What's Good for GM Is Bad for Jim Renacci

For Jim Renacci's rant against the GM bailout to make sense, he needs the bailout to fail. If the bailout, and the subsequent bankruptcy, restructuring, layoffs, elimination of models, and yes, terminating dealer franchises works, then it sounds like he's just whining about his personal ox getting gored.

What's more, he's running on his experience as a businessman. He says experience creating jobs with the businesses he has run and can translate that experience into better economic policies. Apply that to the presser about the closing and the argument seems to be -- indeed must be -- that if he had been in Congress GM would neither need to go bankrupt nor would it need to close dealerships. And for the second to work, he needs to show that closing dealerships has prevented GM from bouncing back.

He could arguably say that the point of the bailout shouldn't only be GM's survival, but the health of the economy as a whole, including all the franchisees. That would be an interesting argument, but also a progressive Democratic one. It's essentially an argument that a company should think about the social costs of it's downsizing strategy, much like when progressives point to studies showing that mass layoffs can hurt a company's long term health.

Such an argument is not consistent with the free market, laissez faire, CEO knows best philosophy of governance that undergirds all of his campaign rhetoric. He can make that argument, but he would have to switch parties first.

Meanwhile, if his fit over losing his dealership is only about him losing a dealership, his whole argument about austerity and personal responsibility. If he can't personally take the medicine he prescribes for the economy, surely he can't provide the leadership we need in trying times.

So, if the bailout succeeds, he was wrong about GMs restructuring. And if he's wrong about GMs restructuring it undermines the entire argument for his candidacy. Got it? Great. Now check this out:

General Motors' promise was this: by cutting its North American brands in half and shedding employees, dealers and creditors, it could break even with 18-percent share of a 10-million unit annual U.S. light vehicle market. In its second full quarter as post-bankruptcy New GM, (having even fired the man who made that promise as CEO, Fritz Henderson) has turned a profit.


* * *

What does all this mean? It means the bankruptcy did what was intended. It shrunk GM to a manageable size and made it an automaker more likely to survive in a market crowded with keen Asian, European and domestic competitors. GM needed to shed brands, models, dealerships, white- and blue-collar employees, production capacity and debt to be viable and help save U.S.-based manufacturing. Liddell expects GM to remain profitable, although it's too early to predict an overall profit for 2010. If GM can pull that off, an IPO that "buys out" a portion of the government's "investment" (large enough to reduce our ownership to a minority position, I hope) should happen by early next year.

Would you buy a used free market ideology from this man?

Primarily a Bad Sign

We can start with yesterday's AP piece trying to divine broader meaning from voter participation in Tuesday's primary. Here's the nub:

Final, unofficial totals show more votes were cast for Republicans in every statewide race except U.S. Senate, the Democrats' most high-profile primary.

Experts say the participation rates show Republicans are energized — perhaps to beat Democrats, but perhaps to either support or defy the nascent tea party movement. Lessons for fall are still being determined.

I'll mostly go along with that, especially since the participation rate parallels the polling data showing that Dems are demoralized and Repubs are energized. But it's worth noting a few factors that may exaggerate Tuesday's numbers:

• The Roll-off Difference. Studies show that Democratic voters are more likely to roll-off, that is vote only the top of the ticket as opposed to filling out the entire ballot. This is, for example, why Republicans continued to win judicial races even in the big Dem cycles. Setting aside arguments about what this says about the respective parties, its certainly possible that Dems are less likely than Republicans to vote in all the uncontested races.
• New Ballots. The new optical scan ballots make it more of a pain in the butt to vote. Filling in an oval is that much more tedious and annoying than punching a button or tapping a screen. Not that anyone would not vote in a real race, but when there is a real (if minimal) cost to doing something that matters not at all, fewer people will do it. This may have heightened the roll-off effect.
• The Tea Party. While the Senate campaign was big for the true political junkies on the left, the Republicans had a near civil war over the Auditor's race in which the Tea Partiers had there guy against the establishment Party pick. This arguably injected an energy into turnout on the Republican side of the ballot.
• Things Change. This an events-driven election cycle. The prime mover in this election is not big ideas about the role and size of government, it's that people want something/anything to happen so they start hurting. It's unlikely the economy -- and in particular the employment numbers -- will pick up appreciably, but if they do, the picture changes.

Make no mistake, things are not good for Democrats this cycle. But it is still good to see the entire picture.

UPDATE: Apparently the GOP's "voter enthusiasm" advantage is dampening. h/t Progress Ohio's Twitter feed.

The View from a Mile High

We are staying at the Inverness Hotel and Conference Center (following custom, they get a plug for giving free wifi -- a rarity in business hotels.) Major swanky, although in true western fashion the lobby decor includes a dog-shaped iron boot scraper mounted on a plexiglass base and displayed as an objet.

The view from outside our window looks like this:



Signs of money abound, at least here in the southern suburbs. High-end retail, luxury cars and these tall spindly things that look vaguely familiar. I asked a local who informed me that these are called "construction cranes" -- things used in areas where it makes economic sense to erect new tall buildings.

With all that, the hot topic on LeftyBlogs/Colorado our first day was a study showing that the state experienced the highest growth in child poverty over the past seven years. While the study notes a number of intersecting factors, it's important to remember that Colorado is home of the TABOR amendment which severely restricts government spending (and also the state that blunted its fangs.) Colorado now lags behind most states in a number of spending categories, including substance abuse treatment, child health and education.

Not to say that spending alone is the cause behind the study's findings. But then as TABOR acolytes were pushing the amendment in Ohio, they pointed to Colorado's gaudy growth rates and attributed them to the amendment which is just as reductivist. The rates of growth and in-migration may have more to do with this:

This picture was taken from the parking lot of the IHOP where we had breakfast yesterday. Now Northeast Ohio has plenty of beautiful places if you know where to look. But nowhere in NEO will you find an IHOP parking lot with a view that will take your breath away -- at least not in a good way.

If we are serious about turning the Ohio economy around, we need to avoid gimmicks from states whose cachet is based on factors we cannot replicate.

See also: No income tax in Florida.

Community WiFi Coming to Akron

The ABJ's lede today is the announcement that Akron will host a "wireless internet access corridor" under a plan unveiled yesterday. The Knight Foundation is granting $4.5 million to the nonprofit digital networking organization OneCommunity to set up the network. OneCommunity will set up the Knight Center for Digital Excellence to run the network. In addition, the Center will be part of a broader effort to expand community wireless access. This from the press release:

The nonprofit Knight Center of Digital Excellence will collect and
share international best practices online with communities everywhere. It
will provide on-the-ground aid to the Knight communities to develop
technology strategies and enable citizens to connect with each other and
the world. Knight's initiative includes a $10 million Digital Opportunity
fund offering challenge grants to Knight communities.

In addition to the seed money from the Knight Foundation, both the City of Akron and the University are pledging money to operate the network.

You can watch the press conference on Knight's site. Case Wester CIO and blogger Lev Gonick blogs about the presser here (h/t BFD. Gonick is also a OneCommunity co-founder.)

Ohio dot com hosts a pdf map of the area to be covered. With less functionality, we offer this:

This is very much about central city with a clear focus being business development. The area is bordered roughly by Memorial Parkway/Tallmadge Ave on the north, Route 8 and Exchange Street on the east, South and Fifth streets on the south and Mercer and Storer Ave on the west. While plenty of residential areas are included, much of what is excluded is residential. Most of the wealthiest (Northwest where the rubber mansions stand) and poorest (especially Summit Lake) areas are just beyond the coverage area.

More thoughts later.

The NAFTA Issue: Sound and Fury, etc.

The ink spilled on the NAFTA issue in the Ohio primary is reaching tidal wave proportions. The latest episode has been a Canadian TV report alleging that an Obama aide let Canada know he was just kidding when criticizing NAFTA, followed by the reports refuting it.

Now come to find, it may not matter. Buried in a Washington Wire post about bipartisan cooperation in Congress is this bit:

“I’m not a fan of renegotiating trade agreements,” said Rep. Artur Davis of Alabama, and Reps. Rahm Emanuel of Illinois, Steve Israel of New York, and Rob Andrews of New Jersey agreed, suggesting that re-opening Nafta would like be a nonstarter in Congress if Democrats maintain control of the chamber this fall. “We’re not running for president,” explained Emanuel, a former Clinton administration aide, on the difference of opinion.

Plenty of members from either side may think that, but when a charter member Clintonista like Emmanel fails to line up behind Hillary, it's hard to discount the threat. It may well be that the President has the discretion to end NAFTA, but he/she will need Congress to get on board a renegotiation.

Ohio Economy Tanking. More.

Ugly, ugly news in today's Dispatch.

The "signs are certainly pointing" to state budget trouble after a new report that shows a drop in tax collections while spending continues to outpace projections, Ohio's budget director said yesterday.

Most of the blame goes to the sputtering Ohio economy, which Gov. Ted Strickland's Council of Economic Advisers says poses the greatest economic challenge for the state since early in the recovery from the 2001 recession.

I haven't checked out the righty blogs today, but no doubt it's all Strickland's fault that he hasn't in one year been able to pull us out of the hole that 16 years of Republican rule got us into. Oh, and if we just cut taxes everything would be fine.

Certainly news like this won't make anyone happy.

Strickland already has announced budget cuts in recent weeks, including postponement of a planned restoration of dental benefits for low-income adults and the delay of planned increases in Medicaid reimbursements to hospitals and other health-care providers.

Strickland took what I thought was a calculated risk by balancing the last budget with some one-time revenues and accounting maneuvers that can't be duplicated. Thanks to an overheated mortgage banking industry, that gamble is coming up snakes. Hope he has more ideas.

Shinking City

We don't really need newspaper stories about census estimates to tell us that Akron is getting smaller. It's enough to just drive around the city a bit and see houses like this one.

Part of it is the burbs. When I go to my dad's house near Wadsworth the farms I used to bike by are now sprouting McMansions like toadstools.

Part of it is that families are simply smaller these days. We lived for a while in a three bedroom bungalow that a generation earlier housed a family with six kids.

Part is people simply up and leaving for where the jobs are. And not just private sector jobs. The DDN pointed out earlier this week that when teachers get laid off, the often head out of state Meanwhile class sizes go up, which means more people want to move out to the burbs, which means less money and more layoffs . . .

Intertwined with all this is the simple fact that cities like Akron don't attract young families much anymore. Our population is aging and, not to put too fine a point on it, dying off. And fewer young people are moving in and having babies to replace those folks.

Mayor Don Plusquellec is stubbornly optimistic. I don't know enough about "smart shrinkage" to know whether we need to follow Youngstown's model. But if we get to that point, it's an open question whether the administration would be willing to do so, or whether Plusquellec would fight it as somehow giving up.

For all of that, I still love this city. I still see great things happening and great potential. Part of that is measured by the fact that our shrinkage rate is well below that of the other northern cities.

The Soccer Stadium Is Not Dead Yet.

As reported in today's Beacon, Summit County is reviving plans to underwrite construction of a 20,000 seat domed soccer stadium to be part of a 400-acre complex featuring additional athletic fields, retail centers and possibly medical facilities. The stadium/retail village concept has been pushed by the Wolstein Group for some time now. That's their artistss rendering at right.

The ABJ does a good job of resetting the story. Briefly the County tried to finance the idea last year by imposing a 30 cent per pack cigarette tax. To do so they needed approval from the General Assembly. At that time, the One-Winged Psycho-Demon Duckbeasts from Hell were in power and, for whatever reason, they didn't approve.

No one in blogland did a better job of following the story than The Boring Made Dull, so catch up there if you need to.

Now County Council is proposing a sin tax on cigarettes and liquor which would not need the GA to sign off but would go on the ballot for voter approval. The ABJ notes that County Council announced that it would consider legislation for the tax at Monday's meeting. The announcement, which apparently happened late Friday, probably was prompted by Medina County taking action to woo Cabela's to Brunswick. As I noted, stadium proponents are looking at Cabela's as an anchor store for the retail component of the complex.

Looking at the stadium proposal makes the Bass Pro deal look so much better. Investment, even public sector investment, is about evaluating risk against reward. The Bass Pro deal, as described in the press, involves a minimum of risk to Akron. Bass Pro makes the initial investment in the property. The deal allows Bass Pro to retain sales taxes to recoup their investment, meaning they recoup only to the extent they have sales. If the business tanks, they take the loss.

On the other hand, if Summit County builds a soccer stadium, we place a $100 million bet on the future of major league soccer in Northeast Ohio. If the preceding sentence doesn't terrify you, nothing will. But independent of whether the stadium is a good risk, we should pause and note that we are taking the risk, not a business whose business it is to take risk.

I can give lots more reasons why the soccer stadium is a bad risk. But for now, the mere fact that we can put together tax deals that place the risk elsewhere should be enough of an argument against it.

Neighborhood Resident's Aren't Happy with Urban Renewal Plans

When I read this in yesterday’s Beacon:

Akron wants to designate a mostly industrial area south of Interstate 76 -- including Goodyear Tire & Rubber Co. property -- as an ``urban renewal area'' that would give the city legal authority to take property for redevelopment.
* * *
Although the area is zoned industrial and hasn't allowed residential development since the mid-1950s, there are 325 people living in 113 households within the area, according to 2000 U.S. census figures.

And this in the City press release:

"Akron has successfully used Urban Renewal projects throughout the city," Plusquellic said, "to remove blighted areas that have outlived their usefulness. We have been able to create new spaces for development that have included new housing, retail, and industrial development."
In addition to removing older houses and buildings in the area that have outlived their usefulness, the objectives include providing suitable sites for redevelopment and construction of new buildings. Urban Renewal Plans also use development standards to encourage more orderly development.

I braced myself for this:

Residents of the ``poet streets'' off Seiberling Street told Akron Mayor Don Plusquellic on Thursday night that they do not appreciate their neighborhood being described as "blighted.''

Our Mayor has many gifts; diplomacy is not among them.

This should be Kelo’s of fun.

Summit and Medina Counties Trying to Hook Cabela's

Call it Destination Outdoor Retailer, Part 2.

I've heard rumors that Cabela's might be coming to the area under a deal similar to that proposed to bring Bass Pro to Akron. The PD finally broke the story today. Medina and Summit Counties are each putting together deals to lure Cabela's to set up shop. Medina's is an impact facilities deal similar to the offer to Bass Pro in exchange for opening a store in Brunswick.

Summit on the other hand is looking to "put together a deal that would create a "synergy" between a proposed domed soccer stadium and a Cabela's store. Part of the venture could include a county tax on cigarettes and alcohol that would raise $4 million for the stadium and pour $1 million into county arts groups."

Wait a minute.

Synergies between a domed soccer stadium and an outdoor sports retailer? Aside from the fact that your best bet to find them on TV is ESPN2, soccer has little in common with hook and bullet sports. The next time I see a minivan with a deer carcass lashed to the top will be the first. Do they think people will attend soccer matches then, as long as they are in the neighborhood, go shopping for duck blinds?

In the Topix comments section to the quickie story the ABJ posted today, one commenter says that he has travelled to Michigan to shop at Cabela's -- the quality of the gear is that much better than the big boxes around here. I posted a couple open questions in a comment but, since I wasnt' actively insulting anyone's intelligence, manhood or mother, wasn't made part of the discussion. So I will post them here.

Obvious question: will this affect Bass Pro wanting to build here?

Less obvious question: Since half the customers must come from more than 100 miles away to fall under the "impact facility" law, would two facilities built a county or less apart affect that evaluation? And in what direction?

Finally, some notes about the Beacon Journal's coverage of the story. As I said, the rumor has been circulating. Yesterday, the ABJ published an editorial about the Bass Pro dealer that included the following paragraph:

Bass Pro Shops and Cabela's (another giant outdoor retailer) know their way around local government. The companies have received ample tax breaks and other public subsidies in developing locations elsewhere across the country. Bass would do so in this instance, Heydorn and her colleagues approving a decade of relief from the county sales tax. If the County Council moved quickly, the early details suggest it hardly gave away the store, so to speak, the incentive aimed, appropriately, at a worn urban area.

Just happened to mention Cabela's. Did the ABJ have wind of the Cabela's deal? I've asked and gotten no reply. Regardless, the PD owned them on the story. Reading between the lines, it looks like the PD figured out what the Medina Co. Commissioners were set to do in their meeting scheduled for today. ABJ, as I said, threw a story up on Ohio.com so quickly the headline initially spelled "Cabela's" with two "L's" (and it still looks that way on Topix as of 11:00 Thursday.)

I want to believe that ABJ/Ohio.com can run with their hyper-local model and their current post-purge staffing levels. I really want to believe it. I'm just not seeing it.

Jillian's in Akron Closes; World to End Tomorrow

The Jillian's restaurant on South Main Street closed suddenly and without explanation over the weekend. This is hard news. If you were desperate for dry, overseasoned meat cooked in the style of a Japanese-American steakhouse by clumsy white guys, this was the only game in town.

The story is remarkable for the flurry of comments on the Ohio.com/Topix page. First off, it's gotta be the fault of someone in government. The smoking ban, yea that's it, the smoking ban. Then the people who disagree pile in and it's on. But sprinked throughout are comments about how this is just another sign that Akron is slipping into the Vortex of Inescapable Despair.

People. First off, the closing may have something to do with Jillian's restructuring under Chapter 11 bancruptcy.

Second, entertainment, like retail, doesn't drive the economy. Jillian's was just about moving around the money already in the economy. It wasn't about generating wealth. Businesses like restaurants can provide a glimpse into how an economy is doing, but they don't spur growth themselves.

Reading the comments page was a "What's the Matter with Akron?" moment. You can read in the comments the phenomena Michael Frank observed in Kansas -- the economic insecurity, the search for scapegoats, the simultaneous belief that government action is killing the economy and that government intervention should save the economy.

I was listening to today's TSOI on 90.3 this morning about how Youngstown is adapting to its shrinking population. In the midst of the show the guests and host Dan Mouthrop joked about whether Youngstown residents are more cynical and resigned than Cleveland residents. Akron should be different, but people utterly refuse to believe that the city could be swinging upwards.

More on Akron's Economy Sucking Less

The ABJ fronts the Brookings study today with some original reporting. John Higgins interviews Ned Hill from the Levin College at CSU who contributed to the Brookings report. Hill lists some of the advantages Akron has over some of the other cities in the area including diverse housing stock, a strong urban public school system and a solid downtown. He specifically credits the Mayor and UA President Luis Proenza for their work.

I'd add some visionary developers like Tony Troppe and Micheal Owen who, among other things, are responsible for the Historic District and the AES building and Canal Place, respectively (and both of whom are friends of mine.) And obviously lots of other people leading big companies sited downtown and entrepreneurs starting small businesses.

Both the ABJ and I have been measured in assessing the degree of the good news. Neither being "off the weak list" or being "less sucky" exactly describes unqualified success. Nonetheless, the relative success of Akron over the rest of urban Ohio is worth remarking on.

And worth studying, which is the next step. Brookings is going to conduct a case study of Akron in an attempt to figure out why things suck so much less here. One of the dominant questions will be the role of states in encouraging urban development. AdNEO is pushing that angle.

Finally, I can't help myself. I wrote up the PD's story from the perspective of the good news it contained for Akron Monday night. But newspapers don't give hat tips.