The politicization, corruption and stagnation that so often creep into the public sector.
How New York and New Jersey Can Fix the Port Authority," about the problems with the Port Authority of New York and New Jersey that have come to light more recently because of the George Washington bridge traffic debacle that affected Fort Lee, NJ last fall, because the local Democratic mayor didn't endorse Republican Governor Chris Christie in his re-election bid. From the article:
But the Port Authority's problem is not that it's run by two states. Its challenge is the same one faced by every large, complex public entity: preventing the kind of politicization, corruption and stagnation that so often creep into the public sector. ... The irony here is that the Port Authority is itself a 20th century effort to meet this challenge.A number of investigations, hearings, and reports have come out since. I've been meaning to write about some of the reports, because they make good points about how many of the economic development initiatives of the Port Authority are more about political payoffs for the New Jersey Governor specifically, how the PATH subway system is a big money sink for the Port Authority, etc.
It didn't turn out that way. The huge amounts of cash collected by the agency’s toll facilities proved an irresistible attraction to the two governors, who proceeded to steadily increase their control over the agency. Today, in practice, the Port Authority’s board members act not as independent officers but as the governors’ representatives. And large pools of the agency's profits are set aside for each governor to allocate as he sees fit.
-- A Port Authority that Works, NYU Rudin Center
This is relevant because I've suggested the creation of a similar kind of multiple-state authority to run railroad passenger transportation services in the DC-MD-VA area, by merging Maryland's Maryland Commuter Railroad system and the Virginia Railway Express operation into what I call RACER, or the Railroad Authority of the Chesapeake Region.
-- Regional transportation planning and fixed rail service
-- Why don't Maryland and West Virginia think about expanding MARC into a true regional system?
I've also suggested that Montgomery and Prince George's Counties in Maryland need to create a massive bi-county development authority to bring about a wide range of social and economic improvements in association with the creation of the Purple Line light rail system.
-- Purple line planning in suburban Maryland as an opportunity to integrate place and people focused initiatives into delivery of new transit systems
-- Quick follow up to the Purple Line piece about creating a Transportation Renewal District and selling bonds to fund equitable development
BUT "politicization, corruption and stagnation" is the flip side of government involvement in "business and economic development," because many elected officials take advantage of the opportunity for contract steering, graft, personnel hiring--these were problems at the Metropolitan Washington Area Airports Authority for example--and this gets in the way of doing good work.
And I have written many thousands of words on this topic as it relates to community development corporations and how they operate in DC--poorly mostly--("Falling up -- Accountability and DC Community Development Corporations") while in some other cities (such as Cleveland and Minneapolis-St. Paul) they can be amazingly positive tools and facilitators of improvement.
Recommendation from the article: Do it like the Europeans. How do we keep such programs and authorities on the up and up in the face of the inexorable pressure to take advantage? The Bloomberg View piece contrasts the Port Authority structure to European "non profit" entities as a way forward.
Europe doesn't have the same form of "nonprofit" corporate structure that the US does. Here, you can create a nonprofit and the public have a theoretical stake in the organization, but for all intents and purposes the corporation is run by the board, which is usually self-replicating. And most boards, as I can tell you from personal experience, aren't big on "critical analysis" and independent, alternative viewpoints and planning for the future and exogenous change.
(The Dudley Street Neighborhood Initiative in Boston is a rare example of a community development corporation that maintains some connection to the public by having board members elected by members. Closer to home, the Gateway Community Development Corporation in Prince George's County does something similar.)
There, such authorities have shareholders, which are usually different agencies of government. For example, the entity leading the revitalization program in Bilbao is "owned" by the Spanish national government, the Basque government, the provincial government, and the local municipality.
Similarly, the Temple Bar Cultural Trust was originally controlled by the national government, but now is controlled by the local government. The same was true of the original "urban regeneration corporation" in Liverpool founded in the early 1980s. And the HafenCity development in Hamburg is "owned" by the city government too.
But, the fundamental issue is accountability. The article claims that sound "corporate governance" is what results from the difference in structures between other countries and the US. But just because these corporations are "owned" by the government in Europe (or Hong Kong) doesn't make them more accountable necessarily. Some of those corporations get disconnected from doing the right thing too, no differently than in the US.
That was an issue in Dublin, as I wrote about ("Dublin's Temple Bar District as a leading example of culture district revitalization"), and bad decisions by the TBCT in a time of economic privation lead the city to take it over, something that elected officials wanted to do anyway, because they resented the organization's financial independence.
And public authorities owned by the national government, but functioning as locally serving institutions can be disconnected from local participation and involvement. (That's true with local agencies too, such as business improvement districts, which usually do a good job of representing property owner interests, but tend to be weak on representing more public interests and residents. See "NoMA revisited: business planning to develop community.")
Plus, government owned entities can be dissolved when governments change and the new administration takes on a different tack, which is what happened with the regional economic development authorities in the UK, which were dissolved by the Cameron Administration, even though I'd argue they did good work, or how local redevelopment authorities were dissolved by the State of California at the behest of Governor Brown.
Conclusion. I don't know what the answer is. But we need to figure it out. The "European" way is better, but it still isn't perfect.