Friday, March 29, 2019

Thirty Years Ago, An Article Described How a 'Benign Conspiracy' of Corporate Executives Took Over Cleveland

Posted By on Fri, Mar 29, 2019 at 4:11 PM

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Exactly thirty years ago, on March 29, 1989, an article published in Fortune Magazine described how Cleveland's corporate executives took control of the city in an explicit — and in their view, public-spirited — power grab. 

After the tumult and populist fervor of the Dennis Kucinich administration (1977-1979), the local business community had had enough. They took it upon themselves to track down and throw their (financial) weight behind a new Mayor — George Voinovich, then the Republican Lt. Governor  — and, through him, impose a new "corporate efficiency" on City Hall. These leaders exerted their influence over the city's political and economic life and successfully implanted the idea that business-friendliness ought to be Cleveland's dominant policy prerogative. It still is.

The article, titled "How Business Bosses Saved a Sick City," by Myron Magnet, was later anthologized in Cleveland: A Metropolitan Reader, edited by Dennis Keating, Norman Krumholz and David C. Perry. The contents of the article resonate years later. Residents have watched as cooperation among the city's business and political leaders has proven extraordinary beneficial, time and again, to the businesses doing the cooperating. Meanwhile, the city itself — I'm referring here to the physical area and the people who live within it — is still bedeviled by the ills that made Cleveland "a microcosm, almost a caricature" of industrial America's woes during the middle 20th century. 



Here's the key paragraph:

"E. Mandell de Windt, the now retired CEO of Eaton Corp. and unofficial dean of Cleveland businessmen, organized the troops and devised a strategy, setting in motion a benign conspiracy of executives and entrepreneurs that still operates. The impressive feat of organizing that cabal and persuading Cleveland's most senior businessmen to take charge of the grittiest aspects of civic life was the real key to the town's turnaround. Cleveland bosses are arguably more public spirited than most, but they had hitherto focused that spirit on their especially successful United Way or their superb art museum or the world-famous Cleveland Orchestra, not on bread-and-butter civic matters. By the start of the Eighties, though, top executives realized they had to get their hands dirty if they wanted to keep viable the Cleveland life they liked so much — the Cleveland of excellent cultural institutions and big-league athletic teams, the Cleveland ringed by enviably comfortable, old-fashioned, family-oriented suburbs, where $300,000 buys you $1 million worth of house by New York City or Boston suburban standards."

It's unclear, from the above description, how exactly the turmoil of City Hall under Kucinich affected the viability of old-fashioned, family-oriented suburbs, or how getting one's hands dirty in "bread-and-butter civic matters" would affect, one way or another, the region's excellent cultural institutions.

What these leaders really seemed to hate, based on their comments, was that Kucinich had treated business as "the archenemy of the people." Local CEOs preferred to be viewed by the public, if viewed at all, in the same beneficent glow in which they viewed themselves.

They also wanted enormous public subsidies.

In his description of this new and "almost irresistible" cabal of business leaders, Magnet characterizes the unity and cooperation of elites as if they represented the unity and cooperation of the city at large. This is an unconscious rhetorical device still very much in use, as when people talk about a "Cleveland renaissance" when they're referring narrowly to downtown economic development, or when people talk about "U.S. interests" when referring to the financial interests of big U.S. businesses.

When describing the value of Voinovich for the business community, Magnet writes: "They got a Mayor with a gift for nurturing all the incipient impulses toward unity and cooperation that the town's revulsion for Kucinich had engendered."

"The town," here, specifically refers to business leaders. It was business leaders, after all, who reviled Kucinich so much that they were compelled to finance Voinovich's candidacy and organize a cabal.

"In a sense, Kucinich was the best thing that ever happened because he became a unifying element," said Dick Pogue, longtime managing partner of Jones, Day, Reavis & Pogue.

Later in the piece, Magnet says that in light of this new spirit of cooperation, Cleveland politics had assumed an "oddly unideological character."

"Most [Clevelanders] agree that you have to create wealth before you can think of redistributing it," he writes. "Most believe that the long-term way to help the poor is to make the local economy flourish."

Again, he's referring to what most leaders believe, not most people.

Despite Magnet's orgasm for these elites — "Isn't this at least a little like what the Greeks meant by the civic ideal?" — it should be clear by now that this economic development strategy has not been an effective way to "help the poor."

Helping the poor, though, is at least conveyed here, accurately, as a second-order concern for the business leaders in question, whose central aim is and always has been "creating wealth [for themselves]" and "making the local economy flourish [via lengthy tax abatements and publicly subsidized real estate development]."

That strategy has had identifiable results: Cleveland is among the nation's poorest, hungriest and most segregated cities, one where students attempted or considered suicide more than students at every other big city school district in the country in 2017. These are hardly hallmarks of a flourishing economy.

These grim outcomes are in spite of the Gateway development project, which Mayor Michael White called, in 1990, the "opening of a new battle against poverty," and which Clevelanders will be paying off until 2023, even as the city ranked dead last in child poverty in 2017. These outcomes are in spite of the Quicken Loans Arena deal, which Mayor Frank Jackson repeatedly referred to in 2017 as an "investment in neighborhoods," though it was purely a handout to team owner Dan Gilbert, and which public sources will be paying off until 2034. These outcomes are in spite of the 2018 Republican tax bill, which was supposed to put money in the pockets of middle-class Americans but, like Cleveland's development framework, is actually just an instrument for the upward distribution of wealth.

Magnet's piece goes on to describe the formation of Cleveland Tomorrow — "a formal conspiracy of CEOs to provide leadership" — and how it cultivated public-private partnerships to solve private problems (by having the public pay for them).

"Cleveland Tomorrow mobilized the resources of local colleges and universities," for example, "helping CSU set up a research center that solves quality improvement and industrial engineering problems for area companies. A program at Tri-C provides customized training for companies."

Local companies, in other words, get to save a fortune by transferring the cost of employee training and quality improvement to publicly funded institutions. This is another form of public subsidy.

Late in the piece, vaunted local titan-philanthropists like Albert Ratner and Dick Jacobs remark upon the degree to which the civic culture and economic climate had improved through the 80s. Magnet can hardly contain himself. 

"The new downtown is springing up as rapidly, extensively and glitteringly as if by Prospero's magical conjuration," he writes, referencing Jacobs' Galleria project, Ratner's Terminal Tower renovation, and a "wave of recreational development" in the Flats.

This is the sort of economic climate, one that permits and rewards huge construction projects, that the benign conspiracy of business leaders were most keen to champion. And they did so for obvious reasons. The big law and accounting firms, to say nothing of the developers themselves, have continually made handsome profits on them, which profits they can be counted upon to return to the political campaigns of local candidates most ardently committed to upholding the business-friendly economic development model, one that most folks abstractly disparage as the "status quo." 

Speaking of which:

"You need big symbols of physical progress," the director of the local McKinsey office told Magnet when discussing downtown development. "They are momentum-building and pride-building. You can't move the city without physical splashes."

Cleveland leaders have proven for forty years now that these physical splashes do indeed move the city. They move it backwards. 

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