CHICAGO – How effective will all the infrastructure stimulus money be without any best practices in place?

Some state and local economic development commissions are asking what we’re supposed to do with this money that’s to be distributed for revitalizing the local economy. Others are just waiting to blow it on something without really considering how the money could do the most good for their communities.

Why do something different than the status quo of the last two decades? I have also heard that some are waiting for stimulus money just to pay off bills that they have already racked up.

So where is the promised stimulus and subsequent growth for regional sustainability? Are the right people in charge of spending this cash infusion wisely or will it get wasted away on pet projects and more “bridges to nowhere”? Accountability should be high on all money going out to corporate and government agencies.

Show Me the Money

Missouri is known as the “Show-Me State”. This is from a reader in Joplin, Mo.:

Our Missouri economic development community is struggling with this question: What can this state (or any state) do that makes sense to support technology and build for the future if the Feds are not going to or are incapable of helping change the direction?

A column on that issue and best practices would be very helpful and interesting.

This gentleman raises a good question. While most state and local agencies know how to ask for more money, do they have the right policies and procedures in place to make that money work the hardest in revitalizing their local economies?

Based on what I see happening, it’s easier to find more on “worst practices” to shed light on than getting examples to follow for best practices. Having said that, we still need to address the Missouri question because they at least want to try to do something good with the money they get. Perhaps more of us should be following their example for our own states.

“How do we spend this stimulus money wisely?” Something as simple and clear as this would resonate loudly over the constant political noise in Illinois. There is a lot of criticism on the value of bailouts and their long-term effects. All of this is being discussed on the various news channels and some feel the bailouts will not provide a lasting positive effect.

If there would be some guidelines on spending this extra money correctly, what would they be? It’s already looking like the bailout is starting to look like a pork sandwich.

Don’t Be Like Citibank & Buy a $50 Million Executive Jet

Best practices? As we can see that Citibank/Citigroup doesn’t have them, we can’t emulate their leadership as a model. Taking government money and blowing it on an executive luxury jet when the same executives drove the company to the ground should be considered a “worst practice”.

Perhaps Citigroup should have been left to collapse as its executives showed poor leadership when given a second chance. How many mortgages would that $50 million have rescued? That expenditure would not have sparked anything for our economy either as the jet was built in France. Could they have at least bought a plane in the U.S.?

Citigroup has received $45 billion in bailout money so far. It’s a good thing they had second thoughts (after all the negative publicity in the last 48 hours) and just cancelled the plane. Financial responsibility? That’s an oxymoron at Citibank/Citigroup.

As they say, that’s water under the bridge. Still, that’s a lot of water. At the same time, it’s interesting to see that most can’t get any mortgage relief from the same banks that had their hands out asking for billions. There was a trader who placed full-page ads in the New York Times this week asking this question: “Where did all the money go?”

Where Were They Before?

How many people at these failing financial places got year-end bonuses? At Merrill Lynch, it’s reported that bonuses went into the billions before Bank of America bought them out with some of its bailout money. Bank of America has received $45 billion so far as well.

A bonus for running the enterprise aground? That’s like giving the captain of the Exxon Valdez a big bonus after running the tanker aground. Now the former CEO of Merrill Lynch is under investigation by the New York attorney general. Where was the SEC with all these financial firms in the last couple years?

There are safeguards and strict compliance issues. Where were all the government agencies that review compliance issues? Best practices for reviewing the investing practices by investors and institutions haven’t seem to be practiced let alone in place. This is a topic for a column in itself.

Infrastructure Best Practices

Now that we’re at this point in the economy, best practices better be discussed and in place before any bailout money comes across to any municipality. I know some of you are saying “dream on,” but someone has to point this out. The people in Missouri seemed to be concerned. Give credit to those who want to do right with the money and not just blow it.

Many people have become so cynical about everything. Some say that at least $1 billion was wasted in Louisiana and Mississippi after Hurricane Katrina.

How much is being wasted and will be wasted now? Remember that best practices are a moving target. What was considered best practices in 2008 could be totally obsolete in 2009. Keep a flexible approach that you can adapt with changes as you get further into this process. Part two of this column will come next week. Stay tuned!

Carlinism: Best practices are a moving target and usually change with the weather.

James Carlini is an adjunct professor at Northwestern University. He is also president of Carlini & Associates. Carlini can be reached at james.carlini@sbcglobal.net or 773-370-1888.
Click here for Carlini’s full biography.