The treasure trove of archived podcasts at StrongTowns.org yields another gem of insight into this deeply perverse system that has only the Pentagon as a rival for massive waste. This is by Chuck Marohn from 7 February 2013, and he called it “The Circle of Highway Funding.” As usual, lightly edited to remove small verbal misfires; any words added in editing are in [brackets].
Interviewer: Does there ever come a moment where you say we may just need to abandon some roads or some bridges, just like Governor Cuomo is now thinking about doing with housing along the coast?
US Secretary of Transportation Ray LaHood: That’s not really up to us to decide that. We don’t decide things like that from Washington DC, that’s up to local officials.
The audio you heard at the beginning there was an interview on New York Public Radio with Transportation Secretary Ray LaHood.
First, I want to tie in this dialog with the transportation secretary who, by the way, I have a favorable impression of. I think this guy’s a fairly decent guy trying to do the right thing. I think he has the wrong narrative that he’s subscribed to, like so many. That’s what we’re going to talk about today.
I received on Monday morning of this week, a fantastic ‑‑ an amazing article from the McClatchy News Service, their Washington bureau, written by Curtis Tate and Greg Gordon. The name of the article was called “US keeps building new highways while letting old ones crumble.”
In terms of a piece of journalism, this is a quite extensive piece. It’s a very long story, there’s a lot that went into it ‑‑ there were no real superficial quotes. This is all real good, deep, hard-hitting stuff.
I want to juxtapose the real meat that is within this article with some of the dialog from our transportation secretary. Then some understanding to explain how we got into this mess and the kind of mental shift it’s going to take to get out of it.
Let me start with this McClatchy article. I’m just going to read from the top because the first five paragraphs are gold. They really set up the whole article:
“Oil rich Texas has built more highways and bridges than any other state, but over the next two decades, it will fall $170 billion short of what it needs to keep the sprawling network in good repair.
In California, transportation officials estimate that 60 percent of the state’s roads and a quarter of its bridges need to be repaired or replaced, at a projected cost of 70 billion over the next decade ‑‑ some 52 billion more than the available funds.
North Carolina, anticipates that it will fall short of keeping its highways in current condition by 22 billion over the next 30 years, and would need more than twice that amount to improve them. America’s highway system, once a symbol of freedom and mobility envied the world over, is crumbling physically and financially.
The potentially disastrous consequence of a politically driven road-building binge. President Barack Obama, state transportation officials, civil engineers, road builders and business groups all say that the country needs to invest trillions of dollars in its infrastructure. Yet there’s little consensus on how to finance it or what the most pressing needs are.”
Let’s start with that. It’s interesting because there’s a litany of states there. They started out with Texas, which is very interesting because Texas likes to tout itself as being this home of modern growth machine and really, when you start digging into it, it is really a Ponzi scheme of highway debt and economic subsidies. Nonetheless, you’ve got Texas and California, the two bookends of different approaches in this country. Then you’ve got North Carolina, they could have easily picked about any state in the union.
I’ve studied most of them to one degree or another and I think only a place like North Dakota, maybe Montana, where they’ve done very little of this is this situation not dire.
In my own home state of Minnesota, there was a report put out not too long ago, that said, “Over the next 20 years, we need 65 billion, we only have 15 billion projected, that we’re going to bring in during that time period.”
The ludicrousness of that gap, that’s not a modest little policy tweak ‑‑ that is an enormous, enormous gap when you monetize that. We shut down the entire state government about a year and a half ago, I want to say, and that was over a gap of a billion dollars in a biennium, in a two-year period.
If we were going to honestly deal with our transportation infrastructure deficit, that wouldn’t have been a billion, it would have been six billion. We’re talking numbers that are off the scale; it’s gaps that are not closable.
How did this happen? This is the most important thing to understand because we can’t start to fix this problem until we understand the problem. I’m going to walk you through this really slow so that we can grasp what the actual problem is.
This is all a function of how we pay for things.
It’s all a function of where the money comes from, how it’s distributed out, and what the incentives are within those systems. It’s critical right off the bat to understand that when it comes to transportation, the federal government pays bulk of everything.
Your local streets are going to be paid locally, but pretty much everything else is a function of money from the Federal government. You’ve got the gas tax that goes to the federal government and goes to what is called The Federal Highway Trust Fund. This is a collection of our gas tax that, in theory, then is distributed back out to the states in order to pay for road construction projects.
This is the way that we’ve done it since the beginning of the Interstate Highway System. It is a system that has run its course a long time ago.
Let me give you the quote on the highway trust fund from the McClatchy article:
“The fund used to carry a surplus, but lawmakers have bailed it out since 2008 by tapping the treasury for $50 billion. ‘That can’t continue indefinitely,’ said John Horsley, who retired in January as the executive director of the American Association of State Highway and Transportation Officials.” That’s AASHTO by the way.
“Congress is going to have to find a way to restore funding. Simply increasing the gas tax may not be the best option. Americans have been driving less since 2007, partly because of the recession and higher gas prices and partly because of a generational shift away from car ownership. Rising fuel economy in cars and trucks has also contributed to the decline in gas tax revenues.”
Now, this is a meme. John Horsley with AASHTO, obviously one of the insider’s in terms of the whole thing, and you can see the meme that he comes forward with: “Congress is going to have to find a way to restore funding. We’ve not been funding these things at the level that they should be. We need more money.”
I’m going to switch back here to Ray LaHood. I’ve got a quote from him on “The Diane Rehm Show” where he’s asked about the funding situation. Here’s what the transportation secretary had to say about that.
LaHood: At one time, Diane, we were the leader in infrastructure. We built the interstate system. It’s the best road system in the world, and we’re proud of it. But we’re falling way behind other countries, because we have not made the investments. Congress passed a two‑year bill. Ordinarily, they would pass five‑year bill. It was only a two‑year bill because they couldn’t find enough money to fund a five‑year bill. The next decisions that will be made by this congress ‑‑ by this administration ‑‑ will have to be bold if we’re going to continue our efforts to fix up our roads, to keep our highways in a state of good repair, to fix up unsafe bridges. We need a bold plan and a bold way to fund it.
So what you’re hearing here is what is become the standard conversation, particularly out of Washington and out of policy people:
We need more money. The gas tax is not kept up. It’s not been adjusted for inflation. Had we been a little more bold ‑‑ kind of commensurate with the original spirit of the bold highway construction initiative from the 1950s ‑‑ had we kept that pioneering experience here in America – at the very least, index the gas tax to inflation — that would have solved all these problems.
Forget the fact that we’re literally talking billions and billions and trillions of dollars that need to be spent to rectify this situation and that the numbers just simply don’t add up. That’s the meme being put forth here. We actually just need a little bit more money.
Before we go any further, let’s step back and look at the way that this system is funded. I’ve written down one, two, three, four, five different ways that we fund this system today or that are in discussion about how we fund them.
Let’s start with the gas tax.
And let’s just talk about the gas tax for a second. Understand that the idea here in the 1950s was that we would have this dedicated fund, the gas tax. When people pay the gas tax that money would go to Washington and get recycled back to maintain the roads.
This makes a lot of sense and is very logical in the 1950s type mentality. Understand, what I mean by 1950s type mentality. I mean gas was, first of all, very cheap. The tax was actually a large portion of the cost of a gallon of gas, much larger than it is today, of course.
We also had an abundance of fuel. The United States was a net oil exporter. We were still a couple of decades away from our oil peak. The idea of gasoline being something that we would someday want to conserve or someday would be a scarce resource was not on anybody’s mind. The idea that as you drove more, as you use more, you would then pay more ‑‑ seemed to make a lot of sense in the 1950s.
Let’s fast forward to today to 2013. Of course, fuel and energy and oil not only being a huge economic issue, not only being a huge family [issue] ‑‑ I want to use the word moral but I don’t quite want to go in the direction of morals, I really want to go towards just the ability of families to adapt in the economy today. It’s a huge issue. Then it’s also become massive security issue, a state security issue ‑‑ the sources of our oil.
Despite the fact of all this conversation on energy independence, we’re not going to be able to bring up and easily convert a system — that is [now] based on petroleum, that is based on oil and gasoline — into natural gas. We’re not all going to in the next five years be driving natural gas cars.
Oil and the gas tax and the tax on oil has become a real burden around our necks.
It has some amazingly, perverse incentives.
If you think of it from the government standpoint, the government actually benefits in terms of revenue when you drive more. I did, a few years ago, an analysis on the standard cost‑benefit approach we have to projects. It’s interesting because one of the things that is listed generally now today as a benefit is a reduction in emissions, a reduction in carbon burned.
While I get what they’re going for, in terms of a real world cost‑benefit analysis that’s not a positive, that’s a negative, because when your revenue stream relies on people burning oil and paying taxes for that, when people burn less oil they use less energy, they’re paying less taxes and you’re actually going to have less revenue.
It sets up this really perverse incentive where the more efficient we make things, the actual less revenue we’re going to have.
It also creates this huge problem where, when we’re short of revenue, when we actually raise the tax, there’s an immediate feedback loop where people then start to make different choices. They start to drive less.
We sat down for instance and figured out that, in Minnesota, we would need an 83 cent a gallon gas tax increase – 83 cents – in order to cover the gap that we’ve got right now today. That is a static analysis. That assumes that the more we raise the gas tax, people don’t drive any less. Of course when the gas tax goes up 83 cents, people are going to drive a lot less.
I met with a Minn-DOT official who — under the table — gave me the information and said,
“You know Chuck, we’ve done this analysis dynamically and nobody really knows where the number is, but we know it would be at least $2 a gallon and probably closer to $3 a gallon that the gas tax would need to go up in order to fill this.”
[The] underlying understanding there being, the more you raise the gas tax the less people drive. It’s like a dog chasing its tail, so then you’ve got a raise it more, which makes people drive less, which means you have to raise it more. The gas tax has become an incredibly prickly and difficult tax to administer because of these perverse incentives.
Now, forget the fact that our economy is an energy slave. We can’t really grow GDP the way that our economy demands and requires that we do without cheap fuel. The whole thing resists, just as a base assumption, anything that would increase the cost of energy.
Let’s look at the second way that we fund the stuff and that is through debt.
There’s a great quote in this article that lays this out, because the debt equation is utterly fascinating. Let me read this from the McClatchy article. “States have taken on more debt, and some have about as much as they can support. According to Federal Highway Administration data, all states carried a combined $56 billion in road bond debt at the end of 1995, in current dollars. By 2010, they owed $154 billion.”
Within 15 years we’ve tripled the amount of debt that we have for transportation at the local level. In fact, one of the statistics that is the most revealing to me, this whole juggernaut of growth that we see in the State of Texas: Texas actually is projected to spend this year or has crossed over already this year, more on debt service for its highways than it actually is spending directly on highways.
In other words, they’ve kept this all going by taking on more and more debt and the cost to actually service that debt now is taking up the vast majority of their budget. This is literally borrowing from future growth in order to fund growth today ‑‑ a completely not‑viable long‑term economic strategy.
Debt obviously has an end to our capacity to use it, to induce and create growth. The dangerous thing about debt particularly the way we do transportation funding today, when our investments are so incredibly low return, when you take on debt to fund capital projects, the idea is that the new revenue created by that capital project would ultimately be able to retire the debt.
Because our expenditures are so low return on investment, because we have no value‑capture mechanism, no way to recoup through taxation any, even pennies on the dollar sometimes, of the investments that we’re making, there’s no way that these debts will be retired. There’s no way that these capital investments will ultimately generate enough revenue to pay off the debts.
Debt is kind of like a dead‑end road. Sorry for the pun, but it’s the dead‑end road from which there really is no easy return from. Let’s look at some of the other ways. Those are the two most common of course.
We also have one now that started to pop‑up and that would be the sales tax.
There’s a lot of places that are pushing the sales tax as a way to bridge these gaps. Understand that this is being done largely because the sales tax is a cash cow.
We have a consumption‑based economy and something like 70 percent of our economy is consumption. By putting modest little taxes on consumption here and there we can generate enormous, enormous sums of money.
And if the goal is simply to fund more transportation spending regardless of its return on investment, regardless on if those are good expenditures or not, if the goal is just to fund more highway spending, kind of the easiest way to do it through the one you’re going to get the least resistance from, because it literally is going to be a penny here and a penny there over very broad spectrum of places, it’s going to be by using the sales tax.
The only thing that would possibly be more stealthy in terms of the taxes would be the value‑added tax, but there’s really nobody talking right now seriously about using a value‑added tax, so let’s just focus on the sales tax.
Here’s the kind of fundamental problem with the sales tax. While it gets you where you need to go in terms of revenue – and I say that with some reservation, because I don’t think we can make up the trillions in gap that we have in terms of our transportation funding scenarios — even with the sales tax, you’re going to be forced to make some really, really difficult choices. But you can start to make up some of those gaps with the sales tax, but here’s the problem:
The sales tax, because it’s so kind of stealthy, is completely uncorrelated with demand for transportation improvements. In other words:
“I pay sales tax. I expect my road to be pothole free, my commute to be quick and congestion free, and I expect that as essentially an American right. I have paid my sales tax. I have paid for that service.”
There’s a general expectation of people today, even from the gas tax which anybody who scratches beneath the surface can see that the gas tax doesn’t cover anywhere near the total amount of liabilities and expenditures we have. Yet, there is kind of this, I’ll say, middle class entitlement mentality that we’re all paying gas tax, and so the road should all be in tip‑top shape.
And everybody, regardless of where they want to live and how they want to live, or where they want to drive or when they want to drive, should be able to drive congestion-free, highly maintained, high quality roads. Door‑to‑door service.
The sales tax does nothing, does nothing to dampen that expectation, and really it takes us far in the other way creating even greater entitlement mentality, because now, not only am I paying gas tax, but I’m also paying the sales tax, and I have expectations on what the outcome should be.
If there is no correlation, no kind of direct supply-demand correlation between what we want, what our expectations are, and what we are willing to pay for, we are all going to expect lobster, and we are all going to be willing to pay for hot dogs and hamburgers.
And there will always be — whether we can extend this out 5 years, 10 years, or 20 years by using sales tax and kind of piece these things together – at some point, we are going to have to reconcile the fact that there is lack of correlation between one and the other.
I’m going to talk a little bit in a little bit about what that lack of correlation does, because today there’s essentially with the gas tax there used to have the same effect that is not as pronounced with the sales tax. But I’m going to talk in a little bit about what the kind of the ramifications are of having things be uncorrelated.
A correlated tax would be something like a mileage tax, or even, to a degree, a toll road.
We use toll roads, and some states are experimenting with mileage taxes as a way to generate revenue. It’s interesting because I often see Minnesota held up as an example of a state that is experimenting seriously with mileage taxes. And I’m telling you being here in Minnesota and being in kind of plugged in to what’s going on ‑‑ we are not experimenting seriously with mileage taxes.
Maybe we are from a technical stand point of view, maybe there’s some people out there, and I think that there are always some meters and stuff that are measuring these things and figuring out like technically how we would do it.
The problem with the mileage tax has never been technical. We’ve always been able technically, not always, but in recent times, you’ve been technically able to institute this tax. The problem is always been political. Are we actually going to do it?
I did see a study, and I couldn’t find it for this podcast, so I’m not going to able to quote the numbers directly, but I saw a study from Wisconsin that looked at “What would the per mile tax need to be to actually pay for the things that we are using?”
The number was just astronomical. It was a low-per-mile taxes like a nickel or a dime.
I don’t know what it was. The aggregated numbers when you start to looking at like what people we are going to be forced to pay additionally in a year, it was hundreds or thousands of dollars, many times thousands of dollars for people, just on top of what they do today in additional fees and in additional taxation based on these mileage-type charges.
Here’s the interesting thing about a mileage tax, and I don’t know there’s a lot of people have thought through. When you get in a taxi — I’ve been in a taxi with my dad and my wife too. If I have ten words to describe each of them, frugal would be one of those ten.
When you get into the taxi, the first thing that happens is they punch the button, and it’ll say the base charge then, so $2.50, $3.50, or whatever it is. Right then, my wife starts squirming, because she’s like, “Oh my gosh, we are just wasting money,” and every time the car stops at a light, and the meter keeps turning even though we are not moving, I can see like her, start to rub her palms together and get a little nervous twitch like, “Oh my gosh, we are just like sitting here burning money literally.” With my wife and my dad I have experienced this.
There is a really, really strong incentive with the mileage tax to drive less. In fact, the McClatchy article has a quote in here that is utterly fascinating. It’s about toll roads but not about mileage tax, but you got essentially the same kind of mentality. Here’s the quote, “Tolls are unpopular with the public. The trucking industry opposes them, and truckers will go miles out of their way to avoid them.”
This is why I’ve always found just hilarious when this cost benefits analysis that engineering professionals and economists put together to equate congestion with time savings and equate those time savings with financial benefits: A lot of people value their time much, much less than they value their money. And people would do ridiculous, ridiculous things to save themselves some money, but cost themselves enormous amounts of time.
The market for time and money, it’s not rational, in other words.
Once you start introducing, say, to state highways, to state aid highways, or whatever level you institute these mileage taxes on, people would do everything they can to avoid them. They’ll drive local roads. They’ll do everything they can do to avoid paying these taxes, and it changes the entire nature of the system. Now, people may say that is good and I actually think that would be good, I think we need to change the entire nature of the system.
But the idea here of the mileage tax is not to blunt driving, it’s to raise revenue. If you hear all the conversations coming out, whether it’s from the transportation sector, secretary, or whether is from one of the activist group, it’s never about driving less. It’s always about having the money to accommodate the infrastructure demands that we currently have now in the system. A mileage tax or toll road will not get you there, because it will directly dampen the demand. It will more closely correlate people’s willingness to pay with their demand for the system. And I would suggest that if there actually was a correlation, people would drive a lot less. People would drive a ton less.
They would live differently. They would feel the transportation cost more closely, and they would become a bigger part of the decision-making process when they choose where to buy a house, where the kids are going to go to school, or where they going to work.
That would be a great thing. It’s never going to happen.
I don’t see mileage taxes becoming an important part of our lives. If they do, I can only see them happening in limited places, in the same way that toll roads happen today. Not something that it’s going to be in the sense of game changer.
Let’s talk about the fifth thing, and that would be, what is kind of in a congenial way called, “Public‑Private Partnerships” — The idea that the government and private businesses would get together to build infrastructure.
There’s two ways that this manifests itself. The first one is where the government literally can’t afford some type of improvement, and they allow the private sector to go out and make this improvement on public right-of-way, something that would normally be public, but then to charge for it.
This is essentially the government being too weak‑kneed to actually do the project themselves and charge a toll. They simply, just under the guise of private‑public partnership, shop the whole thing out. Let someone else be the meany. Let someone else run this thing. Of course, then the risk is borne by someone else, and of course the profit margins are borne by someone else.
It is a kind of back‑door way into doing a toll road for politically weak government or parties.
Let’s look at the other form of private‑public partnership though, that being where some type of improvement is needed or requested by the private sector, and the public sector can’t provide it.
I’ll give you a good example here in Minnesota. Best Buy located in Richfield and they moved their corporate headquarters out there, a huge, huge building, tremendous transportation demand. They needed and I don’t know exact numbers, but it was millions and millions, tens of millions, it might even been over $100 million in infrastructure improvements that were needed on that site in order to happen.
Same thing happened up the road in Bloomington where we had the Mall of America.
The same thing was proposed to happen when the Vikings Stadium was going to be up in Arden Hills. So in Minnesota, we’ve seen a number of times where the private sector makes some type of improvement. That improvement is going to change the transportation situation, and the government does not have the money to react to that.
In those situations, you get what it is essentially called a private‑public partnership. Where the private sector steps in, whether is Best Buy, the Mall of America, or the Vikings, and says, “You know what? We will pay for all of or a portion of those improvements, and then the public sector will take them over and maintain them.”
This is the old Ponzi scheme thing that we’ve talked about on this podcast for a quite a long time. When the private sector builds this stuff, it’s literally a business decision, “Does this make sense? Here’s how much we are going to invest. Can we get this money back with the investment that we are making?”
In Best Buy case, “Are we going to save or buy having everybody in one location enough to justify this expenditure?” If you’re Mall of America, you’re saying, “Are we going to be able to charge rents high enough and have enough revenue coming through here to justify these expenses?”
This is basically a part of your pro forma so it’s part of your upfront cost. For the local unit of the government you essentially get the improvement and in Richfield’s case you get the Best Buy. In Bloomington’s case you get the Mall of America.
You get the private sector investment, but the real liability for this ‑‑ the real costs are a generation away.
If someone else builds the infrastructure for us, we don’t have to come out for 20, 25, 30 years and really do any type of major renovations. So we’ve got 25 years where we’re going to be collecting tax revenue where nothing is going to be going out the door. In terms of a cash flow situation this is the optimal situation, at least for the first two and half decades, zero money out, millions and millions of dollars coming in.
That’s why these public‑private partnerships are so popular because we can literally get stuff done. Leveraging, essentially, making future promises that we don’t have to reconcile with our balance sheets today.
Obviously, that also is not a long‑term solution. At the end of the day you get to the situation where, when you start to analyze the funding, you can really ask what does happen: “How do we go forward from this point on, Chuck?”
I’m here to say that the biggest problems we have is not a lack of money.
Even though that’s how it’s manifesting itself, that we don’t have money to do the things that we think we need to do, the problem is actually how the money we have has been and is being allocated.
This again comes out right in the McClatchy article. There were brilliant couple of paragraphs here, I’m going to quote from it again:
“Paved By Politics. Highway supporters frequently characterize their foes as anti‑road, anti‑jobs or anti‑progress. However, even the most ardent highway proponents agree privately on what they’re reluctant to admit publicly. Some road projects are better than others. In some state transportation plans, it’s hard to tell the difference.
And in the absence of clear national priorities, politics drives where the funding goes.’Instead of making hard decisions, we’re going to make sure everybody gets something,’ says John Fisher, who is a transportation consultant, who worked on federal policy at the Congressional Research Service. ‘We’re going to make sure everybody gets something.’”
This is how someone like Michele Bachmann — I’m not trying to make this political. If I were I probably tend to lean more towards the right side than left especially on fiscal issues, but I will talk about Michele Bachmann here, a darling of the right, the Tea Party movement, who famously said that transportation spending is not pork and earmarks for transportation spending are not earmarks.
It was her district where we spent $670 million, or in the process of spending that, on a single bridge to serve 16,000 cars, while all the bridges in the state that are in a state of structural repairs like 1,154, I think is the number. To fix those will cost $0.5 [b]illion, much, much less than this one bridge, to fix 1,100 bridges. That’s 1,100 bridges instead of carrying just 16,000 cars a day carry a combined 2.4 million cars a day.
Why don’t we spend our money on fixing our existing bridges?
Why are we building new stuff?
Well, it’s because everybody gets a little bit of the pie. Everybody gets a little bit of something. And so, instead of focusing on high return investments, instead of focusing on essential parts of the system, we just simply hand out a little bit to everybody.
Incidentally, for all you urbanites out there, all you people who are large-city dwellers, and rural people too should understand this, because I think the meme is the opposite. There is a sense in rural areas that we are subsidizing the urban areas that somehow we are paying all this amounts and getting very little, while the urban areas are getting all the transit systems and all the big road projects and everything else. The reality is the exact opposite.
Rural areas pay a very small percentage of the total take and get much more back than what they pay in. The urban areas are the exact opposite of that. So you have a situation where we’re essentially trying to make it fair, for political reasons and having nothing to do with what the highest return investments are, we’re spreading the money around to different areas.
There is also another thing that’s going on here and that is that, the federal government essentially defers the decision‑making to local units of government. They basically have no national priorities in terms of what the money should be spent on, and they just ask the states, and the states in turn around and ask the local units of government, “Hey, what do your local districts want? What do your local people want?”
When you put your ear to the ground and ask them, “What do you want? What are we going get?” You’re going to get more of the same and the reasons are very, very clear.
You’re going to get more of the same because the transportation spending on new stuff gives you new revenue and new growth and a new cash community or government, without you having to spend very much money at all.
The maintenance, it just becomes a pain, but when you get something new the maintenance is someone else’s pain. It’s the pain of someone two, three decades from now. It’s not the pain of anyone today. The idea of getting this new growth is incredibly enticing to local governments.
If we can get the new overpass out on the edge of town, and as part of that we get the new Big Box store, the new Kwik‑E‑Mart, the new drive‑through, a fast food joint, we’ve got to spend very little to make all that bulk of the money to build the project. The private sector will come in and then they’ll help us by helping you install the infrastructure and all that. We just get all that new revenue, which is fantastic. It all flows in.
The problem is that we then have this long‑term liability that’s going to come due in 20, 25, 30 years. The reason where we are at today is because when you look back 20, 25, 30‑plus years ago, you see these low return transactions that have now come due and they’ve come due at the same time as we’re continuing to make these other low return transactions.
We literally have had 60 years of unproductive low-return transactions and can’t continue anymore.
Let me backup, because I’ve got an interview. This is the one from the New York Public Radio with transportation Secretary LaHood. He backs up this point like, hey at the federal level we don’t have anything to do with this. You know, this is all about what the locals want.
Interviewer: Does there ever come a moment where you say we may just need to abandon some roads or some bridges just like Governor Cuomo is now thinking about doing with housing along the coast?
LaHood: That’s really not up to us to decide that. We don’t decide things like that from Washington DC. That’s up to local officials, that’s up to local mayors and local officials, state officials to make those decisions. We only take our cues from local officials. If they decide that a road shouldn’t be rebuilt, a bridge shouldn’t be rebuilt then we go along with those local decisions.
That’s very, very true. I mean, I’ve been in meetings with Minn-DOT officials, where I laid this whole Ponzi scheme thing out and showed them how they’re just fueling very low return investments and they’re not getting — there is absolutely no hope whatsoever that they’ll be to recoup Minn-DOT’s cost, let alone the cost being projected on the local level. The pushback that I get most commonly is “Hey Chuck, we’re just responding to what the locals want. I mean this is what the locals are telling us that they want. What are we supposed to do? Are we supposed to fight them?”
Let me throw one other wildcard in here and then I’m going to it tie all together. That wildcard has to do with the idea of jobs, job creation, but then also a whole feedback loop of money.
I don’t want to just descend into the lobbyist kind of thing. I think we sometimes get intellectually lazy in this country by just blaming everything on lobbyists and everything on Washington. Yes. I mean, you can throw a lot of rotten tomatoes in that direction, but I think we let ourselves off the hook at the local level intellectually, when we just say “Oh, everybody’s bought and paid for.”
But I think there is something to be said about the incentives in the system and the feedback loops. Again this great McClatchy article touched on this. I am going to quote a final time from it here. “Highway projects generate work for engineering and construction firms, and the industry is a top political donor. Wealthy landowners, developers and business interests who benefit from new highways also write big checks to lawmakers who deliver fresh pavement. It’s a free‑for‑all where the most well‑organized and well‑financed political interests are driving our transportation policy,” Cooper said ‑‑ Cooper being Donna Cooper, a senior fellow at the Center for American Progress in Washington.”
Let me go on here. “Most members of Congress defend their efforts to secure highway funds for what they regard as crucial projects for their states. Few oppose road projects, regardless of party. They get two photo opportunities, one to throw the first shovelful of dirt and the other to cut the ribbon. There’s a huge difference between spending on things that benefit the national system and spending on things that benefit a local developer,” Fisher says.” That’s John Fisher, the gentleman from the Congressional Research Office, I quoted from earlier.
There is a huge difference between spending on things that benefit the national system and spending on things that benefit a local developer.
I think if you look at. I mentioned the St. Croix bridge earlier, this huge project $670 million for 16,000 cars a day. It was interesting because the conversation all around that, on the pro‑bridge side were all essentially the development community. It was all about job creation. It was all about the new development opportunities that would sprout up.
In fact, if you go to that area of the state, it’s the Stillwater area here in Minnesota. You’ll see that, out of ahead of the project, things have started to occur, the Big‑Box standards have all come in and everybody’s lined up on what the corridors is going to be through there. It’s just anticipation of development that drives all this at the local level. It is a pernicious feedback loop, and I’m going to let Ray LaHood describe the incentives as he sees them. I don’t think he quite sees them the way I do, but he’s actually speaking, I think, the truth here in his own roundabout way.
LaHood: There are a lot of small businesses that are in the road construction business, the bridge construction business that would benefit from a bold infrastructure bill, a bold transportation bill, a five‑year bill with some very bold ways to fund it. I don’t think you’d be turning off people in America because they know that America is one big pothole right now.
So, we can all get behind this because America is one big pothole. We want to create jobs. There is a lot of small businesses, there is a lot of contractors that would benefit from this, a lot of people with well‑paying jobs, so we just go out and start building stuff.
Let me tie this all together, because I think we can all grasp the problem here or I guess the symptoms of the problem, and whether you are one who, at one end of the spectrum believes well, there’s just not enough money or at the other end of the spectrum believes, we’re wasting tons of money on things that are unproductive, these are symptoms of a deeper problem.
Let me try to tie together what that deeper problem is while we finish up here.
Look at how the system is funded. You have these uncorrelated fees that have this perverse effects, the gas tax, the potential mileage tax, the ability to take on debt. These are all done generally at the local level. The gas tax is collected at the pump with you paying it at the local level. It then gets filtered to this centralized place whether it’s the states that are using it then to fund their transportation permits or whether it’s the federal government with the Federal Highway Trust Fund.
These centralized entities then say as a matter of policy. “Hey. We’ve got no priorities here about how this is going to be spent. We’ve got lots of standards and we have lots of rules that you have to follow when you spend it, but really have no priorities: Go on and spend this as you will. Just tell us what you want to do locals. We’re listening to you.”
The locals look at this and say,
“Wow. We’re getting this money from the state. We’re getting this money from the federal government. It’s free money. It’s essentially money that our taxpayers at the local level have paid in, has filtered their way up the system and now is filtering back down to us. All we’ve got to do is meet these federal standards and these federal guidelines and state guidelines and we can get this money. That’s ours to take, if we don’t take it the next city over is going is going to take it, so we should get out there and spend it.”
You create essentially this vicious cycle and then understand when the money comes down, the money is being spent for new things. I mean you get huge matches for new stuff, but when it’s for maintenance that’s all a local obligation.
Well, I can tell you, you can go to any city in this country and you can say, “Look, we’ll give you $2 million, $5 million, $10 million. Whatever the number is, we’ll give you this for this local project you do today. Maybe there’s no match, maybe there’s a 5 percent or 10 percent match, but we’ll give you this money to do this project and then the only catch is that you then take it over and maintain it. 25, 30 years from now, you’re going to have to go out and spend some money.”
If I am a local politician and I am seeing my city decline, I am seeing my city fall apart. I’m seeing jobs flee. I’m seeing general stagnation, neighborhoods starting to decline. Do I sit and say, “Wow, I’m not sure if that’s a good deal for us. I’m not sure if 25, 30 years from now that’s gonna make us better off.” Or do I say, “That’s the problem of those guys 25, 30 years from now. That’s their deal to worry about. That’s not my deal.”
I think we’re asking a lot, if we expect local politicians to do that. The problem we have, the system we’ve set up essentially is just sloshing money around with no priorities, no coordination and no accountability. The people who would be accountable are going to appear over the next three ‑‑ the people who would hold someone accountable — are going to appear over the next three decades.
They are going to likewise be dependent on the system. They are likewise going to be paying these fees, and they’re going to be at a loss to explain exactly what is going on, the same way that we are sitting here today.
If we wanted to hold someone accountable for the mess we’re in today, we would literally need to go back 30 years ago, look at all the people and all the decisions that they made, and say “Are you serious?”
Of course, if we [had done] that many, many, many of our homes wouldn’t exist today. They’ve been induced into the locations that they are because of all of these transportation spending. Would we not be alive? No, we’d be alive. We’d be living somewhere else.
It would be different, but we wouldn’t have this expectation of this massive transportation network, this expectation that is completely uncorrelated now, after six decades, with our willingness to pay.
How do we stop this crazy train? How do we stop this feedback cycle and this feedback loop? I can only see two places where it stops.
The first one is at the federal level, and this is in theory. I mean, I actually don’t see this happening.
I don’t see the Federal government getting out of the transportation business because, literally, this is the place where you can buy your own election. This is the place where you can pass out the slush money.This is the goody bag and I don’t see the feds being interested in getting out of this anytime soon. I can see them continuing to not fund it and I can see them continue to have tighter and tighter budgets, but I can’t see them getting out of the business of funding.
Let me just point out. Canada, to the best of my knowledge, and I’ve spoken to a number of people there who have confirmed this. I’m not a Canadian, but to the best of my knowledge, Canada has no national highway program. They have no national mechanism for funding. I will say, no equivalent of the Federal Highway Trust Fund. They have no federal plan for where to build highways. Yet, somehow you can get all over Canada without the centralized coordination.
Nonetheless, we do.
And I don’t see it going away but if somehow we were to back off from it. If somehow we were to say, “You know, we built out the Federal Interstate System. We no longer are worried that Highway 35 when it crosses from Minnesota into Iowa is not going to line up. Our job is done here. We’re now in a maintenance mode. Let’s turn it back to the states to maintain.” We should really be doing that. If we were to do that, I think that that would be the first step in arresting this problem.
Here is the other way that we can go about doing it and it’s much messier but literally we can do it.
That is to just say no at the local level, to just turn back the money, just not accept it.
When the Federal government shows up and says, “Look, you know, we’ve got all this money for X or we’ve got all this money for Y. You just have a tiny local match and we’ll help you build it.”
We say “You know what. We aren’t going to do it. We’re going to just take care what we’ve got. In fact not only are we only just going to take care of what we’ve got. We’re actually going to cut back on what we have to maintain here. We’re actually are going to have to pay our things back a little bit to get our balance sheet in order at the local level.”
Our local officials need to know that it’s OK to not accept that money. It’s OK to let the next town over get it. In fact, it’s funny because last week when I was actually going to think about doing the show on The Simpsons monorail episode till this came out and I think I might circle back around to that.
It was the 20-year anniversary of The Simpsons monorail episode last week and its one of the most iconic sitcom episodes ever. The Phil Hartman character comes to town and schnookers everybody into building the monorail.
And it’s utterly fascinating from a social commentary standpoint because we immediately identify with the people who are getting on board of the next big thing. Without thinking about all the previous investments that had been made, without any consideration to the long‑term ramifications, we see this.
And what it looks like, at the very beginning, the community is skeptical; the Phil Hartman guy, he goes, “Oh, you know, this might more of a Shelbyville kind of idea. You know, the neighboring community over.” To which the Mayor stands up and says something like, “Well, you just tell us your idea and we’ll vote for it.” The implication here being, if you don’t do it, the [next] city over will do it.
We get this all the time. When the federal money comes in the door and it’s offered. We may look at it and say, “This isn’t the optimum thing for us, but if we don’t do this the money is just going to go somewhere else.”
It’s not like the money is going to be saved or not going to be spent. It’s going to be the city down the road. There you’re going to get the shiny new big box and there you’re going to get the shiny new dry‑through restaurant and the shiny new Kwik‑E‑Mart and all that. We’re going to be left on the outs.
It’s going to take some cities to say, we want to be on the outs, because on the outs is actually, where we are going to be financially solvent. It’s actually the place that’s going benefit us economically. Chasing after the next big inducement that comes through the door is going down further into this dead‑end road from which it’s very hard to get back from. We’re going to stop doing it.
I don’t think we can rely on the Federal government to change their approach. I don’t see them doing it, I don’t see them having any incentives to do it, and they’re certainly far enough away from the ramifications of all this — where you can get a person who I think is a genuinely, probably a very good guy, like Secretary LaHood, or I’ll even say Jim Oberstar who was our local representative for a long time. I think he is genuinely very decent kind person who thinks he is doing the right thing–[but they are] completely out of touch with the ramifications at the local level, especially as these ramifications manifest over multiple decades and multiple life‑cycles.
We have to, as local leaders, as local officials, as local change‑makers, as local Strong Towns advocates, have the guts and the ability to stand up and say, “No, we’re not going to do it anymore.” If you can do that, not only will you have my deepest respect but you’ll actually be on your way to building a Strong Town.
Marohn is nothing if not prolific, so there are hundreds of his essays and podcasts on the StrongTowns.org site. Of those, the single most important one is about a very simple but profound message that we’ve all learned but forgotten: Speed Kills. Below is the transcription of a 12 June 2015 monologue podcast by Marohn called “Gross Negligence.” This talk should be in the curriculum of every single engineering program and school of public administration in the United States.
Marohn’s message is one that Oregon officials and activists most need to read and reflect on at great length, and with an open mind, and an open heart. Because we know that systems produce what they are designed to, because “the purpose of a system is what it does.”
The text is lightly edited, mainly just to remove the kind of verbal tics that creep in when a brilliant mind is speaking with passion about a subject of deep study and personal meaning. Deletions are not marked, but words added by OregonPEN appear in [brackets] to indicate the source.
Many of you know I was in the United States Army. I was in the Army National Guard, actually; there is a distinction there. We train the same. We went to basic training and everything the same but I’m not going to pretend I was regular Army like those guys. Those guys are far more impressive soldiers than I ever was. I want to bring up though basic training because there was an experience I had in basic training that I think relates a little bit to the story I want to talk about today.
[There’s] this one point during basic where you get all your gear on. I don’t know if we had a pack or not but I know I felt like I had a lot of gear, and they put you in a trench, and it’s late at night, the sky is black, it’s dark out. They put you in a trench and they say “you’ve got to crawl forward and take this position a couple hundred yards away.” And what you’re crawling forward through is a field with barbed wire and little dugouts and other trenches and things like that. And as you crawl through this set of obstacles in the dark there’s explosives going off, these little areas that are kind of dug out have pyrotechnics in them, and they blow up and it shakes the ground and dirt flies on your head and that kind of thing. They are at the same time lighting off flares, so up in the sky there are these flares that go off and they illuminate things for a short period of time.
But the thing that is most I think unsettling is, at the time that you’re doing this, they’re shooting M60 rounds over your head. There’s a machine gun that is shooting at a target behind you, and you can see these tracer rounds, the red rounds that are every, I don’t know, fifth, seventh, something like that, round in the shells, are going over your head.
And it’s meant to, I believe from a training standpoint, give you a very basic, basic, and I’m not going to pretend this is at all like combat, but a very basic exposure to what it’s like to be under shell fire. I remember doing this but I remember it being, the one thing I remember most about it, is it being exhausting.
But I also remember it being a little discomforting to look up and see these rounds going over my head. Now at no point was anybody shot, obviously. I don’t think anybody has ever been shot on one of these. I actually think you could have stood up and not gotten shot. I think it was that far over your head. It was not like it was close, but still, the idea of a bullet passing within 20, 30, I don’t know, even 50 feet of your body if it was that high up, it kind of freaks you out a little bit. It kind of freaks you out.
I want to turn to transportation and the system that we have built and some of the assumptions that go into it because I wrote a series of articles this week on the blog that have gotten a lot of traction and a lot of discussion.
And it started with this observation about basic training, about how disconcerting and uncomfortable it was to have these rounds fired over my head. And in fact I went on the blog to point out that if we had someone who was setting up a — let’s say this was a fully acceptable thing — we had someone come to the community and set up in the middle of the street, a [machine gun] nest and pointed at a target a couple hundred yards down the street and that, this was someone who was [expert], target practice was what they did. In other words, there was really no realistic chance that they were going to hit someone or shoot someone or have a round go astray, would you walk down the street where this was going on?
And I’m not talking about walking down behind it, in front of it, I’m talking about next to it, adjacent to it. Bullets whizzing by 40 to 50 feet away, horizontal to you, expert marksmen set up perfectly dialed in, not very likely to have anything go astray, would you walk down the street and of course the answer would be no, that would be crazy, right?
We wouldn’t do that. Even though the odds of you getting hit are incredibly small, why would you take that risk? You’re just not going to do it. And in fact, I even put forth that, when it comes to my kids, I probably wouldn’t let my kids within blocks of this, right? I would say “stay six blocks away. I don’t want you anywhere near this exhibition going on because who knows what could happen.” Maybe the kid darts out into the street and a bullet goes astray or who knows. I just want you to stay far, far away from that.
As engineers, we routinely design streets that have design speeds in excess of what a neighborhood speed would be. We have design speeds in the 30, 40, 50, if you actually look at the lane widths and the shoulder widths and all that stuff, we have design speeds sometimes that are 60 miles an hour. We post them much lower than that when we get into the stroad situation. I’ll talk about stroads here in a second.
When we get in to those environments, we’ll often post them at 40, 45, maybe 30 miles an hour. People, we know, routinely drive 5-10 miles over the speed limit, so if you have something posted at 45 it’s not uncommon to have people driving 50-55.
When you step back and look at these environments you often see — and very, very often see, when we are getting in to cities or approaching cities or in urban environments — directly adjacent to this very fast-moving traffic, you see what? You see sidewalks. You see trails. You see pedestrian amenities right there, right adjacent to it.
Coming in to my hometown, we have South 6th Street. I had a council member on a few months ago or a few weeks ago talking about South 6th Street and the traffic along there goes at 45-50 miles per hour. I think it’s marked in that stretch at 40 miles per hour but — it could be slightly slower than that — but I know people drive through very fast, and on the very edge of South 6th Street is a sidewalk.
Now, very few people use the sidewalk, and that’s a rational response, but it’s not a rational response to the fact that people don’t want to walk or people wouldn’t walk if it were an option. It’s a rational response to the fact that people don’t want to walk within feet of fast moving cars.
People would not walk down a street with someone shooting a rifle at a target, even if it was an expert marksman who was never going to miss. People will also not walk down a street where there is a car driving 45-50 miles an hour ten feet away from them, even if the likelihood of that car going off the street and killing them is very small.
The number of instances that it happens is very small. This is all rational and we get this, we understand this. Yet, when we step back and we look at these environments as engineers, we design them — where we go through and we say “Alright, we’re going to have clear zones, we’re going to have setbacks, we’re going to have posts that have breakaway fixtures on the bottoms.”
If you ever notice a street light within [the clear zone] along a street, [or] a traffic signal. If you look at the bottom of those, they’ll have this kind of odd bolt configuration. They don’t go just straight into the ground. They have, at the ground level, they have a kind of double-bolt kind of thing. And that is a breakaway. Essentially, a sheer pin, so that — if a vehicle goes off the road and hits one of these posts, hits one of these poles, which was a common enough occurrence where it actually made sense to do this — if someone goes off the road and hits one of these, the pole will actually give and absorb some of the shock of this collision and all that shock won’t be absorbed by the vehicle and by the person driving.
[It’s] a common-enough occurrence [that] we’ve done this breakaway stuff.
Knowing this, and understanding this, and having this be a routine part of the way we design streets, we still design them to have sidewalks right adjacent to people driving very, very fast.
We design them where we know people go off the road because we design breakaway stuff, right? We know people go off the road, because we put in clear zones, we put in other areas, so we know this happens, it’s not a rare, rare occurrence. It occurs often enough for us to take all these proactive steps to deal with the people going off the road. Yet we design, as engineers, sidewalks and other pedestrian facilities to be right there in that same area. Why do we do this?
Now we can look at it from the pedestrian standpoint and say, well if we didn’t provide this accommodation, how would people without cars get anywhere? How would people who were walking or biking get anywhere? Would they have to go in the middle of the street with the 50 mile an hour traffic? That doesn’t seem very safe.
Would they have to find a different route, would they have to get a car? Actually it’s kind of funny, that’s what a lot of engineers have told me this week: Get a car, right?
But what if they don’t have a car? What if they’re young? What if they’re too old to drive? What if they’re not able to drive? What if they can’t afford a car? What if they have chosen to spend their money on something else and locate in a neighborhood where they can get to things without having to drive a car?
Well, right now, the engineering profession says “Okay, well the street is all about moving cars and all about moving cars quickly, that’s our charge, that’s our mandate. And if we have to handle pedestrians, if we have to handle other people who are not in automobiles, yeah, that’s not our preference, that’s not what we like to do and we really can’t do it very safely but I’ll tell you what we’ll do, we’ll put the sidewalk over here and you guys can use that, good luck.”
Good luck. And, by the way, we know, we’re well aware, that cars go out of control all the time and cars run into things that are in the same area that you’re going to be in on the sidewalk as a pedestrian, but good luck with that. Good luck with that.
In Buffalo, New York, within the last few weeks, there was a terrible, terrible accident. And I’m going to get the names of all this stuff wrong. It’s on the, it’s, I’m not even going to try to say it. It’s some Native American name that I’m sure is a beautiful and gorgeous name that my Norwegian tongue will just do horrible things to. So let’s just say, my first glance said it looked like Sacajawea, but that shows you that I went to schools using North American textbooks. [Scajaquada], something like that expressway. Anyway let’s just say it’s easier for me as an engineer to call it . . . Highway 198. Let’s just say that. Highway 198.
There’s a park in Buffalo, New York. There’s a college there, there’s some other campus type things there, and then there’s a big park. And this highway runs right through the middle of it. My understanding is that this is one of those Robert Moses-era kind of things, maybe it was a little roadway that ran through there before, a little trail, we went out and “improved this” by making it into a highway. And I actually looked at it pretty thoroughly on Google with the street view, and for the most part it is a highway. It has highway geometries, it has grade-separated interchanges, it has wide clear zones for part of it, it has sound barriers and other things. It’s very much [a] highway. But a part of it runs through a park and this is a park where people actually go. So it’s a park designed for people, and people actually take it upon themselves to go there.
And in a horrible, horrible tragedy a motorist left the road and, predictably, as happens from time to time on these places . . . right? This is why we design breakaway poles, this is why we design breakaway facilities, this is why we have clear zones, because we know people go off the roadway. Someone went off the roadway, hit a mother with a stroller, killed one of her children and put the other child in the hospital.
This is a horrible catastrophe and I point this one out, I’m going to say this now, I may say it again in a little bit, I’m going to give you three stories about children getting killed on roadways. I don’t do this to shock you, and I’m not doing this because there’s a special thing about children, or it’s salacious because it’s children, I’m not doing this to be gratuitous.
I’m doing this because people send me these things every day all the time. I could do “child getting killed in auto accident, in auto collision, children in cars, children out of cars,” I could do this story three, four times a week. It happens all the time.
I’m going to give you these stories because I want to walk you through our response to them and how it needs to change.
So you have this horrible tragedy where the mother, kids hit, kid killed, terrible, terrible, terrible thing. I want to focus on what our response was. Because the governor, Andrew Cuomo — and I’m not from New York, I’m not going to weigh in on New York politics. New York is a fascinating state and obviously we get a little bit of what goes on there because it’s such a dominant place. The governor came out shortly after this, with all the public outrage, and said he wanted to see two things done — two things that are, to me, kind of the antithesis of each other.
The first thing he wanted was he wanted the speed limits lowered. This should not be a highway speeds through this park, we’ve got to lower speeds, the speed should be lowered to 30 miles an hour throughout this entire stretch.
The second thing he said was we also need to put in guard rails and he called them “park-appropriate guard rails” I think is what he said. Oh yeah, park-appropriate guard rails to protect people. So, essentially, put up some barriers, put up some armor to keep the cars on the roadway.
This response embodies our national confusion — that begins with the engineering profession and just spreads out from there — about roads, streets and the difference between the two.
And I want to pause here and focus on that particular order from the governor a little bit because what he did, in Strong Town’s language, is [he] said “I want Highway 198 to be a street and I want 198 to be a road.” What we have called a stroad.
A stroad is a street-road hybrid. We call this the futon of transportation. As a futon is an uncomfortable couch that makes into an uncomfortable bed, the stroad is a piece of transportation investment that tries to do two things at once and does neither of them optimally. It tries to be both street and road.
What is a road? A road is a high speed connection between two places. It’s a replacement of the railroad, which is a road on rails. You have a place and another place and you connect them with a high-speed connection. That is what a road is. A road is about moving people quickly. When you have roads you don’t have other things there, right? You don’t want turning traffic, you don’t want traffic parking, you don’t want people at different speeds. You certainly don’t want pedestrians. You don’t want bicyclists, you don’t want other people in the road because the road is about moving cars quickly. It’s about moving busses quickly. It’s about moving people from one place to another very, very quickly. This is not conducive to complexity.
A street, on the other hand, is a platform for creating wealth. A street is today, and always has been, a platform for creating wealth. And in streets we want all of the complexity that we don’t want in roads. We want cars turning, we want cars stopping, we want cars parking. We want people, we want people walking, we want people jogging, we want people on bikes. We want them all integrated together in a really, really safe kind of place.
When we build stroads what we do is try to compromise between the two of those. We try to have just enough mobility to allow you to get somewhere, not real quickly, but quicker than you otherwise would. And we also want development. We want access. We want people to be able to be there. We want cars to be able to turn and we want kind of a moderate amount of complexity.
These are not only the most expensive environments to build and the lowest-returning environments in terms of financial productivity, but they are also, from a safety standpoint, the most dangerous types of places we can build.
When you mix fast-moving traffic with complexity, statistically it is inevitable that you will have tragedy. When you mix fast-moving traffic with complexity, it is statistically inevitable that you will have tragedy.
That is what occurred here in Buffalo. And so the governor’s response is essentially “make the stroad even more stroady” in a sense. We want to slow down the cars, which is a primary strategy when we’re building a great street. When we’re building a great street, we need to slow cars way, way down because they need to be able to be compatible and mix with people. So 20 miles an hour or less design speeds are absolutely what’s necessary for great streets.
When we’re talking about roads, we want to get people and obstacles and complexity out of the way so we can increase speeds. Well, the governor wants to do that too. Governor Cuomo says “I want guard rails. I want to keep the pedestrians back. I want to make sure that the vehicles can fly through here without having to worry about any complexity, without having to worry about people stepping out or humanity outside of an automobile.”
This is indicative of the incoherent approach that we have to roads and streets. This is indicative of the incoherent approach that we take. Sometimes you can see, in great tragedy, in our reaction to great tragedy, what our gut instincts are.
In this case, our gut instincts about transportation kind of begin and end with confusion. Is this a road for moving people quickly from one place to another? If it is, then you need to get rid of all the complexity. You need to get rid of all the people. You need to get rid of anything that would slow cars down and allow Highway 198, this beautifully named expressway, to function as an expressway.
Or is this an investment designed to create wealth? Is this designed to be a street, a platform for creating value within this community? If it is, and quite frankly I think it should be, but if it is, then we need to do the exact opposite of what’s being proposed.
We don’t need guard rails, we need more people. We don’t need 30 mile an hour speeds, we need 20 mile an hour speeds or less. We need people to be able to flow back and forth. We need development. We need intensity. We need complexity. We need all the things that make streets fantastic.
I want to highlight then a second story that I brought up this week. And this one’s from Florida. And this one kind of illuminates, once again, the responses that we’re conditioned to make when tragedy occurs. This one a little bit different but kind of similar result:
A stroad environment, one of these street-road environments where we try to have high access and high mobility at the same time. You’ve got fast-moving cars along with turning traffic. An individual coming along left the roadway. There’s debate as to why this person left the roadway. It was noted that the person was a drug trafficker, not sure what that had to do with how the person was driving. Nonetheless, it was implied that the person was driving recklessly because they had drugs in their trunk or something like that.
Either way the individual left the roadway, ran into another car. That car was propelled into the entrance of a daycare facility that was located 100 plus feet back from the edge of the road. When they were propelled into the daycare facility, they struck and killed a child and sent seven more to the hospital with serious injuries. There were a number of other people that were injured as well but [who] didn’t require hospitalization.
Obviously, again, a horrible, horrible tragedy, and I don’t bring this one up to be gratuitous. I don’t bring this one up to pull on your heartstrings with this being children. If that were the goal, like I said, I could do this two, three times a week because these kind of things happen all the time. They happen all the time around this country. Kids getting killed by cars, adults getting killed by cars. People are getting killed, it continuously happens all the time. I could not keep up if this was a podcast about kids getting killed with automobiles.
This one is interesting because it ties into the last one and it shows again our response. There was a lot of shock and outrage in the community. Obviously this pulled on a lot of people’s heartstrings. The mayor of the city where this happened commissioned a study for people to come back and give recommendations on what should be done so that this kind of tragedy never happens again.
And I want to quote a little bit some of the statistics that these studies came back with. It said, this is from the Orlando Sentinel: “In the days after the accident Mayor Teresa Jacobs directed county staff from various departments to look at how much of a public safety threat vehicle crashes pose to ‘vulnerable populations’ such as children and seniors. The KinderCare crash was a result of a mix of factors. An initial crash involving two vehicles followed by one driver failing to brake and hitting the daycare center.”
The numbers are pretty stark he said. This is one of the people who did the study: “What we found is, nationally, there’s 60 a day, causing almost 4,000 injuries and 500 deaths a year. Locally the team found 73 incidents in which vehicles hit buildings in unincorporated Orange County over a two year span, resulting in 37 people requiring a trip to the hospital. They found an additional 1,800 road departures, instances of vehicles losing control and leaving the roadway but not striking buildings over a 15 month span.”
So that’s from the Orlando Sentinel. You see that the county is well aware that vehicles leaving the roadway, what do they call [it], road departures, is a serious problem. It happened 1,800 times in the last year and three months, right? It happens a lot. A lot.
And a lot of these places where we have road departures are places where we have sidewalks right along the edge of the road and, in this instance, [we] have a daycare that, while it was set back with a big parking lot out front, was directly adjacent to this high speed strip road environment.
What do you think the response was of the county and the daycare facility after this horrible, horrible tragedy? Well I, maybe could have predicted it, although it’s appalling to me. This is from the Orlando Sentinel, I am going to read you the lead in this article:
“Where once there was only a hedge, now five heavy planters and six concrete spheres stand guard in front of a building presenting a barrier designed to protect those inside should another vehicle come careening towards it. Plans are underway that should make such barriers standard at daycare centers around Orange County.”
So here’s what happened. The response to this was very simple. We need more concrete barriers. We need, in this environment where we have kids getting picked up and dropped off, where we have children at play, what we need here in order to keep everybody safe and keep everything going right, what we need are concrete bollards. We need armor, right? We need to have more armor, more padding.
This is our same mental approach that we take to carseats, right? It isn’t – never! –that you would recommend that you drive less, right? You have a vulnerable child, a young kid who needs to sit in a car seat. Oh no, don’t reduce the amount you drive, that’s never on the table, just put them in a car seat, right? Even though car seats are only rated up to 35 miles an hour, and even then [they] are not going to protect your kid from having serious concussions etc. if there’s an accident, if they get in a collision of some sort.
In this case, it’s the same exact mentality. We’re not going to deal with the design of the stroad, we’re not going to deal with the fact that cars go off, we’re not going to deal with the sidewalk and the fact that some of these kids are going to be walking down, biking down the sidewalk in order to get to the daycare facility, being pushed perhaps in a stroller by their parents.
No, what we’re going to do is, outside of the entrance which itself is 100 feet back from the edge of the stroad, we’re going to put up concrete bollards so that if a car does come careening off the road again it will get stopped by these bollards before it enters our front doorway.
This is offensive to me. It’s offensive to me in many, many ways.
But it’s offensive particularly when we start thinking about the tradeoffs at play here. And of course, what’s the obvious thing that isn’t being talked about? And this is going to come up in the third example that I give.
The obvious thing not being talked about here is vehicle speed.
We have environments that are designed for very fast vehicle speeds and we design, in these environments, facilities for pedestrians and cyclists, knowing that there will be collisions between the two. Knowing that, in this one county, 1,800 cars in 15 months left the roadway.
We know this is a common occurrence that happens all the time, yet we put these pedestrian facilities right there on the edge of it and no one will talk about speed. What do we need? We need more armor. We need more barriers. We need, in the next example you’ll see, public service announcements and things like that, telling people to be careful, be alert.
But we never, ever talk about the speed. And why don’t we talk about the speed?
There’s really one kind of insidious answer to this. And this is going to contrast a little bit with what I’m going to say in the next example because it’s going to let the engineers off the hook a little bit here.
But the insidious reason why we don’t talk about speed is that we high correlate speed with economic opportunity. We highly correlate speed with mobility. The faster you can go, the more places you can get to in a certain amount of time, and the more places you can get to in a certain amount of time, the better our economic environment is.
This is why we’re so obsessed with congestion, right. Congestion allegedly is really, really bad for economic development. We focus, in the engineering profession, on speed because speed is seen as being a great correlation for mobility, which itself is a great correlation for economic growth and economic success.
When we look at the environment that this daycare’s in, it’s the typical stroad environment. The big box stores, the strip malls, the fast food joints, the stuff that looks good for 20-25 years. And I say “looks good” in being very generous. I think this stuff looks like junk on Day One. But it’s shiny and new, it gives off the aura of being new and well designed and what have you. It gives off that illusion.
But we can go back 25-30 years later and see that these places don’t age well. These places don’t hold their value. These places are not ones that look good from the outside.
What we have discovered here at Strong Towns, and kind of the core essence our message, along with Joe Minicozzi at Urban 3 and the work that he and Josh McCarty there have done, have demonstrated clearly, that these type of environments not only are the most expensive to build but had the lowest return on our investments. They are — on a per-acre basis, on a per-foot basis, whatever basis you want to judge it on, that is an apples-to-apples comparison with other parts of the community — these are the places that yield the least. They are the most expensive to build and the least yielding in terms of tax base, in terms of jobs, in terms of economic growth and development.
We are essentially hooked on speed and hooked on fast-moving traffic because we think it correlates with mobility, and we think mobility correlates with these fast food joints, strip malls and big box stores that we call economic growth and development.
The reason why this offends me so bad is that, that’s not a fair trade off, right? That’s not a fair trade off. Not only is it not true — I mean, we could do a whole podcast on this speed issue and the fact that speed does not equal mobility, does not equal economic growth — but let’s pretend for a second that it did.
Look at the economic growth we’re getting, I mean crappy fast food, right, low-wage franchise jobs, low-wage big-box jobs, right? These are not the places driving our economy. These are the places serving our consumptive needs in a way that could be served far, far differently with a different development pattern.
In other words, it is not essential that we have this stuff. It’s not like, if you didn’t have the stroad with the McDonald’s, that you would never get a fast food hamburger, you’d never get a hamburger, right? This is just silly. This is just silly.
This is the way we’ve convinced ourselves we have to build to provide these things. It is a completely false assumption. We are trading not only our wealth but our safety for the lowest-returning investments that are really, really not that great anyway, even if they weren’t so low returning.
I want to switch now to the third example and this one comes from Oregon, Springfield, Oregon, where a 68-year-old gentleman driving a pickup truck went through a light — and there’s some contest about whether it was red at the time he went through or not, or at what phase of changing it was in. But, nevertheless, this individual went through a light. A mother with three kids going back from getting ice cream were walking through the crosswalk, three children were killed. In just what is a horrible, horrible, horrible tragedy.
There’s been a lot of outrage in the Oregon area and Springfield area about this particular thing. A lot of people saying — and this is a part of the world where people are quite tuned into the cyclist message, quite tuned in to the pedestrian message, much more than in Florida, there’s a very strong dialogue going on about biking and about walking — and a lot of advocates there say “this is not an accident, don’t call it an accident. This is a collision. This person is negligent. He should go to prison. This is vehicular homicide,” and there’s a whole debate going on there.
Some of you listening may be involved in it and some of you listening may have very strong opinions about this. There’s a debate going on there about how do we hold this person accountable as a way to deter others from being so reckless.
Horrible, horrible, horrible situation. Now, again, this is another stroad environment. You’ve got four lanes, wide shoulders, pedestrian facilities right directly adjacent to the roadway. You’ve got a fifth lane, a turn lane in the middle. Everything here is about high speed, high-speed traffic. This runs right through the middle of the town but you’ve got the DOT controlling it.
When this one happened, there’s a bunch of community meetings talking about what do we do, how do we address this, we can’t just let this go, we’ve got to do something. I’m going to read from the local newspaper there. “The City Council is discussing safety proposals at a meeting Monday night. Mayor Christine Lundgren told the Register Guard newspaper she wants everything on the table. Ideas range from increased enforcement to more public safety announcements.”
Does this seem adequate to you?
It doesn’t to me. Let’s just talk about — increased enforcement is one of those things that gets thrown out a lot. Actually, I see engineers do this a lot. Engineers will say “I just design and build the road according to the standards and it’s not up to me to police it, you know — If people aren’t going to obey the law, that’s why we have law enforcement. Get out there and enforce the law.” As if, as one police officer was quoted as saying once “Why is it up to me to spend my resources enforcing your terrible design? You’re the one who designed this thing to encourage everybody to drive fast. Why is it up to me to spend my resources to get them to drive slow?”
It doesn’t work anyway. Enforcement is not a long term deterrent.
Who is most likely to speed in these places? It’s been shown, time and time and time again, that the locals are the ones most likely to speed. Think of yourself when you go to a new place, a place you’ve never been, never, ever been. What do you do? You tend to drive, most people tend to drive, a little bit slower because you’re not exactly sure where the bends are, where the people normally are going to be turning, where they’re going to be stopping. You don’t really know the lay of the land and you tend to proceed with a little bit more caution.
But when you’ve been in a place a long time, when you’ve driven a route a thousand times and you know where everybody’s at, and it’s become so routine, what you do is you tend to relax, and you tend to drive the speed you feel comfortable with, which in the stroad designs is very, very fast, because they’re designed for very fast speeds. They’re designed to accommodate a car operating at peak speeds, right?
So the idea that we’re going to increase enforcement as a way to get people to slow down and stop tragedies like this from happening is just silly. It’s just silly. But even more silly than that is the whole idea of public service announcements.
And I’ve had people say to me, “Chuck, these things work,” right? I think that that is crap. I mean, I don’t believe that at all, and if you’re citing statistics that correlate some public service announcement with statistically significant change in traffic collisions, I want to see [those]. I have a really, really hard time believing there’s a correlation there where we can show A leads directly to B. That just seems insane to me. And I’ll tell you why it seems insane to me.
If you’re trying to tell people to slow down, “Hey, be aware, move with care, watch the road,” we got all these fancy ideas, slogans and stuff we come up with, we hire the PR firms to put this stuff together. You’re telling me that that is more effective than having three kids killed? Isn’t having three kids killed kind of like a public service announcement in and of itself?
I mean, I realize that’s not the reason for it, but, my gosh, you have three kids mowed down on the street, that’s in the paper, that’s being talked about all over, it’s this horrible, horrible community tragedy. You don’t think that is more effective than a public service announcement?
That kind of thing happens all the time. Who listening to this does not know someone who has been killed in an auto accident or horribly injured in an auto accident? Who does not know someone who has experienced that? I know lots of people. I know lots of people that have gotten hit, have gotten killed, have gotten injured. Heck, I’ve gotten in [one]. I wrote a blog post a while back about this horrible head-on collision I had on a highway. Someone came across the lane into my lane, I hit them, I went off the road, I hit a tree, had concussion, was out, I mean, just, like, delirious for about two and a half months. It was a horrible experience.
We all know this, right? We’ve all seen this. You think that’s not public service announcement enough? You think public service announcements actually change people’s [habits]? I don’t buy it. I don’t buy it at all.
And in fact, on this stretch of road here, I’m going to quote from an article about this particular thing. It came out that in this stretch of road there had been 14 deaths and I’m looking, I’m scanning this really quickly to figure out what that time frame is. There’s 14 deaths on this particular stretch of road in a relatively short period of time. Let’s say a decade. I don’t know what it was, but it wasn’t like all [that much] time, it was a relatively short period of time.
Do you think having that many accidents, that many collisions, that many deaths in one stretch of road is not a public service announcement enough for this community? Come on. Come on. But that’s what’s on the table, right. That’s what’s on the table.
Now as I’ve been talking here, I’ve used the word accident a number of times, and I know there’s some of you out there that have probably already written and sent me the email when you’ve listened saying “Chuck, these are not accidents. These are whatever way you are going to describe this, it’s not an accident, right?” Someone is being willful here, someone is being negligent here, someone should be held responsible here. Okay, that’s fine. We’re going to disagree on that point to an extent.
But I want to focus on an editorial that was written by the local newspaper there in Springfield that dealt with this and their editorial was called “When A Tragic Accident is Just a Tragic Accident.” And they are essentially addressing you people out there who are at this point mad at me for calling this an accident. And believe me, I’ve had all the people on the blog vent at me as well.
Here’s what the newspaper said. And, by the way, I totally agree with them on this. Let me read this:
“There are few words as inadequate as accident in describing a tragedy of this magnitude. It’s hard not to feel outraged that Thorpe (this is the guy who was driving) isn’t being held criminally accountable for a clear failure with such devastating consequences. How can there be no one to pay for the violent deaths these three children suffered? But, as wholly unsatisfying as it might be, accident is the only way to accurately describe what unfolded at that intersection on February 22. Investigators found no evidence that Thorpe was impaired, using a phone or speeding. While the community may be searching for a way to ease its grief prosecutors cannot look at heartbreak and anger as the building blocks of a case.”
What if — and I want all of you who are upset right now about the use of the word accident, to take a deep breath — and I want all of you out there who are just inclined to use the word accident to also take a deep breath, because you both are probably going to be upset with me by the time we’re done here.
I want you to take a step back and just play with me here for a second. Assume that this individual was, as reported, not driving recklessly, not texting, not speeding, not daydreaming, was completely attentive. Let’s suppose for an instant that everybody was operating exactly how the roadway was optimally designed, everybody was following the rules, everybody was, and tragedy nonetheless occurred, right? Tragedy nonetheless occurred.
I can tell you, in my personal car accident, where I got hit with a car, you could blame someone. I mean, you could point and say “the woman who rear-ended this person was in the wrong, the other woman who had her wheels turned should not have done that.” There were all these like tiny little things that people had done slightly wrong that could have prevented that. But yet — I mean, I was the one who got, everybody else was okay. I was the one who got taken to the hospital. I was the one who had the worst trauma. I don’t look at this and say they’re all to blame.
I mean these were a series of small predictable unfortunate things that accumulated, but let’s even say in this instance there isn’t that. What do you do?
What do you do at this point? No public service announcement can fix that. No enforcement can fix that. No taking away of someone’s license can fix that. There is nothing in the world that could have prevented that in the current context of what we have built and what we have constructed.
This is where I get to what I think needs to be done. And it goes to that issue of speed. Speed equals mobility, mobility equals economic development and gain, we have to have speed because we need the development, we need the growth. That’s the way we make the world work.
And I’ve argued for a long time that we don’t. We need great streets, right? We need great roads and we need great streets. We need to eliminate these stroad environments. And I’ve made that argument over and over again from an economic development standpoint, but I’m now going to make it from both a liability standpoint and also a public safety standpoint.
The article that ran in that letter to the editor, or was an editorial that ran in the local newspaper there in Springfield, contained a really interesting statement about liability. Because they got into this issue that all of you “never use the word accident” people get into, which is “someone is liable,” right? Someone is liable. Someone is guilty. Someone needs to pay. Someone should be strung up in the town square as a deterrent to everybody. Someone has to be made to pay. They actually got into that, and they got into court cases citing what makes someone liable and what make someone negligent and what have you.
And here’s one of the things that they said. They said [that] there’s a court case that established “that mere inadvertence, brief inattention or error in judgment as the proper speed does not constitute gross negligence.” Unless there’s a component of recklessness such as drinking or a — and here’s where I want to emphasize — “a conscious indifference to the safety of others.”
So what courts have said, and I think this is a human standard that we can all kind of essentially agree with — I mean, there might be people who would want to go further than this, but I think, for the most part, most of us can agree that you are grossly negligent if you are reckless.
For instance you’re out drinking and driving, or what have you, you’re driving impaired in some way or you show a conscious indifference to the safety of others. In other words, you’re aware that the safety of others is in danger and impaired but you are indifferent to it. You don’t do anything really to act proactively on that knowledge and awareness.
In this situation that we’re looking at, these three situations that I’ve described to you, the one in Buffalo, the one in Florida, the one in Oregon, who — of all the parties that have an interest here — are very well aware of the safety and how certain people are imperiled but yet are choosing to do absolutely nothing about it? And [who], in fact, have actually created the conditions whereby that imperilment is increased?
I can only point to one subset of people, and that is the people who design these environments, who sign the plans, who have professional licensure that requires them to consider these things but are not doing so. This being the professional engineers, the transportation engineers, the traffic engineers, the design engineers, the people who are putting these places together.
They are showing a conscious indifference to the safety of people.
I’m going to go back to the very beginning, where I talked about breakaway light poles. We know as engineers that cars go off the roads. We know this because, not only do we have statistics that show it, but we’ve actually taken steps to ensure that, when they go off the road, they’re not going to hit things because we know that that’s really, really dangerous. We have breakaway poles, we have clear zones, we have all these things. Yet, knowing that, and understanding that clearly, so clearly that we spend millions of dollars designing facilities to handle that, we also design pedestrian and bike facilities to be directly adjacent, in the same exact areas that we know cars are going to go. If that is not showing a conscious indifference to the safety of others I don’t know what is. I don’t know what is.
Now the articles that I wrote got picked up on Reddit by an engineer group. I don’t have time to go through here in this podcast all the things that were brought up in that group. First of all just the silliness of assuming I’m not an engineer. “This person obviously doesn’t know what they’re talking about because they don’t have a license. Oh you do have a license, oh you must be brand new and naive. Oh I guess you’re 42, you’re not a brand new engineer and naïve, well you must not be practicing in the places we are.”
It’s just this long litany of stupidity, right? But one of the things that kept coming up over and over again is that pedestrians just shouldn’t be there. Like, “Why would you go there, it’s dangerous. Pedestrians should know that. Essentially they’re taking the risk upon themselves when they go there knowing that it’s dangerous. It’s not our fault, it’s not our fault. They should know.”
Not only is that a horrid viewpoint. Not only is that a barbaric sentiment. Listen, I think if you sat a thousand engineers down, the majority of them would deny that statement, would say “I’m not with that.” But, nevertheless, it was a prevalent part of the conversation, and it kept coming up over and over. “Pedestrians should not be there. They should know they shouldn’t be in these places.”
Okay I’m fine with — there’s a part of me that gets that, like — I’m fine with it in the extent that we shouldn’t be designing facilities for them if the objective is to move cars quickly.
But if the objective is to move people there’s only one response that engineers can take. There is only one response that we can do that will make these places safe, that will make these places work, that will stop showing a conscious indifference to the people who are directly adjacent to them and that is to slow the cars. That is to slow cars down.
And it’s not “slow cars by having lower speed limits,” thank you, Andrew Cuomo. It’s not “slow cars by public service announcements.” It’s actually slowing down cars by having a design that induces people to drive slower.
In some parts of the world they call these self-explaining streets. There are many ways to do this. Narrower lanes, get rid of the clear zones. If you’ve been listening to this podcast for a while you’ve heard Ben Hamilton Bailey quote Hans Monderman saying the only way to make a road safe is to make it dangerous.
What he’s implying there, what I am suggesting here, is that when we remove all the obstacles and try to make things as safe as we can for drivers what we do is we give them an illusion of safety that encourages them to drive faster. It gives them a license, it warrants them to be able to drive faster because they can drive at higher speeds and not feel at all impaired themselves.
They’re impairing others, right? You hit someone at 40 miles an hour walking in the sidewalk because you have a moment of inattentiveness, not something that is the driver’s fault by criminal statutes, right? A moment of inattentiveness, and you kill someone, that’s very predictable. We see that kind of thing happen all the time, right, you’re not negligent, it just happens.
We go to great lengths to clear obstacles from a path, but we know people are going to be there, right? The only way we deal with this is to slow down traffic. We’ve got to slow down cars. So we make things feel — for the driver, not that they can go fast because all the obstacles have been removed from the way, but that they themselves are going to suffer some peril unless they drive slow, right? — that it really does not feel safe for them to drive faster than what is a safe neighborhood speed, 20 miles per hour.
We do this by narrowing lanes, we do this by putting obstacles back in. We do this by eliminating clear zones, eliminating shouldering and buffers and all the stuff we do today that gives drivers of automobiles a license to drive more quickly. These are the steps we need to take.
And the engineering profession, in my conversations with people on Reddit and on other places, just seems wholly unprepared intellectually as well as just institutionally to deal with a world where we have urban streets at slow, slow speeds. Yet this is the world that needs to come about.
And I have to admit, and maybe in closing, here, as an engineer, that over the [years], if I go back in my career and look at when I designed and built places like this, it was certainly easy for me to show a conscious indifference to pedestrians.
I knew they were there. I put in facilities for them, knowing that they were there. I designed the breakaway facilities, knowing that cars would go off the road even though pedestrians were there, and pedestrians, while being breakaway, are not exactly replaceable, right.
But it was easy for me to show a conscious indifference to pedestrians because their safety was not what I was charged with, right? I was charged with moving cars quickly in an environment that could be as high performing and as safe for automobile travelers as it possibly could. It was easy for me to show that conscious indifference.
What we need is for the public, our public officials and our non-engineering staff to demand that our engineers stop showing a conscious indifference to the safety of pedestrians. That they start taking into account the safety of pedestrians and bicyclists when they design facilities.
The first thing they’re going to do is come back to you and say, well we need a ton more money then, because we’re going to need pedestrian over ramps and we’re going to need tunnels, and we’re going to need extra facilities, and we’re going to have to buy tons of right of way, we can’t do this with the budgets that you have given us.
And your response needs to be yes, you can. Yes, you can. You can do it by slowing down cars.
If you slow down cars, if you design space so that cars travel at 20 miles an hour or less, so we go out with a radar gun and we do a speed test and we find that the 85th percentile speed is 20 miles per hour or less, if you do that when cars go off the road — which they will much less [often] at lower speeds — but when they do go off the road, there will be a far, far, far less likelihood that they are going to kill somebody. That’s what we want. That’s what we want to see. That’s the change we need to have happen.
Engineers are good people. They want to do the right thing. I really firmly believe that. But they’re trapped institutionally, they’re trapped intellectually in a realm where they are showing conscious indifference to a vast spectrum of humanity. That must end. That must end.
Court reverses a terrible decision by the lower court that let a business’s SLAPP suit (Strategic Lawsuit Against Public Participation) proceed against a wedding guest who posted a negative review.
Case affirms that Oregon’s strong anti-SLAPP statute protects people posting negative Internet reviews from bankrupting attacks by the businesses subject to the negative reviews.
“We conclude that the online review at issue in this case is entitled to First Amendment protection. We therefore reverse the decision of the Court of Appeals to the contrary.”
In a well-written and well-reasoned opinion written by Justice Baldwin, the Oregon Supreme Court gave Oregonians a great victory early this month when the seven justices who heard the appeal unanimously agreed to throw out a terrible decision the Oregon Court of Appeals issued after the business appealed the trial court’s ruling in favor of the citizen. Had the Court of Appeals decision been allowed to stand, corporations in Oregon would have been unleashed and given the ability to use defamation suits to grind into bankruptcy anyone who posted a negative review of the business on the Internet.
The Supreme Court’s decision in the case of Neumann v Liles, found in Volume 358 of the Oregon Reports, starting on page 706, was issued on 3 March 2016 [358 Or 706 (2016)].
The case was so important that a lengthy group of mainstream press organizations submitted a joint “Friends of Court” (amici curiae in Latin) brief to the Supreme Court. Such briefs are often influential in helping an appeals court see and understand the real-world consequences of a decision, which the parties to the dispute often are not concerned with. The groups joining the amicus brief were Reporters Committee for Freedom of the Press, Willamette Week, Gannett Co., Inc., KPTV, Oregon Association of Broadcasters, Oregon Newspaper Publishers Association, Oregon Public Broadcasting, The Oregonian Media Group, and The Bulletin of Bend.
Excerpts from the opinion explains the case and the result. First the court identifies the players and the basis for the appeal:
Plaintiff Carol Neumann (Neumann) is an owner of plaintiff Dancing Deer Mountain, LLC (Dancing Deer Mountain), a business that arranges and performs wedding events at a property owned by Neumann. Defendant, Christopher Liles (Liles), was a wedding guest who attended a wedding and reception held on Neumann’s property in June 2010. Two days after those events, Liles posted a negative review about Neumann and her business on Google Reviews, a publicly accessible website where individuals may post comments about services or products they have received.
The review was entitled, “Disaster!!!!! Find a different wedding venue,” and stated:
“There are many other great places to get married, this is not that place! The worst wedding experience of my life! The location is beautiful the problem is the owners. Carol (female owner) is two faced, crooked, and was rude to multiple guest[s]. I was only happy with one thing. It was a beautiful wedding, when it wasn’t raining and Carol and Tim stayed away. The owners did not make the rules clear to the people helping with set up even when they saw something they didn’t like they waited until the day of the wedding to bring it up. They also changed the rules as they saw fit. We were told we had to leave at 9pm, but at 8:15 they started telling the guests that they had to leave immediately. The ‘bridal suite’ was a tool shed that was painted pretty, but a shed all the same. In my opinion [s]he will find a why [sic] to keep your $500 deposit, and will try to make you pay even more.”
A few months later, Neumann and Dancing Deer Mountain filed a defamation claim for damages against Liles. Liles then filed a special motion to strike under ORS 31.150, Oregon’s Anti-Strategic Lawsuits Against Public Participation (anti-SLAPP) statute.
“We allowed Liles’s petition for review to determine how an actionable statement of fact is distinguished from a constitutionally protected expression of opinion in a defamation claim and whether the context in which a statement is made affects that analysis.”
Initially, we conclude that, if false, several of Liles’s statements are capable of a defamatory meaning. Throughout his review, Liles ascribed to Neumann conduct that is incompatible with the proper conduct of a wedding venue operator and, as the Court of Appeals noted, “inconsistent with a positive wedding experience.”
As a result, a reasonable factfinder could conclude that Liles’s statements were defamatory if he or she found that the statements were false. . . . Moreover, because, if false, Liles’s defamatory statements were written and published—and therefore libelous—they are actionable per se.
The question remains, however, whether they are nevertheless
protected under the First Amendment.
To resolve that question, we must first determine, by examining the content, form, and context of Liles’s statements, whether those statements involve matters of public concern.
Neumann has not disputed that Liles’s statements involve matters of public concern, and we readily conclude that they do. Liles’s review was posted on a publicly accessible website, and the content of his review related to matters of general interest to the public, particularly those members of the public who are in the market for a wedding venue.
Next, we must determine whether a reasonable factfinder could interpret Liles’s statements as implying assertions of objective fact.
Applying the three-part inquiry that we articulated above, we first consider whether the general tenor of the entire work negates the impression that Liles was asserting objective facts about Neumann. From the outset, it is apparent that the review is describing Liles’s personal view of Neumann’s wedding venue, calling it a “Disaster!!!!!”
The general tenor of the piece, beginning with the word “Disaster,” is that, in Liles’s subjective opinion, the services were grossly inadequate and that the business was poorly operated. However, read independently, two sentences in the review could create the impression that Liles was asserting an objective fact:
“Carol (female owner) is two faced, crooked, and was rude to multiple guest[s]. * * * In my opinion [s]he will find a [way] to keep your $500 deposit, and will try to make you pay even more.”
Standing alone, those statements could create the impression that Liles was asserting the fact that Neumann had wrongfully kept a deposit that she was not entitled to keep. In the context of the entire review, however, those sentences do not leave such an impression.
Rather, the review as a whole reveals that Liles was an attendee at the wedding in question and suggests that he did not himself purchase wedding services from Neumann. The general tenor of the review thus reflects Liles’s negative personal and subjective impressions and reactions as a guest at the venue and negates the impression that Liles was asserting objective facts.
We next consider whether Liles used figurative or hyperbolic language that negates the impression that he was asserting objective facts. Although the general tenor of the review reveals its hyperbolic nature more clearly than do the individual statements contained therein, several statements can be characterized as hyperbolic. In particular, the title of the review—which starts with the word “Disaster” and is followed by a histrionic series of exclamation marks — is hyperbolic and sets the tone for the review.
The review also includes the exaggerative statements that this was “The worst wedding experience of [Liles’s] life!” and that Liles was “only happy with one thing” about the wedding. Such hyperbolic expressions further negate any impression that Liles was asserting objective facts.
Finally, we consider whether Liles’s review is susceptible of being proved true or false. As discussed, Liles’s statements generally reflect a strong personal viewpoint as a guest at the wedding venue, which renders them not susceptible of being proved true or false.
Again, the sentences quoted above referring to Neumann as “crooked” and stating that, “[i]n my opinion [s]he will find a [way] to keep your $500 deposit, and will try to make you pay even more” could, standing alone, create the impression that Liles was asserting facts about Neumann. However, viewed in the context of the remainder of the review, those statements are not provably false. The general reference to Neumann as “crooked” is not a verifiable accusation that Neumann committed a specific crime.
Moreover, in light of the hyperbolic tenor of the review, the use of the word “crooked” does not suggest that Liles was seriously maintaining that Neumann had, in fact, committed a crime.
Similarly, Liles’s statement that “[i]n my opinion [Neumann] will find a [way] to keep your $500 deposit, and will try to make you pay even more” is not susceptible of being proved true or false. That statement is explicitly prefaced with the words, “In my opinion” — thereby alerting the reader to the fact that what follows is a subjective viewpoint. Of course, those words alone will not insulate an otherwise factual assertion from liability. However, given that Liles—as a mere guest at the wedding—presumably did not pay the deposit for the wedding involved in this case, his speculation that Neumann would try to keep a couple’s deposit is not susceptible of being proved true or false.
Based on the foregoing factors, we conclude that a reasonable factfinder could not conclude that Liles’s review implies an assertion of objective fact. Rather, his review is an expression of opinion on matters of public concern that is protected under the First Amendment.
We therefore further conclude that the trial court did not err in dismissing Neumann’s claim, and we reverse the Court of Appeals determination to the contrary.
The insurance corporations and the culture of business fraud is destroying the United States economy and allopathic medicine.
I am a US physician who calls for prior authorizations myself, with the patient in the room, and bills the insurance company for the time “counseling and coordination of care” by the minute.
I called with patient X, to get authorization for a medicine, last week. We had already tried by me filling out on line forms, twice, and faxing paperwork to the insurance company. Now I was calling them. His insurance card has a separate number for “Rx”, that is, prescriptions. I call the number.
Call 1 takes me through a phone tree, puts me on hold and then hangs up on me.
Call 2 takes me through the same phone tree: enter my national provider identification number, my tax id number, the patient id number, etc. I reach a human. She asks for my number in case we are cut off. I give it to her. I also confirm my clinic address, national provider number, tax id, fax number, patient id number, date of birth, patient name. She will call back if we are cut off. We are cut off. No call back.
Call 3 takes me through the same phone tree. It hangs up on me before we reach a human.
Call 4 takes me . . . we reach a human. He takes my number. He promises to call back if we are cut off. Repeat previous information. We are cut off.
No. Call. Back.
Ok. I call the insurance company main number and explain. Meanwhile I am documenting each call in my patient’s chart. The insurance company explains that the patient is in a Union and the Union has it’s own prescription program which has NOTHING TO DO WITH THE INSURANCE COMPANY. I insist that as the patient’s insurance company, they must help. They give me the number of the Union headquarters and put me on hold to transfer me. We wait five minutes. Then we hang up.
I call the Union. I reach a person. I explain that my patient needs prior authorization and we can’t reach the Rx company and we called the insurance company. The Union person kicks it upstairs and swears someone will call me. Tomorrow.
I apologize to my patient for the continued delay. I document in the chart: billing by time one hour face to face counseling and coordination of care making SIX PHONE CALLS TO TRY TO GET PRIOR AUTHORIZATION AND UNABLE TO. I express frustration in my note. I hope the company reviews the clinic note regarding the high bill, because I would be very happy to think that the insurance company might get upset at the Rx company for costing them money.
This is fraud. This costs United States citizens $82,000.00 per provider per year to have people sitting on the phone, on the computer, trying to get prior authorization approval from the insurance companies. The contract that I sign with an insurance corporation to be a “preferred provider” basically says that the insurance company can change their policy whenever they want. There are 500 plus insurance policies.
Do you think you could keep up with every policy’s changing rules? I can’t. Nor can my patients. It is in the interest of the insurance corporation to make it difficult and incomprehensible.
I am told that Donald Trump knows how to run a business. I think he does, by US corporate standards, which means that the business is dishonest. I am not in the land of the free and the brave and the independent. I am in the land of corporate dishonesty and lies and I am angry.
I like my patients and I like medicine. But I hate United States business practice:
rob from the poor and the sick to enrich the rich.
(Reprinted by kind permission of Dr. Katherine Ottaway.)
It was a provocative and informative talk. The text of Freeman’s presentation slides and the graphics are below, by kind permission of Dr. Freeman.
• What is social justice?
• What are the social determinants of health?
• How do they impact on health and health care?
• How can communities improve their health by addressing the social determinants of health?
• John Rawls, A Theory of Justice
• “All social primary goods – liberty and opportunity, income and wealth, and the bases of self-respect – are to be distributed equally unless an unequal distribution of any or all of these goods is to the advantage of the least favored.” – Rawls, “A Theory of Justice”, Belknap Press, Cambridge, MA 1971, p 303
Franklin D. Roosevelt:
• Do we have a system of social justice as Rawls or Roosevelt describe in the US?
• NO — We have a system in which the most privileged exert great influence, and (sometimes mostly seem to) use it to increase their privilege.
JUSTICE IS PART OF MEDICAL ETHICS
The 4 core principles are:
JUSTICE AND EQUITY
•Justice, in health care, can thus be seen as health equity: everyone has the opportunity to access appropriate care.
•A further extension: No one should access inappropriate care.
•Conflict with autonomy?
•Depends in part on how the health system is organized and funded.
• “The physicians are the natural advocates of the poor, and social problems fall to a large extent within their jurisdiction.”
• “Medicine has imperceptibly led us into the social field and placed us in a position of confronting directly the great problems of our time.” — Virchow: “Report on the Typhus Epidemic in Upper Silesia”, 1848
“The availability of health care services is inversely proportional to the need for them.”
Dr. Julian Tudor Hart, “The inverse care law”, Lancet. 1971 Feb 27;1(7696):405-12
• Michael Marmot and colleagues in England; began in 1960s
• Studied civil servants, people working in the offices at the seat of British government, to minimize the impact of external factors
• Found that health status and mortality are directed related to class
• Whitehall II studies began in 1980s began to elucidate mechanisms
• “Stress” of life with less money and time Components of the “Social Determinants” (among others)
• Treatment / education of women (The single greatest determinant of the overall society, especially its economic standing, is the education of women.)
How are the Social Determinants of Health Manifested in the Health of Communities?
Jones CP, Jones CY, Perry GS, “Addressing the Social Determinants of Children’s Health: A Cliff Analogy“, Journal of Health Care for the Poor and Underserved, Nov 2008, 20(4):,Supplement, pp. 1-12
SOCIAL DETERMINANTS OF EQUITY (Camara Jones):
Why are members of some racial and ethnic groups disproportionately represented in the lower socioeconomic group that has worse social determinants?
How does this play out in the health of people in our communities?
DEAD MAN WALKING:
• “We met Tommy Davis in our hospital’s clinic for indigent persons in March 2013 (the name and date have been changed to protect the patient’s privacy). He and his wife had been chronically uninsured despite working full-time jobs and were now facing disastrous consequences.
• The week before this appointment, Mr. Davis had come to our emergency department with abdominal pain and obstipation. His examination, laboratory tests, and CT scan had cost him $10,000 (his entire life savings), and at evening’s end he’d been sent home with a diagnosis of metastatic colon cancer.
• Mr. Davis had had an inkling that something was awry, but he’d been unable to pay for an evaluation… “If we’d found it sooner,” he contended, “it would have made a difference. But now I’m just a dead man walking”.
Stillman M, Tailor M, “Dead Man Walking”, NEJM October 23, 2013.
“I didn’t have the money even to walk in the door of that office…”
Late last month, Donna Atkins, a waitress at a barbecue restaurant, learned from Dr. Guy Petruzzelli, a surgeon here, that she has throat cancer. She does not have insurance and had a sore throat for a year before going to a doctor. She was advised to get a specialized image of her neck, but it would have cost $2,300, more than she makes in a month. “I didn’t have the money even to walk in the door of that office,” said Ms. Atkins. (Tavernise, S. Cuts in hospital subsidies threaten safety-net care. New York Times, November 9, 2013)
The gravest of all quality deficits is denial of care”*
• Can we really say that we provide quality care if people do not have access to it?
• Measuring the quality of care given to people you gave care to doesn’t reflect the care received by the whole population.
• The appropriate measure for population health is the quality of care given to everyone who needed it, included those who were unable to access it.
* Schiff GD, Bindman AB, Brennan TA., “A better-quality alternative. Single-payer national health system reform.” Physicians for a National Health Program Quality of Care Working Group. JAMA. 1994 Sep 14;272(10):803-8.
What we can do vs. what we could do
• We have highly advanced technology
• We have tremendously skilled physicians and surgeons
• We have top notch hospitals
• We have incredible imaging procedures
• But not everyone can access these wonders
• Sometimes we apply them too liberally
• What should Tommy Davis have done?
• What should Donna Atkins do?
• How do we advise them?
• What can we do for them?
This is a problem we face daily
• Just a few real people that I saw in one week on our family medicine inpatient service (names and non-relevant details changed):
Get a job!
• AG has diabetes and high blood pressure.
• He had lost his job, and while unemployed and without health insurance he hadn’t been going to the doctor. Luckily, his chronic diseases weren’t bothering him much, except for a small sore on the bottom of his foot.
• He finally found a job, a reasonably good job with the promise of health insurance after a while. Unfortunately, it involved walking almost 20 miles per day, not a good thing for his foot.
• The foot developed a severe infection, requiring expensive hospitalization for intravenous antibiotics, and might still need to be amputated.
Get a place to live!
• PS also has diabetes and, in late middle age, presents with a very serious infection, requiring not only intravenous antibiotics, but surgery to clean out the pus, resulting in an open wound.
• A machine attached to his leg to drain out the residual infection and keep it clean will need to be regularly replaced for many weeks as he continues the intravenous antibiotics.
• Fortunately (should you ever be in a similar situation), home health can be arranged to provide these services. . . . Provided, that is, you have health insurance coverage. Oh yes, and a home. PS has neither. This makes follow-up care a little more difficult.
Health Disparities [vs. inequities]
• The social determinants of health manifest as disparities in health status
• Inequities are disparities that could be addressed
• Some places have done a better job than others
• For example, maybe the situation for my patients would have been better if they lived in Oregon, which has expanded Medicaid, than it was in Kansas.
White mortality rates rising
• Case and Deaton (economists) study, Proceedings of the National Academies
• White mortality rates in US rising – all other groups and developed nations decreasing
• Not evenly distributed across class: in low-income, lower-educated (HS or less)
• Not new: Virginia Commonwealth University study reported early 2014
• Causes of increased death rates are substance abuse, suicide
• Loss of “American dream”
• African-American mortality rates still higher
Note: The [life expectancy] gap is large and increasing.
Note for women, the life expectancy for the bottom 30% is DECREASING.
For context, median household income is $53K, and in the 40s for individuals; an individual making $100K is in the top decile.
The Woolf Thought Experiment:
“Giving everyone the health of the educated: an examination of whether social change would save more lives than medical advances“
Woolf et al, AJPH 2007, 97:679-83
Woolf demonstrates that even if we attribute all reduction in mortality over to medical advances (nowhere near true; most are due to the types of societal change generally characterized as “public health”, such as clean water, sanitation, and cleaner air), eliminating the disparities that exist on the basis of educational level would dwarf that change, as shown in this table.
THE COUNTY HEALTH CALCULATOR – Virginia Commonwealth U.
•Allows comparisons between states and counties.
•Ranks State vs. State or County vs. County by Education (% of people with at least some college) and Income (% of people over 200% of poverty)
•Has a very cool slider that allow you to see what would happen to health indicators if Education or Income went UP or DOWN. You can select a state or county and see which are the best and worse states or counties within a state. The “slider” allows you to change those percentages and it reveals how many lives would be saved.
OREGON’S RESULTS ON COUNTY HEALTH CALCULATOR:
• In Education, near the top with 63% of people earning at least 2x the poverty rate (low WV 41%, top CO 66%, national average 56%)
• In Income also high, at 67% of people having earning twice the poverty level (range 56% in MS to 80% in NH, average 68%)
• There are 12,900 deaths/year, 197,000 people with Diabetes, and $999 million spent on caring for diabetes
• In Oregon, if
5% more people attended some college, and
4% more had an income higher than twice the federal poverty level,
we could expect to save 1,300 lives, prevent 11,300 cases of diabetes, and eliminate $54.7 Million in diabetes costs every year.
OREGON COUNTY COMPARISONS
• Best: Clackamas County, 77% >200% poverty
• Worst: Wheeler County, 50%
• Best: Benton County, 77% w/ at least some college
• Worst: Jefferson County, 44%
• Others: Inc/Educ• Multnomah: 67% / 68%; Lane: 63% / 64%; Marion: 61% / 55%; Benton: 64% / 77%; Linn: 67%/53%
FAR DIFFERENT WORLDS, CLOSE TOGETHER:
From Clackamas to Wheeler County, there is just one (Wasco) in between; same for Benton to Jefferson County.
In Kansas, the richest and healthiest county (Johnson) and poorest and least healthy (Wyandotte) are right next to each other.
WHAT CAN BE DONE?
What can WE, providers and communities, do?
“To improve health the US must spend more on social services”
• Bradley and Taylor, “To Fix Health Care, Help the Poor”, challenge the idea that the US spends more per capita on health [than other nations].
• Amounts are closer if all social service spending factored in
• US is exception in that almost all of this money [social service spending] is spent on medical care.
• “To fix health care, help the poor”, NY Times, 12/8/11
• Bradley E et al, “Health and social services expenditures: associations with health outcomes.” BMJ Quality and Safety 2011 Oct 20(10):826-31.
WHAT CAN HEALTH PROVIDERS DO?
•Provide Justice/Equity: the same options for care available to everyone
•Not “make assumptions”
•Provide new and expanded services based upon the need in the community, not profit or competition
•However, providers will respond to financial incentives.
•Who bears the cost?
WHAT CAN COMMUNITIES DO?
•Address the social determinants of health
•Support government and private programs that benefit the “least advantaged”
•Provide equity in philanthropy
• States (Colorado) and cities (New Orleans, Houston) have nearly eliminated homelessness
• Rather than requiring people to clean up all the rest of their act (drugs, jobs, etc.) to get housing, these cities recognize that having a place to live makes it possible for people to focus on the other things they need to do. Otherwise there is a usually insurmountable wall.Housing in Oregon
• “Formerly Homeless People Had Lower Overall Health Care Expenditures After Moving Into Supportive Housing.”
• Housing for the homeless saves $8700 in health care spending the first year
• Wright, et al. Health Aff January 2016 35:20-27;
THE STORY OF SIDEWALKS . . .
• Kansas City Kansas community: collaboration with community researchers
• Community: OK, we need sidewalks
• Us: Oh, we do health
• Community: Food desert: Transportation
• Us: Got a grocery to come in!
• Community: How do I walk there? No sidewalks…
• How do I exercise?
• “I can’t walk; I don’t have a car!”
• Communities collaborating on . . . sidewalks.
EFFORTS IN BRITAIN
• Dr. Michael Marmot, leader of the “Whitehall Studies”
(showed that social class is linearly connected to health status)
• Recently President of the British Medical Association (2011)
• Development of white paper – and action“Social determinants of health: what doctors can do,” an effort by the British Medical Association to identify:
• principles of addressing social determinants of health
• Evidence for effectiveness of interventions
• Direct and indirect impacts
• Best practices being implemented.
• But really: What doctors and communities in collaboration can do!
Camden model: “The Hotspotters”
• New Yorker article by Dr. Atul Gawande:
• Jeff Brenner and others in Camden: Camden Coaltion of Healthcare Providers http://www.camdenhealth.org/
• Collaborations with other cities and with faith-based organizations:
Kansas City’s Communities Creating Opportunities (CCO)
OREGON HEALTH PLAN (CCO)
• Coordinated Care Organizations: Type of ACO
• Local control: Fifteen community boards
• Flexibility in what to spend money on
• Plan to reduce spending [rate of] increase by 2% per year (5.4% to 3.4%),
save $8.6B in 10 years
• Pretty successful;
• Cost saving (but increase in primary care = good!)
• Improvements in quality with bonus payments
• Improvements in “screening, brief intervention, and referral to treatment for alcohol and substance use (0.1% to 7.3%)
• Less consistent improvement in quality measures not tied to bonus
(McConnell, KJ, “Oregon’s medicaid coordinated care organizations”,
JAMA 1 Mar 2016; 315(9):869-70.)
Gov. John Kitzhaber, MD [asked]:
Which will most benefit a 92-year old who lives alone during a heat wave?
(a) Ambulance ride to ED, treatment and probable admission, risk to life, at cost of many $Thousands once she is found with heat stroke and dehydration?
(b) $200 air conditioner?
• “One thing unique about the C.C.O. process is the degree to which it focuses on all the elements of an Oregon Health Plan recipient’s life.” (i.e., Social Determinants of Health)
EQUITY IN PHILANTHROPY
• Questions to ask in philanthropy:
• Will the project I am donating to improve the health of all people or the most vulnerable?
• Or will it just create more options for those who already have access?
• Does a community benefit from private fund raising for duplicative services?
• Example: If I donate to create or expand a cancer center at hospital X when there is already one at hospital Y, will it serve different people and expand care, or will it just try to “steal” hospital Y’s?
• Community benefit vs. institutional benefit
SOCIAL JUSTICE and HEALTH
• Equitable distribution of health resources
• Social determinants of health
• Recognizing systemic injustice
• Advocating for positive change in the health care system and society• Content about eliminating structural violence
• Specific understanding about how social issues lead to poor health
“Health in all” policies
• Require work in the community
• Land use
• Built environment
• Environmental justice
• Social conditions are the biggest determinant of health status
• Social inequities (lack of social justice) results in health disparities
• Addressing inequities decreases disparities and the burden of ill health
• Communities – if possible, in collaboration with physicians and other health care providers — can and should be involved in efforts to address disparities and advocate for social justice in order to improve their health
“Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.” – Martin Luther King, Jr
“Charity isn’t a good substitute for justice” – Jonathan Kozol.
“Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” – Martin Luther King, Jr
Joshua Freeman, MD, Department of Family Medicine, KUMC
3901 Rainbow Blvd., MS 4010, Kansas City, KS 66160
by Jeff Sovern
GOP candidates need to say whether they’d weaken laws meant to prevent another Great Recession.
Everyone is a consumer, and it was only eight years ago that failures of consumer protection contributed to the worst economic downturn since the Depression. So you might think that consumer protection would be a hot topic during the presidential campaign. But no, it has taken a back seat to walls with Mexico, email servers, eminent domain and the like. That’s a shame because if the largely unnoticed war on consumer protection succeeds, it will affect all of us.
Consumer laws are useless unless they are enforced, and so lawmakers have created two enforcement options. The government enforces consumer laws, but because the government has limited resources, lawmakers have also given injured consumers the power to sue companies that have violated some consumer laws. Both options are under attack.
First, the government: Congress created the Consumer Financial Protection Bureau in part to prevent another subprime meltdown. As of last year, the bureau had secured more than $10 billion in relief for more than 15 million consumers bilked by financial institutions. But that hasn’t stopped stealth attacks on the CFPB. These attacks sound like neutral proposals but depend on the fact that most consumers lack the “inside baseball” knowledge of Washington to realize what is really going on.
For example, the CFPB is led by a single director, enabling the bureau to respond nimbly when banks break the law. But in the name of accountability, House Republicans have introduced legislation to replace the director with a five-member commission with a maximum of three members of the same party. The process of confirming five commissioners could take years, judging by the fact that the current director, Richard Cordray, was confirmed after two years of GOP delays, and then only because Democrats threatened to change the filibuster rules.
Imagine how hard it would be to confirm a fifth commissioner who could break ties. Instead of responding quickly to problems, a commission split among different parties could easily end up deadlocked and ineffective, just like the Federal Election Commission. And exactly how does having five leaders make an agency more accountable than having one?
Another GOP proposal to cripple the bureau would change the way it is funded. Rather than get its money through the Federal Reserve, as it does now, the CFPB would be funded by Congress through its highly politicized appropriations process. That was the funding method used for the former regulator of the mammoth mortgage enterprises Fannie and Freddie. The reason it’s former is that Fannie was able to lobby members of Congress to starve the regulator of money. That left it too weak to control Fannie and Freddie, which eventually needed massive bailouts.
Suits by injured consumers are also under fire. Many such suits can be brought only as class actions because the cost of litigating exceeds the amount individual consumers have at stake. But businesses derail class actions by inserting in their consumer contracts obscure terms saying consumers agree that disputes will be decided by arbitrators rather than in class actions. The conservatives on the Supreme Court have enforced such clauses to bar the use of class actions even if state law is to the contrary. The CFPB has begun the process of regulating class-action waivers in arbitration clauses, but congressional Republicans are trying to block that effort by mandating more study, despite the CFPB’s existing study, which clocks in at 728 pages.
And more attempts to protect businesses at the expense of consumers are underway. The Supreme Court is hearing another case that could decimate efforts to enforce consumer protection laws, while at the state level, the business-supported American Legislative Exchange Council has proposed model legislation that would make it much more difficult for injured consumers to sue for deceptive advertising.
How much should consumer protection matter to voters? Plenty, if they want to stop predatory lenders and other bad actors. For example, when states passed laws before the Great Recession trying to stop predatory lending, George W. Bush’s Treasury Department announced that national banks could ignore the laws. Congress gave the Federal Reserve the power to bar unfair mortgages in 1994, but the Fed under Alan Greenspan and Ben Bernanke didn’t use that power until 2008, far too late to stop the subprime mortgage crisis. As President Obama famously said, “Elections have consequences.” Those consequences include how well-protected consumers will be.
Voters should ask candidates their positions on consumer protection. Presidential candidate Ted Cruz, who has called for elimination of the CFPB, should have to say whether consumers who have obtained redress because of the CFPB ought to return money to their swindlers — and who will stop the swindlers next time. And candidates should make clear whether they believe we should return to the way things were, with the laws that led to the Great Recession, or whether they support enforcement of consumer protection laws.
Like the narcotics agencies who always hand journalists stories about drug busts with eye- popping numbers about “tons of drugs seized” while staying mum on what percentage of drugs that bust represents, the FTC m.o. is to publicize the size of the judgments awarded (what the judge SAYS the crooks should pay), and while never posting a followup about how much money is actually recovered from the crooks and paid back as restitution to victimized consumers.
Anyone who wants to hamstring the CFPB — and there is one whole political party that very much wants to, along with corrupt members of the other who agree — has only to look at the sleepy watchdog that is the FTC for an example of how to do it.
Weeding out deceptive and unfair data practices
Ask any gardener and they’ll tell you it’s a fool’s errand to lop weeds off at the surface. You also have to target the root system that allows them to propagate in the first place. That’s one of the messages to take from a judgment in the FTC’s case against Ideal Financial Solutions, Inc., and previous actions against data brokers and others who lent their green thumbs to Ideal’s large-scale consumer scam.
Ideal Financial acquired massive quantities of confidential consumer information – Social Security numbers, account numbers, and the like – and used it to make unauthorized withdrawals from consumers’ bank accounts.
How did they get their hands on such sensitive stuff? It turns out many of the consumers had applied for payday loans online. The personal data they turned over in the hope of getting a loan was compiled by purported loan sites and data brokers who – without batting an eye, it appears – sold it to Ideal Financial.
It’s hard to imagine things could get worse, but they did. Ideal Financial set up a sudoku-like puzzle of shell corporations and fake business names that made it even harder for consumers to figure out who was pilfering their already-depleted accounts.
The FTC sued Ideal Financial in 2013. The just-announced order imposes a $43 million judgment against the company, its subsidiaries, and four defendants, and an additional $36 million judgment against one of the ringleaders. That follows a $25 million partially suspended judgment entered in 2014 against two others involved in the operation. That order required one of them to liquidate his assets and turn them over to the FTC.
Put it all together and the orders suggest it’s a good time for all seven defendants to consider a new line of work. They’re all prohibited from collecting or disclosing account numbers except for transactions specifically authorized by the consumer. The most recent judgment also bans three ringleaders — Jared Mosher, Steven Sunyich, and Christopher Sunyich — from the marketing, sale, and handling of any credit-related products or services.
What about the companies that sold the data to Ideal Financial in the first place? The FTC has already announced settlements with Sitesearch Corporation (also known as LeapLab), Gen X Marketing Group, and Sequoia One.
What can other companies conclude from this announcement?
First, the FTC isn’t fooled by mounds of mulch. We’ll till the soil necessary to unearth exactly what’s going on. Complicated corporate structures and evasive tactics won’t deter us from protecting consumers.
Second, when evaluating liability, the FTC looks at the entire ecosystem of deception. Operations like Ideal Financial’s can’t germinate without the cooperation of information sellers. Therefore, it’s unwise for data brokers to get down in the dirt by selling sensitive information without a closer examination of how it will be used.