On Sunday, The Oregonian’s Editorial Board opined that Oregon’s top politicians and the “business community” now see “eye-to-eye” on the future for Oregon:
“Two years ago they couldn’t even stand to be in the same room.
“Today they couldn’t be closer. What a difference 9 percent unemployment, stagnant personal income and a terrifying dread of more of the same make.
“When hundreds of the state’s top business and government leaders gather today and Tuesday in Portland for the annual Oregon Leadership Summit, there is an unusual consensus about the state’s many economic and public-service challenges, and what should be done about them. For the first time in the nine-year history of the event, there’s no new business agenda. Instead, there’s a three-word theme on the front of a 30-page document that is more or less identical to last year’s publication: ‘Time to Deliver’.”
The Oregonian’s editorial might be a little premature given that it was written before the Summitt was actually held. But, then again, these things are pretty much pre-ordained and follow a distincitve pattern.
The editorial continues:
“And so it is. The Legislature and Gov. John Kitzhaber have set in motion two of the three sweeping government reforms that business leaders have most wanted. A reorganization of education, from early childhood to universities, is taking shape. And a revamping of health care, meant to wring a quarter-billion dollars in savings and slow the runaway medical inflation eroding business and government, is under way.”
The more things change, the more they stay the same. By virtue of my position with then-U S WEST, I was not only a member of Oregon’s major business associations, but was on the executive committee of several of them. Initially, I was surprised by the homogeny of the separate groups’ “priorities” – none of which related to business but all of which corresponded precisely with the “priorities” of the then-sitting governor. During Gov. John Kitzhaber’s initial terms, it was all about funding schools and saving the salmon. During Gov. Ted Kulongoski’s terms, it was all about funding schools and the “green” economy. And, OMG, this year, the returned Gov. Kitzhaber’s priorities are reorganizing education and re-igniting his failed Oregon Health Plan. What a coincidence that the Oregon Leaderhsip Summit has seized upon those priorities also. (For those of you forced to endure an education in Portland Public Schools, that last comment was meant to be sarcastic.)
When I asked about the real needs of business – tax reform, land use reform, regulatory reform – I was informed that Oregon’s future was dependent on “quality of life” and so my concerns, while amusing, were irrelevant. After I suggested that Oregon’s quality of life might start with a job, I was informed that Oregon did not want just any job, it only wanted quality jobs. After that my interest in these organizations quickly waned. And nothing in fourteen years suggests that there has been any change.
Those organizing and staffing the Oregon Leadership Summit are dominated by the officers of Oregon’s major utilities, multi-state banks or other national or international businesses. Most of them are immune from the frailties of Oregon’s descending economy. Many are evaluated more on whether the governor returns their calls than whether the business environment is actually improving. (I remember a conversation with the president of my company who was incensed that the governor would not return his calls and who suggested I wasn’t doing my job. I told him that our agenda and the governor’s agenda were diametrically opposite and that he needed to make a choice as to whether he wanted me to be the governor’s friend or accomplish the agenda to which I had been tasked. He chose the latter and we succeeded – but the governor still wouldn’t return his calls.)
The needs of local businesses continue to be ignored. Even the Oregonian noted:
“Of course, that’s not all Oregon business wants or needs. Lawmakers still haven’t summoned the nerve to change or stabilize an income-tax system that loads taxes where it hurts, on investment and jobs. Oregon’s congressional delegation still has not broken the policy deadlock on federal timberlands that has devastated rural areas and now even threatens to bankrupt some counties.”
But therein lies the rub. Oregon has been horsing around with its educational system for over twenty-five years with always the same solution – spend more money – and yet Oregon’s educational achievements vis-‡-vis other states and countries continues to decline. It will continue to cost more and achieve less until control of the educational system is wrested from the teachers’ unions and returned to local communities who are actually interested in the children rather than job security and political power. Mr. Kitzhaber’s solution of transferring responsibility for the state’s education from an elected State Superintendent of Public Instruction –wholly obligated to Oregon’s public employee unions for campaign funds – to an elected Governor – wholly obligated to Oregon’s public employee unions for campaign funds – is the moral equivalent or re-arranging the deck chairs while the Titanic sinks.
And likewise healthcare. Mr. Kitzhaber’s vaunted Oregon Health Plan created during his first two terms failed. His second attempt is simply a bigger, more costly version destined to fail in a bigger and more expensive manner. But what the hell, it’s only taxpayers’ money. Even if Mr. Kitzhaber were successful, neither of the initiatives would have any direct or even indirect impact on Oregon’s current economic doldrums or high unemployment.
It is the items that Mr. Kitzhaber and the Oregon Leadership Summit have failed to address that can actually provide the necessary stimulus but which will continue to be ignored. Let’s be clear. Before Oregon can anticipate any realistic economic growth it must do the following:
Revise its steeply graduated individual and business income tax. The tax burden imposed on those who create jobs in Oregon provides a disincentive to locate, grow or retain jobs in Oregon. I have previously proposed a two-tier flat tax system with the elimination of all tax subsidies and most tax deductions.
Eliminate Oregon’s gold-plated retirement system (PERS) and replace it on a going forward basis with a defined contribution plan that requires employees to actually make a contribution before the government matches it. Oregon’s current PERS system has endangered the financial health of every level of government. The current requirement giving PERS payments priority over every other government expenditure is rapidly leading many local communities to the point that legitimate government services, including schools, are sacrificed to pay PERS.
Remove the restraints (mostly land use and excessive environmental regulation) from Oregon’s timberlands to allow timber production and accompanying bio-fuels production. A by-product of this will be to reduce the severity of Oregon’s forest fires through grooming of existing forests and rapid replanting of destroyed forests.
And finally, localization of business regulation. Portland’s far left political community dominates Oregon’s regulatory direction. But what is good for Portland, in most instances, is very bad for rural communities.
If Portland wishes to suppress economic growth in its own environs, let it. But other communities should have the right to determine their economic priorities without Portland’s interference. Regulatory requirements can be come a competitive element in attracting, growing and perserving business growth.
But don’t hold your breath. Those who can actually force change in Oregon – the businesses dominating the Oregon Leadership Summit – won’t. It remains more important for them to have their pictures taken with the governor, have their phone calls returned, and be invited to the West Hill’s social gatherings than to advance Oregon’s economic well-being.