Last week's Spokane Regional Economic Development Summit was, according to many, a genuine success. But while the Davenport Hotel ballroom was packed with more than 200 business and political solons and savants, each taking turns spinning their own forecasts of Spokane's economic weather, one scholar was mysteriously missing.
The absence of Dr. Shane Mahoney at a meeting of regional economic thinkers was conspicuous, though hardly surprising. Especially if you agree with the claims he made in a 39-page monograph published by the Institute for Public Policy and Economic Analysis in September. The monograph, entitled "Culture and Economic Development in the Spokane Region," has created a kind of uproar in economic circles. Or, if not an uproar, at least a small, weird, Spokane kind of brouhaha.
In the report Mahoney, a semi-retired professor in EWU's Department of Government, makes five somewhat controversial claims about Spokane's economic development climate, one of which is that area business and political leaders are too nice, too polite, too skittish about antagonism to talk freely about what's really going on.
Which is why, Mahoney suspects, he wasn't invited to attend last week's summit. He says the organizers of the event (primarily County Commissioner Kate McCaslin) "invited many, but not the one who has done the most recent piece of research on the topic." He adds that, "None of that matters to me in the least -- but from the point of my research, it tends to be a confirmation."
The Doctor is In
Mahoney is not an economist, a businessman or a politician. He's an academic with a background in studying Soviet military organization. But the underlying concept to his research, he says, has been the exploration of how culture affects organizational behavior, how "operational codes" (norms, spoken and unspoken rules) influence decisions.
To explore how Spokane's embedded cultural values impact the region's economic development, Mahoney sat down with 30-some unnamed economic and political thinkers and leaders in the area to plumb their feelings on the local economy. "I tried to put people on a couch," says Mahoney. Playing Freud to Spokane's economic patients, he asked them to "tell me a story."
Sessions often lasted more than two hours, Mahoney says, as respondents were asked to "freely speculate as to what one might find in a newspaper article headlining a hypothetical economic boom some 10 years hence in the Spokane region." Mahoney notes that this allowed his interviewees to establish their own priorities in response to the hypothetical boom and reveal what they deemed to be the most important elements of economic success. "What the respondents did not say," Mahoney adds, "proved equally interesting."
Parsing out and extrapolating on the themes and sentiments from those conversations, Mahoney summarized the regional economic ethos and analyzed the effect that ethos had on the region's economic development; how "the rules" affected actions. He then compared Spokane's cultural traits and its economic success to the same in Boise and the Silicon Valley in California. The results have people talking.
Throughout his report, as Mahoney identifies the operational codes that guide the Spokane area's business regimen, he also analyzes how those cultural rules affect the area's ability to create the kind of knowledge-based, innovation-based economy found in the Silicon Valley.
But for a closer regional comparison, and perhaps a "halfway-there" kind of model, he looks to Boise. Though it does nothing for Spokane's oft-lamented view that Boise is the cool older brother to our twerp of a city, Mahoney says that in the race to the economy of the future, Boise is far outpacing Spokane. Don't be alarmed, though, he says. We can still catch up.
The thrust of Mahoney's research seems to be that the Spokane area is quite sick, that not only is it struggling financially -- we all knew that -- but that it also exhibits five major self-destructive economic and/or cultural traits that inhibit its ability to succeed in building a vibrant economy, particularly the kind of vibrant "knowledge-based," tech-centric economy found in the Silicon Valley (Mahoney's Holy Grail of new economies).
His first claim is that Spokane culture is distrustful, that unlike in Silicon Valley (and, to some extent, Boise), business leaders here have closed organizations rather than open ones; they're centralized rather than decentralized; they're self-focused rather than regionally focused. Mahoney stresses that, "That's where deals are made, technical info passed along, start-ups started. You've got to have trust." He cites the now-popular story that in Silicon Valley it's possible to sit in a bar and seal a deal on a napkin.
Mahoney suggests that Spokane's tendency to look out for one's own company interests has led to what a former Economic Development Council CEO calls "fighting for scraps."
Greg Green, chairman of OneEighty Networks, on whose fiber-optic backbone the city's wireless network rides, knows the feeling. "It's what everybody gets frustrated about. There's too many people wanting to take credit for too few successes." He cites the success of the business accelerator Connect Northwest. "That was 100 percent done by Intec," he says, "but now everybody wants a piece of Connect because it's successful. It's, like, turf wars out there."
ConoverBond whiz Rob Brewster agrees, saying that, when considering new economic initiatives, many business leaders publicly cry "you'll never see it done" while they privately sort out plans to do it better and steal all the credit.
That may be so, argues former WSU-Spokane Dean William Gray, but conversely too much networking and too much collaboration can have an equally adverse effect. "The constant pressure to collaborate," says Gray, "to include everybody at the table -- that is a very inefficient way of doing business."
Gray cites the many community-wide economic initiatives that have sprung up in recent years -- Focus 21, One Spokane, Momentum, etc. -- and suggests that giving particular projects to particular groups, like Intec or the EDC, would yield better results. "If we were one notch of maturity ahead of this ... we would be far more productive and be able to use our resources better."
Mahoney's second observation seems to be his most controversial. In his report, Mahoney states that "Spokane culture is taciturn" and that public policy is difficult to piece together because "important public issues, especially those related to economic development, are difficult to discuss frankly in a public forum." Such forced politeness, he says, rules out certain touchy subjects altogether.
That hits home for Spokane City Councilwoman Cherie Rodgers. "Of course I could understand why [Mahoney's respondents] wanted to be anonymous," she says. "The message really hasn't changed from what I thought it was 10 years ago. And that is: Don't criticize economic developments in this town." Business people who speak out against the status quo, she says, risk being black-balled by the status quo. "Your phone would stop ringing."
Rodgers and others, like former councilman Steve Corker, lay a good deal of the blame on the Cowles family and its media empire. "I think the business community has ignored the dynamics of the influence of the Cowles family," says Corker, "And has basically ignored their ability to control and influence the media."
Corker, who has worked closely with Met Mortgage's Paul Sandifur for years, and who was elected to the council in the fallout of the 1997 River Park Square debacle, says that that control of the public dialogue has led to a join-or-die attitude in civic decision-making. He also believes that his somewhat anti-establishment stances have cost him positions on nonprofit boards, even at his own church.
William Gray agrees that Spokane can be taciturn, but he frames it in a larger context. "[Mahoney's] notion that Spokane as a community seems reluctant to understand itself and then confront significant issues, I think is real," he says, suggesting that the city's inability to openly explore its strengths and assets leaves it constantly "chasing one possible panacea after another."
Mahoney also observes that Spokane culture is distrustful of, or lacks confidence in, state and local government as a player in economic development. He says that, paradoxically, business often blames government policy for limiting economic growth while simultaneously looking to government subsidies as a source of development.
Though Mahoney's respondents' opinions differed on the importance of government in economic development, all agreed that government was not working as well as it should when it comes to development.
Rodgers points to an overall crumbling of public trust in local government, the result of the River Park Square fiasco, the current budget-cutting frenzy, the Lincoln Street bridge debacle, you name it.
Steve Corker, like a handful of people who rose to speak at last week's summit, suggests that there's too much red tape and that small business entrepreneurs are drowning in it.
Rob Brewster opines that while "other cities are able to offer all kinds of incentives to keep business locally ... Spokane just can't seem to do it," adding, "And we can't seem to get together to go to Olympia and force the issue."
Rich Hadley, president and CEO of the Spokane Regional Chamber of Commerce, claims that Mahoney's findings are already outdated, that government has become more transparent and that the last several years have seen more public dialogue on critical issues.
(That Mahoney's findings are out of date has been a common response, despite the fact that his research began last summer and finished only this spring. Though some of the data his study draws on is slightly older than that, Mahoney notes that the real meat of his study is the observation of embedded cultural values, which "do not change quickly, here or anywhere else.")
But if Mahoney's report is quick to point out the common perception that government is hindering economic development, he's equally quick to point out that it's not necessarily true. Mahoney counters the common complaint that this is an unfriendly state in which to do business by pointing out "extensive tax exemptions and reductions provided by Washington law for specific kinds of commercial activity -- including high-tech start-ups" (his favorite kind).
Still, the difference in business tax structures between Washington and Idaho was enough to persuade OneEighty's Greg Green to move one of his companies' warehouses to Coeur d'Alene and employ people there rather than here. And Green echoes the refrain that Washington is bad for business and adds that without proper government help, the private sector is having to jump in and offer incentives to other businesses considering relocation to the Spokane region. "We're happy to do it," he says, "but that's not our role."
Spokane Economic Development Adviser Tom Reese, however, spins Idaho's proximity as an asset. He insists that Washington's regulatory environment is not "overly oppressive," but says that in wooing a business to the region, Spokane can offer two different tax structures, or development procedures (Washington's or Idaho's), to fit that business' tastes. While he says he'd rather a business set up shop in Spokane than in Coeur d'Alene, he implies that success across the border leaks over here, too. "We need to look at how that is a strength ... and not a detriment or a weakness."
Knowledge Equals Jobs
Mahoney's claim that "Spokane culture does not fully understand and appreciate the role of a research university as an economic driver for the region" comes in the midst of a planning fury for the University District. Despite all the hype, Mahoney says that of the more than 30 people he spoke to, only one thought that the current plans for such a district would be able to form the basis for a new, knowledge-based economy in Spokane.
After professing unfamiliarity with Mahoney's well-publicized report on economic development, Reese, like Rich Hadley, says that the report's findings in regard to attitudes about the University District are outdated and irrelevant. He says that "there's a whole new consideration of city government that's different now than when the research was done," adding that plans for the U-District have received "unprecedented public support."
If they disagree on that matter, however, Reese and Mahoney agree on the importance of building a knowledge-based economy. "In order to be competitive in a global environment," says Reese, "we need to be the place where new ideas and new technology and innovation happen."
How that will happen remains anyone's guess. Nobody -- not Reese, not Mahoney, not WSU's William Gray -- has yet been able to present a clear, doable plan for bringing to Spokane the kind of research presence that Boise was able to attract with Boise State University. But we're anxious to find out more.
The last of Mahoney's five central observations is that "Spokane culture has a very weak sense of regional symbiosis." He stresses that his participants weren't quick to articulate a link between economic success in the Spokane area and success in the surrounding area.
He points out that part of the Silicon Valley's success has been due to the work of several area-wide organizations. The most important of these, he says, has been the Association of Bay Area Governments, a voluntary council of Bay Area cities and counties that "incorporates an extensive list of participants, aggregating their interests and massaging them into compromised agendas that can be presented to city, county, state and federal governments as items to be addressed."
Such an approach appeals to Steve Corker, who sees the formation of a consolidated regional government, which would extend the city of Spokane's boundaries to the boundaries of the entire metro area, as an ideal way to incubate regional interest and eliminate wasteful administrative duplication.
Like Reese, Mahoney believes that everybody's regional success is likely to rub off on everyone else. Mahoney rails against the "atomistic" attitude toward development that only results in further "fighting over scraps."
Gray argues that developing Spokane as a regional city can only help its economic development. "We're an urban island amidst a huge geography where we are the service provider," he says, noting that Spokane provides health services from Eastern Washington to Montana, from British Columbia to eastern Oregon. It's the same with public and agricultural services.
Gray urges the city to look for help from state lawmakers in getting the next big research center located in Spokane. "We're well-positioned to take advantage of that kind of initiative."
Shane Mahoney says that so far his report, though controversial, has been met with "widespread acknowledgement of its accuracy." Sure, there was that blistering editorial in the Journal of Business, which called the report "flawed research that masquerades as sound social science." And Mahoney and others attest to an "intemperate" e-mail fired out by Economic Development Council head Jon Eliassen shortly after the report's publication. (Eliassen couldn't be reached for comment.)
But most of our respondents not only approve of (or at least appreciate) Mahoney's work, they say most of the buzz surrounding its publication has been positive.
Still, Mahoney wasn't asked for his opinion running up to the Summit. He wasn't even formally invited. That makes us wonder if Mahoney's pill is still too bitter for Spokane to swallow.