Using metrics to expose the emperors

Policy wonks in Washington, DC are getting enthusiastic about metrics—the numbers that show whether a program actually delivers what it was designed to deliver. Later this month, the Brookings Institution will host a conference entitled “Investing in What Works: The Importance of Evidence-Based Policymaking.” Brookings is the think tank that regularly publishes a compilation of useful statistics gleaned from federal government sources, statistics like the ones in the new Metro Monitor, which tracks how well we’ve been doing since the absolute bottom of the Great Recession in late 2009. It’s a nice reality check, and exactly the kind of thing that every one of the 100 communities portrayed in the report can do, by the metrics, for themselves.

A quick check of the numbers shows that we should start doing some evidence-based policymaking around Western New York, and quickly. The national Bureau of Labor Statistics says that the overall workforce in the Buffalo-Niagara Falls metro area has shrunk since 2008 when the Great Recession began. The actual number of people still working here is below what it was in the depths of the national recession in 2009, what the Brookings Metro Monitor calls “the trough.” In September 2008 there were 551,774 people working in the Buffalo-Niagara Falls metro area. In September 2012, regional employment had shrunk to 522,746. A different fact-gathering office, the Bureau of Economic Analysis, reporting that our “gross regional product” had risen from $41.9 billion in 2008 to $45.9 billion by the end of 2011. But the overall size of the community has shrunk, and the unemployment rate now is as bad as when it was in 2009. Worse, actually. And there are 29,028 fewer people working here than there were before Lehman Brothers collapsed.

Say it again: There are almost 30,000 fewer people working here today than there were in 2008.

Soon after Andrew Cuomo took office as governor of New York in 2011, he set up regional economic development councils. It became evident that because of the extraordinary challenges in the Upstate metros of Syracuse, Rochester, and Buffalo—especially Buffalo—that he would have to make an extraordinary effort. The Western New York regional council, led by UB President Satish Tripathi and developer Howard Zemsky, recently published a strategic plan that is quite different from earlier plans. Here’s how: It is focused on metrics.

On page after page that details metrics like the number of employees, the dollar value of wages paid, the number of degrees granted, the number of new enterprises formed and the net number of businesses remaining, the slogan says, “We’ll be successful if” the number goes up. This group that is advising Andrew Cuomo is already doing what the Washington think-tankers are advising.

But these advisory groups are not in charge. The permanent, self-reinforcing bureaucracies of the industrial development agencies—of which there are six in Erie County—are in charge.

Just ask Mark Poloncarz. Recently, the Erie County executive voted against yet another Erie County Industrial Development Agency handout of tax breaks to a politically wired real estate development company for yet another building to house already existing workers. Poloncarz was bravely asserting what the regional economic development council, the Washington think tanks, and the number-crunchers all agree on: that outcomes matter, and that the outcomes here have not, and do not, justify the handouts.

Poloncarz is trying. His predeccessor Joel Giambra tried, too. At least this time, at the insistence of Assemblymember Sean Ryan and with some help from Cuomo’s staff, the 2013-2014 budget that Cuomo and the Legislature just passed begins to curtail the power of those industrial development agencies—but already, the IDAs are fighting back.

We don’t need no stinking metrics

“Economic development” in Erie County is all about handouts to existing businesses and existing organizations—not new enterprises or new organizations—to move into new or refurbished buildings. Mark Poloncarz objected to handing out over $5 million in tax abatements to Ciminelli Development Corporation for its planned development of a medical office building at Main and High Streets, a building that will not add any jobs to the regional economy that is today almost 30,000 jobs short of where it was in 2008. Poloncarz also objected to handing out over $4.9 million in tax abatements to the Uniland Development Corporation for its planned development of a new corporate headquarters for the Catholic Health System. No new jobs there, either.

Say that again, too: There will be zero net new workers or enterprises in either of these developments. Yet the Erie County Industrial Development Agency’s members—except for Poloncarz—voted to transfer almost $10 million of taxpayer funds to these projects, funds that line the pockets of the developers, result in empty office space, and add no net new economic activity after the construction period is completed.

While the former treasury secretary, a couple of Harvard professors, and members of Congress address the gathering in Washington, the story here, on the ground, where high-minded federal policy gets implemented (or not implemented) is as follows: The local ruling elites command that public money funds their projects, and metrics—deliverables, actual outcomes—be damned.

The Buffalo Niagara Medical Campus is a hotbed of zero-net-economic-impact spending, in the midst of which is an inconvenient truth or two. First, there is the ongoing fiscal challenges of the Roswell Park Cancer Institute, which is budgeting for an increase in New York State support from $77.6 million this year to $102 million in 2014 just a year after Cuomo proposed reducing the state subsidy by a third. Another inconvenient truth: The ongoing public subsidy of Kaleida Health’s consolidation plan, which would bring Women and Children’s Hospital from a few blocks away, leaving another large tract of real estate with empty old hospital and medical-office structures on Elmwood and Bryant, rather like the looming, empty hulk of the 10-acre Millard Fillmore hospital complex on Gates Circle. This allegedly non-public entity relies upon taxpayers for most of its revenue.

The public expenditure juggernaut, however, rolls on. The recent decision of the UB Foundation to purchase a surface parking lot near the intersection of Washington and High Streets for over $1.25 million from a former UB Foundation director, who purchased the property for $400,000 while serving as a UB Foundation director, is a part of a long-established pattern of real-estate development that ultimately relies on public funds that are being invested without any near-term prospect of population, employment, or economic growth, and that somehow, some way, typically involve insiders.

The emptiness of earnestness

Calling attention to this pattern does not change it. We seem to be living a version of Hans Christian Andersen’s brief fable from 1837, his inimitable story “The Emperor’s New Clothes.” The story is about how a few voices question whether there’s any substance to what is paraded before us, but the parade goes on and on. There has been no shortage of exposes, critiques, complaints, and gotchas published about the ineffectiveness of public spending in Buffalo—most famously, Jim Heaney’s blistering summary of the half-billion of HUD money published in the Buffalo News and Ed Glaeser’s blistering critique published in City Journal—but the politics of spending trumps the story of futility.

What the earnest, learned Washington think tankers miss about policy is this: At the local level, where policy gets implemented, policy is shaped entirely by local insiders. Just look at what happened in 2009 when Congress and the president enacted the American Reinvestment and Recovery Act, which resulted in $74.5 million in federal “stimulus” funds flowing to Erie County government. Then led by County Executive (now Congressman) Chris Collins, Erie County simply banked the money, refusing to spend it on infrastructure or employment the way the Washington wonks designed. When Mark Poloncarz ran against him, Collins lost mainly because Collins mis-stated the metrics on area jobs, ignoring the fact that 29,000-odd fewer people were working than when he took office. Some of them could have been put to work with the stimulus funds; had more been put to work, perhaps there would be more working still.

Recently, some of the remnants of the labor movement here have begun to advance strategies for “high-road” economic development—clean-water infrastructure, clean-energy projects, smart growth, and most recently, a new emphasis on worker-owned cooperatives that could process laundry for our hospitals, food for our schools and colleges, and electricity for our grid. There is a growing recognition that the top-down, developer-driven paradigm of publicly financed projects has not changed the trajectory of the regional economy.

And as the recent Artvoice survey of leadership and “influence” indicates, not many thoughtful progressives hold out much hope for our elected officials, all but two of whom—Poloncarz and Ryan—are content to let the paradigm of developer-led, subsidy-driven “economic development” chug along undisturbed.

Organizing worker-owned cooperatives to spring up here is a worthy effort. One hopes that the regional economic development advisory council will invite such efforts into its long-term strategic plan. But until public officials ridicule the emperor’s new clothes, and empower a discourse of community uplift by making fun of the ripoff of public funds that keeps Buffalo laughably corrupt, preposterously expensive, and ludicrously dirty, nothing will change. The joke, the terribly expensive joke, is on us.

Bruce Fisher is director of the the Center for Economic and Policy Studies at Buffalo State College. His recent book, Borderland: Essays from the US-Canada Divide, is available at bookstores or at www.sunypress.edu.