Oregon’s Economic Doldrums: A Sign of Government Apathy

Right From the Start

Here we go again. After a brief hiatus, Oregon’s job market has declined again. According to the Department of Employment, Oregon total employment fell from 1,624,900 to 1,622,400 – a decline of about 2,500 jobs.

This might be described as a modest decline but where the jobs were lost spells continuing trouble for Oregon’s moribund economy. The three highest paying industries made up almost all of the job losses. Construction lost 1,200 jobs, Manufacturing lost 100 jobs, and Transportation lost 1,100 jobs. That is bad enough but State Government began to grow again adding another 200 jobs. This continues a long trend by Democrat administrations of growing government while private industry suffers and growing budget deficits through reckless spending.

Look folks, there is a connection. A state government that cannot take care of its own business certainly cannot create an atmosphere that encourages location, growth or refurbishing of business. For years Oregon state government and the Portland business community engaged in a self-deception that Oregon’s quality of life was so superior that business would ignore all of the downsides in a rush to capture the “superior quality of life.”

The problem, however, is that Oregon’s quality of life is largely illusionary. Today, when business looks at Oregon here’s what it sees:

1.  Oregon state government continues to spend faster than the state’s underlying total personal income grows. By definition that means that Oregon is locked into an economic trajectory that requires annual increases in taxes and fees. Once again the legislature has turned to tax and fee increases for the coming biennium instead of reducing spending. Of course since state government is dominated by Democrats we are referring to the impending tax increases as “reductions in tax expenditures.” No matter what politically correct label you put on it, the results of reducing deductions in the computation of taxes results in a tax increase – the taxpayers are going to pay more. Get it.

2.  Oregon state governments spending is undisciplined. There are no priorities. No, let me put it another way – everything is a priority. Every idea, regardless of its long or short-term benefit, is treated equally and millions of dollars are thrown at it. A government program once begun is never terminated. Neither individual programs nor the totality of government expenditures are weighed against the meter of affordability. Here are a couple of examples:

  • Former Speaker of the House Vera Katz lobbied for and got the notorious CIM/CAM programs for K-12 education. For nearly fifteen years Oregon spent copious amounts of money – hundreds of millions of dollars – on a program that never produced a single positive result. The teachers hated it, the students failed it, and no college or business relied on it. It was pointless. Worse yet, by distraction it actually retarded actual education reforms resulting in Oregon’s continuing decline in academic achievement when compared to other states and other nations.
  • Gov. Kitzhaber lobbied for and got the failed Oregon Health Plan. While his Democrat colleagues were criticizing HMO’s for rationing healthcare, that is precisely what the Oregon Health Plan did. It was a plan that may have had some legitimacy at the point of its creation but like every government program in Oregon it grew beyond its capabilities and the taxpayers ability to fund it.
  • Gov. Kulongoski, searching for relevance in eight years of governmental malaise, seized upon “green economic growth” as his legacy. Like most everything else that Kulongoski engaged he didn’t know what it meant, where to begin or what success would look like. He just knew that he could throw a lot of money at it and by the time anyone noticed he would be gone and, therefore, unaccountable. The sum total of Kulongoski’s “green economy” is the provision of hundreds of millions of tax dollars to out of state entities to build the turbine blades and the generators for the wind farms that are now a blight on Oregon’s eastern landscape. Despite the massive subsidies, these wind farms cannot produce a reliable stream of power at a competitive price.

3.  Oregon’s educational system has been surrendered to the teachers unions and the result has been a continuing decline in academic achievement and a continuing increase in the cost of provisioning. By every measure Oregon’s K-12 educational system is failing and there is not an original thought in Oregon state government to fix it except to spend more on the same broken system. When Oregon voters confronted the $750 Million tax increases under Measures 66 and 67, they thought they were supporting education. In point of fact, they were simply paying for salary increases and gold-plated benefits (PERS and healthcare insurance) for the existing teacher union members.

4.  A single special interest group dominates Oregon state government. The public employees unions receive nearly $80 Million dollars each biennium from state and local governments through the payroll deduction process. Because the unions bargain with the very people whose election they funded, precious little of that money is used for recruiting, organizing, or bargaining. The vast majority of that money is used for political purposes to ensure that Democrats are elected at all levels of state and local government so that union numbers, wages and benefits can grow regardless of the underlying economic conditions.

5.  Oregon state government is not really hostile towards business; it is simply ignorant of the cause and effect on business. Government is populated primarily by people who lack any experience in the business world. Speaking about business to them is like speaking Urdu in Mississippi – they just don’t get it. And worse, twenty plus years of Democrat administrations has tolerated the growth of a class of government employees who are not just ignorant but are, in fact, malicious. Nelson DeMille in his novel Gold Coast described it thusly:

“’They don’t give a sh-t about collecting taxes for the government. You still don’t get it. They care about scaring the hell out of people. That’s power. And that’s jealousy, too. A guy like Novac don’t have the balls to get rich like you and me, but he’s got the brains to be pissed at not being rich. That’s a dangerous man.
“I nodded. Bellarosa really did sound like Machiavelli in modern translation.

“’Take a guy like Ferragamo.’ Bellarosa continued. ‘He pretends like it’s all about justice, democracy, equality, and caring about the poor and the victims of crime and all that sh-t. Wrong. That ain’t what it’s about, pal. It’s about f**king power. It’s jealousy, it’s personal, and it’s all covered up with nice sounding bullshit. . .”

There aren’t many but there are enough and the past five administrations have not only tolerated them but have encouraged them as punishment for those who oppose them.

Yes, when business looks at Oregon it doesn’t see promise; it sees formidable barriers. And when presented with more favorable alternatives, business routinely turns away.

As Pacific Power Chairman Pat Reiten noted:

“’It’s painful to say this, but Oregon isn’t so special a place any more,’ Reiten said. ‘It’s in decline. It’s below average.’”


Will Oregon change? There isn’t much indication that it will, or that it can, or that it cares.