I don't think Mike Rounds understands competitive advantage. Check out how he rationalizes the privatization of South Dakota's EB-5 program:

South Dakota officials were closely involved with plans to bring in a private company to help run the state's EB-5 program in 2007, two years before the economic development effort was fully privatized.

...Rounds said he was briefed several times in 2007 on plans to reshape South Dakota's EB-5 program, including that there would be private companies involved. At the time, EB-5, which solicited investments from would-be immigrants, was run by the South Dakota International Business Institute, an arm of the South Dakota Board of Regents but under contracts with the Governor's Office of Economic Development.

"What they could not do at the current level through the Board of Regents office was ... set up a separate program where they could offer these partnerships," Rounds said. "The idea was to look more like a regular regional center (like the ones) that they were competing with" [David Montgomery, "Letter Laid out EB-5 Privatization Plans in 2007," that Sioux Falls paper, 2014.09.16].

Separate program... these partnerships... I feel like I do when I'm in the insurance office and my agent isn't making himself clear. Rounds is talking about the scheme under which his man Joop Bollen formed a private company to aggregate EB-5 dollars into loan pools, collect huge fees from the investors, and keep it all off the state books so that when things went south, interested citizens would have a heck of a hard time following the money trail.

But think about the business model. There are two ways to compete in business: offer something cheaper or offer something different. South Dakota got into EB-5 in 2004 to offer something different: to lure foreign dairy investors with the additional benefit of a green card through the then underused EB-5 program. Three years later, that advantage was fading, as more "regional centers" popped up to offer EB-5 investment opportunities.

To compete for more EB-5 money, the Rounds Administration thus needed to offer a different different or offer cost savings. Mike Rounds could have done both. Imagine this alternative-universe pitch from a governor with real competitive ganas:

Hey, EB-5 investors! Tired of being fleeced by all those private regional centers? Want to deal straight up with a state government that will handle your investment with efficiency, integrity, and rigorous public accountability? Sign up for South Dakota's EB-5 program! We are one of the only state-run EB-5 programs in the country.

Private regional centers will charge you fees of $30,000, $40,000, even $50,000 or more on your $500,000 investment. South Dakota will only charge you $1,500.

Private regional centers just want to recruit more investors to pad their pockets. South Dakota wants to help you come to America and ensure that your money supports viable projects that pay off for everyone.

South Dakota EB-5: We're different! We're better! We're cheaper! We're here to help you. [South Dakota Regional Center, promotional video, alternative universe, 2008]

With a pitch like that, South Dakota could have recruited more EB-5 investors than it knew what to do with.

But our Mike Rounds chose to do the opposite: he thought South Dakota could compete by doing the same privatization and charging the same hefty fees as other regional centers. His plan led to some brief profits for his cronies but ultimately to a huge failed project in Northern Beef Packers and corruption that led to dozens of investors losing their money and Governor Daugaard shelving the program in 2013. So much for competitive advantage.

12 comments

Ah, high school debate, that joyous season when ninth graders stand and deliver more public debates in one weekend than Mike Rounds will during the entire general election season.

Looking at contemporary public political discourse through my high school debate judging paradigm is generally a bad idea, since it insults high school debate. But let's imagine South Dakota's Democrats and Republicans are high school debaters and see who won this week.

When I judge a high school debate, I take notes called a flow. First the Affirmative team speaks and puts points on the flow to prove some point. Then the Negative team speaks to put responses on the flow. Usually, after two speeches by decent debaters, my flow looks like this:
Sample FlowAff lays out arguments, and Neg responds to each one, point by point. Even if Point III is bogus, Neg takes a moment to explain why Point III is bogus before moving on to IV, V, etc. (And Neg does this in eight minutes or less—smart kids!) That's good clash (and good fun!).

South Dakota Democrats are on Affirmative, arguing that Mike Rounds is corrupt andunfit for U.S. Senate. This week, Democrats put a lot of arguments on the flow. And how did Team Rounds and the SDGOP—the Negative team—respond?Bollen-Rounds corruption flow Clash? What clash?

Against seven well-evidenced Aff points that show Mike Rounds rewarding the corrupt double-dealing and deceit of state employee Joop Bollen, Neg launches two ad hominem attacks at the bottom of the flow, tacks one diversionary non-response to one point, and leaves the rest of the flow blank. Mike Rounds, Dick Wadhams, and the rest of the GOP team have not challenged...

  1. the existence of Joop Bollen's contract with himself;
  2. the illegal conflict of interest created by such a contract;
  3. Bollen's violation of Board of Regents policy;
  4. Bollen's concealment of his unauthorized legal pleading on behalf of the state;
  5. Bollen's subjection of the state to legal liability;
  6. Kathy Tyler's specific math or her general charge that Bollen diverted money from state coffers;
  7. Rounds's rewarding of this rogue state employee with a no-bid contract.

In a high school debate round, I can just glance at the flow, see all that white space in Neg's column, and know that Aff is winning the debate. The SDGOP's inability to come up with direct responses to these questions about Mike Rounds's management of economic development shows they weren't ready for this corruption to be exposed and don't know how to spin pretty black-and-white evidence that Mike Rounds should not be our next Senator.

Of course, Republicans have more than eight minutes to respond. But every day they leave the flow blank is a day when Democrats can shout "Drop! Pull!", and tell voters to draw the arrows and vote Aff. Keep piling on, Dems!

7 comments

Ignored along with low wages in Governor Dennis Daugaard's Workforce Summits: Indians. With thousands of Lakota, Dakota, and Nakota people on South Dakota's reservations shut out of South Dakota's workforce, the Governor held none of his six Workforce Summits in reservation towns, and the Workforce Summit report does not mention American Indians or reservations.

Enter Rep. Rev. Steve Hickey (R-9/Sioux Falls). The Republican legislator got brief mention at the bottom of one article about the Workforce Summit report, saying he thinks the Governor could do more to address workforce issues in the state's poorest areas. But the state's poorest areas don't vote or donate Republican, so don't expect much if any of the Governor's latest one million dollars of corporate welfare to go toward the reservations.

Into this glaring policy gap, Rep. Hickey throws the first draft of his SD TRADE plan, a proposal to include our Indian neighbors in the Governor's South Dakota WINS economic development program:

SD T.R.A.D.E.
South Dakota Tribal Resource and Development Exchange
Rep. Steve Hickey, SD-District 9.

SD TRADE is a proposed sub-initiative within the SD WINS workforce initiative.

As SD WINS seeks state “cross-collaboration” with communities and businesses, SD TRADE seeks state cross-collaboration with tribes and industry.

SD TRADE looks at the sober unemployment realities on our reservations not as a problem but as an opportunity.

SD TRADE seeks to create a perpetual jobs pipeline across South Dakota bring economic opportunity, development and prosperity to desperately impoverished areas in our state.

DEFINITIONS

Trade:

  1. The exchange of jobs and services
  2. A skilled job

SD TRADE employs both aspects of this definition exchanging land for skilled jobs.

Trade Center:

  1. A central location for commerce and industry
  2. A hub for job opportunity

REALITIES

South Dakota industries need workers to move into the state. South Dakota Indians need employment opportunities in the state.

South Dakota celebrates a low unemployment rate only because tribal unemployment statistics are excluded. The real unemployment rate in South Dakota which include tribal unemployment are much more dire.

How many potentially employable natives are on reservations without access to job opportunities? 10,000? Most certainly more.

Industries are not tapping into this available labor force on reservations for a variety of reasons, first and foremost of which are things like sovereignty issues and complication legal and tax uncertainties.

If our best minds can navigate through the complexities, obstacles and challenges to build a hundred clinics overseas, and if our industries can capitalize on exporting jobs overseas, and if our industries can get creative to import foreign labor into our state then surely our best minds can navigate the challenges of tapping into a challenging and remote labor force within our state.

WHAT IS SD TRADE?

SD TRADE encourages strategic land swaps between the state and the tribes. Tribes indefinitely release and legally assign (one hundred) acres to the state for the establishment of TRADE CENTERS (commercial and industrial) in exchange for (one thousand acres) of land the state deeds back to the tribes.

Imagine several TRADE CENTERS, one on Rosebud and others on Pine Ridge and Lower Brule. These are commercial and industrial work centers with various industries in one location, given tax and other incentives.

Industries at each TRADE CENTER contribute toward shift shuttles commuting workers back and forth to their communities each work day.

Pharmacies, clinics and support agencies can be encouraged to offer services adjacent to or within a TRADE CENTER complex.

South Dakota Tech Schools can be encouraged to develop onsite training for new recruits. State funds can be allocated to tech-ed schools for use in developing on-site skill training. Perhaps Federal funds are available and can be acquired for a TRADE CENTER pilot project.

South Dakota can ensure good roads from the Interstate to the various TRADE CENTER complex [Rep. Steve Hickey, draft proposal, 2014.09.04].

Land swaps to create economic development zones where we could plunk factories, offices, and training centers—fascinating! Our industry leaders find ways to make profits on production done thousands of miles away in Malaysia; what stands in the way of their using Hickey's SD TRADE plan to make Jeeps, jackets, and jerky just hundreds of miles away in Manderson and Mission?

Economic development on the reservations may be complicated, but Rep. Hickey reminds me that our "best minds" have plumbed all sorts of complexities for past economic development plans. Recall the wildly complicated financing of Northern Beef Packers.

And while we're recalling Northern Beef Packers, let us ask why NBP and other EB-5-backed projects weren't directed toward employing South Dakota's Indian workforce. EB-5 investors get their green cards for half price when they invest in "Targeted Employment Areas"—i.e., rural areas or areas with high unemployment. Every project funded by EB-5 dollars in South Dakota was in a rural area, but none targeted an area of high unemployment.

If EB-5 is wonderful (and Mike Rounds desperately needs us to believe to the exclusion of everything else), imagine how much more wonderful it would be if we combined it with Rep. Hickey's thinking and used it to join workers and jobs on South Dakota's reservations. Traditional markets don't gamble on reservation projects. Directing EB-5 investments toward SD TRADE work centers would fill exactly the capital gap that government intrusion in the economy like EB-5 ought to fill.

We may do better implementing Hickey's SD TRADE plan on its own, without entangling it in the questionable morality and economics of EB-5. But couple SD TRADE with EB-5 financing, and we may have a recipe for tackling the Indian workforce problem that the state and the free market are ignoring.

129 comments

Mike Rounds, Dick Wadhams, and Pat Powers are projecting. They say Rick Weiland and I and anyone else who reports the facts about Mike Rounds's economic development policies are telling big desperate lies, when in fact the big desperate deception comes from those trying to help Mike Rounds win a U.S. Senate seat. As is the case with deficit spending and government intrusion in the doctor-patient relationship, Republicans accuse Democrats most loudly of the sins Republicans themselves commit.

Rick Weiland encapsulated the corruption of Mike Rounds's administration in the neat and direct 30-second "Auction" ad released yesterday, accusing Rounds of selling U.S. residency to wealthy foreigners through the EB-5 visa investment program so his cronies could make millions. The attack stung enough to provoke immediate and voluminous responses from Rounds, including a swiftly produced video summarizing Rounds's evasions and absurdity.

As usual, Rounds says EB-5 is a federal program. "Mike didn't create EB-5, didn't run it," says the Rounds response. The former is true; the latter is either false or damning. But the federal provenance of EB-5 is far less important than how Mike Rounds used and abused it:

  • Through his Governor's Office of Economic Development, Mike Rounds authorized state employee Joop Bollen to seek EB-5 investment for projects that apparently couldn't stand on their own in the South Dakota market.
  • Mike Rounds allowed his cronies Joop Bollen and Richard Benda to privatize this portion of the Governor's Office of Economic Development's portfolio, for no apparent reason other than sheer greed.
  • Mike Rounds allowed his cronies to create a bank that appears to have violated South Dakota law and cheated the state of millions in bank franchise tax.
  • Mike Rounds signed off on $2.36 million in lame-duck handouts to subsidize his delayed and doomed centerpiece EB-5-financed economic development project, Northern Beef Packers.
  • Mike Rounds hired and admired a GOED chief, Richard Benda, who used his EB-5 travel expenditures as his personal slush fund.

Rounds responding to concerns about bad policy choices, corruption, and mismanagement in the Governor's Office of Economic Development by shouting "EB-5 is federal!" is like the kid we nab running with scissors shouting, "But these scissors were made in China!"

In further evasion, Rounds repeats his absurd semantic stretch that "the state did not lose money" in Rounds's/GOED's/Joop Bollen's/Richard Benda's (yes, this is complicated) exploitation of the EB-5 program. Even under the most generous yet documentable reading, the state poured $4.3 million in tax dollars into the EB-5-dependent Northern Beef Packers, which generated $3 million in sales, use, and contractors excise tax. That's a loss. And even that $3 million came at the cost of one local contractor being stiffed $2.1 million and other contractors and suppliers losing big money when the plant went bankrupt after just nine months of operation.

The newest Rounds ad then goes for the big enchilada, saying EB-5 "creates thousands of jobs across South Dakota. If Rick Weiland had his way, thousands of South Dakotans would be unemployed today."

Hogwash. EB-5 job creation numbers are mathematical fictions, not real bodies at new work. Fortune agrees:

First, the government is exceedingly generous in its employment tally. It gives EB-5 investors credit for all the jobs theoretically spawned by a project even when EB-5 money represents only a sliver of its financing. Second, for many mainstream ventures, EB-5 money isn’t really creating jobs—it’s merely saving developers money for projects that would be financed anyway. (Indeed, those big companies are actually “hijacking” money from worthy smaller investments in hard-hit areas, argues Michael Gibson, a financial adviser who vets EB-5 investments.) [Peter Elkind and Marty Jones, "The Dark, Disturbing World of the Visa-for-Sale Program," Fortune, 2014.07.24]

Homeland Security says EB-5 projects provide no evidence that they have created new jobs. The Brookings-Rockefeller Project on State and Metropolitan Innovations says "there is a dearth of reliable and publically available data that would enable better monitoring and evaluation of the economic impacts of regional center investments."

In other words, Mike Rounds is talking out his backside. Show us, Mike, the "thousands" of people at work in South Dakota right now who would not be working if you had not included EB-5 investment in your Governor's Office of Economic Development strategies. Where are they, Mike? Are they the Korean contractors brought in to drag Northern Beef Packers to completion? Are they the hundreds of Aberdeen workers who got stiffed paychecks by Northern Beef Packers when it collapsed in July 2013? I don't see them, Mike. Where are these mighty and prosperous thousands whom you say Rick would turn to paupers?

Mike Rounds is lying. He's making stuff up. He's kicking up dust to keep voters from seeing that Mike Rounds owns his bad policy choices and his sloppy management of his economic development policies.

27 comments

Speaking of wages, the Governor's Workforce Summit report isn't.

  1. Accenture (the international consulting shard of Arthur Andersen that incorporated in Bermuda, then Ireland, thus avoiding U.S. taxes—way to keep our dollars local, Governor!) does not mention wages in the executive summary.
  2. Accenture does say South Dakota's workforce problems come from stupid workers "Job seekers do not know the real potential of technical and other careers, or what is expected to succeed") and misfocused teachers ("Education is critical to providing the workforce South Dakota needs, and must be focused on the skills and competencies needed to grow and sustain South Dakota’s economy"). Obviously we are the dummies, not our business leaders.
  3. The executive summary damns us with limited thinking: "...South Dakota will never fully solve its workforce challenges."
  4. The key to South Dakota's economic success is "having enough workers with the right skills and competencies."
  5. The bullet list of the key difficulties in recruiting and retaining workers mentions "competition for available skills", lack of job seeker "soft skills", and lack of housing, but does not mention wages.
  6. Summit participants proposed that the business sector can boost recruitment and retention if it will "Increase workplace flexibility to meet needs of a changing workforce... expand the number of apprenticeships leading to jobs... [and] develop creative solutions to provide transportation for workers." Wages are not mentioned.
  7. The three scariest words in the entire report: Business-driven curricula.
  8. Once we retool our schools to do what business wants, we just need to build more complicated "centralized online hubs for job seekers and employers" built around "common language, data, and a unified agenda" so we can match up skills and competencies with openings (but not wages).
  9. In their discussion of "Creating a Roadmap" for recruitment and retention, summit coordinators asked business participants several questions, but not, "Do you think you pay your employees a competitive wage?"
  10. Participants at all six summits included low wages as a problem for recruitment and retention. But only the Brookings, Rapid City, and Sioux Falls sessions managed to get "increase wages" to bubble into the top suggestions for recruiting and retaining more workers. Watertown, Aberdeen, Huron-Mitchell-Yankton, are you that dense?

I'm sure Accenture's consultants were paid very well to conduct and summarize these Workforce Summits. If South Dakota would apply its attitude toward Irish consultants to its own workers, it might not need another Workforce Summit.

44 comments
Sur la table: Rosemarie Cornelius (left) and Emma "Pinky" Iron Plume (right) discuss housing and community development with me where business happens in Manderson: the back table at Pinky's store, 2014.08.18.

Sur la table: Rosemarie Cornelius (left) and Emma "Pinky" Iron Plume (right) discuss housing and community development with me where business happens in Manderson: the back table at Pinky's store. Photo by Francis, 2014.08.18.

Emma "Pinky" Iron Plume opened Pinky's, the only store in Manderson, South Dakota, thirty years ago. She continues to run the store on BIA Highway 33 today, providing her neighbors and folks from the nearby elementary school and the Oglala Lakota College branch campus a place to buy a few staples and snacks and gather to do business.

Iron Plume serves her neighbors with an even larger economic development project on the Pine Ridge Reservation. Through the Oglala Sioux Tribe Partnership for Housing, Iron Plume helps Indian families become homeowners, which Iron Plume says is central to personal and community economic security.

The benefits of homebuilding and homeownership are obvious. Building homes creates jobs and economic activity. It addresses the critical housing shortage on the reservation, where Iron Plume sees families doubling and tripling up in the few available houses. Owning a house not only makes a family safer, healthier, and happier but also gives that family a real sense of ownership and a stake in the community that does not exist when a family must bounce from rental to rental or other temporary lodging.

Getting Indian families into new homes isn't easy. Iron Plume says the OST Partnership for Housing used to build homes, like Habitat for Humanity, but found that model too costly to coordinate and carry out. Now the Partnership focuses on educating homeowners and finding allies to help them buy homes.

A key part of that education is financial education. The Partnership helps Indian families learn about credit and savings. Iron Plume says the group warns its clients of predatory lenders, both the payday lenders and the subprime mortgagers who crashed the economy a few years ago.

Once families have a grip on their finances, the Partnership helps them find willing lenders and homes, often the small, affordable Governor's Houses built by state inmates.

The Partnership also helps families find land. Those who have driven through the wide open expanses of Pine Ridge would think that finding available land would be no big deal. But viable building land is hard to find on the reservation. Infrastructure is limited: a lot of places around Manderson, Wounded Knee, and Porcupine don't have electric lines or water pipes. (Pinky also notes that AT&T hauls extra cell-phone transmitters to Sturgis for the Rally but provides unreliable cellular service to Pine Ridge year-round; get with it, AT&T!) The Partnership thus has conversations with utilities and agencies to try to extend infrastructure to make new land available for development.

Where infrastructure exists, land ownership is complicated by fractionation, the slicing up of ownership through inheritance. The Oglala Sioux Tribe is using Cobell settlement money to buy back and consolidate small tracts into viable housing plots. Iron Plume says the tribe will keep ownership of the buy-back land and lease it out to homeowners in 50-year intervals.

So far, the Partnership has helped put over 100 families into homes of their own. The Partnership has now received a grant from the Administration for Native Americans (under the federal Department of Health and Human Services) to help young Indians invest in homeownership and other economic development. The Partnership will use that grant to launch a savings-match program in 2015: young Indians (age 16 to 26) who apply can receive two dollars for every one dollar they place in an "Individual Development Account." The money invested must be earned income, not gifts from Grandma. The IDA money must then be used to buy a house, take postsecondary classes, or start a business. The match goes up to $1,500, so young investors can turn $1,500 into $4,500.

The goal of the grant program, says Iron Plume, is to create assets. Thus, the program will also include an insurance fair to teach its young participants how to protect their assets. The program will offer a marketing workshop to young entrepreneurs to help them expand their sales and create even more assets.

Iron Plume says the Partnership has promoted other projects to help her neighbors with homemaking. Among other things, the Partnership has promoted food self-sufficiency. Iron Plume recognizes that a lot of the prepared foods she sells at Pinky's are not the cheapest or healthiest options. She encourages her neighbors to try making meals from scratch. The Partnership has given out cookbooks. It held a canning workshop last year and has a jelly-making workshop coming up. Iron Plume says a lot of her neighbors garden and derive great satisfaction from that bit of self-sufficiency (not to mention the chance to make maybe one less trip to Walmart in Rapid). She sees local food as an important part of the Partnership's philosophy of centering life on the home.

Pine Ridge and our Indian neighbors face all sorts of challenges, but Pinky Iron Plume views every challenge as an opportunity to find new partners to help. Iron Plume tackling those challenges both as a traditional entrepreneur, selling goods to her neighbors and providing a meeting place for her community, and as a social entrepreneur, helping others use and build their financial well-being. The Oglala Sioux Tribe Partnership for Housing is a good example of a local effort building cooperation among numerous agencies to make life better on Pine Ridge.

4 comments

Governor Dennis Daugaard has declined the Rapid City Journal's invitation to debate in Rapid City in October, saying he's too busy with all of his gubernatorial duties...

...like hobnobbing with rich people in New York City to promote Sioux Falls:

South Dakota's governor and economic development leaders are leading a campaign to encourage national companies to relocate to Sioux Falls.

The delegation is in New York City this week to promote the state's largest city to financial writers in the hopes of attracting development, said Sioux Falls Development Foundation president Slater Barr.

"The real reason behind these types of visits is we recognize a disparity between the reality of crunching the numbers and the perspective of executives as to the viability of Sioux Falls and South Dakota as an attractive business location," Barr said of efforts to attract new business.

...Joining Daugaard on the New York trip are two leaders from the Governor's Office of Economic Development, commissioner Pat Costello and Steve Watson, business development director [Carson Walker, "Governor Promotes Sioux Falls to Promote Investment," AP via Sacramento Bee, 2014.08.05].

Wait: Mayor Mike Huether isn't on this trip? Whose job is the Governor doing?

Of all cities in the state, one would think that Sioux Falls is best positioned to promote itself, without state assistance. But in true GOP fashion, Governor Daugaard keeps working to help the rich get richer.

*   *   *

Among his media stops, the Governor gets ten blurpy minutes on Bloomberg TV:

The panel of interviewers seem to have trouble sticking with one line of questioning or following up on Governor Daugaard's statements. The Governor credits our population growth to out business-friendly environment of low taxes and low costs of doing business but says nothing about Indians having more babies.

One interviewer notes that economic development is not just about taxes but also about amenities and infrastructure. Governor Daugaard responds that South Dakota has concerns about federal Highway Trust Fund that "all the states depend on" but offers no statement about what South Dakota is doing to promote better roads, schools, and parks.

The interviewer asks about high-speed Internet access, Governor Daugaard brags that he has fiber-optic cable at his place in Garretson. Daugaard's respons epitomizes Republican "I've got mine!" thinking, and the interviewer fails to follow up on whether anyone is doing anything to ensure better Internet and infrastructure for all of South Dakota. The interviewer does return to the topic toward the end of the chat to ask who laid that fiber: Governor Daugaard manages to say his local co-op without saying the word socialism. Daugaard's co-op, Alliance Communications, spent $66 million over eight years to build that fiber network; some of that money came from federal Universal Service Funding. Alliance is seeking more federal dollars to expand its rural broadband service. Ah, self-reliance.

Asked about partisan polarity, Governor Daugaard says South Dakota Republicans and Democrats "get along pretty well" and "treat each other with civility." His Beltway-focused hosts chortlingly encourage Daugaard visit Washington with his lessons in civility, not asking Daugaard why his party has hired Dick Wadhams to launch personal attacks on Democrats.

Opining on how Washington obstructs entrepreneurship, Governor Daugaard says the feds burden us with uncertainty: would the stimulus affect the economy in the way it was hoped, would the sequester take hold, would the government shut down. Governor Daugaard ignores the fact that the stimulus worked except for the drag his own party put on it by (among other things) hamstringing government hiring. He also ignores the fact that the potential for economic destruction from sequester and shut down came from his party's kamikaze politics.

When asked for his five-year plan for South Dakota, Governor Daugaard offers no new ideas, just the typical Republican faith in marketing: South Dakota just needs to "get the word out" about its business climate. But remember: in Republican circles, "getting the word out" means sharing unchallenged sound bites with New York journalists, not fielding questions from local journalists who know what questions to ask in front of challengers for your job.

10 comments

Madison's new thrift store, now christened the Encore Family Store, is scheduled to open in November. Store organizers have scheduled donation drives to collect merchandise for the store for Aug. 16, Sept. 6 and Sept. 13 from 9 a.m. to noon. On those days, folks can bring the usable contents of their basements and rummage sale leftovers to the empty lot between Lewis and Montgomery's on South Washington.

The thrift store organizers continue to seek financial donations. A fundraising letter sent around town on July 25 says that the project as reached two thirds of its fundraising goal. Last March, organizers reported that the thrift store had raised $400,000 of the projected $650,000 it needed; that was 62%. Climbing from 62% to 67% (assuming the July 25 letter isn't rounding) in four months isn't exactly a torrid fundraising pace.

Inter-Lakes Community Action Partnership will run the thrift store, as it runs similar operations in Howard, Flandreau, and Clark, to generate revenue for its various community service programs, like 60s Plus Dining and rent and utility assistance.

ICAP will need some rent assistance of its own. A flyer distributed with the July 25 letter indicates that the thrift store's operating expenses will include rent. Recall that the landlord, the Madison Community Foundation, acquired the property for free, meaning they have no mortgage to pay off. I suppose someone has to pay the property tax on the lot, and I suppose it doesn't hurt to have one non-profit pay another non-profit to pay the city and county and school district, but I can't imagine the Madison Community Foundation will charge ICAP much more than that.

The thrift store promoters continue to press the fear of federal budget cuts as a reason to support the thrift store and "lessen ICAP's dependence on governmental support." Since that fear of federal budget cuts is generated mostly by the government-crashing politics of Kristi Noem, Mike Rounds, and the GOP, I assume this fear will also motivate everyone supporting the thrift store to vote for Rick Weiland and Corinna Robinson this fall.

In a discussion here in early July, local reader DB, responding sarcastically to comments questioning Madison's commitment to desirable economic development, contended that the thrift store can meet a currently unfilled role in boosting the local economy by recycling otherwise economically valueless goods locally:

Yeah, we have no need for a thrift store. Don't mind the Goodwill Truck shipping thousands of dollars of items out of the city every quarter(it will be in town in the next week), not to mention the overflowing bins located on main, near Nicky's, and near El Vaquero. Let's just keep letting that slip away while someone will fully fund a venture by taking worthless taxpayer assets and turning it into something good. It's a need that can't be filled by one of the many consignment shops in town [DB, comment, Madville Times, 2014.07.09].

I have mixed feelings about that comment. On the one hand, I appreciate the notion of increased recycling and local self-sufficiency. But don't we already meet that need with rummage sales? And should we really let ourselves get into the mindset of thinking of donations to Goodwill and other state and national non-profits as losses to our community? If we must think in economic bottom-line terms, we could argue that the system of rummage sales and current donation exports is more efficient for the local economy. At rummage sales, the owners set up a few tables in their garages and yards for a day or two. The free market quickly sorts the usable treasures from the junk no one wants. The owners strike their tables, leaving no sale infrastructure or overhead. They dump the remaining items in the donation bins, which are emptied by out-of-town interests, leaving Madison with no lingering useless inventory—and remember, from a strict economic perspective, static inventory is a cost.

The thrift store will shift that inventory from basements and closets to a new downtown store. It will shift some of the economic benefit from individual rummage sale profits to a few ongoing salaries and support for charity. But the thrift store will establish new ongoing overhead, and it will reduce the economic benefit of outside agencies removing our junk at no local cost.

Of course, these costs and benefits are all pretty marginal. Remember, Madison is spending $650,000 to turn an empty lot into a secondhand store, a venue with slightly more draw but the same basic mission as the city recycling station on Southwest 7th.

Send your cash contributions for the Encore Family Store to the Madison Community Foundation, 820 N. Washington Ave., Madison, SD 57042

11 comments

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