The public forum on the Tuolumne County Economic Development Authority on Aug. 8 was a real eye opener. Our Grand Jury is responsible for oversight and has charged the Tuolumne County Economic Development Authority (TCEDA) with ineffectiveness, a lack of accountability, misusing funds, and even claiming work days, while on vacation.
At the forum, a few people supported the work of our economic development director, Larry Cope. He has coached and assisted many local businesses. They cited his help with websites, finding locations, networking in the community, getting permits, and so forth.
Unfortunately, Cope’s work is mostly business coaching, and not economic development. Business coaching helps local businesses owners improve their business. It’s usually done by for-hire business consultants. It is almost never done with public funds and should not be funded by Tuolumne County.
The basics of economic development are simple. Attract businesses that bring money into our county. Pretend we are an island. Are new businesses bringing in money from outside our county? Or, are they shipping away money from our county?
With more money coming in, we will need more homes, more restaurants, more shops, and more services. With less money coming in, we will need less of everything. We will lose jobs and our economy will decline.
A new retail store does not bring money into our county. Mostly, it ships money out. When I buy clothes, most of my spending goes to the clothing manufacturer (outside) or to the stockholders of the company (outside).
A little stays in, like worker salaries and rent, but this is a very small percentage of the total. Often, a new retail store just increases the competition. A national chain puts local stores out of business. The net gain is negative. Of course, it would be worse if all of the clothing stores were in Modesto, then none of the money would stay here.
If we focus on bringing in new retail stores, we are not bringing more money into our county. We are simply dividing the existing pie among different players. Now, I am eating at this restaurant instead of another, or I am buying my fabrics at this store, instead of the former store that is now out of business. The new stores may offer better selection or better prices. Both are of value. But, they do not meet the most basic goal of economic development: bring additional money into our county.
What brings money in? Tourists bring money in. They come here to watch plays, gamble, see the Gold Rush buildings, go skiing, hiking, hunting and fishing, or just to hang out in the mountains under tall trees with beautiful scenery.
The state jail brings money into our county. Logging brings money in. They export lumber. High tech companies that sell software to the world would bring money in. People who work from home for Bay Area businesses would bring money in.
We need more businesses and people that export products or services, and bring money in. The money that comes into our county creates jobs directly and even more jobs, indirectly. The new workers build homes, support our restaurants and clothing stores, and so forth.
I was formerly a high level manager at Hewlett Packard. We participated in a lot of economic development. For example, we built a large factory in Roseville, California, that brought money into El Dorado County and created thousands of new jobs — good jobs with high pay.
Why did we pick Roseville? Our criteria were simple: good schools, good community services, attractive recreational opportunities and affordable housing. Basically, we were looking for a place that our future employees would find to be an attractive place to live, buy a home, and raise a family.
Successful economic development for our county will be a two-step process. First, we must make our county an attractive place for new businesses that bring money in. We need to fix our roads, protect ourselves from wildfires, strengthen our schools, strengthen our community services, build parks, and fund after-school programs.
We also need to work with service providers for widespread access to high-speed internet and good 4G cell phone coverage. We already have a beautiful place with great recreational opportunities.
Second, once we have an attractive place for new business, then we need an economic development team to court businesses. Until then, the TCEDA is a waste of money. We should disband the TCEDA and use the money to strengthen our community, fix our roads, protect ourselves from wildfires, and strengthen our community services.
Marvin Keshner has SB, SM and Ph.D. from MIT. He worked for 26 years at Hewlett Packard, where he and his teams developed many billions of dollars of products in hard disks, optical disks and tape, and where he eventually became the chief technical officer for about a quarter of HP’s business. In 2005, he left HP to found OptiSolar, which pioneered low-cost, utility-scale solar, including one of the world’s largest solar farms, Topaz, now owned by Warren Buffet. Since then, he was a founder of NovaSolar, headquartered in Hong Kong, and has been a consultant to the solar industry.