• Bend Business Roundup 2-28-20

    By on February 28, 2020

    Happy Friday,

    Here’s some stuff you might like.

    Business: The coronavirus has already hammered U.S. stocks as badly as they’ve been hammered since 2008 which you may recall was an, uh, off year for business. Part of the problem is the uncertainty caused by the fact that China cannot be trusted to accurately report even routine economic data, let alone the severity of the disease within its borders. I’ve been on kind of a Chernobyl spree lately – watched the HBO series and read a really good book about it, and it’s hard to avoid the parallels: authoritarian regime lies to its citizens and the world about an event originating within its borders that impacts the health of lots of people outside its borders. Chernobyl blew up in 1986 and the Soviet Union collapsed five years later. Lots of smart people think that’s not a coincidence.

    Law: The feds are suing New China, Inc., which owns a Medford restaurant, for sexual harassment. This follows the criminal prosecution of the manager for sexual assault, among other things. A business is in a bad spot when the federal government is suing it, and this serves as your reminder that business owners who catch even a whiff of harassment need to (for moral as well as legal) reasons act swiftly and decisively to address it, even if the business owner is not the person inflicting the harassment.

    Politics: A couple weeks ago, we observed that there are now more registered Democrats than registered Republicans in Deschutes County. Well, that news item spawned a national AP story about the decline of the GOP generally on the West Coast (and caused a picture of downtown Bend to appear on the Drudge Report for what must be the first time ever).

    The story recounts the erosion of Republican voter numbers and fortunes from Orange County to Bend to the Seattle suburbs, and blames it mostly on the changing demographics of the West Coast; it quotes a former Washington GOP Chairman as saying of the Republican west coast withering, “There is no way out.”

    That there is a way out is demonstrated by the premise of the story – that the partisan lean of the West Coast has been changing. The one certainty is that they will continue to change and not necessarily on their current trajectory. In recent decades, we’ve seen significant partisan shifts in other regions too. In the South, from Democrat to Republican; in the Northeast from Republican to Democrat; in Portland from Democrat to the Oh Wow, Really? Party.

    Demographics isn’t the only variable affecting geographic partisan preferences. The parties themselves – and the candidates they run – change significantly too. In 1988, the last time a Republican presidential candidate won California, George H.W. Bush was that candidate. In 1992, when California joined Oregon and Washington as a reliably blue state, Bill Clinton was the Democratic nominee. Donald Trump may be an actual antonym to Bush 41 in temperament, and Bernie Sanders would sooner part with one of his three houses than say, like Clinton did, “The era of big government is over.”

    Which is to say that the process that leads to partisan outcomes is very dynamic, even to the point that what it means to be a Republican and a Democrat can change significantly. Assuming that trends will always stay the same in an environment like that is a bad idea.

    Et cetera:  We’re in Newport, Oregon for the weekend. As I type this I’m looking up the coast to the Yaquina Head Lighthouse. A few people are trudging up or down the beach below because it’s the Oregon coast in February and while it’s not (yet) raining, stationary beach activities are best avoided.

    Newport’s one of our favorites because it has a blend of beach tourist amenities (especially around Nye Beach) and an actual, functioning economy outside tourism, with its fishing industry and NOAA fleet. Like Bend, it didn’t start as a tourist spot and is still not solely or even primarily a tourist spot. While the higher-end cultural and educational offerings took a big hit with the recent closure of the Undersea Gardens, there’s still lots to do.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 2-21-20

    By on February 21, 2020

    Happy Friday,

    Thanks to the bunches of you who took the time to fill out the survey in the last edition of BBR. Your insights, compliments and gentle criticisms (e.g., “sometimes I just don’t know what your point is”), are really helpful to me as I try to keep (make?) this thing relevant and useful. Thank you.

    Here’s some stuff you might like.

    Business: Oregon enacted its unique “corporate activity tax” (I put that in quotes because the tax in fact affects anyone who sells over $1 million in Oregon annually and anyone includes, you know, people) effective January 1. It is effective as of January 1, with affected businesses owing the first quarterly payments as of April 30, the problem is the state can’t really tell businesses whether they’re affected and, furthermore, what the amount of the first quarter payment should be. But it’s ok, if taxpayers don’t get it right, under standards that do not yet exist, they’re only subject to fines, penalties, liens and ultimately imprisonment.

    Law: I understand that public transportation can be a means of getting people around cities more efficiently than having them in cars. I also understand that, in practice, public transportation is often not primarily a means of transportation but instead primarily a means of political self-celebration among folks who don’t regularly – or ever –  use public transportation.

    In a system focused upon the efficient transportation of people in urban areas, you probably want to ensure that people who are required to pay fares pay those fares, so those fares can contribute to operating the system (I know that fares are a small but not inconsequential part of most public transit systems). If you’re more into the political theater of it all, you vote to prevent police officers from inquiring about whether someone bought a ticket while within a transit system that requires a ticket. The justification for the bill is apparently to protect riders’ civil rights, but there are lots and lots of other laws, including those enshrined in the U.S. and Oregon Constitutions that provide robust protection for our civil rights whether or not we happen to be riding public transit. Police enforce traffic violations while drivers are protected by those civil rights, it’s not clear why police should not also be able to enforce public transit violations, while riders are also fully protected by the civil rights we all enjoy.

    Politics: Let’s take a step back for some perspective, shall we? This is generally how politics works: (1) identify a problem; (2) solve the problem by changing the way government acts. Politicians tend to be pretty good at step (1). When you boil down what elected officials do, it mostly comes down to listening to other people’s problems and sometimes, when there’s a fit between enough or important enough people’s problems and what the official thinks he or she can do about it, they move on to step (2).

    Step (2) is where there’s often a disconnect. Take, for example, the “corporate activity tax” discussed above. The problem lawmakers said they were trying to solve was the fact that many of Oregon’s public schools do not do a good job at what ought to be their main job of educating students. Most people agree that this is a problem. The solution people came up with was to hoover a bunch of money into Salem and spend it on stuff related to education. Bend-La Pine School District will receive a bunch of money from the tax and will use it to hire staff. Will this solve the problem of schools educating poorly? Who knows, and as far as I can tell there’s no method in place to even determine what the impact of this spending will be on solving the putative problem of poor education outcomes, either at the state or the local level.

    The cap and trade bill is similar. Climate change, which if I have this right boils down to temperatures getting warmer, appears to be a problem. The solution preferred by the governor and most members of the legislature is the cap and trade bill that would, you guessed it, hoover billions of dollars into state coffers, which the state will the distribute to causes it deems worthy. Will it solve the problem? Nope. It will have no impact on temperatures.

    The consistent theme here is that the solutions don’t or may not solve the stated problem, but we do know that they do solve one problem that exists in the minds of many who craft the solutions: that the state government and people who work in it and would like to receive money from it would like more money. That’s the one “problem” that the solutions out of Salem solve with ruthless precision and consistency.

    Et cetera:  This has been a heavy one, so I’ll end with this memo in which Dick Cheney complains about Donald Rumsfeld drinking too much coffee.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 2-14-20

    By on February 14, 2020

    Happy Friday and happy Valentine’s Day,

    Here’s some stuff you might like. I hope you’ll take a minute (literally) to take part in.

    Business: A town described as “127 miles south of Burns,” is going to be remote and tiny and Fields, Oregon does not disappoint in either department. It’s at the southern end of Steens Mountain, which is itself remote. But the northern end of the mountain, anchored by the metropolis of French Glen, is relatively accessible for people going to see the Steens. In contrast, you have to really work at it to go to Fields. I’ve only been there once, on an epic drive from Bend with my buddy who’s also a politically inclined lawyer (imagine being in the car with us for eight hours and count your blessings you weren’t with us).

    Anyway, unbeknownst to me at the time, apparently Fields is home to some really good milkshakes. We got gas at The Fields Station, but didn’t venture inside, unfortunately. I won’t make that mistake again.

    Law: For years, the Oregon has waged a war of attrition against agreements which restrain employees from competing with their former employer for a period of time after termination of employment, aka non-competition agreements or as lawyers say when they think no one is listening, non-competes. Employers can only hope to enforce them against well-paid professionals, must provide a copy of the agreement before the employee’s start date, etc. At least 90% of these I see are unenforceable under Oregon law.

    Now, in a law that went into effect January 1, the legislature has conditioned enforceability of a non-competition agreement on the employer providing to the former employee a copy of the signed agreement within 30 days of the termination of employment. So this is one more hurdle employers must jump, and this one at the end rather than at the beginning of the employment period.

    Politics: Allow me to try to tie together two recent developments: (1) There are now more registered Democrats than registered Republicans in Deschutes County, for the first time in a very long time; and (2) the Democrats appear at least somewhat likely to nominate an actual socialist, Bernie Sanders, as their presidential candidate.

    First of all, some clarity around what I mean by “socialist.” If you’ve hung around conservative folks, you may have heard them refer to relatively mainstream Democrats as “socialists.” Barack Obama, Bill Clinton, etc. Those guys aren’t socialists. Eugene Debs, a five-time presidential candidate in the early 20th century was a socialist at a time when socialism was on the rise, with the 1917 Russian revolution ultimately creating the first modern nation-state based upon the social, i.e. government, ownership of the means of production. Despite the historical moment, Debs never received the nomination of a major party – he ran as the presidential candidate of a series of small socialist parties.

    Between Debs’s last run for president in 1920 and today, the Soviet Union collapsed in large measure because its socialist economy couldn’t keep up with the West, and its satellite socialist countries all morphed into something resembling capitalism. China became first socialist via the Chinese revolution and then veered toward capitalism when socialism finally starved enough Chinese people that the Communist Party couldn’t help but reform. Socialism, at least the hardcore variety of it practiced in the Soviet bloc and today in North Korea and Venezuela has largely been discredited as a useful economic system.

    The other thing that happened between Debs and today is that Bernie Sanders in 1988, then mayor of Burlington, Vermont, spent his honeymoon in the Soviet Union, praising housing affordability and badmouthing American foreign policy, which at the time was largely aimed at containing and besting the country in which he spoke. Sanders is the real deal – a socialist who even calls himself that.

    Which brings us back to Deschutes County. Registration has trended Democrat for years, fueled by in-migration from left-leaning places like Portland, Seattle and California and more recently due to the relative unpopularity of Donald Trump here. If the Democrats nominate Sanders, whose self-professed ideology plants him well outside the ideological mainstream of most Americans, they run the risk of alienating more moderate voters who have found a home in the party recently. Some voters will never again vote Republican because that party nominated Donald Trump; Sanders is an extreme enough character that he may similarly drive voters away from a Democratic Party that formally embraces socialism.

    (And for those who would point out that Trump is also outside the mainstream, you’re right that he is in demeanor and, um, approach. Part of my point is that the Democrats might nominate someone who may repel some voters, kind of like Trump has.)

    Et cetera:  I wonder if you could do me a favor and take this one-minute (seriously, one minute) survey about the Bend Business Roundup. It’s anonymous and really easy. Having assaulted in-boxes with this thing for a few years now, I want to make sure I’m giving you all what you want and need! I greatly appreciate the input.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 2-7-20

    By on February 7, 2020

    Happy Friday,

    Here’s some stuff you might like.

    Business: Aside from Nike, it’s hard to think of a more recognizable Oregon-based business than Les Schwab Tires. Here in Bend and presumably throughout other snow-afflicted cities in the Pacific Northwest, the twice-annual trip to Les Schwab to get snow tires put on (Fall) and taken off (Spring) is a region-defining ritual. Of course, here in Central Oregon Les Schwab, founded in Prineville and now headquartered in Bend, is one of the area’s most enduring business success stories.

    Les Schwab has always been family-owned and since the patriarch’s death in 2007, the ownership has been broken up between grandkids and great-grandkids. As these things often go, the heirs are now seeking a buyer. Amid the concerns about the future of the Bend headquarters and Prineville distribution center once the company is acquired, I wonder if Les Schwab might end up being employee-owned. Schwab already has a culture of sharing half each store’s profits with its employees, and promoting from within – taking the step to employee ownership, in which the employees via a trustee advocating on their behalf, would purchase the company from its present owners, typically via a note payable over time, would not be a huge one culturally.

    Law: If you’ve owned a business, you’re familiar with an employee identification number (EIN), which is kind of like a social security number for your business, issued by the IRS. Surely one of the best things the IRS has ever done (admittedly not a high bar) is to establish its EIN website, where people can pretty easily get an EIN for their business via a five-minute or so process. You just enter some information about you and your business and the site spits out an EIN right away. It works really well.

    Here’s the weird thing – the website has hours of operation, specifically Monday through Friday, 7 am to 10 pm Eastern Standard Time.  This is the only self-service website I’ve seen that has hours of operation, and I cannot for the life of me understand why this one does. The Oregon Secretary of State lets you register a new business any time during the day, but you have to wait for people there to review before it’s actually entered into the state’s system, so that can take a little time. But the IRS site gives you an EIN as soon as you hit submit, indicating that the process is entirely automated. Do the IRS servers need to rest between 10 pm and 7 am Eastern? I don’t get it.

    Politics: The words “the legislature is in session” ought, by now, to strike fear in the hearts of Oregonians. Well, the Oregon legislature is in session for its mercifully brief but perhaps not brief enough 2020 “short session.” The governor and her allies in the legislature have renewed their push for a cap and trade bill which, in its most recent iteration, would raise fuel prices west of the Cascades and in Bend and Klamath Falls (but not the rest of Deschutes County and Klamath County), unless one of the counties east of the Cascades opts into the program, in which case the increase would extend statewide.

    The whole scheme is intended to drive up fuel costs to deter people from using fuel, and to raise billions of dollars which the state government would, without any chance of graft or waste, dole out to programs intended to combat climate change. If you believe, like I do, that the climate is changing and that humans probably play some role in that change and the change is likely to have some negative consequences, you might be inclined to support cap and trade until you realize that for all the cost that it places on Oregonians it would have no perceptible impact on the climate. That’s because Oregon is barely even a rounding error in global greenhouse gas emissions. So, the bill would make Oregon even less affordable than it is already without actually doing anything meaningful to solve the problem it intends to solve.

    Et cetera:  Have you seen the video of a coyote appearing to recruit a badger to hunt together? Turns out coyotes and badgers do hunt prairie dogs and ground squirrels together sometimes. The coyote stays above ground and the badger digs below ground so the prey doesn’t have anywhere to go. The cooperation ends, it seems, when the prey is caught – whoever catches it eats it.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 1-31-20

    By on January 31, 2020

    Happy Friday,

    Here’s some stuff you might like.

    Business: This here nifty map tool from Harvard’s Joint Center for Housing Studies shows the ratio of median home price to median income by metropolitan statistical area (“MSA”), from 1980 to 2017.  When you get to 2017, there’s an interesting pattern. On the east coast, the only localities with a ratio of median home price to median income of five or more (e.g., median income $50,000, median home price $250,000) are the New York metro, Boston metro, Miami and Naples, FL metro areas. There are zero metro areas in which the ratio exceeds eight (e.g., median income $50,000, median home price $400,000).

    The west is a very different story. Starting with Denver and west from there, there are zero MSAs with a ratio of three or less. Bend-Redmond MSA, Portland and Seattle are in the same ratio range as New York metro and the other expensive east coast mega-cities. San Diego, L.A., San Francisco and Josephine County, Oregon (!) outpace any ratio east of Denver, Josephine County presumably due largely to income issues.

    Something about the west causes us to pay a lot more to live here – maybe call it a summer without humidity tax?

    Law: There are so many aspects of the impeachment trial that are, procedurally speaking, just weird. First of all, you have 100 senators, who, how shall I say it, did not obtain their positions due to a preference for not talking, being forbidden to talk or to use electronic devices. You also have the chief justice of the Supreme Court, John Roberts, presiding over a process that is by design political, despite the legalistic window dressing.

    When senators want to ask questions, they have to submit them in writing, and the question is then read by Roberts. Well, Senator Elizabeth Warren, who is confined to the senate chambers when she surely would rather be in Iowa trying to become the first President of the United States with a DNA test to prove she has a Native American ancestor six to ten generations ago, had a question and it was a doozy. Chief Justice Roberts read the question, which asked whether the fact that Republican senators refused to allow witnesses during the trial would “contribute to the loss of legitimacy of the Chief Justice, the Supreme Court, and the Constitution?”

    Judges, even those that aren’t the highest-ranking judicial officer in the country, don’t really appreciate someone questioning their legitimacy or that of the court or, I would think, the Constitution. Roberts’s grimace in reaction indicates he will probably be very happy to conclude his role as presiding officer over the impeachment trial.

    Politics: One of the (myriad) things we here at BBR were hyperventilating about during the 2019 legislative session was something called the Student Success Act, which levies an economic activity tax on lots of people and businesses who sell goods and services in Oregon. It was apparent to everyone that the tax  (essentially a sales tax hidden from the consumer/voter) would drive prices higher. I don’t think there was even that much of a fight about that issue; rather, the bill’s proponents mostly argued that the cost increases would be worth it because the corresponding increase in school funding would drive better education results.

    Fast forward to now, and it turns out the tax is driving up the cost of building schools. The North Marion School District has been hit with a change order increase of $180,000 from the contractor performing school bond projects for the district. The reason? Price increases for goods and services related to the tax hike. The tax to improve education is making it more expensive to provide education, and to do most anything else in Oregon too. And while the North Marion School District would probably accept the higher construction costs in exchange for the presumably significant increase in funding it will receive due to the tax, similar cost increases are impacting people, businesses and governments that don’t receive revenue from the tax. I hope someone independent from the politics of this whole thing can run an analysis to compare the costs imposed by the tax with the educational benefits it generates.

    Et cetera:  Quick: after English and Spanish, what is the most commonly spoken language in Oregon? I would have gotten this wrong. 

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 1-17-20

    By on January 17, 2020

    Happy Friday,

    After a nearly two-month hiatus, the Bend Business Roundup is back. The emphasis in weekly(ish) is on the (ish), you see.

    Business: According to something called CloudKitchens, the Bend-Redmond metro area has the second-highest rate of self-employment among small cities in the U.S. Over 20% of workers here are self-employed, twice the national average. Self-employed folks make, on average $50,000 nationally versus $48,000 who are employees. Longtime readers will recall that we track and report on new business registrations in Bend, which are consistently the highest per capita in the state of Oregon. More self-employed folks means more business registrations.

    Law: If you’re self-employed, which is to say that you (or the company you own or work for) contract out services to other people or other companies, the truth of the matter is that unions and many Salem policymakers don’t like you very much. Well, they would say that they like you and probably like you better than you like you because they know better than you how you should sell your services.

    The state and unions don’t like independent contractors because these folks don’t pay unemployment insurance or workers compensation and they don’t withhold taxes. They are also largely immune from unionization efforts. During last year’s legislative session, unions and their allies were nearly successful in passing a bill that would have made it even more difficult for self-employed people to freely contract to sell their services by, among other things, re-defining employees to include anyone who provides services to someone else who more or less provides the same services. Many if not most real estate agents, construction contractors, hairdressers, truckers and many other professions would be impacted and forced to dissolve their businesses and become employees. The language of the bill was so broad that even my law firm could be prohibited from performing business law services to another law firm, because we’re all lawyers. Or doctors treating other doctors, I suppose.

    The self-employed are not asking for this “protection” and the “protection” would disproportionately hurt people in Central Oregon, who have found, in very high numbers, that self-employment is the best way to use their talents. Unfortunately, the legislature is likely to take the bill up again in next month’s legislative session. The legislature should reject it again.

    Politics: Oregon House Speaker Tina Kotek recently mentioned that she might seek to declare homelessness an emergency in the state. The primary effect of such a declaration is that it would allow cities to more easily site homeless shelters without jumping through Oregon’s famously restrictive zoning and other land use laws. Kotek’s proposal joins a growing list of recent exceptions to the state’s land use system: affordable housing and urban growth boundary expansion in the western Portland suburbs, child care centers, to name a few recent examples.

    The proliferating exceptions demonstrate just how pervasive are the effects of our land use system. The system makes it very hard to construct and site most anything. The exceptions arise when that “anything” is politically palatable enough to get the legislature’s attention, but most frustrated uses are below the surface. If you believe that the legislature knows what is best for us, our families and our communities, this system is fine but if you believe the legislature doesn’t and actually can’t know that due to the complexity at issue, then the system needs a reset.

    Et cetera:  If you’ve ever wondered what George W. Bush, Barack Obama, Kim Jong-un, Richard Nixon or Vladimir Putin would look like with a man bun, you’ve come to the right place, my friends.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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