them, which results in massively devastating fires that can span several states. After these fires, it takes years for anything resembling a forest to reappear, and even then, the makeup is very different than previous forests. We are getting better, with controlled burn strategies replacing no burn mandates. We still put too much faith in a bureaucrats ability to second guess nature.

We do much the same thing with economic policies. In a functioning free market ecosystem, you don't have a build up of highly volatile loans and securities. Most of the time, they won't take root, and if they do, they get burned off in small, localized bankruptcies and foreclosures. Values go up and down. Not everyone succeeds. Failure is as much a part of the economy as success. We get in trouble when the government tries to pick winners and prevent losers. They have tried to prevent loan failures in parts of the housing markets. They have tried to eliminate any drop in real estate values. They have encouraged the pooling of volatile loans into complex structures in companies so big they are too big to be allowed to fail. They practice a brand of political numerology in which if they can just find the right numbers, everything will magically come out right.

Recently we have had some lightning. The economic forest is burning. We may be able to protect some parts of the economy, but just like the major brush fires we are see frequently in the west, a change in the weather with lower winds, etc. is really what it will take to put it out. Until then, we need to work on some fire breaks.

Sunday, October 05, 2008

Bailouts, Commons and Muntzing the Economy

I, like most people I know, have been following the progress of the Bailout package as it went through various changes before final passage. Needless to say I'm not happy. In the end, though I think Chris Gibbons summed up the situation in the analogy posted in an economic gardening message group on Yahoo.

" This one might be called the Irresponsible Forest Owner.  If I live in the forest together with my neighbor and he is very careless about fire - what is my response when he sets fire to his property?  My instincts are "You need to live and learn from your own mistakes.  If your house burns to the ground, perhaps you will be more careful next time.  This is the natural consequence of your actions."

But then I watch the fire getting ready to spread into the rest of the forest including my property and so I reluctantly go to his rescue. I am angry, I have violated my principles of self responsibility but my only other choice was to watch the entire forest go up in flames.

I sense the great majority of Americans are against the bail-out. But I also sense that the great majority of Americans don't believe that the "fire" has any possibility of spreading to them.

So ultimately it gets down to whether a person believes credit will dry up because of the fear created by this sleazy affair. Let me relate a conversation I had the other day with our local banker who chaired my advisory committee. He said simply--people are pulling their money out and taking it home. He is a profitable bank but now he is less liquid and less able to meet his legal requirements. He doesn't want to but now he cannot make as many future loans and is starting to call in current loans. Did the far away fire on Wall Street spread to his property simply through fear?
He goes on with some more observations but this captures the essence of the problem in a very understandable way.

We all share this vast economic forest which has grown over the centuries until it covers the earth. As it has grown, certain fire breaks, barriers, and supports were added to help stop the spread of dangerous conflagrations. Recently, there has been a lot of tinkering with these safety mechanisms. Some of this has been necessitated by new technologies like computers and instant communications. Some is a desire to "increase efficiency." Much of it is just old fashioned greed. Most of this tinkering appears to be random and inconsistent. The more I read about it, the more I had a strange sense of De Ja Vu.

In the early days of commercial television, there was a self taught engineer by the name of Earl Muntz who was the first to offer a TV for under $100. He did this by using a technique that is now called Muntzing. He would take a standard, working TV and start clipping out components until it stopped working. He would put that component back in and move on to another section, and keep this up until nothing else could be removed. He would then make copies of that TV and sell them for budget prices. His televisions were cheap, but they were also unstable, insensitive, and had a hard time lasting to the end of the warranty. All those components put in there to keep the TV working as components aged or the voltage varied had been removed, so Muntz's sets were frequently operating on the verge of failure. Because everything was operating right on the edge, when something broke in a Muntz TV, lots of components went out and the TV was not worth repairing.

We have been Muntzing the economy for decades. Pull a regulation here. Change an accounting requirement there. Favor a special interest over there. Muntz the interest rates. Muntz the reserve requirements. Muntz business models. Muntz the risk analysis. Clip and tweak economic components hither and yon until something breaks and maybe put that back. This random, uncoordinated, poorly planned tinkering has left us with with a system that is always on the edge of being unstable.

We have been lucky. Economies are remarkably self correcting over the long term. That is unless someone is in there Muntzing them.