Ever wonder how our elected officials could make such terrible decisions? My father-in-law has his own hypothesis. He says it can all be explained by game theory.
He uses the Firefly fiasco as an example:
- If a council person votes against loaning money to Firefly and Firefly succeeds, voters will think the council person is an idiot.
- If a council person votes against loaning money to Firefly and Firefly fails, no one will hear about it or remember how the council members voted.
- If a council person votes for loaning money to Firefly and Firefly succeeds, the council member will be seen as prescient and his vote will be celebrated.
- If a council person votes for loaning money to Firefly and Firefly fails, voters will excuse the poor decision by saying the council person only had the best interests of the city at heart.
Given those outcomes, the smartest move is to vote for loaning money to Firefly. It carries the least risk and greatest potential reward to their reputation and reelection chances. And the same goes for any public body considering any development or risky scheme.
Interesting use of game theory. What it should also consider is that the council person is not an investment banker or venture capitalist and should not attempt to play that roll. While I do not know the education background of the City council, my best guess is that few of them are highly educated business professional with years of financial analysis training and experience in reviewing detailed and complicated business plans that involve start up technology. I would be interested to find out who (if anyone) the City had review the business plan and advise of the risk.
The council member is not investing private dollars that are seeking a high rate of return but is in fact investing public dollars that should be used to provide basic services or if used for a speculative project should have some justification as to how they better the lives of the people in the municipality.
If this was such a great investment than why did National City need additional collateral (I don’t fault the bank for this situation), why did Cat not play a more active role and why were they spinning this off if the technology was so good, why was the company unable to attract adequate/additional funds from private investment/venture capital?
Just a real bad decision. Probably the same one we will be having 3-5 years after the hotel opens and projections are not being achieved.
I think your father-in-law’s example isn’t really game theory as it is instead a regular cost-benefit analysis. Game theory compares one’s decision as it relates to (depends on) another one’s decision. In essence, the two (or more) players are competing in a game that produces a theoretical result.
However, I do believe game theory can be applied. The “players” are the Peoria City Council and another city wanting Firefly. The applicable game is the generalized Prisoner’s Dilemma.
“In the Prisoner’s Dilemma, each player pursuing his own self-interest leads both players to be worse off than had they not pursued their own self-interests” and it “demonstrates why two (cities) might not cooperate even if it is in both their best interests to do so.”
So, we keep offering greater incentives (more than we’d prefer) out of fear that another city will offer even more. The net result is that both cities are worse off (took on too much risk or got too little benefit). If it were just two cities competing in the game, they’d “learn” to cooperate. But, of course, we’re not simply competing with one city all the time.
ANP — Bob Manning would seem to fit the description you lay out for a good decision-maker, and he voted for it.
Sud – good point. Yes based on his background (MBA, CPA, licensed broker) he does have the qualifications but what about the others? Who did the review work on behalf of the City? Also Bob Manning was not risking his own dollars on this project.
Far more of these venture capital investments go bad then work. The payoff gets to be when one of them really works and it gets acquired or goes public then the investors get a substantial return. If you have ever had the opportunity to read a private offering (non public company) memorandum, you would see a document that basically tells you not to invest due to all of the risk involved
Venture capital usually happens in multiple stages with the most risk and most reward to the early investors.
It is always easy to look back at something and figure out why it did or did not work. I guess the more fundamental question is should the City be in the venture capital game or at what level?
I’m not disagreeing with you ANP, just pointing out that obviously having all the right characteristics is not a guarantee. I am sure it didn’t seem like a gamble at the time.
I didn’t think you were. I just think if you look at these investments, for every one that works probably twenty (or more) do not. It is picking the right one that makes it work out.
I remember looking at the pdf of the bankruptcy filing. Many “smart” people lost money on this deal. All of which probably did not plan on a lost investment when they put money in. It is just the nature of what they were doing – high risk and high reward.
Despite the fact that many “smart people” lost money on this deal, they were still ‘willing’ to risk their OWN capital on this investment.
Investing in a risky venture on my own accord is one thing, but being forced to ‘buy-in’ as a tax payer is something else entirely.
Can anyone say ‘MUSEUM?”
What you and it seems many elected representatives forget, you are there to vote for the wishes of your constituents, the people who elected you in the first place. On a city council, it can’t be hard to poll your district and get a feel of wht they want. You then should use that as a weight when you vote on something. Unless something that is presented that out weighs this, you should vote the way the people who elected you want. Right or wrong.
That is what is wrong especially in the First District, maybe others. These people and their egos get in our way or I should say, we get in their way. They know what is best for us. Bull! And their past record proves they don’t.
If I run, and win the First, I will poll my District on important issues like loans and big development. Sure a lot of people don’t give a rat’s butt either way, but those that do, I will listen. I will then vote their wishes.
Isn’t that how it is supposed to work? No games needed.
The problem,as it has been pointed out so many times in the past,
is that these people are being re-elected again & again & again………..
“What you and it seems many elected representatives forget,”
Randy, you may be right. I am pretty sure they don’t believe they have any obligation to the voters. We are an inconvenience. Their election only proves they are qualified to make these kind of decisions. They think they are special. We elect them and then immediately begin thinking they are special, too.
Randy:
You hit a bullseye with your comments! You have my vote from the First! If you would remember that the Near Northside is part of the First that would be appreciated too!
I think some of our local leaders are enamored of various municipal fads. For example, there are some who believe giving developers handouts for hotels and retail developments is a way to drive “growth,” or that promoting urban sprawl is a good thing to do. Unfortunately, these misguided folks have yet to wake up to the fact that those particular fads have gone away in many areas of the country – and for good reason.
Emtronics, I totally agree that our City Council reps need to vote in a way that reflects the will of their constituents. There are those who believe that they know best what we need and, I say, they need to be voted out.
Five districts in Peoria, each has about 22500 persons. ( somewhat less than that number) are the number of voters. Lets say 50% are registered which equals 11250 constituents that a rep/council member is generally concerned. If EM wins I hope he gets at least 5800 calls to his phone or email to his account that reflects the views of his district ( on each issue)anything less and he is voting against the majority will/view
Only 5800 calls? Is that 5800 different people, or just one person calling 5800 times?
– So what Precinct is saying is that [politicians] should have free reign; once they are voted into office their obligations to their constituents is at an end?
Crap.
There are how many blog sites that deal with Peoria City alone? We have the J Star editorial section, local radio/TV, etc. Most of the major issues effecting Peoria City/County are discussed using these various forums. Are these not the sounding boards of the ‘people?’ If the Peoria City Council members took the time to scan these sources, they would get a pretty good idea of where their constituents stand on any given issue.
Of course why would the council members want to do that….?
“Are these not the sounding boards of the ‘people?’ ”
No – not “the” people – they are some of the sounding boards of a few, generally more vocal people.
I don’t agree with the notion that we should essentially poll the people to decide how our representatives should vote – whether that be a limited poll such as looking at blogs or a full out vote (in which not all constituents vote, of course).
And I think CJ, for one, also agrees. I remember this quote (talking about Lahood and Mitt Romney):
“See, this is the problem with not being principle-driven….The classic conundrum is that constituents simultaneously want lower taxes and more/better services. A poll-driven politician, trying to meet both demands, will put the country in a ton of debt.
Wait a sec…. That’s exactly what has happened…. Weird….”
I think we “mere taxpayers” need to do a better job of letting our local government leaders know where we stand on issues. Neighborhood Associations and Community groups should be developing and articulating positions on issues affecting them. Citizens need to pick up the phone or write their Council persons. Heck, I think if even half the folks who have told me what a bad idea the “Wonderful Development” is had shown up at the Council meeting to voice their displeasure, the outcome may have been different.
unfortunately there are some neighborhood leaders in the core area of the City that are too enamored of the Mayor and City Council to effectively represent the neighborhoods. they are only interested in advancing their own pet projects and acting like groupies.
Well, if a council person spoke during a meeting and said; “If we are going to vote on XYZ next meeting, will my constituents please call and say Yea or Nay. I think people will call. Those interested enough will. So, let’s say only 100 people bother, and 75% of them want a vote of Yea, I think then it is my duty to vote that way or at the very least consider that as a weight to vote that way.
Besides, knowing a few council persons myself, the city provides a Blackberry or media phone. I have no problem going thru thousands of emails and voice mails and taking some calls. I doubt by the voting turnout that would happen but it’s the least I could do because it is MY JOB as an ELECTED representative to feel out the people I represent.
Jon — If an elected representative has ongoing communication with his/her constituents then the rep. alreadys knows for the most part what constituents want their tax dollars to purchase. Open door policy with listening ears — hear a lot about basic services, safety, code enforcement, street repair and so on. One does not hear support for the now failed Cub Foods, museum, hotel deal and so on. Listening ears — not like the OSF ‘Village’ plan where constitutents were being notified via a late evening newscast that a neighborhood meeting for the next night would tell them about this plan for their neighborhood. We want to seek your input —- hummm ….. sounds regrettably and hauntingly familiar … more exclusive planning without including the villagers.
Emtronics — you are talking the same language of communication. Will you be seekig office for District or At-large?
Em – I noticed twice you “qualified” how you would vote by saying :
“Unless something that is presented that out weighs this”
“at the very least consider that as a weight to vote that way. ”
I agree.
And Karrie, I agree that there needs to be more meaningful communication.
However, at the end of the day, the representative has to vote how s/he feels is in the best interests of constituents – sometimes (rarely, hopefully) that means going against the “popular” opinion. And, yes, therein lies the danger…
Interesting thought……..
A rep who has constituent’s best interests in mind, yet still manages to go against popular opinion…?
Jon,
I would hardly call a politician who scans the blogs, editorials, etc, “poll-driven,” especially when we are talking local politics. As a matter of fact, I wouldn’t call that poll-driven at all. Outside of the periodic, rigged-for-time city council meetings, how do you suggest our politcians keep their fingers on the pulse of the community [and their hands out of the cookie jar]?
NV – My reciting CJ’s poll-driven comment was directed at Emtronics/Karrie. However, to their credit, they both probably have several ideas/plans about how a politician can more effectively communicate with the constituency, so you might want to as them.
For me, rather than worry about what my elected officials can do to “keep their fingers on the pulse of the community”, I know what I can do – contact them directly.
Yes Jon, I understood your meaning, though you seem to be contradicting yourself all over the place.
You are free to contact ‘them’ directly… and see how far that gets you, especially if you are moving in a different direction then the council.
Karrie listed a number of issues that involved Peoria City Council. The council either ignored direct one-on-one contact or any type of community input on most of those issues, or swept any opposition under the rug.
I would also venture to say that you grossly underestimate the value of blog sites and other media as ‘community sounding boards.’
Need proof?
NV – please explain the supposed contradictions. (though it makes me wonder – if you understood my meaning – then why post an earlier comment that imparts a lack of understanding that meaning? – this makes me really curious to see your explanation of the “contradictions”)
I understand that you and I disagree on some issues. I also recognize that the reason might simply be that we have different opinions – not that you ignore me or try to sweep my opposition under the rug. I don’t need to question your integrity.
Karrie: District 1
Jon,
Perhaps we can call this a draw. I think we can all agree that there needs to be more of a ‘comm-link’ between politicians and their constituents.