Monday, July 7, 2014

The non-problem of Citizens’ executives and their questionable ethics

Citizens Property Insurance Corporation has built itself a notable history of questionable ethics.  Most recently, South Florida newspapers have brought attention to the revolving door between Citizens’ executives and the private industry. 

A revolving door between public service and private interests is not unique to Citizens.  It is a common concern in nearly all aspects of US politics.  For example, personnel often move between journalism (the job of informing the public) and advocacy (the job of influencing the public). 

Former Vice President Dick Cheney served as Halliburton CEO in between many years of holding high-level public offices.  This revolving door caused great speculation over motivations behind US military action in Iraq. 

Let us not forget Florida’s own Governor, Rick Scott, who seamlessly moved between the private insurance industry and Florida public office.  Last year, his tie to Heritage Insurance Company was a much-discussed public controversy.

Citizens manages the largest hurricane risk in the world.  The job of running Citizens is demanding and its executives are powerfully influential in the global insurance and risk transfer industry. 

Public policy makers face very real challenges in finding executives with the skill and expertise required to run Citizens, but little interest in realizing their own full earning potential after working there.  Indeed, it is hard to imagine that such a person exists.

Given no obvious solution to the political revolving door so prevalent in our political system, why does Citizens’ CEO Barry Gilway seek to investigate the career paths of Citizens’ previous executives?

One possibility is that Governor Scott is up for reelection.  The governor is responsible for appointing two members of Citizens’ Board of Governors.  So, if Scott loses the election, the new governor could replace Gilway.   

Investigating Citizens is a timely show of symbolic politics.  While policymakers can do little to solve Citizens’ revolving door problem, Gilway can take credit for making ethical behavior a legacy of his management.  Perhaps this will discourage his potential successor from critically examining Gilway’s own career path after Citizens.   

Another possible explanation is that Scott, Gilway and/or others seek to establish a precedent that questions Citizens’ legitimacy and perhaps, builds a case for its eventual termination. 

Consider a hypothetical scenario where upon thoroughly investigating Citizens’ executives, the corporation’s inspector general, Bruce Meeks, finds that by, its very nature, the corporation cannot function by established conflict of interest regulations.  Such a finding sets the stage for political attack on the establishment of Citizens in the first place.

Whatever the reason, a spectacle about specific Citizens’ executives and their career history draws the energy and attentiveness of the public away from two far more fruitful underlying issues in Florida.

First, Florida’s democratic governing process is fragile.  Many South Florida residents will recall the election of 2012: the poorly managed waiting lines, unreasonably long ballot and shameful efforts to restrict voting rights, which received international attention.  There was the 2000 election debacle where Florida demonstrated all sorts of trouble counting ballots.  Also, last year, several Florida mayor arrests boosted the state’s reputation as a “hothouse for corruption.”

A struggling democratic process has impacts on managing public programs like Citizens.  When the process ensuring democratic accountability of elected officials is challenged, the public has difficulty managing the responsible behavior of the executives that elected officials appoint.   

Second, Florida’s economic goal of real estate development conflicts with the public goal of affordable property insurance.  This conflict underlies all debate regarding Citizens, its pricing, its management and its existence.  

These two problems are far more amendable to policy solution than attempts to socialize decision making about the career paths of insurance executives.  Paramount to resolving these problems is a renewed focus on the democratic accountability of elected officials and debate involving the public’s moral values regarding Florida’s economic policies. 

Political efforts that focus public energies on difficulties having no solution rather than underlying policy problems performs a disservice to society and further underscore Florida’s shaky democratic process.  This is where the unethical behavior lies.

Thursday, July 3, 2014

Florida Sea Level Rise Politics

While North Carolina seeks to manage the perception of sea level risk placed upon itself, Florida is all about their sea level rise.  Undoubtably, economic and political dynamics influence the different approaches the two states have taken to this particular coastal risk.

The image above shows a prediction of sea level rise for South Florida taken from a recently released report by the Miami-Dade Sea Level Rise Task Force.  

Notice the difference between the predicted sea level rise based on historic measurements and that based on all sorts of other stuff.  The difference in planning for 4 inches of sea level rise is likely different from planning on 2 feet of rise.  

Watching how North Carolina and Florida manage the debate about flood risk will certainly be interesting.  How they proceed will offer lessons of good ideas and bad ideas for other states and nations.