MBA Confessions (vol 1)

–by Mike Murray

I stick my head into the room and inquire of a pair of wingtips passing for a man: “Is this where the MBAs anonymous meeting is being held?”

“No,” he corrects: “This is a meeting of Recovering MBAs. MBAs are never anonymous; our pinstripes always give us away.”

“Yeah,” I reply. “The clothes are a little out of date.”

“Hey!” he protests. “Being an MBA means never having to say you’re sorry for power ties.”

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Freshly scrubbed clean of years of B-School programming, I offer the following: the next time you hear an elected official utter the words “Economic Impact Statement,” run! And be very sure you haven’t left your wallet or purse behind.

This is the simple truth about economic impact statements: they are conclusions in search of validation.

They deal always in revenues — never in costs — and they deal in gross (rather than net) amounts. Universally, they are used to justify something that permits the allocation of scarce resources to the benefit of a few at the expense of many.

Disclosure: I have conducted several such studies. And in every case, the mandate of the person or group for whom I did the work was the same, “Make damn sure that the results indicate that the impact on the surrounding community is huge, substantial, vital, critical,” etc.

Never once did anyone say: “Just tell me what you find and let the chips fall where they may.” Hah! Not even close. Hell would freeze over before the commissioner of such a study directed that the results be under- rather than overstated.

No, ladies and gentlemen, boys and girls, the point of such studies is persuasion. They are meant to serve as ammunition in the war over resources. Precious, scarce resources. When such a study is undertaken, its purpose is to get something for someone, someone who almost certainly isn’t you.

Here in “Mistake on the Lake” land, er, make that “The Best Location in the Nation,” much talk surrounds a new or expanded convention center. My twisted mind, filled with years of study involving macro and micro economics, accounting, marketing, management, finance, and similar disciplines leads me to imagine the following. (It’s parody people, so don’t even think about suing me!).

I ease my way into a community meeting meant to sell (I mean solicit opinion about) a potential new convention center. I sidle up to an affluent-looking gentleman and chat him up.

I ask what he thinks about the idea of such a construction project (as if I didn’t already know). He’s in favor of it, of course. I mention that there are tradeoffs, but that I suppose it depends upon whose ox is being gored as to whether one finds them troublesome.

As business types are wont to do, he corrects me, “I like to say, ‘it depends on whose Gore is being oxed.’” Noting that he does project a rather Republican image, I get the joke.

I press on. “Won’t the project be expensive? Doesn’t Cleveland have more urgent needs?”

His face positively glows as he produces a professionally prepared case statement entitled, Cleveland’s Convention Future: an Economic Impact Study.

I do my best to suppress a giggle and continue. “So, the cost / benefit analysis bodes well?”

“Hell,” he says, “The new convention center will pump a gazillion dollars into Northeast Ohio!”

“A gazillion,” I repeat earnestly. “That’s a lot of scratch. There must be a long line of developers wrestling over the right to build and operate it.”

“Well, to build it anyway. I don’t know that it makes much sense for a developer to actually operate the thing.”

“Why not?” I inquire. “If it makes such economic sense, if it will be so profitable, why aren’t developers salivating over the opportunity to run it?”

“Look son,” he continues (I guess my boyish good looks confuse him about my advancing years …or maybe it’s just that next to his fossil self, I am young), “You just don’t understand business. Developers build things; we don’t operate them.”

Ah ha! Just as I thought: this old coot is one of the fat cats vying for the project.

“What about shopping malls and such,” I inquire. “Don’t developers build them and then own and operate them, too?”

“That’s different,” he insists. “Convention centers are profitable in different ways than malls. There’s the multiplier effect — something you wouldn’t know about.” (I do, but as a recovering MBA, I don’t let on.)

“See, when we build a new center, people will eat at nearby restaurants, shop at stores and so on. Then those business owners will buy other goods and services in the area. Get it?”

“Yeah,” I offer. “Sort of a trickle-down effect.”

“No, no!” he scolds. “Don’t try to paint me as a heartless conservative. Reagan misspoke when he coined that phrase. He meant to say that a dollar spent stimulates the economy by generating more spending. He didn’t mean it to sound like the ‘little people’ will get the scraps that fall from rich people’s plates.”

(Okay, I’ll give him that. The Democrats said essentially the same thing to better effect when they stated that, “A rising tide raises all boats.” Same principle, more ably — and more humanely — put.)

“Still,” I continue, “plenty of studies have shown that such construction projects seldom net more revenue for the public that funds them than they cost to build. How can that be good?”

He raises an eyebrow and his voice turns haughty. “Don’t you want what’s best for the region?”

There it was. That catch-all bugaboo: “The Good of the Region.” How many times have folks in Northeast Ohio been fed that line when movers and shakers wanted to persuade us to sacrifice, to swallow a bitter pill for some supposed greater good?

(Those of us who live near Hopkins Airport were told it was our duty to accept major expansion under the same civic banner, under the supposition that the “economic engine” that is, essentially, strips of cement and asphalt would be our financial salvation. I guess we can now all sit back and bask in the glow the project produced, secure in the knowledge that “the region” is, at long last, fiscally sound. Not.)

“So let me get it straight,” I persist. “You want build the project for a ten percent general-contracting fee, place it near other business interests you control, maybe even sell the city land on which to build …all out of a sense of civic duty?”

“It’s the least I can do,” he beamed. “When you die, all you probably hope they’ll say about you is that you died with your boots on.” (He’s right, I do. Well, that and that I was just a little more good than bad.)

“When I die,” he trumpeted, “I want them to say that I did what I could to the region.”

A Freudian slip if ever I heard one.

Berea Pundit