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Where Public Policy and Small Business Meet
I was reading NPR’s Planet Money blog the other day, when I came across this link to a Third Way brief. The basic argument is that it would be cheap and easy to provide each taxpayer with a detailed receipt of exactly where their taxpayer money goes.
It’s really very easy. The total amount of federal spending is the denominator and the amount of money spent on a particular program is the numerator. The resulting quotient is the percentage of all federal spending that goes to that program.
It is a lovely theory, but as I have argued before, it would not be as easy as it might seem at first blush. For one, Third Way massively oversimplified the federal budget. This is the taxpayer receipt that Third Way proposed:
Not quite as neat as the Third Way’s vision, but certainly a lot more accurate.
Have you ever been in a long check-out line in a store when a customer who has just completed a transaction decides to take issue with a receipt? I certainly have. Sometimes the issue is the result of poor signage or operator error. But, I have also stood waiting while someone complained that an item he/she purchased was cheaper at another store (this is a true story). The poor check-out clerk couldn’t do anything, so she called a manager over. The manager calmly explained (several times) that she had verified that the price for the item was clearly listed on the shelf and she that she would be happy to refund the cost of the item so it could be purchased elsewhere. The customer didn’t want a refund. She wanted the store to lower the price for her because it was cheaper elsewhere.
I am a strong proponent of government transparency, but context is critical. Without adequate context I think a taxpayer receipt would grind the federal government to halt (I realize that is only a short distance from where we are now, but I digress). Suddenly, citizens would have just enough information to make them dangerous. They would haggle over the cost of their share for a specific item. Or, feel entitled to choose what they will and won’t pay for. I can just hear the complaints now:
“I oppose (insert Program X here), I want my share refunded.” or “I will only pay part of my taxes because I don’t support (Program x).”
“Instead of paying taxes, can I just buy supplies and give them to the government, it would be cheaper that way.”
Last night I went to Public Media Camp at OPB. Unlike most unconferences in Portland, members of the tech community were in the minority. Attendees were varied in age, gender, profession and interests. I really enjoy conversations with a diverse group of people. I like how different interests, experiences and knowledge can enrich a discussion. With multiple perspectives functioning as a prism, refracting ideas rather than light.
One of the recurrent themes of the evening was the challenges inherent in building and sustaining communities with both online and face-to-face components. People had successes with one or the other, but very few had succeeded at both. Those that had succeeded at both shared one thing in common. They each had someone responsible for managing the community.
Communities are like ecosystems. With no external intervention, they can sometimes achieve a degree of stasis. But change is inevitable. The most successful communities have someone whose role it is to either help the community regain its equilibrium or adapt and evolve.
Koalas have lived in Australia for 20 million years. For almost all of that time, they thrived on a rich and diverse diet. At some relatively recent point, the Australian climate changed. Over time eucalyptus forests took over what had been rainforest. Koalas did not adapt well at all. They became very picky eaters and limited themselves to eating only the youngest, most tender eucalyptus leaves and only of certain species. Eucalyptus leaves have very little protein. In response, koalas brains shrunk significantly. Koalas sleep 19 hours as day to conserve their energy, and three of their waking hours are spent eating. Koalas have survived their habitat’s transition, but they certainly have not thrived in it.
I have seen the same cycle occur in communities time and time again. A huge amount of time and effort is put in to building a community. Once the community becomes stable, energy gets shifted to more pressing concerns. Initially, the deterioration is slow. Little things fall start falling through the cracks. Eventually, the community shrinks to just those that are most committed. Without the initial excitement, it is much harder to initiate the momentum needed to rebuild. The renewal process can be successful. But often at the cost of the community’s core members who have burnt themselves out. Other times the community slowly atrophies until nothing is left.
Last night a couple of people reminded me how important my cat-herding was to the CubeSpace community. I am often uncomfortable taking credit for much of my community building work. Fundamentally, I believe that no one person can take credit for building a community. It takes a community to build a community. But last night’s conversations helped me see my contribution from a different perspective. My role was like a lynchpin, mostly invisible. But without one, the wheels literally fall off.
That quote by Timothy Egan perfectly sums up how I feel about the direction Portland is heading. So much energy is going to remaking Portland in the Bay Area’s image that I fear we are losing sight of our own charms. Something has been luring the creative class here for years, despite the fact that they could make more money elsewhere. Why do you think that is? Quality of life is clearly part of the attraction, but there is something else that doesn’t get mentioned as often. Portland is a perfect sandbox.
Eric Weiner traveled the world choosing destinations based on their placement on the the Gross National Happiness Index. Iceland rates as one of the happiest countries in the world. This is despite the fact that one of their most popular foods is rotted shark. Weiner’s theory is that Icelandic culture values experience over financial success. It is neither unusual nor frowned upon to switch professional fields several times over one’s working life. There is just a cultural recognition that having to choose a single profession is just too limiting. The same holds true for recreational activities like playing in garage bands, of which they have many. It doesn’t matter whether the only people willing to listen to a band are the people playing in it. That is beside the point.
Rotted shark aside, Portland shares many of the same values. Despite ballot measures 47 & 50 decimating funding for the arts, Portland still has an amazing number of experimental theaters, shoved into the back corner of cafes or wherever space is available. We love our neighbors ‘ art so much that what started as a monthly gallery walk has spread to neighborhoods around the city. We show up in droves to hear local bands play in parks, outdoor markets and anywhere else people can gather.
Our burgeoning food cart culture is another manifestation of our communitarian values. We happily travel the city to eat whatever food experiments someone wants to try. Fried snickers bars? Yup. Poutine? Check. A simple bowl of beans and rice doused with crack sauce? Now available at 3 carts and an actual restaurant.
So the next time someone complains that Portland needs to be more like Seattle or the Bay Area, smile politely and take them by the hand. Then go to a free outdoor concert or go on an art walk and treat them to some cart food. Then remind them that we are happiest just the way we are.
By the way, that quote was said in reference to Seattle at a time when Seattle was struggling with its own feelings of inadequacy.
Sunday marks a year since we had to close CubeSpace. I think it is fair to say that this has been one of the hardest years David and I have experienced, both separately and together. Generally I have a positive outlook on life, being fairly confident that everything will work out in the long run. But lately I am finding it harder and harder to remain optimistic about the future. David and I remain unemployed, scraping by with contract and temporary work. The niche CubeSpace served remains unfilled, leaving medium-sized community events without a venue and scores of potential co-workers without the community they crave. And, our former location appears to remain vacant.
Although it has been a difficult year, there have been some bright moments. David and I have had the flexibility (and frequent-flier miles) to see my twin 2 1/2 year-old niecelettes more often than CubeSpace would have allowed. We were also able to offer some well-deserved and much needed respite to David’s father who has been caregiving his own parents for the last 6 years or so. In the almost 12 years that David and I have been together, I had grown very close to his grandmother. When we lost her suddenly (but not unexpectedly) in April, I was very grateful to have had that additional time with her. David and I also had the flexibility to stay in Boston for 2 weeks after her funeral and generally help out. Most importantly, it gave me an opportunity to spend quality time with David’s grandfather, look at family photos and hear his stories about the woman he adored for over 68 years.
It has also been a year of true friendship. I had the privilege of meeting many incredible people through CubeSpace and some of them have turned into dear friends. Friends who have been there for me throughout this difficult process. Friends who gave me the space to be an emotional wreck and not walk away. Friends who had my back when I needed them most. Friends who gave me a hard time for not asking for help when I needed it and then doing more than their share.
Our future? My crystal ball is in the shop and the Magic 8 ball is stuck on “Cannot predict now.” Hopefully, David and I will both be employed doing work we enjoy. David has begun to look for work beyond the Portland Metro area, so who knows where we will be in a year.
If you’re involved with Portland’s software community, you know that there’s an amazing variety and depth of work being created at companies large and small, in hobby side-projects, and open source efforts. The City of Portland has selected software as one of its economic development clusters for the economic plan currently being written. Agencies like the Portland Development Commission (PDC) are involved in documenting our software community and developing a plan for working with it, but they lack accurate data on the types of software development local organizations are undertaking, and have limited experience with the kinds of small companies, ad hoc organizations, and independent work that forms much of our technology efforts.
We’d like to assist the PDC and City of Portland efforts by initiating a software community census to:
* Gather some basic demographics about Portland’s tech community
* Flesh out what work people are doing and for whom
* Build a baseline so we can quantitatively track the community’s breadth and depth
How can you participate?
* Take the survey at http://www.surveymonkey.com/s/KTGSH9Q before May 17
* Spread the word to your colleages, coworkers and friends
* We will be posting the results online, so check back with Silicon Florist and your community tech organizations for details.
What do we get out of this? This census will:
* Ensure economic development efforts are targeted to what our industry actually needs
* Provide data that can be used to assess the success of economic development efforts
* Create an accurate picture of our amazing tech community (and give us bragging rights at OSCON).
* Market Portland to companies like Involver who are coming to check out Portland!
How our work fits into the City of Portland’s plans:
* Software is the of the 5 clusters identified in Portland Economic Development Plan. It is the cluster that is least well defined in the plan.
* PDC took the first step with their survey. Now we are helping them flesh out their results and better target their efforts.
* We will be sharing our survey’s results directly with the Mayor and PDC’s Urban Development Director, Erin Flynn.
The survey will be open through the end of May, but we strongly encourage you to complete the survey by May 17th so we can include your data in the results we share at the next Lunch 2.0.
Two of my favorite things about Portland are the people and the breakfasts. On the theory that one can never have too much of a good thing, J-P Voilleque (aka @lawduck) organizes a bi-weekly breakfast tweetup. We alternate sides of the river and a different configuration of folks come each time. The one constant is the high quality of the conversation.
Perhaps we were inspired by Olympians striving for gold, but yesterday’s conversations raised an already high bar. After we lamented not having recorded ourselves, I took it upon myself to record our ideas for posterity.
If the #pdxbreakfast folks ran the world, these are some of the improvements we would make:
And , last, but certainly not least:
I had forgotten how much I enjoyed the conversations my blog posts sparked. I find the opportunity to engage in discussion with others very energizing. So much so, that one response inspired this post.
Jeff Schwaber, instigator extraordinaire, asked me the following:
“Have you seen the book The Illusions of Entrepreneurship or Malcolm Gladwell’s article about it? I’d like to read your thoughts on them. Here’s the abstract of the Gladwell article: http://www.facebook.com/l/1a4ce;www.newyorker.com/reporting/2010/01/18/100118fa_fact_gladwell“
I read the article, and it reminded me of the number of times I’ve been told to only take risks with other people’s money. Is this really the secret to success? I decided to dig a little further. I found some interesting answers from 2 recent studies by the Kaufman Foundation. The Anatomy of an Entrepreneur: Family Background and Education and The Anatomy of an Entrepreneur: Making of a Successful Entrepreneur.
But first, a caveat. British Prime Minister Benjamin Disraeli is most often credited for coining the phrase: “Lies, damn lies and statistics.” I am painfully aware how open datasets are to interpretation. This is the bugaboo that sends me down rabbit holes in search of primary data. I came to somewhat different conclusions than the authors after reviewing their summarized data. All of the following commentary is based on my own analysis.
Ninety-eight percent of respondents ranked risk as the biggest barrier to entrepreneurship. When asked the reasons for starting a business, 74.8% responded that they wanted to build wealth and 68.1% wanted to capitalize on a business idea. The greatest risks generally produce the greatest returns. One can extrapolate that entrepreneurs take calculated risks in pursuit of high returns.
Serial entrepreneurs are an interesting population because they repeatedly choose to take risks. A closer look at the data reveals that a serial entrepreneur’s personal risk decreases as he/she starts additional businesses. First companies are overwhelmingly funded through personal savings followed by loans from friends and family. As a serial entrepreneur’s experience grows, so does the ability to secure angel and venture capital.
Even if someone else’s money is on the line, most of us prefer success to failure. Entrepreneurs highly value the lessons learned through both failures and successes. Willy Wonka once said: “Invention, my dear friends, is 93% perspiration, 6% electricity, 4% evaporation, and 2% butterscotch ripple.” Entrepreneurs work incredibly hard, sacrificing free time, friends and family to succeed. But 73% of entrepreneurs understand that luck can make or break a business. A lesson we’ve all learned in this economy.
I have so much more to say on these 2 studies, and with any luck, I will have the opportunity to share them with you all.
For reasons that don’t bear further exploration at this juncture, I have had a hard time finishing blog posts for the last 6 months. I would get myself all riled up about something, start a post, lose my momentum, and that was all she wrote. But, I am now back to herding all different kinds of cats (even invisible ones).
First some background. A long, long time ago, when CubeSpace was just a baby and before the world’s economy imploded, I initiated a series of conversations with business-people and local governments about addressing the perennial funding issues facing Portland’s microbusinesses. My take is that as a city that explicitly values local businesses, we should also be willing to put our money where are mouths are.
My thought was that by creating our own revolving loan fund, we could help business-owners who needed short-term operating capital to manage cash-flow issues. My idea was to create of pool of individual investments ranging from $10,000-$25,000. I also had a (pipe) dream of securing a public match (via the Oregon Investment Fund or Oregon InC.) The only questions remaining were where to house the funds and who would manage the loans.
I wasn’t able to answer those last two questions before the economy took its precipitous downturn. But, I can be patient when I need to be, so I tucked the idea aside and waited. Good things do happen to those that wait. While my idea was laying dormant, credit unions started taking on business customers.
Fast forward to now. A few months ago I met a woman named Yolanda Karp who has spent much of her career working in local banks and credit unions. It didn’t take long before we realized that we shared a vision in common. She started talking to her colleagues at OnPoint, Unitus and Shorebank and got a very positive response.
Yolanda and I have both been hearing from experienced business-owners that the economy has brought them new challenges (and to be fair, a couple of new resources). There is an ever-growing population of “Involuntary Entrepreneurs” who have given up looking for work and are trying to hit the ground running with their businesses. We think it is high time for an environmental scan of Portland’s microbusinesses.
That is where we need your help. In order to run two focus groups of microentrepreneurs, we need to recruit 30 microbusiness-owners. We are defining microbusiness as businesses with either 5 of fewer employees or annual gross receipts of less than $250,000. We are hoping for a participant distribution that looks roughly like this:
We would like a good mix of gender and ethnicity, so please keep that in mind. We are also hoping to recruit some immigrant business-owners because they represent a significant percentage of Portland’s microbusinesses.
If you or someone you know would like to participate in one of the focus groups, please contact me via email at evaschweber [at] gmail [dot] com, leave a comment on this blog, tweet me @evacatherder or call me at 503-310-4645.
Thanks in advance!
I spent this past weekend at Transparency Camp West, at the Google campus in Mountain View, CA. I went expecting to be surrounded by my fellow policy wonks, but surprisingly they didn’t make up the bulk of attendees. Most of the folks in attendance seemed to be developers looking to market their web applications. There were some marked exceptions, primarily from outside of the US. I had some fascinating conversations with Ilya Ponomarev, a member of Russia’s State Duma (parliament) and Chair of the Parliament’s High-Tech Development Subcommittee, Daniela Silva, a graduate student from San Paolo, Brazil, Pedro Valente, a Yahoo! employee working out of their Brazilian office and Jonahtan Adir, a senior policy advisor to Israel’s President, to name just a few.
The focus of the weekend was primarily on federal transparency. My interest is primarily on local and state government. I am also a serious data junkie, so my ears perked up whenever I overheard a conversation about data. During one of my many data-centric conversations, one of the tech folks asked me what kind of data I would like to see used in his web application. My immediate response was budget data. The techie looked at me blankly and said that budgets only involved entering numbers, and really wasn’t very interesting. He then asked me again what data would be most useful to me. Ilya was also part of the conversation and his explanation on the importance of budget data was met with a similar dismissal. That is when I knew I wasn’t in Kansas anymore.
Budgets are not spreadsheets or columns of numbers. Budgets are policy documents. Budgets are where the rubber meets the road; where priorities are put to the test. Budget Hero is a great exercise in matching your priorities to federal expenditures. A politician may talk a good game, but validation comes only when we get to peek behind the curtain (apparently I am in a Wizard of Oz kind of mood today).
Think of your own personal budget. There are times when your spending behavior is consonant with your values. For example, buying locally sourced and organic foods, even if they are a bit more expensive than the produce grown in Chile or Mexico. From time to time, we all find ourselves facing a disjuncture between our values and our spending behavior. Usually it is small, like eating junk food when you didn’t have time to make lunch.
Other times the disjuncture has a significant budget impact. For example, If you had decided to purchase a Suburban because you have a large family and need a lot of space to haul them and their stuff around, then your spending behavior is consonant with your needs. However, if you decide to buy a Prius because of its great fuel efficiency, and instead purchase a Suburban that gets 14 MPG, your spending behavior is not consonant with your values. Neither the Prius nor the Suburban are inherently good or bad. They each serve their own purpose. The problem only arises when you say one thing and do another.
I wish I could say I only had that conversation with one person who was an anomaly. Sadly, I cannot. What I can say is that many of those calling for transparency are doing so without a clear sense of what or why. No one I spoke to could truly articulate what they meant by transparency. The most common answer can be summed up in the Sunlight Foundation’s mission statement:
The Sunlight Foundation is committed to helping citizens, bloggers and journalists be their own best watchdogs, by improving access to existing information and digitizing new information, and by creating new tools and Web sites to enable all of us to collaborate in fostering greater transparency.
At first glance, the mission sounds like it has meaning. But when I took the time to parse it, I still wasn’t able to answer the basic question of what or why. The mission makes no reference to improving transparency in government. Any connection to government is implicit, forcing people to apply their own interpretation–ensuring a Tower of Babel with no common language. Nor does the mission statement address the question of why. The most effective mission statements are written in such a way that all stakeholders will know when the mission has been achieved. The classic example of a good mission statement is the March of Dimes. The March of Dimes was created to fight polio, a mission in which they succeeded, having supported the development and distribution of the polio vaccine. It seems to me that the transparency conversation can only move forward when we have developed broad consensus on what should be transparent and why.
The following anecdote really captures the problem. A person at Transparency Camp said he wanted the federal government to give him a receipt like he would get at a hotel or a restaurant. Further discussion clarified that what he was really asking for was a breakdown of how the hotel determined its price. He wanted his receipts to include the following:
Hotel room – $100
The list goes on and on, but I am going to stop there because I think I have made my point.
If hotels had to generate receipts like that for every customer, even Motel 6 rooms would cost hundreds and hundreds of dollars. The amount of staff time that would be required to generate receipts like that is mind-boggling. And it couldn’t just be done once. Supply prices change on a regular basis. Receipts would need to be generated for the precise length of time guests were in their rooms. A guest who checks in at 3pm will use more water and utilities than someone who checks in at 8pm (I really am having way too much fun generating these lists of expenses). We don’t always want a fine, detailed accounting of how our money is spent. Not when fine details are just not worth the cost of generating them.
Public budgets are the same way. Do we really want to use our tax dollars used to track down every incremental cost included in every expenditure? Public information laws require governments at all levels to disclose their budgets. For the locals who read this blog, City of Portland, Multnomah County and Metro have budget pages on their websites. Want to do some additional analysis yourself? Fortunately several jurisdictions (including the federal government) offer easy access to APIs.
I am all in favor of volunteers and voluntarily-funded organizations (aka non-profits) creating applications using the data already available through APIs. I support anyone’s desire to drill down into the minutiae of budgetary data. What concerns me is when we criticize government for not doing the fine-grained analysis for us. I see that as serious misappropriation of tax dollars.
Every time we have to choose between options, we face a decision-making point between immediate gratification and long-term consequences. For example, buying the cheaper printer with the more expensive ink cartridges or eating that treat that you know will add bulges to where you want them least. There is a dedicated part of our brain (the frontal cortex) devoted to making choices and recognizing the consequences of our actions. However, the frontal cortex does not inherently distinguish between short and long-term consequences. That is a learned behavior.
We, as a country, are beginning to factor the impact of our choices on global climate change. Individuals may choose to walk or bike rather than drive or to bring a reusable bag to the grocery store. Large organizations, including both businesses and governments, are choosing to purchase energy from renewable sources and purchase products with recycled content. Analysts are refining methodologies that allow us to quantitatively compare short and longer term costs. These methodologies are variously called Life Cycle Costing or Life Cycle Analysis, but the concept is the same regardless of what it is called. (you can see some of City of Portland’s life cycle costing policies here).
I find it surprising how infrequently these same methodologies are applied to funding the public sector. As a public budget wonk, I have heard the same conversation repeated every year since I took my first budget and finance class in 1995. The year is important because I have only watched the budget process in a post-Measure 5 Oregon. A typical conversation begins with an explanation of how funding scheduled preventive maintenance is much more cost-effective than emergency repairs or replacement. Or that schools need adequate funding that includes education in the arts in order to produce a skilled workforce for the future. The vast majority of politicians understand this argument, and try to sell it to their constituency. All too often, citizens only consider the short term and complain about wasteful spending.
In Oregon and California, voters have tried to reign in public spending through tax abatement ballot measures. It took a couple of decades, but now education and public infrastructure are so badly deteriorated that they require impossibly large budgets to correct. California’s Proposition 13, the progenitor of Measures 5, 47 and 50 in Oregon, has placed the 8th largest economy in the world on the verge of bankruptcy, and forced them to pay their creditors with IOU’s. I am not the only one who has connected the dots, so has Peter Aldous in New Scientist:
…the pernicious effects of Proposition 13, passed in 1978. A populist constitutional amendment that capped property taxes, it has created a hole in state finances that gaped wide this year as recession bit into tax revenues. By limiting local school boards’ ability to raise funds from property taxes, it also turned a public education system that once led the nation into one of the worst in the US.
Just as Proposition 13 destroyed California’s exemplary public K-12 and higher education system, Measure 5 destroyed what was once an excellent public K-12 system in Portland.
We need to take a deep breath and remember that government’s role is one of stewardship. Government is supposed to function as our frontal cortex and consider the long-term consequences when expending public resources. It is not sound fiscal management to circumvent the process and manage tax policy through citizen initiatives and referenda. Our role as citizens is to actively engage with our government and elect people we trust because we are the primary check on the system. Those that complain about inept or corrupt politicians should take action with their votes. That is the core of democracy.
We should use California’s fiscal crisis as an object lesson and consider both the long and short term implications of tax reform. Change won’t happen overnight, but it can happen over time. Just as we have started down the road to reduce the impact of global climate change, we can apply the same strategies to adequately funding our public infrastructure.