Category Archives: American Politics

America’s Skewed Economic and Political Systems Can be Righted by Divine Law

A_Disney_Patchwork_by_DisneyDreamersMy life experience is that if you take a snapshot of what is occurring and it does not make sense then something is askew. Life balance occurs when life is working toward a laudable goal. Yet the direction the United States has been taking is not laudable. Something is amiss. Most of Americans know it.

So we know America is not well yet we do not look holistically at our systems to define the illness. This has been the purpose of my writing for the past two and a half years, to reach the inner workings of our systems and to understand the imbalances as they relate to each other. From this vantage, I have written my perspective of the path that America can follow to heal herself.

I have found no better economic system than capitalism in my search, for capitalism works with man’s nature to find balance, one man’s interests against the other’s. And when capitalism is rooted in a political system like America’s Republican form of government, it is even more stable. America’s Constitution was created to force stability amongst the classes and to ensure that neither wealthy elites nor poor mobs could easily take from the other using the law of the land.

Yet the Constitution was flawed in that its founders were not able to see all men as truly equal and so we struggled through the Civil War and the Civil Rights movement, resetting the boundaries of the Constitution through great sacrifice. In the process of our social reforms, we found that the economy also suffered greatly in large system cycles that engulfed the smaller business cycles. These larger, implosive cycles seemed to create crises every three generations or so.

These economic upsets were driven by America’s unique mixture of our form of capitalism and Republicanism that failed to curb man’s nature from greedy excess. So we struggled through the Long Depression and the Great Depression. FDR dragged the country left during the social reforms of the Great Depression, yet some of those leftward movements were necessary to curb the ills of capitalism. Financial reforms were installed that gave hope to disrupting the greater implosive economic cycles that had kept wreaking havoc on America.

Yet, from the Depression, the pendulum of affairs swung too far left and the power of unions became excessive. While their impact in assisting America’s racist institutionalism was great, their disruption to our economic system was too rapid and threatened America’s elite too greatly to lead to a stable conclusion.

Coming out of the 20th century wars, the world appeared America’s economic oyster. America seemed for the moment the hegemonic leader of the world. Rather than deal with the social disruptions occurring in the United States, our elite changed America’s laws to allow investments around the world (America was not unique in this regard. We raced East with the rest of the Western first world nations, similarly to how the Western world had rushed into colonialism prior to WWI)

The resulting rush to worldwide corporatism began to gut America’s manufacturing base, a base that had provided living wage jobs to millions of America’s working class. Without that base, many of our school children lost their incentive to continue. Our cities began to crumble from within. Crime rose. Debts rose. Unemployment rose. Our intertwined systems of capitalism and republicanism began to unravel.

Whenever, a complex system begins to fail, choices are made to either improve its health or to provide patchworks to keep it moving along. America chose patchworks. We were, of course, the world’s hegemony and the world’s money system relied on our dollar as its reserve currency, so we had ample capacity to take from the world to keep our patchwork economy going even as we gutted the sound economic system that had made our country strong.

So America skewed our financial systems and we skewed our political system to allow the skewing of our economy. Our system kept failing and being repaired by patchworks until the failures took on crisis dimensions. Just before the 2008 implosion we had the savings and loans crisis and the stock market crisis. Finally, we skewed both so much that both our economy and our political system finally broke under the weight in 2008.

A snapshot now of our economic and political systems has most Americans dismayed. We point to one faction or another as the culprit, yet our system has been under patchwork for decades. I wrote my last post denouncing the position of America’s elite, yet what about the static positions of the rest of our factions? A nation held together by patches can only arrive at this condition because all have accepted the patches leading to America’s skewedness rather than fighting to set our nation’s course anew.

Certainly, capitalism has always gone in cycles to permit the world’s elite to suffer the extremes of greed, and without corrections to capitalism the world’s implosive three decade cycles will continue. My admonitions in the last post, however, were not an indictment of America’s capitalists or of capitalism, only a pronouncement of our nation’s current skewed position that includes within it the excesses of our elite, which must be heartily corrected.

Sometimes, calling out the horridness of a static position must be done to wake up all that have accepted the patchwork, including our elite. Now the corrections of peeling away the patchwork and repairing the nation’s infrastructure will not be easy. And my advice to America is that the corrections must keep all whole including our elite. Allow our elite to reinvest in America and make a healthy profit. Bring back living wages. Repair our schools. Correct the imbalances that create crime and unhealthy communities. Restore America’s path toward prosperity.

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Filed under American Governance, American Politics, Full Employment, Jobs

Divine Law is the Defense Over Addictive Power

1361966304_Victory parade in Red Square, Moscow, 24th June 1945.Is there a truly evil power that afflicts the world, is there a dark side as is portrayed in science fiction, is there universal force of evil that attempts to feed men? We suggest that capitalism is the economic system that balances this dark force for the good of nations but if such a dark force exists can it truly be contained? Consider this thought from the sci-fi writer Adam Turquine…

“Evil is not just a theory of paradox, but an actual entity that exists only for itself. From its ether of manifestation that is garlanded in perpetual darkness, it not only influences and seeks the ruination and destruction of everything that resides in our universe, but rushes to embrace its own oblivion as well.

To accomplish this, however, it must hide within the shroud of lies and deceit it spins to manipulate the weak-minded as well as those who choose to ally themselves with it for their own personal gain. For evil must rely on the self-serving interests of the arrogant, the lustful, the power-hungry, the hateful, and the greedy to feed and proliferate. This then becomes the condition of evil’s existence: the baneful ideologies of those who wantonly chose to ignore the needs and rights of others, inducing oppression, fear, pain, and even death throughout the cosmos. And by these means, evil seeks to supplant the balance of the universe with its perverse nature.

And once all that was good has been extinguished by corruption or annihilation, evil will then turn upon and consume what remains: particularly its immoral servants who have assisted its purpose so well … along with itself. And within that terrible instant of unimaginable exploding quantum fury, it will burn brighter than a trillion galaxies to herald its moment of ultimate triumph. But a moment is all that it shall be. And a micro-second later when the last amber burns and flickers out to the demise of dissolving ash, evil will leave its legacy of a totally devoid universe as its everlasting monument to eternal death.”

How does one that is not driven by the intoxication of evil power nonetheless gain an understanding of it. If it is power that skews men’s wages to the detriment of a nation, should we then not try to gain more than a vague understanding of it:

“The fairy tale belongs to the poor…I know of no fairy tale which upholds the tyrant, or takes the part of the strong against the weak. A fascist fairy tale is an absurdity.”
― Erik Christian Haugaard

“Power is a word the meaning of which we do not understand.”
― Leo Tolstoy

Perhaps we are lucky to have escaped a grasp of understanding for it seems there is no escape once one falls prey to its lure:

“In the beginning, the taste of power is sweet, savored on the tongue, like fine wine. It whispers promises in your ear and pretends to be your friend. It is easy to become addicted to this feeling.”
― Rahma Krambo

“Whoever has experienced the power and the unrestrained ability to humiliate another human being automatically loses his own sensations. Tyranny is a habit, it has its own organic life, it develops finally into a disease. The habit can kill and coarsen the very best man or woman to the level of a beast. Blood and power intoxicate … the return of the human dignity, repentance and regeneration becomes almost impossible.”
― Fyodor Dostoyevsky

For the masses of us who have not been tormented by the temptations of power, we are nonetheless victims of this obscure stranger:

“Power lacks moral or principles. It only has interests.”
― Horacio Castellanos Moya

“For the powerful, crimes are those that others commit.”
― Noam Chomsky

“The object of terrorism is terrorism. The object of oppression is oppression. The object of torture is torture. The object of murder is murder. The object of power is power. Now do you begin to understand me?…Power is not a means; it is an end.”
― George Orwell

“Station is the paradox of the world of my people, the limitation of our power within the hunger for power. It is gained through treachery and invites treachery against those who gain it. Those most powerful in Menzoberranzan spend their days watching over their shoulders, defending against the daggers that would find their backs. Their deaths usually come from the front.” -Drizzt Do’Urden”

“People with power always take advantage of those without power.”
― Christopher Pike

“It is the destiny of the weak to be devoured by the strong.”
― Otto von Bismarck

“Power brings a man many luxuries, but a clean pair of hands is seldom among them.”
― Robert Harris, Imperium

We Americans go about our quiet lives depending on our institutions of fairness and justice to govern the affairs of others over us yet it is power that directs our lives when we turn over our institutions to others:

“If we define an American fascist as one who in case of conflict puts money and power ahead of human beings, then there are undoubtedly several million fascists in the United States.”
― Henry A. Wallace

“What better way for a ruling class to claim and hold power than to pose as the defenders of the nation.”
― Christopher Hitchens

“All governments suffer a recurring problem: Power attracts pathological personalities.”
― Frank Herbert

So then we must choose whether power will be our master:

“In this world, who can do a thing, will not;
And who would do it, cannot, I perceive:
Yet the will’s somewhat — somewhat, too, the power —
And thus we half-men struggle.”
― Robert Browning

“History shows that it does not matter who is in power or what revolutionary forces take over the government, those who have not learned to do for themselves and have to depend solely on others never obtain any more rights or privileges in the end than they had in the beginning.”
― Carter G. Woodson

Unless we are so far removed from power, it is hard for us to see it influence over us:

“What, to the American slave, is your Fourth of July?
I answer: a day that reveals to him, more than all other days in the year, the gross injustice and cruelty to which he is the constant victim. To him, your celebration is a sham; your boasted liberty, an unholy license; your national greatness, swelling vanity; your sounds of rejoicing are empty and heartless; your denunciation of tyrants, brass-fronted impudence; your shouts of liberty and equality, hollow mockery; your prayers and hymns, your sermons and thanksgivings, with all your religious parade and solemnity, are, to Him, mere bombast, fraud, deception, impiety, and hypocrisy-a thin veil to cover up crimes which would disgrace a nation of savages.
There is not a nation of savages. There is not a nation on the earth guilty of practices more shocking and bloody than are the people of the United States at this very hour.”
― Frederick Douglass

“It is a self-deception of philosophers and moralists to imagine that they escape decadence by opposing it. That is beyond their will; and, however little they acknowledge it, one later discovers that they were among the most powerful promoters of decadence.”
― Friedrich Nietzsche

Yet as a nation, we collectively have righteous power to correct imbalance:

“To me, the conclusion that the public has the ultimate responsibility for the behavior of even the biggest businesses is empowering and hopeful, rather than disappointing. My conclusion is not a moralistic one about who is right or wrong, admirable or selfish, a good guy or a bad guy. My conclusion is instead a prediction, based on what I have seen happening in the past. Businesses have changed when the public came to expect and require different behavior, to reward businesses for behavior that the public wanted, and to make things difficult for businesses practicing behaviors that the public didn’t want. I predict that in the future, just as in the past, changes in public attitudes will be essential for changes in businesses’ environmental practices.”
― Jared Diamond, Collapse

The powerful may be less powerful in the end for they are inhibited by their station:

“The higher a man stands on the social ladder, the greater the number of people he is connected with, the more power he has over other people, the more obvious is the predestination and inevitability of his every action.”
― Leo Tolstoy

Yet the masses are not so constrained:

“You have a power that most high noblemen envy. It is a power that, had you been born an aristocrat, would have made you one of the most deadly and influential people in all of the final empire…’But, you weren’t born an aristocrat. You’re not noble. You don’t have to play by their rules–and that makes you even more powerful.”
― Brandon Sanderson

“You can tell people of the need to struggle, but when the powerless start to see that they really can make a difference, nothing can quench the fire.”
― Leymah Gbowee

Ultimately the rule of law is no defense against power:

“Constitutions become the ultimate tyranny,” Paul said. “They’re organized power on such a scale as to be overwhelming. The constitution is social power mobilized and it has no conscience. It can crush the highest and the lowest, removing all dignity and individuality. It has an unstable balance point and no limitations.”
― Frank Herbert

Yet divine law if it exists, is a subtle, everlasting defense:

“God has chosen to save the world through the cross, through the shameful and
powerless death of the crucified Messiah. If that shocking event is the
revelation of the deepest truth about the character of God, then our whole way
of seeing the world is turned upside down… all values are transformed… God
refuses to play games of power and prestige on human terms.”
― Richard Hays

“The great question…What did Jesus actually bring, if not world peace, universal prosperity, and a better world? What has he brought?

The answer is very simple: God…. He has brought God, and now we know his face, now we can call upon him. Now we know the path that we human beings have to take in this world. Jesus has brought God and with God the truth about our origin and destiny: faith, hope and love. It is only because of our hardness of heart that we think this is too little. Yes indeed, God’s power works quietly in this world, but it is the true and the lasting power. Again and again, God’s cause seems to be in its death throes. Yet over and over again it proves to be the thing that truly endures and saves.”
― Pope Benedict XVI

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Divine Law Allows for Imperfect Institutions to Find Perfecting Solutions to Man’s Poverty

pb-111230-detroit-churches-da-01.photoblog900Assume divine law is real….Assume for just a moment that the purpose of Earth is as a vessel to allow man to find his way toward an infinite, pure life….If this were so, perhaps then it would be the task of man is to find his way through a jungle of worldly jeopardies toward choices that allowed a pathway toward this infinite life. That task might seem impossible if not for these innate carnal tools given at birth of greed, lust, and fear.

So we bubble our way through the maze and hope to find our way through at the end of 100 years of life. Yet, since it takes a lifetime of learning to find our way through that maze, it necessarily means that the vast majority of us have not yet found our way. We are an imperfect world struggling to make it through, and the billions of our world citizens are therefore imperfect in their governments and other institutions.

It is these imperfect institutions made of imperfect beings that must then look to create perfect solutions for the least of our citizens. If then drivers such as greed, lust, and fear are what will guide us for most of our lives until we have reached our final earthly terminal, then our institutions must be able to function with these drivers as well.

Capitalism is one such tool. It does not depend on the goodness of all men such as communism does. It depends on the greed of all men so that all will seek best personal solutions in a way to benefit everyone. My tools for Detroit depend on these same imperfect drivers. I say all must benefit from Detroit’s solution. The elite capitalist must be made better off by his choice to locate in Detroit and the illiterate, out of work citizen must be made better off as well.

Divine law applies to all human beings, not just those of Detroit. All in our world should have adequate food to eat, clean water to drink, a safe place to sleep, and the ability to provide for their families. The Western capitalist system has left many to suffer. The capitalist system that is rising in the East is not much better, and perhaps history will even judge it worse.

Divine law will by necessity then loosen the world from the imperfections of capitalism even as capitalism continues to provide the world a tool to progress in spite of mans imperfections. Just as capitalism by necessity in the 1970s was able to loose itself from the gold standard, it now needs to loose itself from the bondage of international banking that limits world progress to a chosen few nations. Capitalism can exist on the promises of people without the bondage of bankers, just as it now exists on the promise of people through bankers without the bondage of gold.

This will be the next step in the world’s travels toward divine law, yet it will not occur until the next crisis of necessity forces its hand.

However, this talk of divine law is simply a diversion from the task at hand, and only meant for those struggling to see why we must employ all of Detroit’s citizens. The solution to Detroit’s financial problems is employment. That will come when Detroit decides by necessity that jobs are more important than politics. The solution will come when Michigan determines that jobs are more important than to allow artificial barriers to keep them from returning to the state. Roll up your sleeves and begin to knock those barriers down. Put your citizens back to work and bring your city and state back to prosperity.

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“Do the Right Thing” Detroit!

spike lee“Do the Right Thing”, Spike Lee’s critically acclaimed film about racial tensions leading to a riot in Brooklyn is a poetic description of tensions brewing again in Detroit. In his movie, the heat of the summer drenched the neighborhood in frustration as racial prejudices simmered and then snapped in a triggering event that led to a rioting climax.

Detroit is a city, region, and state that seems destined to repeat its failures of the past. Embroiled in its latest crisis, the answer seems once again that a white majority will impose its will on a black, oppressed minority. How fairly that the white majority’s will is imposed will be critical to the measure of civil reaction, but nonetheless, unless found to be unconstitutional, it’s voting majority will be imposed. Rather than work to build revenues through a viable plan, the state has hired an emergency manager whose responsibility will be to impose austerity on the city.

Detroit’s fiscal problem of too few citizens covering pension and infrastructure costs of a bygone era that had 250% of its current population will be met by a state that has drawn a battle line with Proposal 2. The short term solution, given this paradigm, will be to impose some austerity. In Greece and in London, this solution has created riots. In London, the first riots occurred just because meetings were occurring to discuss what austerity measures would be imposed later. Could the sweltering summer of 2013 be the breaking point for Detroit?

Voicing this issue will no doubt raise the ire of Detroiters that may be concerned that merely mentioning the word riot could inspire would be rioters to carry on Detroit’s tradition. However, if the slightest possibility exists that racial tensions are now such that civil unrest could be a result of future measures to be imposed, then reasoning in relative safety of pre-action discourse is a safety valve on the issue. Raising the question should be viewed dispassionately as part of the solution to the potential problem that is brewing.

The white majority, now living in the suburbs, left Detroit. The city now must pay for pensions and infrastructure that were incurred to support suburbians, their parents and their grandparents, before they left for the suburbs. Now after having used Detroit’s infrastructure, and after having left the legacy costs to a much smaller, entrapped, vastly black population of Detroit Proper to pay for them, the white majority is going to impose austerity on this entrapped population to pay for those past services and infrastructure.

This scenario, however correct or flawed in its interpretation, is what will be the match that lights the tender box of continuing institutional racism in Michigan. History has shown that a small youth gang disturbance, or a police scene at a party is all that is needed to leave scores dead and hundreds injured when such rife brews undetectable at the surface.

In Spike Lee’s movie, a wise elderly town drunk with a good and decent heart that the neighborhood calls “the mayor” tries to stop the riot that begins to build through reasoning with the people on the street. But by the time a riot erupts, reasoning is an obsolete tool of political leadership. Kevin Orr must do what he must do now that the state has imposed its will. The time for reason, community involvement, understanding, and hope for a future after austerity is now. The time for a viable plan for Detroit’s citizens to rise from this bottom is now. The time to add such a plan that brings real hope is now!

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Filed under American Governance, American Politics, City Planning, Economic Crisis, Racism, Social Media Democracy, social trajectory

For America’s Worsening Joblessness, Detroit is the Canary in the Mine!

mine canary

Why is it that out of 245 million working age people in America, only 143 million are actually working? A good percentage of ‘non-working’ adults are those that care for children in the home.

According to a 2012 Forbes survey, 1 in 3 working age women stay at home with their children. 1 in three of working women that have children resent their husbands for not making enough to allow them to stay at home. 84% of working women with children wish they could stay at home. Stay at home dads make up 176,000 of the population.

With the addition of women to the workforce, the overall percentage of Americans working increased from 59% 1950 to 67% in 2010, with women gains displacing men in all age categories, and especially in youth and over 55 age categories.

From before WWII when 19% of women entered the workforce, the percent of women participation grew to 67% through 2008, the recent job implosion. During that time, men’s participation actually dropped from 88% to 73%. The majority of percentage men’s employment drop was in youth and over 55 age categories. But, even in the men’s prime 25-45 years, men lost about 5% between 1950 and 2010.

The effect of such labor shifts was to reduce labor costs, shifting wages from men who still enjoy a 20% wage differential, and older workers who also are paid more for similar jobs, to less paid women and younger workers.

Of America’s 245 million eligible workers, why are only 143 million working? The numbers break down:

Documented Workers………………..143.2
Stay at home parents……………….….40.3
Unemployed……………………….………….19.2
Disabled………………………….…….………11.0
Welfare……………….………….………..……5.0
Undocumented immigrant workers..5.0
Organized and career crime…………..5.0
Investors…………………….……………..…..4.0
Incarcerated…….………………….………..2.3
Homeless…………………………………..…..1.0
Institutionalized………………….……..…0.3
Slaves………………………………………..…..0.1
Dropped out/opt out/barter………..…8.6

Arguably, the level of other categories that should be employable such as the ballooning disabled population and the doubling of incarcerated individuals is substantial. However, the combination of unemployed and dropped out is double what was the case prior to the job implosion and investors’ transfers of jobs overseas.

Adding a reasonable number of the above categories, say 19 million unemployed, 5 million disabled, 5 million welfare, 1 million incarcerated, and 5 million dropped out, we have 35 million Americans that would want to work if there were jobs for them. In addition, of those that are working, 25% of American workers earn less than $10 per hour and 47 million are on food stamps.

Of those the 8.6 million workers that have lost their way, typically older or less educated that have long since stopped looking for any job, unlike in decades of recessions past, they have no jobs for which to return. Their forgotten lives will be the monument of America’s era of international capitalism.

When I visited the salt mines in Krakow Poland, they symbolized the tour with a mine canary. Canaries are more sensitive to mine gases and die before the miners are affected. They say that Detroit is the canary in the mine of the United States economy and that what happens to Detroit is a symbol of what is to affect us all.

Detroit is sliding into workless oblivion. We watch as the state of Michigan rushes in to chop the city up. Instead, America should be shouting for action to reverse the city’s joblessness before the canary dies. We are all continuing to slide into a workless oblivion and the canary is just trying to warn us.

The Fed is continuing to keep the slide from accelerating, which is temporarily a good thing. The same catastrophe that Detroit is dealing with now would be happening in other parts of the country if it were not for the Fed buying stock to support the pension plans of public unions around the country. Housing would have continued to slide if it were not for the Fed purchasing excess housing stock.

We are not adding enough jobs to make up for population growth. We are stuffing excess joblessness in other categories. For those jobs that are created, we are subsidizing them with food stamps and other ballooning welfare programs.

Will we decide as a nation to choose another path? Will we implement system wide strategies that bring back working wages? Will we slow the slide of the disintegrating family? Will we return our schools to priming our businesses of the future? Will we reverse the scourge of crime on our communities? When will we reach out in support of Detroit?

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Detroit and America Must Choose to Banish Catch 22

Catch-22-1961-by-Joseph-H
Catch 22 is a phrase in the book by the same name that has come to mean a problem that has no solution, for it contains a circular argument, like those that have plagued Detroit for the past 63 years. These problems have been blamed for the misery of millions. Are they truly Catch 22?

Problem #1

To bring more business and population to Detroit, crime must be reduced. But crime cannot be reduced unless there are jobs that pay living wages. And jobs will not be created unless there are incoming businesses, which will not come because there is too much crime.

……………………………………………Catch 22….

Problem #2

Crime will not be reduced unless would be criminals can find jobs to replace benefits of crime. To do so, those jobs must pay living wages. But a majority of the unemployed are illiterate and undereducated and do not qualify for jobs that pay living wages. Therefore, they cannot obtain jobs that will pay living wages. Without a living wage, crime will not be reduced.

……………………………………………Catch 22….

Problem #3

America’s unemployed need jobs. To employ Americans, a minimum legal wage must be paid. But the world competes to make and sell widgets, and world wages to make widgets are less than America’s minimum legal wage. Therefore widgets must be made overseas and sold to Americans. Making widgets overseas keeps Americans unemployed and without jobs.

……………………………………………Catch 22….

For the past 63 years, since the peak of employment and population, the leadership of Detroit, as well as most major cities in America, has accepted the Catch 22 paradigm that their economic problems are unsolvable and therefore, not really a burden that is theirs to carry. Accepting the Catch 22 paradigm means they condemn America to high unemployment and high crime in our inner cities. Accepting the Catch 22 paradigm means that millions of lives will go unfulfilled and wasted, that millions of children go unfed each night, and that our nation suffers as we commit the least of ours to an arduous lifelong pursuit of happiness.

Catch 22 paradigms are roadblocks that keep America’s political leadership from helping America to reach optimal output and productivity. Catch 22 paradigms are impediments that keep Americans from reaching their highest opportunity for all to pursue happiness.

Catch 22 paradigms, however, are merely paradigms that are placed in the collective consciousness of America by those that wish them to exist. America is conditioned to accept them yet they need not be accepted. Owners of capital benefit from them. Political leaders benefit from them. The rest of America does not benefit from them. If America accepts these paradigms, they continue. If America simply rejects these paradigms, they vanish.

Catch 22 paradigms support the efforts of owners of capital to create maximum wealth but cost trillions of dollars and millions of jobs in the American economy. America could force American capitalists to spend their dollars in America. But our history, principles, and laws support the freedom of owners of capital to spend their dollars in whatever part of the world provides the highest returns.

To force owners of capital to spend their dollars in America would require a change of laws that would turn on our principles of freedom for all Americans. We cannot turn our back on our heritage of freedom. Therefore, we accept that the economic engine of America, the capital of our wealthy elite will be spent in other parts of the world, costing trillions of dollars of loss and millions of jobs in our economy.

…………………………………………………Catch 22

Solutions do exist to Catch 22. American owners of capital can make profits in America to employ our workforce without forcing them to spend dollars here if political compromise is made to allow equivalent profit. Jobs can be created that include a living wage, if political compromise allows for living wages. Crime can then be reduced and the pursuit of happiness can be lifted to a higher plane. And believe it or not, all of this can be accomplished without spending more tax dollars, which is the ultimate cry of those shouting Catch 22.

These real and viable solutions, however, require political compromise. America’s economic problems have arisen from deep seated differences of vision that drive conservative and liberal parties alike to pursue their own visions without compromise, producing the political vacuum that must exist for Catch 22 paradigms to live.

In Detroit, one vision is for all that have made it through the gauntlet and that have risen at least to the middle class to escape to the suburbs, and to make Downtown a playground fortress against the poverty of the inner city, while giving up the rest of Detroit’s citizens to Catch 22. The other vision is to form a grass roots effort to fight the plight caused by Catch 22 to all of Detroit’s citizens, yet without attacking Catch 22 as a mere paradigm. They therefore accept its paradigm that economic suffering must continue. Detroit’s two opposing visions have fought compromise since the riots of 1967 brought their opposing views into the political light.

Problems that such a lack of compromise creates in Detroit then cause the city to fester without solution. Polarized city political leaderships acquiesce to the meager capital investments left for their cities as they pursue their opposing political visions. Polarized state political leadership compete with other states for limited capital investments by promising owners of capital that they will not have to share the tax burdens of the state. And polarized federal political leaders pass legislation to allow for owners of capital to make maximum profits overseas at the expense of jobs at home.

Political leaders become convinced that their political interests lie closer to the owners of capital than to those of the rest of their constituency. Without having to compromise across the aisle, they pass Catch 22 legislation that make it easier for owners of capital to invest dollars overseas while escaping the uncompromising political fighting that continues at home. Political leaders’ efforts on behalf of America’s elite become an easier route to remaining in political power than having to bend in political compromise on behalf of America.

Detroit’s solution rests in ending Catch 22. America’s solution rests in ending Catch 22. The solution to ending Catch 22 rests in political compromise that puts Detroit’s future, America’s future ahead of political expediency. Viable solutions exist. Jobs can be created. Owners of capital can be rewarded in America. Much suffering can be banished. The American economy can return to prosperity.

No Catch 22….

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DETROIT’S SOLUTION

Anniversary Rededication CollageIf the key to a successful Detroit Revival is lowering crime, and if the key to lowering crime is to reform our schools and to put everyone to work making living wages, can we not just get on with putting everyone to work making living wages? Well, it is not that simple. For one, there is a cost to putting everyone to work making living wages. Yet putting everyone back to work also has benefits.

We will examine both the cost of putting people back to work and the benefits of doing so. Yet, before we get started, I can tell you that the benefits of putting everyone in Detroit back to work are at least 10 times the cost. If I am correct, isn’t it a slam-dunk decision that we should get on with paying the cost, and putting everyone to work. The short answer is of course, absolutely yes!

However, the political difficulty of such a decision is in determining fairly who will pay the cost and who will gain the benefit. For instance, all levels of government will benefit to some degree. Yet, no mechanism exists for government to share in the cost in proportion to benefits received.

Since the benefits outweigh the costs by so much, and in fact are the difference between Detroit thriving and withering, we absolutely must find the way to overcome the political obstacles that have held back the city for so long, and have cost Detroit a trillion dollars in the last half-century.

That said, let us start by just examining the direct costs and direct benefits of putting people back to work. Remember that the direct benefits are only a fraction of total benefits, and yet as we will see, direct benefits are already twice the cost even before determining fair payments and benefits.

What is the cost to put 100,000 people to work? If factories are profitable after employing them, then the net cost is zero. But we know that 40,000 labor-intensive factories have left our shores for the East, partly because the cost of labor in America made them unprofitable here.

Yet at $4 per hour, a factory might be able to compete with overseas factories that have shipping costs on top of labor. If a government were to subsidize the factory’s labor cost so that the factory could pay a worker $12 per hour and yet have an equivalent labor cost of $4 per hour, the factory could have a net profit and the cost to the government would then be $8 per employee hour worked.

If for instance, a government entered into contracts for companies to build factories in Detroit and those companies employed 33,000 workers, the cost to that government would be $550 million dollars annually.

What about the 140,000 businesses in the Detroit area, could they hire more employees? Businesses generally hire people in response to demand, yet there is a gray area of demand that makes businesses begin to think about hiring without actually making the decision to pull the trigger and hire.

What if businesses were given an economic incentive to hire? Could an additional 33,000 employees be hired this way? What would the incentive need to be to increase demand for employees? One way to determine an acceptable incentive would be to have each individual business tell the government what the incentive must be and for the government to decide whether or not that incentive was acceptable.

A formal method to accomplish this task would be to hold a job subsidy auction each month and to have companies bid on acceptable subsidies. Then the government could decide how many jobs to subsidize each month and what the clearing subsidy price must be each month to incentivize hiring. Suppose that 33,000 employees were hired through this process at an average $5 per hour incentive rate. The annual cost of incentives plus administration of the program might be $350 million.

In addition, as factories come to Detroit and as businesses expand, adding labor, the money spent by these business multiplies through the local economy. More money is spent in restaurants, more is spent at the barber, more is spent on Doctors. Additional labor is needed to cover the needs of an expanding economy. Suppose the remaining 34,000 are hired to support the growing economy without subsidy. The total gross cost then for a government to expand the economy by 100,000 workers would be $900 million dollars annually, or $9,000 per employee, a rather inexpensive investment.

So if the cost to government of creating a hiring mechanism for 100,000 employees is $900 million, what is the direct benefit just to government of having these 100,000 employees hired? These individuals will now be taxpayers and the direct costs of social safety nets will be lessened. The revenues generated through their new employment that is directly attributed to them is almost double the expense of employing them. Yet these benefits only begin to scratch the surface of benefits.

(in millions)
Federal Income Tax….100
State Income Tax…….175
City Income Tax…… …60
Utility Tax………… …..10
Additional sales tax……40
Social Security……… 375
Unemployment…… ….50
Social Services…… ..420
Bus fare…………… …..25
Health Care………… ..120
Property tax……… ….190
Corporate tax………….200
Total…………… ……1765

Still, just looking at the benefits to the governments that provide the initial funding, how many times do the incomes of these 100,000 individuals multiply through economy? I have assumed 0.5 in the hiring process, yet we know that it is much higher, perhaps 4 times, perhaps 7? At 4 times, the benefit listed about jumps to $7,060,000,000.

What about the benefits to the justice system? People working aren’t scrapping or burglarizing. They aren’t being arrested, arraigned, sent through the court system, or jailed. They are not causing property damage, maiming or murdering others. Cutting crime in half by employing Detroit’s downtrodden would save the city conservatively $500 million annually, half of which would be saved by government.

How about property values? Employing these 100,000 would improve neighborhood appearance, would reverse blight, would reduce crime, and property values across the city would increase conservatively $20,000 per house or $7 billion dollars. The 25,000 acres of empty lots would increase in value conservatively by $5,000 each or $120 million dollars. Now some of these properties are owned by the city, and those dollars directly translate. But one thing is for sure, tax collection would go up dramatically on tax sales. In addition, the mill rate value of an additional $7 billion dollars of property value would increase annual government revenues by $440 million annually. Plus the stamp tax on sold houses would also benefit by increased home values. More homes would sell as well. Stamp tax collections would increase by $50 million. And with city services now able to be provided, the collection of an additional $150 million in unpaid property taxes would be easier to collect.

We have only touched on benefits to the governments for we haven’t even explored the benefits of wage increases over time for employees that are gaining skills, nor have we even begun to explore the improved performance from school graduates, their increased income potential and all of the tax benefits that will accrue the governments from students that graduate high school, not to mention college. We haven’t even begun to explore the dollars spent by the businesses that enter Detroit and their tax implications, or of the taxes generated by the the businesses themselves. And these are just the benefits to government, not even calculating the value to the individuals, their families, and the community.

But thus far, the initial investment of $900 million has returned the governments $8 billion and will easily surpass the 10X figure I initially posited. The pay back is obviously enormous. The value accrued is different to each government entity, but all benefit. This investment in Detroit’s people is a no brainer. It is simply a matter of determining how this paradigm shift can be accomplished through the cooperation of all levels of government.

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Detroit Must Commit and Go All In….

Rdetroit-casinoeversing the plight of Detroit rests with integrating the economic success of all of Detroit’s citizens into the future success of the city. The city can no longer afford to do otherwise.

Integrating all Detroit’s citizens implies providing living wages to the city’s underclass, and to providing jobs to future high school graduates. It also implies reforming Detroit’s schools to give students a realistic hope for a brighter future.

Detroit has 100,000 out of work citizens that require living wages. Yet, Detroit’s history has left many functionally illiterate, high school dropouts with few employable skills.

To date, Detroit has had very limited success in bringing in companies that could provide jobs to Detroit’s unemployed. Most of the jobs that have been provided thus far are minimum wage jobs that cannot sustain living standards above the poverty line.

The type of jobs that Detroit must lure to reduce the city’s structural unemployment are labor-intensive jobs that require low skills. These are the very ones that China lured to her special economic zones in the 1980s and 1990s. These jobs pay low, internationally competitive wages that are much lower that what would be considered a living wage in Detroit.

* Detroit’s Revival ** rests in being the first major city to create a way to bring plants and jobs back to Detroit from Asia and that can simultaneously create a way for these returning plants to pay employees a wage that is livable by Detroit standards and that is much higher than companies are used to paying.

For plants to return to Detroit, they must be reasonably assured that they will make comparable (actually higher for taking on Detroit’s political and socioeconomic risks) profits. Detroit must make the benefits so enticing that 1,000 plants are willing to repatriate to Detroit. And Detroit must be prepared to act quickly on the plan that it conceives, so as to establish Detroit as the place to come above all other cities that might try to copy Detroit.

Detroit must gain the support of the State of Michigan for the idea and Detroit’s government must be willing to commit 100% to the effort. The city must be fully prepared to integrate hundreds of plants into the city.

Detroit must go all in….

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Detroit Can Either Reinvent or Wither…I Vote For Reinventing!

blight buster
My analysis of Detroit’s problem is that the roots of racism that exists in all of America was uniquely exacerbated in this city. For the past 40 years, Detroit has been in a stubborn conflict of philosophies that unless is finally resolved will keep the city from a much needed recovery. In fact, this deadlock has now thrust the city into a crisis of immense proportions.

One side has attempted to create a conclave of gentrification to push through the malaise, to grow Detroit in spite of the frustrating residue of the city’s blue-collar era. The other side continues to try to find an economic solution to the city’s problems despite a school system that has failed miserably and community that commits crimes against itself at appalling rates.

My analysis suggests that no city government could have turned around Detroit’s depopulation without resolving the city’s institutional racism, which until now, has been a suppressed issue that acts out in violence. And my analysis also suggests that no attempt to gentrify Detroit out of its decay will have the growth rate to overcome the city’s budget issues. Even if the city’s small growth of last year were tripled to maximize the potential of the millennials, it would take a quarter century to grow out of the city’s financial crisis. The city’s infrastructure and pension costs are just too great for any realistic gentrification population growth to meet the city’s growing needs for revenue, even if we ignore for the moment the violent reaction and tax collection difficulties that would accrue to such an apartheid policy.

At some point, the city is going to have to find a way to reinvest in the city’s existing population as part of a holistic solution. Mr Gilbert has done a masterful job of buying up real estate and creating a vision of what Detroit could become. He just has no viable pathway to get there without bringing along the city’s population. Detroit has 620,000 African Americans spread throughout who are part of the equation. Their history is one of oppression, defiance, and internal struggle in the face of exodus.

Social safety net policies will not placate Detroit. Only a solution that builds a real economy that includes the current population will work. Yet few businesses remain in the United States that can provide a living wage to a population whose educational system has failed them so miserably. A radical departure from the status quo is what will be required to turn around Detroit.

My suggestion is that the gentrifiers who are putting their hopes in Kevin Orr to bust apart the city and start over should stop thinking that this path has any chance of success. Can Detroit gerrymander its geography and carve out the parts of the city that would take decades to recover under a build out scenario, returning blighted areas to the historical township structure of unincorporated American lands? That scenario is vastly unlikely politically or realistically, and no other city would annex blighted sections of Detroit. The emergency manager will not choose such a path. Detroit must face its demons.

Yet, with the right strategy, one that is inclusive of all its citizens, Detroit can actually recover quite quickly, and in so doing, Detroit can provide the rest of the country a blueprint to find the gold buried in all of our inner cities, our people. The strategy must overcome the catch 22 circular arguments I have listed above. No current political or economic policy exists to do so. It must be invented. As such, the paradigm shift that is necessary to create such a political invention will be called radical by some.

Radical or not, with no other viable alternative in sight, Detroit can either reinvent or wither. My vote is for re-invention.

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Is Saving Detroit Worth The Effort? (Yes)

detroit kids

Thus far, I have outlined Detroit school principles and Detroit work responsibility principles, two sets of principles amongst others that will be important to outline as the basis for a holistic solution. Yet already the solution set to accomplish just these two sets of principles might seem extremely difficult to some. To accomplish the two sets of principles that I have outlined thus far, for example, would take a great deal of cooperation between local, state, and potentially federal governments on both sides of the aisle and would force a paradigm shift that would be difficult to accomplish even with both major political parties working in concert. For this reason, many would simply scoff at my principles as unrealistic.

Yet, no other set of principles set forth thus far have been implemented in the past 60 years of Detroit’s decline that have resulted in the city’s turn around. And no principles being presented contemporaneous solve Detroit’s immediate growth problems either. Without a bold set of principles that sets the bar as high as the stars, Detroit cannot expect to even hit the moon. And right now, Detroit’s revival depends on hitting the moon.

I am suggesting that Detroit reach for a difficult task (that is reachable) to avoid a terrible alternative of bankruptcy and further decline. The alternatives thus far presented to Detroit by others show a strong and good future yet without a viable path forward. The thriving path forward requires that the city grow robustly, but the initiatives thus far presented project a slow growth.

Could Detroit achieve slow growth from Downtown and key city centers without a bold jobs initiative? Perhaps, yes, perhaps no….the answer depends on how deeply city services must be cut to balance the city’s budget and how much more crime and blight will be exacerbated by such cuts. The answer also depends on how many city assets will be sold off to forestall bankruptcy or whether bankruptcy will cause the city to lose its ability to borrow for the future.

A seemingly more complex but actually more viable solution is one that aggressively pursues a much higher rate of city growth. If a viable solution can project a realistically higher growth trajectory, it will also project a balanced budget at higher city revenue levels that can put Detroit in a position to borrow, not to pay for further operating deficits, but to create assets for the City’s future prosperity.

Since Coleman Young’s terms in office until now, Detroit has attempted to lure businesses to the city to provide jobs to keep Detroiters from leaving. The city has had some successes but not nearly enough to save Detroit from having to endure the emergency manager’s executions.

A net 1.1 million people have left Detroit since 1950, to find work and to escape Detroit’s growing crime. Now that the rate of exodus has slowed in Detroit, city leaders might be able to bring residents back if they can first bring businesses back. Yet to do so, they must convince business owners to relocate their businesses in Detroit instead of other alternatives. Detroit’s blight and crime rate make the effort formidable.

Even more formidable, the city’s leaders find themselves in two catch 22 dilemmas. First, without reversing its crime rate, Detroit will not bring in new businesses quickly enough to overcome mounting deficits. If the city cannot grow quickly enough, it will resort to selling off assets to pay debts and the sale of those assets could cripple the city. Yet, without bringing in enough businesses to provide good paying jobs, Detroit cannot reverse its crime rate. This is the circular argument that has haunted the city’s mayors for the past four decades, the catch 22.

The second circular argument is even more insidious than the first in that to lower crime, jobs must provide living wages. Yet, the type of jobs that most unemployed Detroiters qualify for pay the lowest wages. Half of working Detroiters aged 25 and under have jobs that pay minimum wage. Minimum wage is already too low to keep a worker out of poverty. Bringing in more jobs that pay minimum wage to hire unemployed Detroiters does not take them out of poverty. Without reducing Detroit’s poverty, crime will not significantly decrease. And if crime is not lowered, even those minimum wage jobs will not come to the city, hence catch 22 squared.

Since jobs could not be lured into the city to decrease crime, city leaders resorted to entertainment businesses like casinos and sports arenas, and gentrification, creating mini-walled off cities within the city, to increase the tax base, yet the pace of growth from these pursuits did not compensate for the losses due to depopulation, and now Detroit faces the impending possibility of bankruptcy.

The principles I have outlined for schools and business development will lower crime but both depend on breaking the circular arguments. If they can be broken, jobs can be brought in that provide current residents with livable wages, and Detroit can significantly lower its crime rate.

With lowered crime, the vision that Detroit is now presenting to the business community of a better Detroit will be viable. Detroit’s vision of the future city, combined with significant incentives for businesses to invest in the city, can then help the city bring in more jobs. More jobs will increase property values, which will in turn create higher city revenues that will lead to reinvestment in the city’s livability and a path toward a thriving Detroit.

To break the circular argument, however, two things must simultaneously occur. First, businesses must be convinced to hire 100,000 employees from the ranks of Detroit’s largely illiterate unemployed. Second, businesses must be convinced to pay new hirees a living wage that is above minimum wage, when half of Detroit workers under the age of 25 are being paid minimum wage. This is the herculean task that has perplexed a good many people without a solution. Therefore, Detroit faces bankruptcy.

Yet, the fact that no viable solution has been proposed in 40 years does not mean there isn’t one. The solution requires a paradigm shift. It requires the collaboration of both sides of the political aisle, and of local, state, and possible federal government leaders. Is saving Detroit worth all that effort?

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