The Dictator's Handbook (2 page)

Still, it is a community that takes pride in its accomplishments, its families, and its prospects. Despite its many challenges, Bell consistently outperforms other California communities in keeping violent crime and property crime below average. A cursory glance at Bell's official website suggests a thriving, happy community brimming over with summer classes, library events, water play, and fun-filled family trips. And Bell seems to be a concerned community too. The town offers, for instance, Housing and Urban Development (HUD) grants to pay for repairs to single-family homes provided certain basic residency and income requirements are met.
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Robert Rizzo, in his job for seventeen years, must surely look back on his time as city manager with pride. In 2010, Bell's then-mayor, Oscar Hernandez (later jailed on corruption charges), said the town had been on the verge of bankruptcy in 1993 when Rizzo (also ultimately charged with corruption) was hired. For fifteen consecutive years of Rizzo's leadership, up until he stepped down in 2010, the city's budget had been balanced. Hernandez credits Rizzo with making the town solvent and helping to keep it that way.
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That, of course, is no mean feat. Surely he and the town leaders with whom he worked
were deserving of praise and tangible rewards for their good service to the people of Bell.

Behind the idyllic façade, however, lies a story that embodies how politics really works. You see, Robert Rizzo, hired at $72,000 a year in 1993, and in his job for seventeen years before being forced to step down in the summer of 2010, at the end of his tenure was earning a staggering $787,000 per year.

Let's put that in perspective. If his salary had just kept up with inflation, he would have made $108,000 in 2010. He made seven times more! During long years of low inflation, his salary went up at an annual, compounded rate of more than 15 percent, almost exactly the return promised by Bernie Madoff, the master Ponzi schemer, to his hapless investors.

How does Rizzo's city manager's pay compare to other responsible government jobs? The president of the United States is paid $400,000.
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The governor of California's salary is just over $200,000. The mayor of Los Angeles, just a hop, skip, and a jump from Bell, is paid only a bit over $200,000. To be sure, Robert Rizzo was not even close to the highest paid public employee in California. That distinction, as in most states, went to the coach of a university football team—UC Berkeley's coach earned about $1,850,000 in 2010, but then he probably brought in a lot more revenue than Mr. Rizzo.
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Robert Rizzo was indeed credited with doing a good job for Bell, but was it really that good? It seems that he was the highest paid city manager in the entire United States (or at least until we discover another Bell).

The natural thought is that somehow Robert Rizzo must have been stealing money, dipping into the proverbial cookie jar, taking funds that were not rightfully and legally his or, at least, doing something or other that was immoral and illegal. The California attorney general (and Democratic candidate for governor) at the time of the Bell scandal in the summer of 2010, Jerry Brown, promised an investigation to find out if any laws had been violated. The implicit message in his action was clear enough: No one would pay a small town city manager nearly $800,000 a year. The truth, however, is quite a bit more complicated.

The actual story is one of clever (and reprehensible) political maneuvering implicitly sanctioned by Bell's voters and the city council members who represent them, supplemented only by a touch of larceny.

Cities comparable to Bell pay their council members an average of $4,800 a year. But four of Bell's five council members received close to $100,000 a year through the simple mechanism of being paid not only their (minimal) base council salaries but also nearly $8,000 per month to sit on city agency boards. Only poor councilman Lorenzo Velez failed to reap such rewards. Velez apparently received only $8,076 a year as a council member, approximately equal to what his fellow council members were getting
each month
. How can we possibly explain these disparities, let alone the outrageous salaries and pensions provided not only to Mr. Rizzo, but also to the assistant city manager and Bell's chief of police (all subsequently jailed on corruption charges)?

The answers lie in a clever manipulation of election timing. The city's leaders ensured that they depended on very few voters to hold power and to set their compensation. To see how a poor community could so handsomely reward its town leaders we must start with the 2005 special election to convert Bell from a “general city” to a “charter city.” What, you may well ask between yawns, is the difference between a general city and a charter city? The answer is day and night: decisions are made in the open daylight in general cities and often in secret, behind closed doors in charter cities. While a general city's governing system is dictated by state or federal law, a charter city's governance is defined by—well, as you would expect—its own charter.

The California legislature decided in 2005 to limit salaries for city council members in general cities. No sooner did the state legislature move to impose limits than creative politicians in Bell—some allege Robert Rizzo led the way—found a way to insulate themselves from the “whims” of those sent to California's state capitol, Sacramento. A special election was called, supported by all five council members, to turn Bell into a charter city. The selling point of the change to charter city was to give Bell greater autonomy from decisions by distant state officials. Local authorities know best what is right for their community, more so than distant politicians who are not in touch with local circumstances. Or, at least, so the leaders of Bell, California, argued.

Special elections on technical questions—to be a charter city or to remain a general city—are less than captivating to the general voter. Of course, if the decision had been made in the context of a major national or even statewide election, the proposition would likely have been scrutinized by many prospective voters, but as it happens—surely by political design—the special election, associated with no other ballot decisions, attracted fewer than 400 voters (336 in favor, 54 opposed) in a town of 36,000 people. And so the charter passed, placing within the control of a handful of people the right to allocate city revenues and form the city budget, and to do so behind closed doors. As best as one can tell, the charter changed nothing else of consequence concerning Bell's governance. It just provided a means to give vast discretion over taxing and spending decisions to a tiny group of people who were, as it happens, making choices about their own compensation.

Lest one think the council members were stupid as well as venal, it is worth noting how clever they were in disguising what they had done. Should anyone care to ask a city council member's part-time salary, any councilman or councilwoman could say openly and honestly that they were each paid just a few hundred dollars a month, a pittance for their services. As we have already seen, the bulk of their pay—the part denied to Lorenzo Velez—was for participation on city agency boards. That, as it turns out, may ultimately have been their Achilles' heel.

As of this writing all of the principal players in Bell's scandal have been jailed, but not for their lavish salaries. As reprehensible as these may have been, it seems they were perfectly legal. No, they were jailed for receiving payments for meetings that allegedly never took place. It seems they collected a lot of money while overlooking their obligation to actually attend committee meetings. This is to say that the well-paid managers of Bell may end up falling victim to what one might describe as a legal technicality. Outrageous salaries were okay, but getting paid for attending meetings while being absent from them was not. We cannot help but wonder how many government officials are held to that standard. How many senators and representatives, for instance, draw their full salaries while skipping meetings of the Senate
or House so that they can raise campaign funds, give speeches, or go on boondoggles?

You may well wonder how a little town like Bell could balance its budget—one of Mr. Rizzo's significant accomplishments—while paying such high salaries. (Indeed, we anticipate a high probability that once Bell's governance is cleaned up, its spending will involve indebtedness rather than a balanced budget.) Remember, the town's leaders got to choose not only how to spend money but also how much tax to levy. And did they ever tax their constituents. Here's what the
Los Angeles Times
reported about property taxes in Bell:

In plain and simple terms, Bell's property tax was about 50 percent higher than nearby communities. With such high taxes, the city manager and council certainly could pay big salaries and balance the budget, all the while enriching themselves and their key cronies.

Now that we have Bell's story let's look at the subtext. In the city, council members are elected, although their election was not contested for many years before 2007. That means that council members are beholden to the voters, or at least the voters whose support was needed to win office. Before 2007 that was hardly anyone since elections were not contested. Since 2007, as it turns out, even with contested elections, it still took very few votes to win a council seat. For instance, Bell had about 9,400 registered voters in 2009, of which only 2,285—that is, 24.3 percent—turned out to vote. Each voter could cast a ballot for two candidates for city council out of the six candidates seeking that office. The two winners, Luis Artiga and Teresa Jacobo,
received 1,201 and 1,332 votes respectively, out of 2,285 votes that were cast, but they didn't need that many votes to win. Speaking generously, election was achieved with supportive votes from only about 13 percent of the registered electorate. We say “speaking generously” because to get elected to the city council in 2009 all that was necessary was to have one more vote than the
third
largest vote-getter among the candidates. Remember, two were to be elected. The number three candidate had just 472 votes. So, 473 votes—about 5 percent of the registered voters, just over 1 percent of the city population, and only about one fifth of those who actually turned out to vote—is all that was needed to win election. Whatever the reason for the vote being divided among so many candidates, it is evident that election could be achieved with support from only a tiny percentage of Bell's adult population. This goes a long way to explaining the city government's taxing and spending policies.

One thing we can be sure of: those on the city council could not have been eager for competing candidates (or even fellow council member Velez) to get wind of the truth about their compensation package. City manager Rizzo had to maintain the council's confidence to keep his job and they needed his support to keep theirs. He could have exposed how deeply they were dipping into the public's hard-earned money, which would have sent them packing (as it now has). It is in this need for mutual loyalty that we see the seeds of Bell's practices and of politics in general. Rizzo served at the pleasure of the mayor and city council. They, in turn, served at the pleasure of a tiny group of Bell's citizens, the essential supporters among Bell's considerably larger prospective electorate. Without the council's support, Rizzo would be, as he now is, out on his ear—albeit with a fabulous pension estimated at $650,000 per year. How best to keep their loyalty? That was easy: promote the means to transfer great private rewards in the form of lavish compensation packages to council members.
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Of course, if all were being done in the open, or if Bell remained a general city subject to control over compensation from Sacramento, Rizzo could not have provided the means to ensure that he would scratch the city council members' backs and they his. When a leader's
hold on power—his or her political survival—depends on a small coalition of backers (remember the small percentage of voters needed to actually win a seat on the city council), then providing private rewards is the path to long tenure in office: Mr. Rizzo kept his job for seventeen years. Furthermore, when that small coalition is drawn from a relatively large pool—just five council members, elected under a city charter ratified by only 354 voters out of a registered voter population (in 2009) of 9,395—then not only are private rewards to the small coalition an efficient way to govern, but so much budgetary and taxing discretion is created that the folks at the top have ample opportunity for handsome compensation, an opportunity that the city's top leadership did not fail to exploit.

Bell presents a number of lessons to teach us about the rules to rule by. First, politics is about getting and keeping political power. It is not about the general welfare of “We, the people.” Second, political survival is best assured by depending on few people to attain and retain office. That means dictators, dependent on a few cronies, are in a far better position to stay in office for decades, often dying in their sleep, than are democrats. Third, when the small group of cronies knows that there is a large pool of people waiting on the sidelines, hoping to replace them in the queue for gorging at the public trough, then the top leadership has great discretion over how revenue is spent and how much to tax. All that tax revenue and discretion opens the door to kleptocracy from many leaders, and public-spirited programs from a very few. And it means enhanced tenure in power. Fourth, dependence on a small coalition liberates leaders to tax at high rates, just as was true in Bell. Taxing at high rates has a propensity to foment the threat of popular uprisings, just as happened in Bell. Of course, in Bell it was easy for the people to rise up and end Rizzo's rule because they have essential freedoms: the rights to free speech and assembly. We shall see that how the structure of government and the economy works explains variation in how many of these rights people have. This in turn accounts for whether the people take to the streets and whether they can succeed in orchestrating change, as we recently saw in some parts of the Middle East, or remain oppressed, as we saw in others.