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Moth-like Agencies Morph
Into “New Deal” Economic Pollinators

by Wayne Lusvardi 8/5/08

et’s see if you can make sense of the following confusing picture?  Certainly the media is sociologically incapable of doing so. 
The Right Reservoir in the Wrong Place?

Earlier this month California Governor Arnold Schwarzenegger and U.S. Senator Dianne Feinstein proposed a $9.3 billion bond for a combination of reservoirs and conservation projects mainly in Northern California to inconsistently "offset the climate change impacts of reduced snow pack and higher flood flows" and get water around the Sacramento Delta to Southern California.  But in 2004, the Metropolitan Water District (MWD) of Southern California completed the largest dam and reservoir in the south half of the state for $2 billion (Diamond Valley Reservoir) which was to provide a long-term stable source of water supply.

Guest Contributor
Wayne Lusvardi

Wayne Lusvardi worked for 20 years for the Metro Water District of So. Cal. and is an independent real estate appraiser in Pasadena. The views expressed are his own. Wayne receives e-mail at waynelbox-blogger@yahoo.comand blogs at http://www.pasadenapundit.com

Was the dam built on the wrong side of the state water system (the Colorado River Aqueduct instead of the northerly California Aqueduct)? It certainly looks like it, as the main source of back-up drought water for Southern California has since shifted from two-thirds from the Colorado River Aqueduct to two-thirds dependence on the California Aqueduct.   
Fixing Up “Closed” School Buildings

In the City of Pasadena, the Unified School District has recently proposed to put on the ballot a $350 million bond, backed by a 1.26% increase in property taxes, to refurbish public schools, many of which are now closed or obsolete due to declining enrollment.  To add to the suspicion around fixing up closed schools, Pasadena not long ago completed $250 million in repairs to many of the same closed schools buildings in 1997 to 2001 under what was called Measure Y (dubbed Measure Why?).  The new proposal would fix the school buildings up for vague social service centers, or as magnet schools to take underperforming students from surrounding schools districts, or as over-improved public parks, or maybe just to preserve as “white elephants.” 

Expanding Public Transit Now That Freeways are Uncongested

Contemporaneously, the Board of the Southern California Metropolitan Transit Authority (MTA) voted to put on the November ballot a half cents sales tax measure for Los Angeles County that would finance several transportation projects, including the extension of the Metro Gold Line from Pasadena to Eastern San Gabriel Valley, a subway extension and Expo Light Rail Line on the Westside of the City of Los Angeles, a rail connection to Los Angeles World Airport (LAX), and extending the Metro Green Line to the South Bay corridor.  
Certainly, these projects seem necessary with the spike in gasoline prices and public transit ridership.  But the increase in public transit users can mostly be absorbed by the current system. And, ironically, freeway commuters report that due to high gas prices, for the first time in an eon, the freeways are truly free-ways with almost no congestion at rush hour due to fewer commuters.  Parenthetically, the private nonprofit Los Angeles County Economic Development Corporation (LAEDC) estimates the sales tax would jump start the regional economy. 

Butterflies or Moths?

What’s going on with all of the above?  Got any idea yet?  The answer is that public agencies are beginning to shift into their “New Deal” jobs creation programs from their presumed main mission as water suppliers, public schools, and public transit carriers.  Public agencies morph into their Keynesian economic stimulus mode just as a caterpillar turns into a pupa (chrysalis) and then into a butterfly. Only they do it without anyone noticing the radical shift in the agency’s life cycle. And just as butterflies are important economically as agents of pollination, so are public bureaucracies as economic stimulators.  But unlike pretty butterflies, the public projects most often turn out as ugly moths.   

A problem is that the media -- sympathetic with government and reflexively anti-business -- typically is blind to this cycle taking place. Instead, it dutifully reports such bureaucratic actions as if they are part of the primary mission of such agencies.  In fact, if you review the mission statements of public agencies you won’t find their shadow purpose – to act as a piggy bank during economic downturns.  Sociologists call this the difference between the manifest and the latent function of an organization.  Most people, including the media, never seem to catch on that the latent function (jobs programs) is, or originally was, the real primary function of many bureaucratic agencies since the Depression era New Deal. 

Do we need behemoth water agencies to combat droughts, public transit agencies, and public school systems?  The consensus answer of political and media elites would be yes. 
But during a drought Southern California typically uses only 4 million acre feet of water to serve 15 million people and 5 million during wet periods.  So conservation results in more water available in a year than the 800,000 acre feet Diamond Valley Reservoir holds.  And it now comes to light that the Diamond Valley Reservoir may have been a big and costly mistake. Water and environmental activist Dorothy Green writing in the August 15, 1994 issue of the L.A. Times was apparently right as the headline of her article said it all: “Diamond Valley: A dam site too expensive MWD: a huge reservoir would cost $2 billion, but water to fill it is problematic and there are cheaper alternatives.“

Light rail doesn’t make sense economically on a cost per passenger basis nor as even an effective method of transportation compared to much cheaper bus ways which can deliver passengers closer to their destinations. 

Public schools are enshrined as a reflection of the public good in society.  But large school boards and districts could be reduced to mere financing mechanisms for charter schools rather than humongous jobs programs.   

During the last recession from 1990, Southern California saw three similar huge public works projects all of which promised reliable water, a solution to traffic congestion, and a magnet public school for downtown Los Angeles.

In retrospect the Diamond Valley reservoir was arguably a mistake. The Wilshire Subway and Gold Line Light Rail did not solve congestion, but ironically high gas prices have, at least momentarily. 

And the Belmont Learning Center in downtown Los Angeles built by the L.A. Unified School District, costing one-fifth of a billion dollars, sits empty as a “contaminated” complex of buildings erected over a known oil and gas field. In 2004, approximately 60 percent of the buildings were demolished because of a discovered earthquake fault under the project.  All of these projects were Works Progress Administration style jobs programs meant to counter the last economic recession. They were projects built on speculation. They were all bad bets. 
These projects were all church-like edifices built on faith that the public would get a return for their investment in the long run.  However, the media never seems to ask if the public got a decent payback for its tax buck.  Arguably, it did not.  The public will likely not get much benefit from the current round of large public works projects being touted either unless the media better informs the public that such projects are first and foremost economic stimulus programs rather than necessary public works projects.  But the media has an occupational ideology that incapacitates it from doing so. 

Just as the caterpillar goes into its cocoon, history repeats itself. Only what will emerge will likely be an ugly pickpocket moth that puts a hole in the change pocket of your pants hanging in your closet while you’re not looking.  You will end up having to buy a new suit, which will stimulate the economy.  Only the new suit you get will not be the one you wanted and will just hang useless in your closet until you donate it to a used clothing store run for charity. CRO


copyright 2008 Wayne Lusvardi




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