Fallout from the Pass-Through Economy

Miami Mayor Manny Diaz must feel blind-sided by the furor over his possible appointment to an Obama Cabinet-level position (“Mayor Diaz facing a backlash over a Cabinet post”, Miami Herald, December 5, 2008). The AFL-CIO is objecting to Diaz on several counts. The clearest is Diaz’s role in the response by law enforcement to the 2003 Free Trade of the Americas Summit meeting in downtown Miami. There are other reasons to get to, in due course.

The 2003 FTAA meeting– and prospective establishment of a permanent FTAA secretariat to Miami– deserves historical context. It was meant to be a feather in the cap for then-Governor Jeb Bush; a signature moment that would open business opportunity to those empty lots in Miami’s downtown core and to campaign contributors from the development community.

The building and construction boom was in full swing. There was nothing but blue sky on the horizon. Jeb prevailed on Mayor Diaz to support a massive show of police force against arrayed demonstrators including the retired, school teachers and students, environmentalists, civic activists, and– to the point– members of the AFL-CIO anxious to protect the middle class jobs that were under assault by the new wealth economy built on the tendrils of Wall Street securitization.

From his first day in public office, Jeb had been working from the Karl Rove playbook and its strategic vision described so vividly in an interview with New York Times writer Ron Suskind at the time: “… guys like me were ”in what we call the reality-based community,” which he defined as people who ”believe that solutions emerge from your judicious study of discernible reality.” I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ”That’s not the way the world really works anymore,” he continued. ”We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.”

At the FTAA summit in Miami, Governor Jeb Bush and Miami Mayor Manny Diaz were on the same page: there would be no question how their respective administrations would project security. Miami would not be a Seattle or Rome where demonstrations made the front page of news reports around the world, forcing the perception of reality in directions off-script. They were determined to show that Miami and its then-booming downtown district would be safer than any Latin American capitals the visiting guests called home. And it back-fired.

Diaz asks the Herald, “Can something like that be absolutely perfect? I don’t think so.” But if the governmental response to security at the FTAA was “absolutely” anything: it was absolutely a disaster. It was an outsized show of force, ill-coordinated law enforcement dressed in Robocop gear driving hapless, peaceful demonstrators to the ground and worse. Mayor Diaz can’t squirt away from history any more than the former governor– a possible candidate for US Senate– in respect to the new political reality that does not conform, in the slightest respect, to the equations that held only a few years ago.

But the bigger issue– especially in respect to a HUD appointment in the Obama administration– is the urban landscape of Miami itself, and its thousands of vacant condominiums. What materialized as dead, collateralized debt on distant investors’ balance sheets is still being held as a paragon of success instead of a remainder bin of the housing bust where “make an offer, any offer” commands respect.

Neisen Kasdin, the builders’ lobbyist and former mayor of Miami Beach, says Miami’s building boom bolsters Diaz’s qualifications to lead HUD; I’m not sure what statistical record he’s looking at. “The repopulation of downtown Miami has been an unqualified success,” Kasdin says and then he is quoted immediately after, “Perfect? No, but unquestionably a success.”

Well, if one were skeptical, it would be natural to ask Kasdin how you go from “unqualified success” to “unquestionably an imperfect success” in two sentences? Only by deforming logic, or, believing that no one pays attention.

This is, you see, the problem wrapped up in the housing market implosion that Mayor Diaz regrettably stands for, next to former Governor Bush. Its political origins were here in Miami, where downtown “environmental land use” lawyers, bankers, and builders– threw their full weight behind the city and county commission and the Florida legislature to pave the way for the asset bubble in construction and development and, now, its implosion.

“Until the financial crisis, we had an unemployment rate in Miami of 4 percent,” Diaz told the Herald as if griping what does the AFL-CIO have to complain about?

But if we have learned any lesson from the housing market crash in South Florida; there are big problems with growth that is not organic to the nature of a city or neighborhoods. As for jobs in construction, they do not substantially improve the economy unless the underpinning economic activity is secure. In Miami, it is not. The lack of planning, of infrastructure, of parks and public spaces are the other legacy of the building boom.

The new leader of HUD should not come from the old order that supervised the massive mistakes as a result of a now-discredited growth model.

In so many respects, both Mayor Diaz and former Governor Bush are confronting the realities of a pass-through economy whose foundation in the past decade was built on the ethereal fabrications of debt– such as that sold by Lehman Brothers; one of Jeb’s first clients when he left the Governor’s Mansion.

Today, Jeb Bush refuses to answer what exactly he did for Lehman Brothers and whether his influence helped direct public investment toward any of the billions in the State Administration Funds that are now “segregated”; ie. toxic and illiquid. Both Jeb and Mayor Diaz would like to run from accountability for the current economic straits, as though the ill winds sweeping through our city and county and state are naturally occurring atmospheric events; how could mere humans be held accountable for so much financial pain and economic turmoil?

ALAN FARAGO, who writes on the environment and politics from Coral Gables, Florida, and can be reached at alanfarago@yahoo.com





Alan Farago is president of Friends of the Everglades and can be reached at afarago@bellsouth.net