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San Diego political leaders have excitedly been discussing the 30 year impact of Proposition B — the initiative to freeze employee salaries and to replace city pensions with 401(k) style retirement plans.
City Councilman and mayoral candidate Carl DeMaio is busy bragging about the cost savings while labor representatives are focusing on debunking their math. In this argument about downsides and costs, both sides are missing the better question: What should we be doing to continue to improve San Diego’s future?
Preparing economic impact reports for ballot initiatives is a legal requirement but taking this 30-year prediction seriously shows either arrogance or ignorance. Think back to 1982. Qualcomm did not exist and Apple was selling computers that were tan boxes. Meanwhile, the Dow Jones Industrial Average was at slightly over 1,000 points and Leonid Brezhnev was still general secretary of the Soviet Union.
There are great visions of what San Diego will be in 30 years but we need to recognize that these future predictions are hazy at best. Instead of looking at small adjustments that will almost certainly disappear with changes in the economy, city leaders should be looking at investing in the future of our community. As any entrepreneur will tell you, growing revenues has a huge upside, while cutting costs tends to cause significant harm both to employee morale and customer service.
More than anything else, Prop. B suffers from a failure of imagination. Instead of focusing on pensions and 401(k)s, we need to be talking about how stock options and profit sharing for city employees could work. Translating these concepts from startups to government will not be easy but it’s a lot more positive than anything we can achieve by sticking with traditional models.
While the long-term impact of Prop. B is unclear, the short-term impact is clear: $54 million in transition costs for the first two years. Let’s think creatively about what we could do with that $54 million to help foster the growth of the San Diego economy: a thousand startup loans; job retraining for ten thousand employees; opening a new college focused on starting small businesses; or facilitating trade with Mexico. There is no shortage of great investments to make in San Diego. It these kinds of investments that can help create the future San Diego that we want.
I’ve spent most of my adult life building one startup company after another. With each one, I have had the pleasure of hiring talented workers, facing new challenges and building upon our successes. These are the joys of being an entrepreneur. But reading the details of Prop. B, I am reminded of a business model that I read about years ago: a company that bought up declining beer brands. They cut staff, killed advertising and tried to pull out as much money as possible until the brand finally died.
San Diego is not a declining brand. San Diego is a city with huge potentials. Our city leaders need to be investing in that potential.
Ben Katz is a serial entrepreneur. His current company, JSX, Inc, provides custom information management and workflow systems to businesses and non-profits. He tweets about politics and an assortment of other issues at @MeanestBossEver. Do you have a reply? Post it here.