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What Would Google Do? Take 2

My post the other day drew so much interest, I'm doing another. Seems a lot of media, including Business Week, are taking a look at what Jeff Jarvis is up to.

Making sense of the stimulus

The stimulus package - through the House, awaiting Senate action - isn't playing to very good reviews.

For starters, here's a critique  of the stimulus package by conservative economist Martin Feldstein. He doesn't like it, but his rationale is not knee-jerk GOP think.

The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit.

David Brooks, another right-of-center perspective, has this to say in the New York Times.

They’ve created a sprawling, undisciplined smorgasbord, which has spun off a series of unintended consequences. First, by trying to do everything all it once, the bill does nothing well. The money spent on long-term domestic programs means there may not be enough to jolt the economy now (about $290 billion in spending is pushed off into 2011 and later). The money spent on stimulus, meanwhile, means there’s not enough to truly reform domestic programs like health technology, schools and infrastructure. The measure mostly pumps more money into old arrangements.

The Wall Street Journal details how pork has made its way into the legislation.

The economic stimulus plan could include dozens of special-interest provisions pushed by lawmakers to help constituents such as the South Florida yacht-repair industry, Manhattan subway riders and California wine makers.

President Barack Obama wanted to keep the package free of such narrow provisions, partly to hold down the cost of the plan. But the business-as-usual process for handling the legislation on Capitol Hill is swelling its price tag to nearly $900 billion and giving Mr. Obama a refresher course on the congressional sausage-making process.

Many of the special-interest projects were included in a version of the stimulus plan that passed the House on Wednesday. In the Senate, lobbying groups from the agriculture to timber industries are working with home-state senators to add their pet items to the Senate version of the bill, which is set to be debated on the floor next week.

But it's not just conservatives who are less than enthused.

This Washington Post story details how some Democrats are grumbling.

In testimony before the House Budget Committee (Tuesday), Alice M. Rivlin, who was President Bill Clinton's budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right.

"Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package. The elements of the investment program must be carefully planned and will not create many jobs right away," said Rivlin, a fellow at the Brookings Institution. The risk, she said, is that "money will be wasted because the investment elements were not carefully crafted."

The New York Times has a couple of analytical pieces here and here. There is some qualified good news it what they have to say.

Says Times columnist David Leonhardt:

The package really is stimulus. It will quickly give money to the people who have been hardest hit by the recession and who, not coincidentally, will be most likely to spend that money soon. The spending also has a chance to do some long-term good, by paying for the computerization of medical records, the weatherization of homes and other such investments.

By my count, the current package has just one major flaw. It could do a lot more to change how the government spends its money. It doesn’t have nearly the amount of the fresh, reformist thinking as Mr. Obama’s campaign speeches and proposals did. Instead, the bill is mostly a stew of spending on existing programs, whatever their warts may be.

The Times has a topics page that's a good way of tracking developments.

Read on, Wayne. You, too, Garth.

 

 

How blue is New York?

Real Clear Politics has an interesting story on the political implications of Gov. Paterson's appointment of Kirsten Gillibrand to succeed Hillary.

Governor Paterson has given three gifts to the New York GOP: He has opened up a district that is likely to flip back to them, he has made a much more competitive race for the Senate seat than there otherwise would have been, and he has appointed the most conservative Democrat to the seat.

But the really good part of this piece involves the maps that accompany it, showing changes in the political makeup of the state's members to the House of Representatives. We are real blue these days, but we sure didn't use to be that way.

Check out the post, if for nothing but the maps.

State pensions - among other outrages

Writing this post left me troubled on several fronts. Steamed actually.

For starters -- and believe me, I'm just warming up -- there's this story from the Rochester Democrat & Chronicle about the high cost of public employee pension in New York State.

Taxpayer support of state and local public employee retirement programs has increased more in New York than any other state except Arizona, recently released U.S. Census data show — and the Empire State's $486-per-resident cost in 2007 ranked highest in the nation.

New York, meanwhile, is one of only a handful of states where employee contributions have declined over the past decade.

Little wonder that Gov. Paterson has proposed a pension reform package that The New York Times explains like this:

 Workers in the state pension system would have to work until they were at least 62, instead of 55. The changes would apply to all state workers, many city employees, including teachers, and employees of a number of municipalities outside New York City.

New workers would also have to contribute 3 percent of their pay to the pension system for their entire career; currently the contributions stop after 10 years of service. And workers would no longer be allowed to use overtime in their last year of service to bolster their future pension payments.

Mr. Paterson’s move is reminiscent of steps taken by many American corporations over the last two decades, including changes initiated by the Big Three automakers several years ago.

The Rochester D&C reports those reforms are not being warmly received.

Despite a projected $15.4 billion state budget gap over the next 15 months and a nearly $32 million shortfall in Rochester for 2009-10 — the proposals are not likely to go anywhere this year.

"I don't believe that these proposals will be part of the year's budget," said Sen. Diane Savino, D-Staten Island, part of the new Senate majority and newly-appointed chair of the civil service and pension committee. "I don't believe they should be either, for that matter.

Now, that caught my attention. Who exactly is this Senator Diane Savino?

A press release issued by her office the other day announcing her appointment as committee chairman told me all I needed to know:

Before being elected to office in 2004, Senator Savino was a powerful advocate for working families as the Vice President for Political Action & Legislative Affairs SSEU Local 371. With the large number of union and civil service households, both working and retired, in the 23rd District, she is looking forward to continuing her advocacy in the Senate. 
 
"In today's unstable economic environment, it's crucial for us to protect retirees’ hard-earned pensions and ensure their income security," said Savino.

Great. We have a union person overseeing the pension committee who is committed to the status quo -- and is loud and proud about it.

There's more.

Savino I looked up who has contributed to her campaign since 2004. Take a look for yourself. 

 

She's raised $953,836 and just for kicks, I went through the contributors that start with the letters A, B, C and D.

 

The "As through Ds" have given have given a total of $255,887. Unions account for $108,475 of that, and probably more, because not all the contributor names make it entirely clear who they are or what they do.

 

AFSCME, one of the major public employee unions, jumped right out, with $43,700 in contributions. And that's just in the "As." Go to "L," as is "Local," and there's "Local 1549 AFSCME" and the like. They added up to at least another $27,150.

 

So AFSCME is into Savino for at least $70,900.

 

And there's a lot more where they came from. At least 22 unions listed in the "As through Ds."

 

One non-union contributor caught my eye. No other than Responsible New York, which gave $1,000 in October.

 

Way to go, Tommy Boy. Is Senator Savino your idea of reform?

 

("Tommy Boy?" Did someone say "Tommy Boy?" Oh, what the heck, we could use a laugh at this point.)

 

 



So this is the way it's gonna be? The Dems take control of the Senate and they, among other things,  put Savino in charge of the pension committee? An honest broker, she is not. Can't be, actually.

 

Of course, Savino is chairing more than one committee, even though she is one of the Senate's more-junior members. I guess that's what happens when you serve as co-chair of the Democratic State Senate Campaign Committee. And don't hail from north of Yonkers.

 

Meanwhile, we folks in Western New York have two state senators, William "Sticking With Stachs" Stachowski and Antoine Thompson. They've each got one committee chairmanship.

 

In other words, Staten Island has as many committee chairmanships as all of WNY.

 

Savino, by the way, is entitled to a stipend to chair the Civil Service and Pension Committee. But because she's also the chair of the Majority Steering Committee, she's required to take one stipend or the other. She took the bigger one attached to the Majority Steering Committee worth $20,500 a year.

 

There, now, I feel better having gotten all that off my chest. Let's get back to pensions.

 

The Rochester D&C reported that the average state or local government employee who retired a decade ago received an average pension of $15,026. The average pension for those retiring last year was $27,744.

According to my math, if the pension payout of a decade ago only kept pace with inflation, those retiring last year would have drawn $19,039. Which is to say public employee pensions are going up a lot faster than inflation.

This is even more true when you zero in on cops and firefighters statewide. The numbers:

Average pension for those retiring a decade ago: $37,413.

Last year: $58,106

Last year, if kept to inflation rate: $47,404.

We see it playing out here in Buffalo.

My colleagues Sue Schulman and Mary Pasciak have done a series of stories over the past year detailing pension abuses. They include cops working huge amounts of overtime in the years leading up to retirement, in some cases boosting their pensions beyond their base pay -- tax free, to boot.

Reported Sue and Mary:

Patrick McDonald keeps setting records. When last heard from, the 59-year-old police officer had accumulated more than $123,000 in overtime last year, and his $189,000 in total earnings was a record high for the Buffalo Police Department. Now, McDonald’s pension is record setting, too.

At $105,361 annually, McDonald’s pension is not only the highest of any retired police officer in Buffalo, it’s also among the highest — possibly the highest — pensions of any municipal employee in all of Western New York.

And it’s nearly twice the $58,000 base pay McDonald earned as a police officer.

School administrators, meanwhile, can retire as young as 55 with a big pension they continue to collect while taking another big-paying education job. 

The state retiree who most benefits from this practice is James H. Hunderfund, 64, a Long Island superintendent who makes $200,000 a year from one school district on top of his $316,245 pension from a nearby district. And while no educator in Western New York can match Hunderfund’s $516,245 in payments, two dozen, including (former Pioneer Central Superintendent David) Kurzawa, have double dipped in the past three years alone.

It's no wonder that Empire Center for New York State Policy, among others, has been sounding warning alarms for several years. In its 2006 report entitled Defusing New York's Pension Bomb, the center said:

Skyrocketing pension expenses have been a major factor in the fiscal stresses afflicting every level of government in New York State. From 2000 to 2005, statewide public pension contributions soared by more than $5.6 billion-and they are still climbing. In New York City alone, higher annual pension costs have consumed three-quarters of the new revenue generated by a record property tax rate increase and rising property assessments since Mayor Michael Bloomberg took office in 2002.

The problem has only gotten worse, as the D&C story attests to.

Then again, "problem" is in the eye of the beholder. Just ask the good senator from Staten Island.

 

What would Google do? Start thinking about it, WNY

Jeff Jarvis is one of the most innovative and provocative of the new media thinkers. His blog is a must read for anyone trying to figure out the future of the news/publishing business.

With the release of his new book, What Would Google Do? Jarvis is arguably about to become a big deal in the field of economic development. He tries to apply the thinking behind Google's success to the rest of the economy. The potential applications are aplenty, from pizzerias to auto plants.

We've got some of both of them around here, don't we?

I'm posting the opening salvo in his book in an effort to interject some new thinking into this community's stale approach to economic development, one rooted in one part "woe is us," one part "gimme a subsidy," and one part "hang onto what we've got, regardless of the cost." It's no wonder WNY is in the mess it's in.

Read this post, watch the video, read the book, and get thinking about if and how the thinking behind WWGD? has application in our moribund regional economy. I won't know myself until I read the book, but I find the notion intriguing.


 

Here's how Jarvis starts out the book:

It seems as if no company, executive, or institution truly understands how to survive and prosper in the internet age.

Except Google.

So, faced with most any challenge today, it makes sense to ask: WWGD? What would Google do? In management, commerce, news, media, manufacturing, marketing, service industries, investing, politics, government, and even education and religion, answering that question is a key to navigating a world that has changed radically and forever.

That world is upside-down, inside-out, counterintuitive, and confusing. Who could have imagined that a free classified service could have had a profound and permanent effect on the entire newspaper industry, that kids with cameras and Internet connections could gather larger audiences than cable networks could, that loners with keyboards could bring down politicians and companies, and that dropouts could build companies worth billions? They didn’t do it by breaking rules. They operate by new rules of a new age, among them:

• Customers are now in charge. They can be heard around the globe and have an impact on huge institutions in an instant.
• People can find each other anywhere and coalesce around you—or against you.
• The mass market is dead, replaced by the mass of niches.
• “Markets are conversations,” decreed The Cluetrain Manifesto, the seminal work of the internet age, in 2000. That means the key skill in any organization today is no longer marketing but conversing.
• We have shifted from an economy based on scarcity to one based on abundance. The control of products or distribution will no longer guarantee a premium and a profit.
• Enabling customers to collaborate with you—in creating, distributing, marketing, and supporting products—is what creates a premium in today’s market.
• The most successful enterprises today are networks—which extract as little value as possible so they can grow as big as possible—and the platforms on which those networks are built.
• Owning pipelines, people, products, or even intellectual property is no longer the key to success. Openness is.

Google’s founders and executives understand the change brought by the Internet. That is why they are so successful and powerful, running what The Times of London dubbed “the fastest growing company in the history of the world.” The same is true of a few disruptive capitalists and quasi-capitalists such as Mark Zuckerberg, founder of Facebook; Craig Newmark, who calls himself founder and customer service representative—no joke—at craigslist; Jimmy Wales, cofounder of Wikipedia; Jeff Bezos, founder of Amazon; and Kevin Rose, creator of Digg. They see a different world than the rest of us and make different decisions as a result, decisions that make no sense under old rules of old industries that are now blown apart thanks to these new ways and new thinkers.

That is why the smart response to all this change is to ask what these disrupters—what Mark, Craig, Jimmy, Jeff, Kevin, and, of course, Google—would do. Google generously shares its own philosophy on its web site, setting out the “10 things Google has found to be true.”They are smart but obvious PowerPoint lines helpful in employee indoctrination (especially necessary when your headcount explodes by 50 percent in a year—to 16,000 at the end of 2007 and to 20,000 before the end of the following year): “Focus on the user and all else will follow,” Google decrees. “It’s best to do one thing really, really well.?.?.?.??Fast is better than slow.?.?.?.??You can make money without doing evil.?.?.?.??There’s always more information out there.?.?.?.??The need for information crosses all borders.?.?.?.” These are useful, but they don’t tell the entire story. There’s more to learn from watching Google.

The question I ask in the title is about thinking in new ways, facing new challenges, solving problems with new solutions, seeing new opportunities, and understanding a different way to look at the structure of the economy and society. I try to see the world as Google sees it, analyzing and deconstructing its success from a distance so we can apply what we learn to our own companies, institutions, and careers. Together, we will reverse-engineer Google. You can bring this same discipline to other competitors, companies, and leaders whose success you find puzzling but admirable. In fact, you must.

Any first impressions?

Our primary source of job growth

Hey, we are adding jobs!

Business First has an interesting chart in its current issue, showing employment by sector in Buffalo Niagara and how it has changed in the past year. I've recreated it here because it doesn't appear to be available on its Web site.

Health care leads the way with 70,300 jobs. No new jobs were added between November 2007 and November 2008.

Business services rank second with 69,900 jobs, but that sector shed 700 jobs during the year.

It could have been worse. The natural resource sector dropped 2,200 jobs, retail 2,100 and durable manufacturing 1,400.

There is one sector that added a lot of jobs, however. Local government, which increased employment by 2,100 jobs, according to Business First calculations.

Yep, that's right. Taxes are high, times are tough and local government is hiring more people. Up to 66,200 jobs, making it the region's third-largest employment sector.

The state, by the way, added 200 jobs, bringing its total to 22,900. Budget deficit? What budget deficit?

Add the federal government, and taxpayers are footing the bill for 103,200 jobs in our region.Or about one government employee for every 10 man, woman and child living in Erie and Niagara counties.

The growth in government employment here is nothing new. As my colleague Matt Spina reported in 2006:

Buffalo Niagara's private-sector job growth this decade has been mediocre, six times worse than the state average. But the region's largest employer -- state government -- grew its work force by nearly 9 percent by adding some 1,700 jobs from July 2000 to July 2006, mainly in higher education.

Keep in mind that local officials, in reaction to Gov. Paterson's proposed cuts in school aid, among other things, have largely demanded something akin to the status quo.

Albany shortchanging Buffalo?

Mayor Byron Brown says the state needs to do more for Buffalo.

This budget year, Albany will provide Buffalo with 42 percent of the money it spends on basic operations  -- up from 32 percent in 2001. State aid totals $181.5 million.

Aid from Albany will also provide the city school system with three-quarters of its operating budget, with state aid topping half a billion dollars, nearly $575 million.

In all, state aid to City Hall and the Board of Education is $755 million this year. As in, three-quarters of a billion dollars. (Here are more details.)

When Albany authorizes Empire Zones -- the state's primary economic development tool -- it almost always limits their size to no more than two square miles. Empire Zones in Buffalo total four square miles.

The mayor is is right. The state of Vermont needs to give more to Buffalo. Ohio, too.

In the meantime, I think the mayor may have a future in motion pictures. (The first 13 seconds of the clip covers it.)



 

Obama, Take 3

The Obama White House has a blog. Interesting.

Jeff Jarvis, one of the innovative new media thinkers in the biz, offers his two cents on his blog, Buzzmachine.

Now that Barack Obama is in the White House, he must continue to use and spread the tools of the internet and transparency that he so brilliantly plied to win the office or else it would make his promises of change empty ... 

A new age of government openness, and collaboration with the citizenry won’t be made on one blog or Twitter or RSS feed or YouTube stage. It will be made by issuing and instilling a new ethic of transparency in government.

I argue that we should abolish the Freedom of Information Act and instead make transparency the default for government’s business, which should occur digitally and in the open, so citizens may search, link, comment on, and analyze it. Rather than our asking the government to release our information, the government should ask our permission not to.

Speaking of which, Obama, on his first full day on the job, issued an executive order intended to make it earier for the press and public to obtain government information under the federal Freedom of Information Law. Dubya had tightened access.

We FOI Freaks, and anyone who supports government transparency, are real happy about this, although there are still a few hanging questions. I file 50 to 100 FOI requests a year -- mostly with state and local governments -- and it is an invaluable tool for prying loose information and data.

Hopefully, Obama's action will have a ripple effect, not so much on state FOI legislation, which is pretty good here in New York, but in changing attitudes of the gatekeepers of public information, many of whom remain either ignorant of the law or hostile to its intent.

And the new White House blog, and the push to bring the federal government into the Internet Age, should also prompt people in local and state government to do likewise. At present, almost everything around here is really lame.

Around Christmas, I went to Buffalo's web site in an effort to find out if trash pickups were delayed because of the holiday. Good luck. If the information was there, it was buried. Not to pick on Buffalo -- there are a lot worse local government sites out there.

 

 

 


Losing 1,000 jobs a month

Buffalo-Niagara will lose nearly as many jobs in the coming year as it did in the past eight years combined, a new economic forecast predicts.

We lost 12,900 jobs from 2000 through November of this year. 

We're projected to lose 11,400  through the end of this year. That's nearly 1,000 a month.

The projections are included in a report by done by ISH Global Insight for the U.S. Conference of Mayors. The report looks at the economic situation in the nation's 363 metropolitan regions, which account for 86 percent of the nation's jobs and 90 percent of wage income.

The U.S. economy is now in a deep recession. When the final data is tallied, real GDP growth is expected to have dropped nearly 5.6% in the fourth quarter of 2008, its worst performance since 1982. The results are grim across the board – consumer spending is falling, exports are weakening, and both housing starts and prices continue to decline.

The near-term outlook is not good either, with another 5+% drop in real GDP slated for the first quarter of 2009; it is too soon to look for signs of recovery. The recession, which began in December 2007, is expected to last 18-24 months, longest in the post-war era, with the second largest peak-to-trough drop in real output. A return to solid growth is at least a year away.


OK, readers, start signing "Oh Happy Day" whenever you feel moved. Not now, you say?

How about this clip of Fonz and the gang. It's as close to Happy Days as we're going to see for a while.


 

Let's take a closer look at the numbers, starting with a bit of history.

In the Go-Go '90s, jobs grew by 20.1 percent nationally. Here it was 2.1 percent, some 11,500 jobs. Which is to say, if we grew at the same rate of the rest of the nation, we would have added another 100,000 jobs, give or take.

And Scott Norwood would have nailed that field goal.

But I digress.

During this decade, we've lost 2.3 percent of our jobs. The median figure among metropolitan regions was a growth of 5.2 percent.

Looking forward, Global Insights projects a loss of the aforementioned 11,400 jobs, a shrinkage of 2.1 percent, compared with a nationwide average drop of 2 percent.

That would bump our unemployment rate up from the present 7.1 percent to 8.7 percent. The national averages are 6.7 and 8.3 percent respectively.

"Everybody is in the same boat now because of the nature of the downturn," said Jim Diffley, manager of regional services for Global Insight. 

The picture is pretty much the same across the state. Here's a list by metro regions, the projected percent decline in jobs and what the unemployment rate will look like by the end of the year.

New York City-Long Island-Northern New Jersey:  -2.1% (job loss), 7.6%, (unemployment rate)

Buffalo-Niagara Falls: -2.1%, 8.7%

Rochester: -1.9%, 8.4%

Syracuse: -1.8%, 8.3%

Albany-Schenectady: -1.3%, 7.2%

Binghamton: -2.5%, 8.2%

Utica-Rome: -1.6%, 8.2%

Elmira: -2.1%, 8.3%

Glens Falls: -1.7%, 8.3%   

Kingston: --1.4%, 7.8%

Ithaca: -0.1%, 6.2%.

Moral of the story: Move to Ithaca.

Things could be worse for us in Buffalo, Diffley said.

"You've done a little better than the Midwest," he said.

Yeah, Flint, eat our dust.

Diffley offered this advice when I asked what political, business and economic development leaders in our community ought to be doing in light of the recession.

"The two things you should do now is try to mitigate foreclosure-type problems and capitalize effectively on the federal government stimulus. Get jobs in place that are useful for long-term productivity," he said.

In which kind of sectors?

"Alternative energy sectors, advanced manufacturing. You have a business and workforce infrastructure that could be rather productive."

Funny, but that's not what our fearless leaders have in mind. No, they want A/C in City Hall. And more traffic signals. Nevermind what's been happening to the economy.

Just a thought: Perhaps the powers that be, and some folks who think outside the box, ought to get the the same room and reach a consensus on what the region's ask should be for federal bailout funds. Because right now, all we have are some DOA wish lists.

U.S. economy better - and worse - than you think

But before I get to that, let me tick you off with this piece of news.

The American International Group, aka AIG, recipients of $150 billion in federal bailout funds, has paid some 4,200 employees at least $169 million in "retention pay," in an effort to keep them from leaving for another job. (Like there are other jobs for these people?)

That works out to an average of a little more than $147,000 per employee. Payments are running as high as $4 million per.

No word on whether any of these folks were among the executives AIG spent $440,000 on for a weekend retreat shortly after crying poor and taking Uncle Sam's money.

And people are squawking about auto worker pay?

Now, back to your regularly scheduled outrage. Actually, more of an insight.

The New York Times has had a couple of especially good stories on the bailout. First the bad news.

Most banks getting bailout money aren't using it to lend and simulate the economy. The headline to the story says it all: Bailout Is a Windfall to Banks, if Not to Borrowers.

Reported The Times:

Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy, and many lawmakers want to know how the first half of that money has been spent before approving the second half. But many banks that have received bailout money so far are reluctant to lend ...

Individually, banks that received some of the first $350 billion from the Treasury’s Troubled Asset Relief Program, or TARP, have offered few public details about how they plan to spend the money, and they are not required to disclose what they do with it. But in conversations behind closed doors with investment analysts, some bankers have been candid about their intentions.

Most of the banks that received the money are far smaller than behemoths like Citigroup or Bank of America. A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.

In another story, a Times analysis of economic data finds that things are not as bad as they were in 1982.  

The economy is not yet as bad as it was in the early 1980s. It’s not even that close to being as bad. The ranks of unemployed and underemployed, controlling for the size of the population, were much larger in 1982 than today.

The recession of the early 1980s doesn’t have a catchy name, and almost half of Americans are too young to have any real memory of it. But it was terrible — qualitatively different from the mild recessions of 1990-91 and 2001.

All this may be of little comfort, but it does add some perspective.

 

 


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