Go Lean…Caribbean

Go Lean Commentary

The concept of a super-national / multi-state administration to foster development and growth in the Caribbean sounds so revolutionary.  Has such a concept ever been attempted or succeeded before?

Yes … and yes.

The book Go Lean…Caribbean identifies one such winning role model (Page 137): The Port Authority of New York and New Jersey (PANYNJ).

This entity was created in 1921 by an act of the US Congress, an interstate compact, to coordinate the common interest of the two states, even above and beyond the self-interest of each state. The focus is on common interest, not self interest. This charter facilitates trade and transportation. This is a very exacting model for a Caribbean focus, as the Go Lean book serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU). Facilitating trade is a parallel objective of both the CU and the PANYNJ. In fact, this Go Lean/CU roadmap has these 3 prime directives:

• Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
• Establishment of a security apparatus to protect the resultant economic engines.
• Improve Caribbean governance to support these engines.

The Port Authority of New York and New Jersey operates much of the region’s key transportation infrastructure. But some assets are profitable while others are not; some hubs chew up a lot more cash than they generate. So says the following news article:

By: Aaron Elstein
Subtitle: Why the agency endures despite political interference, scandal and lots of red ink.

It didn’t take long after the George Washington Bridge traffic caper erupted for people to start demanding dramatic change at the Port Authority of New York and New Jersey. By a unanimous vote, the New Jersey state Senate urged Congress to examine the “organizational structure” of the agency, which runs the region’s bridges, tunnels, airports and much else. Others called for more drastic measures.

“I’ve started hearing people say that it’s time to break the Port up,” said Carol Kellermann, president of the Citizens Budget Commission.

A breakup might sound like fair comeuppance for the Port Authority, a massive government body that’s now seen as a jobs bank for Gov. Chris Christie’s friends. Carving up the agency into its New York and New Jersey parts would certainly simplify the chain of command in an unwieldy organization that effectively has two chief executives and a board that reports to two governors, who each have veto power over decisions. Even a consulting firm hired by the authority described management two years ago as “dysfunctional.”

“It could be simpler and cleaner if you separated the different parts of the Port into individual agencies,” said Stephen Berger, a former Port Authority executive director. “It would also be insane.”

Dismantling the agency is not a new idea. The idea was first broached in the 1940s and most recently in 1996, when Mayor Rudolph Giuliani unveiled a plan to merge PATH into the Metropolitan Transportation Authority, sell the World Trade Center, fold the Port Authority police into the city’s Police Department and create a new agency called the New York Airport Authority that would have been in charge of rebuilding the city’s airports.

Mr. Giuliani, who didn’t return a call seeking comment, argued at the time that the Port Authority was riddled with inefficiencies and mismanagement. The idea went nowhere.

The agency endures for a simple reason: The economics of a breakup don’t work. Many of the authority’s operations lose substantial sums and couldn’t survive without hefty subsidies from other parts of the organization.

PATH, for instance, devoured $2.3 billion in cash between 2007 and 2011. The harbor ports and midtown bus terminal chewed up $755 million and $537 million, respectively, during the same period. Rebuilding the WorldTradeCenter has cost the agency about $8 billion in the past decade.

Cash Cows

Yet even amid these gushers of red ink, the Port Authority in 2012 managed to generate $1.1 billion in net income on $4 billion in revenue. That gain was all thanks to the huge toll and fee revenue coming from the region’s three major airports and the George Washington  Bridge. Those four hubs generated about $5 billion in operating cash between 2007 and 2011.”One of the most powerful things about the Port is how it moves revenues from one place to another,” Mr. Berger said.

The Port Authority’s diverse revenue streams also mean it can borrow more cheaply than the airports or bridges could on their own. That’s an important consideration because the agency has $20 billion in debt obligations and is expected to borrow another $8 billion over the next four years to pay for such projects as completing the World Trade Center, building a new central terminal at LaGuardia Airport and raising the Bayonne Bridge so larger ships going to and coming from the Panama Canal can dock here.

“The Port is different from just about any city or state in that they can go to the market and raise whatever capital they need whenever they want,” said Matt Fabian, a managing director at independent debt-research firm Municipal Market Advisors. “The management team is seen by investors as very sophisticated.”

“Sophisticated” might not be the word preferred by most people to describe the management team behind the Fort Lee traffic jam engineered by aides of Mr. Christie, but interference from elected leaders and their lackeys isn’t new at the agency.

Jameson Doig, a professor of government at DartmouthCollege, dates the first example to 1927, six years after the Port Authority’s creation. That’s when the governor of New Jersey demanded—and won—the right to veto agency decisions because he wanted to help a company get a contract installing wire cables on the GeorgeWashingtonBridge.

Political Interference

Mr. Doig said many of the Port Authority’s current problems stem from an agreement made in 1995, when Gov. George Pataki appointed an investment banker with no experience in transportation to the executive director job. After New Jersey Gov. Christine Todd Whitman objected, the leaders compromised by creating a new deputy executive director position to be filled by the New Jersey side. The executive director and the deputy share the same box on the authority’s organizational chart, and the deputy can’t be fired by the executive director.

At the time, the move was applauded as a sensible division of power, but “that’s when you started seeing the management problems that are blindingly obvious today,” said Mr. Doig, author of a book about the agency called Empire on the Hudson.

He added that Port Authority management suffered further when Mr. Christie rewarded up to 60 political backers with jobs for them or their family members after he was elected in 2010. In the past, governors have appointed no more than five supporters to Port Authority jobs.

“The first thing you change with the Port is eliminate those patronage appointees and put in people who are strong and independent,” Mr. Doig said. “And get rid of that deputy executive director job.”

At least for now, that job is vacant. Bill Baroni, one of the masterminds behind the Fort Lee traffic jam, resigned last month.

See Revenue/Profit Appendix below.

Crains New York Business News Online Site (Posted 01-19-2014; retrieved 08/18/2014) –http://www.crainsnewyork.com/article/20140119/POLITICS/301199988/breaking-up-the-port-authority-is-hard-to-do#

The foregoing article was a published news item; this generated feedback and commentary. As follows is a valid and relevant comment by a regular citizen identified as Roger. His comments are “spot on“, as follows:

Roger wrote on 01/19/14 at 6:44 AM:

Breaking up the Port brings the region back to the bad old days of NY-NJ rivalry and stalemate that necessitated the creation of the bi-state Authority in the first place in 1921.  The Port Authority for most of its history was an incredibly effective, highly professional and often visionary agency of development of the region’s essential trade and transportation infrastructure.  This it did reasonably free of political interference and cronyism, especially considering the political cultures of the two state parents.  Its great fault was a dearth of public accountability and transparency, in response to which the Governors have steadily sought greater oversight which morphed into outright control, ending in the current miasma of political patronage that now afflicts the Port Authority.  What is needed is a new regime of state oversight that provides broad policy direction but keeps hands-off to let the agency do what it once was permitted – as intended – to do so well.

This subject of regional administration is important in the consideration of Caribbean elevation. How do we learn from the successes and failures of PANYNJ and ensure that we do our multi-state compact right. (The CU is a confederation of 30 member-states). Some previous Go Lean blogs, highlighted here in the following samples, showed how the application of the Go Lean roadmap is designed to benefit the region, and glean insights, intelligence and wisdom from other models/examples:

The people and institutions of the Caribbean must lean-in to the initiatives spelled out in the book Go Lean…Caribbean. Similar to the PANYNJ, there is no need for CU member-states to fund the CU Trade Federation, just the opposite, the CU will generate revenues to remit back to each member-state. This commission involves duplicating a lot of the functions that PANYNJ conduct now, but we must do it better (efficiently and effectively). This point is clearly defined in (Page 12) of the Declaration of Interdependence, with these statements:

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xii. Whereas the legacy in recent times in individual states may be that of ineffectual governance with no redress to higher authority, the accedence of this Federation will ensure accountability and escalation of the human and civil rights of the people for good governance, justice assurances, due process and the rule of law. As such, any threats of a “failed state” status for any member state must enact emergency measures on behalf of the Federation to protect the human, civil and property rights of the citizens, residents, allies, trading partners, and visitors of the affected member state and the Federation as a whole.

xiv. Whereas government services cannot be delivered without the appropriate funding mechanisms, “new guards” must be incorporated to assess, accrue, calculate and collect revenues, fees and other income sources for the Federation and member-states. The Federation can spur government revenues directly through cross-border services and indirectly by fostering industries and economic activities not possible without this Union.

xvi. Whereas security of our homeland is inextricably linked to prosperity of the homeland, the economic and security interest of the region needs to be aligned under the same governance. Since economic crimes, including piracy and other forms of terrorism, can imperil the functioning of the wheels of commerce for all the citizenry, the accedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdictions.

Enacting a multi-state compact, and the related governance, is “Step One, Day One” in the Go Lean roadmap. Implementing the CU with a heightened regulatory framework compared to PANYNJ as depicted in the foregoing news article, allows the transparency and checks-and-balances that stakeholders deserve, but not to undermine the fundamentals of a technocracy – we must be able to deliver first and foremost on our obligations, irrespective of political maneuvering. The CU emergence would therefore provide the foundation so that the regional society can be elevated, economically and governmentally.

The Go Lean book details samples in this series of community ethos, strategies, tactics, implementations and advocacies to foster progress in regional administration:

The Port Authority of New York and New Jersey set out to manage the common waterways (and related trade) of the Hudson River as it empties into the Atlantic Ocean. That was the initiation; it has since over-reached, but still for the providential benefit of the people of States of New York and New Jersey. As a parallel, the Caribbean Union Trade Federation sets out to manage the common waterscapes of the Caribbean Sea, with the built-in “over-reach” mandate from the beginning – the focus is not just limited to port activities. In fact the Go Lean roadmap details 144 different mission/advocacies.

This, the CU, is not for political gain, or to accumulate power and wealth for a few. No, the purpose, planning and execution of the CU is for the Greater Good. In fact, a lot of the executions for the CU is neutral/agnostic of politics. While politicians may have influence on budgets and policies, as a technocracy the Federation is required to just deliver – think postal mail (“neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds”).

Now is the time for all of the Caribbean, the people and governing institutions, to lean-in for the elevations described in the book Go Lean … Caribbean. The benefits are too alluring, a better place to live, work and play.

Download the book Go Lean … Caribbean – now!

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APPENDIX – PANYNJ Revenues / Profits

TOTAL AVIATION: +$2.5 BILLION

TOTAL BRIDGE AND TUNNEL: -$537 MILLION*

TOTAL PORT COMMERCE: -$755 MILLION*

TOTAL WORLD TRADE CENTER: -$3.1 BILLION

GRAND TOTAL: -$2.5 BILLION

The total shows the authority doesn’t generate enough from tolls, fees and grants to cover its costs. It borrows to cover the shortfall.

*Total includes other entities not listed here.

Source: Phase II report to the special committee of Port Authority’s board, prepared by consulting firm Navigant in September 2012.