Monday, February 15, 2021

The long history of anti-corporatism in Cascadia (again) and I wonder where that might take the Washington State Republican Party

 

Just some social media that I hung onto. But it tells a consistent tale. Not only government can be trusted, big business can't be either.

During the peak of the restaurant-centered protest wave during our COVID-19 winter, I started noticing a consistent talking point among speakers at protests and on social media posts. It was normally centered around a Costco on the Eastside of the state that had been able to stay open despite more than 150 employees testing positive with COVID-19. The logic was that the state government was favoring large corporations over small mom-and-pop stores. 

The actual details of the debate notwithstanding (even chain restaurants were closed for sit down service and mom-and-pop retail was open), the consistent beating of this drum is a reminder falls into what looks like a new theme for conservatives in our region. The most telling of these examples is a post on former gubernatorial candidate Loren Culp's website targeting Republican lawmakers that have taken money from "Big Pharma." 

While a Republican calling out corruption from big government may seem mind-bending, it really shouldn't be. We have a long history of anti-big business, anti-corporate tradition across our regional political identity.

I can point to a few historic episodes that can illustrate the evolution of this anti-corporate attitude, and where it might lead us still.

One of my favorite anecdotes about Cascadian history is the (lack) of effort by Willamette Valley farmers to successfully capitalize on the Gold Rush. While Puget Sound settlers spent zero time doing all they could to make as much money as they could by sending timber for the bustling Bay Area, Oregon farmers yawned.

Best told by David Alan Johnson in "Founding of the Far West," the failure to capture more of the California trade was deeply engrained in the Valley's ethos:
(The farmers') response to the California market -- their enterprise -- was motivated as much by a modest desire to improve their landholdings, assure their household's self-sufficiency, and enhance their families' material comfort as by a drive to command greater market share or increase production as an end in itself. 
Puget Sound settlers (that had a few years lost to production compared to the Willamette Valley) were more likely to be from capitalist New England. Oregon's farmers on the other hand were more likely to be from areas of Appalachia and the South that did not have large slave populations. In fact, you can trace anti-black laws in Oregon to the settlers' desire not to import the slave-based economy to Cascadia. But, not only slavery wasn't welcome, but also apparently large-scale agriculture.

I've covered this ground before, but the discussion at the founding of Oregon was in fact about how corporations would integrate into the state:

Many of the delegates entered the convention with a strong mistrust of corporations. They had seen abuses in the Midwest and elsewhere in which unscrupulous corporate operators had left innocent stockholders deep in debt and workers unpaid... Some of the debate would revolve around stereotypes of corporations as large and uncaring machines of the economy that routinely chewed up farmers and workers.

This is years before the Wobblies and the more institutional development of strong labor unions in Cascadia. But the anti-corporate attitudes of the decedents of the small Willamette farmers was baked in to the batter. You can see it in Washington's failed 1870s constitutional convention ("Some of the provisions adopted by the Walla Walla Convention reflected distrust of corporations and railroad"). And the proclamations of Senator Homer T. Bone against a nascent Boeing in the 1930s. 

If we dig deeper, we can see the clear settlement patterns of where this anti-corporatism comes from, the Appalachian settlers that at first came to the Willamette Valley, but also were dotted by settlements of New Englanders. This thesis is most clearly laid out in Woodard's "American Nations," but that work draws from Johnson's "Founding." What we are seeing now is the Appalachian anti-corporatism having a moment inside the nationally-favorable to business Republican Party.

And the criticisms seem to be correct. Democrats in Washington seem to fit comfortably dealing with corporations. Former Governor Gregoire famously worked the backrooms in the run-up to the COVID-19 lockdown almost a year ago:

Seattle is home to some major international companies, and two of them, Microsoft and Starbucks, have major operations in China, where COVID-19 started. They also had access to some modeling from medical research that raised concerns about the possible spread.

They quickly came to the conclusion the region needed to start preparing for a significant outbreak, Gregoire said. The executives decided they had to communicate the seriousness to their employees, about 250,000 total, but based on science, data and facts.

They began reaching out to other businesses and the rest of the community, trying to help increase the blood supply and acquire personal protective equipment.

“We have created a unique public-private partnership that is not just for Seattle but literally for the whole state,” Gregoire said.

The daily noon conference calls continued, and have grown to about 250 people, including business leaders from Spokane and experts from Washington State University. They get briefings from public health experts and from state and local officials who are about to make a public announcement about government action and want feedback.

The reason I blockquoted a huge portion of that article is to emphasize that this coordination didn't come from thin air. The hand-in-glove relationship between big businesses and Democratic Party led government was not in the least strange bedfellows. At least for right now, Democrats occupy the political space that was created by city-based New England settlers. Comfortable with capitalism and comfortable with government. 

This isn't to say that many of these businesses wouldn't rather see regulation-wary Republicans in charge of the state. But that is a far cry from not being able to work with Democrats.

If the rhetoric from this last winter is just a convenient weapon to use against Democrats who happen to be in charge or less conservative Republicans who also happen to take Pharma money, that's one thing. But if this is a return to anti-corporatism defining one of the regional political parties, that is something completely different. I would be interested in seeing where that goes, policy-wise.

Saturday, February 06, 2021

Olympia’s rising tax exempt skyline that will start paying off

One thing about Dan Leahy's analysis of the multifamily housing tax exemption that bothers me almost two years later is that he stopped at the eight-year life span of the tax exemption. 

He illustrated that over the life of the exemption, the tax-paying owners (for example) of the 123 4th would not pay the $2.2 million in taxes owed on the improvements they made to the three parcels they built on in downtown.

Dan's analysis didn't make obvious that they are still paying some taxes, but only on the value of the property as if it was still a parking lot. Which I think is pretty interesting, because now we can figure out the impact of taxes would be lost if the building stayed a parking lot instead.

So, this is an absolute back of the napkin analysis, but based on the most recent valuations, the subsidy would begin paying off in 2032, seven years after the exemption ends. It would take less time to "pay off" the exemption than its entire lifetime.

Over 40 years, the increased value of the property (again, back of the napkin) would net the city over $7 million in taxes.




The difference in the tax payments on a mixed-use apartment/commercial building and the tax payments of a parking lot would be about $200,000. So, over the 40-year time span, the taxes lost by not incurring the short term loss lost of $2.2 million that the tax exemption represents would be just under $8 million.

We'll never know if the 123 4th would have been built without the 8-year tax exemption. Even the most thoughtful analysis of the statewide program could not figure out if it actually increased development. What we can point to was the trajectory of downtown Olympia up until the point the exemption was available in 2007. New housing had not been coming downtown for years.

We can also see that given the decades of full-rate taxes these buildings will be paying, the so-called subsidy will be paid off sooner than earlier analysis would imply (even given my possibly rosy assumptions). Big buildings pay way more taxes than parking lots. That's my big takeaway.