Utah in a dysfunctional world

By Darin Mellot, KSL.com Contributor | Posted - Oct 16th, 2013 @ 11:42am

SALT LAKE CITY — It is currently striking to contrast Utah's economy and leadership to that of the nation's. One recent example of the state leading where the federal government was not able is the closure and reopening of the national parks. This situation also speaks to the fact that Utah is not immune to the effects of dysfunction that happens in Washington and even across the globe. While this was a very visible example, policy paralysis on a national level has weighed on Utah's economy for quite some time.

In my first column after the end of a quarter, I typically address the performance of Salt Lake's commercial real estate market. Generally speaking, there was continued improvement across the board with encouraging signs. However, businesses remain very cautious and there is a continued focus on the bottom line. As a large expense, commercial real estate becomes a critical area for cost-containment measures to be fully realized. CBRE professionals (full disclosure: where I am an analyst) continue to report to me that their clients remain interested in "right-sizing" strategies.

To be sure, businesses are always searching for ways to become more efficient, but in uncertain times it becomes even more critical. If a business is unsure of the future, it's hard to project revenues; as such, they act to control their expenses as a defensive buffer against uncertainty.

Policy Questions

In past columns I explained that businesses are dealing with a tremendous amount of uncertainty and much of that is associated with policy questions. Perhaps obviously at this point, I can again reaffirm that policy questions are continuing to weigh on businesses. As the drama unfolds in Washington and negotiations continue, one thing is apparent: we'll be doing this all over again soon.

In a very disturbing way, leadership in Washington (both parties) has consistently failed to govern effectively and manufactured crisis after crisis during the last several years. I was reminded of this during a meeting with several prominent economic experts in the community. As we discussed the state of the economy and analysis of what comes next, a colleague of mine reminded us that over the last few years, huge policy questions have consistently dominated the group's discussions.

Best Case Scenario

Unfortunately, the best-case scenario for current negotiations (short-term deal) will only ensure that this pattern of deferring difficult decisions and manufacturing crises will continue. While this is disappointing, I say it's the best case scenario, because a default would be catastrophic for everyone. In simple terms, it would be a national failure - there are no winners in a default. Some people reading this may be inclined to argue the meaning of a default and talk about prioritizing payments with incoming revenue. However, the fact that many are arguing about prioritization of payments only tells me that we've gotten to a very low point. Instead of arguing over a set of bad options, policymakers should be thinking strategically about the future.

The question is: how do we get past this? To answer that simply, there are a lot of ways to solve our problems. The current crisis is not due to the fact that there are no solutions available; America's problem is that it cannot agree on a path forward. So, in my view, the key to getting back to achieving effective governance will certainly lie in the approach we take to problem solving.

Realistic Expectations

Common sense, reasonableness, decency and a dose of realistic expectations are needed. I'm not naive and understand the complexities of national politics; but we must not lose the expectation that our public officials meet the most basic criteria of being reasonable people, capable of working with others who do not agree with them. In a democracy, neither a majority nor minority should impose its will on others without regard for differing opinions. Leadership consists of much more than the power and ability to do something.

Last week, we saw Governor Herbert and others step up to the plate to reopen national parks in the state. This leadership was critical for those who directly rely on tourism associated with these parks. Within this example of leadership is an embedded desire to confront and solve problems creatively and even collaboratively. While this example certainly reflects well on our state, that kind of spirit is also a part of our country - it's an American characteristic.

Influence National Debate

Perhaps the most important contribution we can make at this point in time is to remind the rest of the country of how to go about solving a problem; not by imposing one's will, but genuinely searching for ways to get things done in good faith. We need to influence the tone of the national debate and we proved that even a small state like Utah can do that. One recent example is with immigration where the Utah Compact contributed to an elevated national discussion.

I am convinced we can also elevate future budget debates. As unsustainable as the federal budget might be, one thing is for sure: poor governance is equally unsustainable. Solutions to problems exist, but what must change is how policymaking is approached - business is counting on it.

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