How Politicians Help Billionaires Fleece A City—The 3 "C"s Of Legal Robbery In Your Town

Why You Might Want To Read This: Buckle in for the most bizarre, Orwellian, insane, immoral, unbelievable story chronicling how a billionaire is extorting money from the people, all with the enthusiastic collusion of politicians of both parties, who, while wielding an axe to lay off workers, are down on their knees ready to hand over to a very rich person hundreds of millions of dollars of tax dollars. It’s a template for the political and economic collapse most folks know happens in every community [If you are a regular reader, are you a paid subscriber yet so you can get archived subscriber-only posts for the bargain price of ONLY $50 a YEAR?]

Let’s say, just spitballing, you are an Oregon state legislator looking at a huge budget deficit that will mean, among other things, cutting hundreds of jobs of teachers and educators, putting off fixing roads, chopping action on climate change and slashing a whole range of other services—and said state legislator also knows some of the workers losing their jobs will end up houseless and living in their cars. And the current deficit is just a taste of what is to come in future budgets thanks in part to the federal tax bill manufactured by the malignant minds in the White House. Calamity looms!

Or, you might be a member of the Portland City Council staring at a serious revenue gap which will mean, you guessed it, laying off people and cutting services to the entire community. Not that a tone-deaf mayor cares but those public workers, who make the city run, will be thrown out on the streets and face financial destitution.

What would you do, as an elected custodian of the peoples’ money?

The answer is obvious: shower a billionaire with hundreds of millions of dollars in precious tax dollars to renovate a sports arena, in part to build luxury sky-boxes for the very wealthy, which will increase the value of a sports franchise for the sole benefit of a billionaire and his friends—all of which does very little for the majority of the people who don’t care about sports, and, indeed, people who can’t afford the ridiculously expensive ticket prices or the over-priced hotdogs.

And, the cherry on top?

The shoveling of money into the pockets of a billionaire is built on a ***massive lie***.

Right? Logical?

Before you turn away from this astonishing story because you don’t care about sports or you live elsewhere…This story is a theme for all my readers because it tells a tale of:

• Lies about economics that paralyze virtually every policy discussion and rob the people of wealth;

• The corrosive combination of ignorance and cravenness of careerist politicians, which is at the core of peoples’ anger sweeping the nation.

Short Background: along came a billionaire, Tom Dundon, and does what a lot of these bottom-of-the-pond, obscenely rich, almost exclusively men, does—he buys a sports team, the locally beloved basketball franchise Portland Trail Blazers.

It’s no small point to say that this cretin made his fortune from sub-prime auto loans—an industry entirely based on the exploitation of the working class. In fact, what should be a colossal embarrassment but apparently isn’t, Oregon politicians KNOW all this about Dundon’s character and his CEO role at Santander Consumer USA thanks to—and you will thank me (perhaps with a paid subscription???) for revealing this deep secret—an obscure, mysterious, unknown tool called “Google”:

Oregon officials wrote in their 2020 court complaint against Santander Consumer that many customers took out loans under the “false pretense” that they were acquiring a car they’d eventually own, when in fact the terms of the loans were so onerous that they would “almost certainly” result in the loan defaulting and the car getting repossessed.

Oregon Attorney General Dan Rayfield, when asked about Dundon’s call for waiving proof of income on car loans when he was at Santander Consumer, said in a statement: “Proof of income requirements exist for a reason — they protect borrowers from being sold loans they cannot afford. When those guardrails get waived, dealerships win in the short term, and consumers lose.” [bold emphasis added by yours truly]

Pfft. No matter. He’s a rich guy who comes to town waving a lot of dollar bills. Who cares if that money is drenched in the tears and heartache of a long list of people taken for a ride…after all, why is this guy any different than the model of behavior in vogue as a guiding principle for Elon Mush, Jeff Bezos or the malignant narcissist in The White House who all believe that everyone out there is a mark to be soaked for every dollar. Forget all those high-minded press releases politicians churn out decrying the daily outrage of the billionaire class…they are ready to do business with this guy.

And so the red carpet is rolled out…

For what? Dundon is threatening to move the team to another city if the state, county and city don’t hand over $600 million to “renovate” the Moda arena, where the Blazers play. While Dundon ponies up no money, he wants to exploit, effectively, an entire state and city by playing on the fears and loyalty of a small segment of people.

This is worse than a Bonnie-and-Clyde hold-up. It’s worse because this isn’t a one-off, single bank robbery but a wholesale ripping off of millions of hard-working taxpayers who will bear the brunt of a rougher life just to satisfy the demands of one rich person.

Now, before we get into a few more of the twists-and-turns of this story, I want to give the 50,000-foot level for my readers:

None—and, I mean, ZERO, NADA, ZILCH—of the promises made about the economic benefits of building or “upgrading” sports arenas or stadiums ever pan out.

Ever.

In the history of every organized sport in any place in the country.

It’s all alchemy, intellectual fraud and just pure theft of peoples’ money.

Every single sports arena project has cost the taxpayer much more than promised and has never—NEVER—returned some mirage-like “economic development”.

When city boosters, pro-business shill front groups (in Portland, we have the scammy Portland Business Alliance and Westside Economic Alliance) and team owners tell you about the great riches sports brings that justifies investing hundreds of millions of dollars in public money…

There is ample proof that they are lying (or ignorant). Check these out.

Take Field of Schemes by Neil deMause & Joanna Cagan, which although it was published in 2008, the authors host a terrific, up-to-date website giving chapter-and-verse about the decades-long scam.

Or you can listen to a podcast I did way back in 2018, “A Con Job—Using Taxpayer Dough To Build A Stadium”, with THE national expert on the issue, now-retired Stanford economist Roger Noll whose 1997 book “Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums” is the bible for the topic (Notice how I casually threw in “Stanford economist”… cuz, then, you went, “whoa!”).

Or, finally, for the current Dundon scam, there is no better resource than Rip City, Not Rip Off. The entire amazing body of work at this site is the unpaid labor of love of two people, Edan Krolewicz and Jonathan Pulvers. “Love” in the sense that they declare:

We’re a grassroots group of Blazers fans who want Portland to negotiate like a serious public owner. We love this team, and we expect a lease that respects the people paying for the building.

We started this campaign because no one else was making the case that Portland already owns the Moda Center, that every other city negotiated rent and revenue sharing, and that relocation shouldn’t be treated as proven leverage without evidence. The early reporting was thin, and the timeline left little room for public scrutiny. So we built this site, read the bill, ran the numbers, and started organizing.

If the Council signs without negotiating, the leverage is gone forever. That’s why we’re here.

For brevity sake, and urging folks to visit their site (and share it!), I’m just going to summarize the Krolewicz-Pulvers main points so we can spend most of the rest of this post on the lessons everyone should learn from this scam:

• Dundon and his cronies at the Blazers, aided and abetted by a weak mayor, are consistently, willfully, refusing to have an open, transparent negotiation. They want the money to be approved by the City Council, stat, WITHOUT all the information available about the cost of the project. Personally, I think it’s hard-wired in the DNA of a billionaire who made money by taking advantage of people to do everything possible to not deal honestly, up front and, instead, squeeze every dime from taxpayers;

• The numbers that have leaked out, or are dug up, don’t add up! Read for yourself.

• Essentially, right now, taxpayers will be left holding the bill and Dundon doesn’t put in a single dime.

Krolewicz-Pulvers summarize a Fair Deal thus:

Now, I diverge a bit from Krolewicz-Pulvers on one issue: I’m a life-long sports fans but I don’t give a goddamn if this team leaves—and if this comes up in your city, sports fan or not, you should not care either. Fuck ‘em and fuck the wealthy/corporate owners who exist, in every major sport, within a legalized monopoly that ensures every franchise appreciates by a lot (an aside: this is mostly due to media rights and real estate values, not butts in the seats).

Sports is fun and entertaining but in the ladder of priorities comes a different calculation: what benefits the broadest swath of humanity, of a city? I say again from where I started: how in the fuck—HOW IN THE FUCK! (because we need to scream)—is there even a speck of consideration to toss millions of dollars at the feet of a billionaire when people are homeless, schools are falling apart, kids are going hungry, the axe is falling on hard-working public workers, arts programs are on the chopping block and, oh, as an aside, the planet is imploding because of the climate crisis? “Civic pride”, which is a go-to slogan for sports boosters, is as empty as a fart in the wind, is of virtually no economy value and, certainly, isn’t paying the bills for regular people.

This, to me, is the definition of insanity, of an utter collapse of rationale thinking. And it’s driven by greed.

I have a modest theory that is easily translatable to virtually every economic scam that we live with across the nation, which is why, hopefully, you’ve stuck it out to this part. This is the story of the three “C”s, which are intertwined:

There’s a heavy dollop of ignorance that infuses any economic debate. Honestly, I can’t tell if it’s real ignorance or laziness—or a combination of both. Most elected politicians who make decisions on tax-and-spend policies do not understand basic economics.

I texted one Oregon state legislator I know quite well to ask that s/he send me the documents s/he used to vote (stupidly) in favor of the state’s piece of this rotting carcass, an up to $365 million bond obligation.

Crickets.

S/he eventually replied, and I quote: “I think we’re going to have to agree to disagree on this one. But I respect your opinion”.

With no data. Nothing.

That shallow answer has an obvious backstory: s/he voted for this without really knowing the details, most likely because s/he either didn’t have the time, expertise or, more important, was just following what the legislature’s leaders were demanding.

This isn’t unusual. I’ll come back to the reason under “careerism” below.

The level of stupidity is mind-boggling, verging on idiotic:

The situation caused state Senate Ways and Means co-chair Kate Lieber, who was at the event and helped pass the [state portion of Moda] funding package, to warn of devastating economic consequences if the Center’s anchor tenant were to leave town.

“If we lose this, I guess the economic realities, the downturn that it would take, would be really, really devastating,” Lieber said. [bold added by yours truly]

I actually thought she was being sarcastic because this is so foolish it should make one cringe. A key person charged with tax and budget for the entire state should never have hands on a gavel who would actually think—and tell less-informed voters—that a sports team leaving a city would be economically “…Really, really devastating”. Maybe that’s why the state is in such poor fiscal shape because its senior leaders are out to lunch and don’t grasp the basics of economic policy other than what corporate lobbyists are blurting out.

You can believe a non-serious politician. Or you can believe a real economist, Roger Noll, and his co-author, who are not bought by corporate interests, are experts in the field and, most important, don’t have a dog in the fight for any arena project. They deal in another world: reality. They write:

A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus. [bold added by yours truly]

Noll writes above about a NEW FACILITY—which draws in a handful of temporary construction jobs—and, thus, this is even more true for renovation of an existing arena. It just doesn’t move the needle in a diverse economy.

It’s worth zeroing in on the “perhaps even negative” point. You see, with limited resources, we all live in a world of “opportunity costs”. Meaning, if you blow your wad on a dumb-ass arena—that provides a limited number of jobs—then, logically, that money is not available for every other project that could actually generate a lot more economic benefits and more permanent jobs.

Noll’s point above also deserves a short aside for unions, which is worth digging into in the future: for the same investment of money, which in an arena project delivers very small economic activity (and perhaps even negative), even construction unions would be wise to consider the knee-jerk support for arena work. The short-termism of grabbing onto the promise of a few jobs now is throwing away money for longer-term investment in projects.

The above cluelessness points to another cancerous problem we have in politics. I’ve dealt with hundreds of politicians in my life. Alas, it’s fair to say that I can count on two hands the people who would risk their careers to fight a bad deal. Sure, they all make grand pronouncements when it’s safe to do in a crowd—”Trump is the devil”— but very rarely can you find someone who will put his/her career on the line for something that really matters.

Risking a career might not mean losing an election; incumbency and gerrymandering are pretty powerful advantages. Careerism is also about amassing more power and looking to move up the next rung on the ladder to higher office, or, perhaps a lucrative lobbying job.

So, if you are a middle-of-the-pack legislator or a City Council person you hear the signals to get with the program. It can be explicit: “You have to vote for this terrible bond”. Or more subtle: you watch where leaders are coalescing and understand that’s where you have to be. Vote against, say, an arena project, against the wishes of the political machine or business interests, and that will almost certainly mean a career hurtling down a dead end.

Corruption in politics comes in two forms. First, it’s the most brazen “cash in the suitcase”. Sure, that happens—especially with this White House gang who never met an under-the-table deal to pocket money drenched in blood or crime that didn’t trigger Pavlovian salivation.

But, far worse, is policy/moral corruption.

Just to keep the topic on our economic theme here: we’ve lived with decades of a massive fraud, a corrupt narrative (promoted by people who claim they are “moderates”) selling people on a fraud that “economic development” is best done by embracing the so-called “free market”, so-called “free trade”, de-regulation, lower taxes for “small business” and, yep, handing out tax incentives to billionaires.

Funny, how that hasn’t worked out—if your yardstick is the massive concentration of wealth and the inability of people to pay basic bills. This false narrative—I’m saying “false” not as a rhetorical flourish but based on real facts over half a century—is why this foolish Moda scam isn’t dismissed out of hand on its face and the sub-prime auto billionaire isn’t sent packing back to Texas.

It’s also funny, and I mean by that “not funny”, that the conversation about “economic development” never starts with the First Principle: paying everyone a decent wage with benefits.

As in: you don’t get to do business in [fill in the blank city/state] if you don’t pay a living wage, which, at this point, based on productivity over the past four decades, should start at $25-per hour. And a company should be told it won’t get a single dollar of public money if it doesn’t, first, sign an iron-clad promise of neutrality in any union organizing campaign.

Otherwise, to the regular person, the “economic development” debate is just a lighter version of Trumpism.