Category Archives: City Planning

Detroit is the hole that Mike’s Steam Shovel Dug

mikes shovel
Who here remembers the story about Mike Mulligan and his steam shovel? Detroit’s problem is like Mike’s. Mike’s steam shovel, Mary Anne, wasn’t as nifty as new diesel shovels, just like land-locked Detroit auto plants were not as nifty as new, single story automated ones. But Mike vowed to work hard building a basement hole for city hall, so he and Mary Anne got the job. They dug a great big hole but with no way to get out of it.

Detroit dug a big hole with no way out too! Everything Detroit did to help herself didn’t slow the hole getting deeper, and her city hall was left with a dilapidated steam shovel in its basement. Detroit’s impossible hole is that it needs good paying jobs for its illiterate citizens….period. It’s that simple and that difficult.

As auto jobs left, whites left with them. Blacks could not qualify for federal housing loans because of federally supported racism and could not enter communities built up around the new plants because of restrictive covenants. So the low level jobs that the auto manufacturers allowed them to have went away.

Now, they were left in the city with poorly supported schools with few good paying jobs. Crime got worse. Family situations got worse. Home values plummeted. City revenues dropped. And as the city blight worsened while the outer suburbs improved, new businesses chose to build in growing, safer areas rather than in the city. Dig, dig, dig…

The diesel shovel jobs that competed with Mary Anne steam shovel, those jobs that illiterates in the inner city of Detroit, 47% of her citizens by some accounts, could qualify for, they are growing at 10% per year in Eastern countries but paying well less than the mandated minimum wage in Detroit.

America created an economic infrastructure that produced generations of illiterate Detroiters. Our failure to face institutional racism kept our most oppressed of citizens corralled in the city. Our elites took away jobs that illiterates could have worked. Now, our latest generation of Detroiters sit in a basement hole with no chance at earning a living wage as an alternative to crime and dysfunctional communities.

In the story, “Mike Mulligan and His Steam Shovel”, because he was stuck in the hole, he created a living wage in the hole by converting his steam shovel into the new city hall furnace, making a living wage to provide the city hall with heat.

America, having created this impossible hole, must now create living wages for our tens of thousands of illiterate unemployed, and we must vow to create a future economic infrastructure that does not dig such impossible holes. Political intransigence must now make way for a willingness to fix the problem.

I wrote an article in 2011, explaining the mechanisms of job transfer to Asia that is worth reading, Called How China Ate America’s Lunch…

http://www.zerohedge.com/contributed/how-china-ate-americas-lunch

China was ready to take back its world leadership in 1978 after “150 years of shame” and America’s elite were all too willing to sell out our posterity to help them. Detroit’s bankruptcy was foretold by the decimating our middle class to fund China’s emergence.

Yet, just as was seen in the Arab Spring, it is the fringes of society that break first. While the whole of our middle class is having its life slowly drained, those poor souls on the outer edges, such as our citizens in the inner city of Detroit, are the ones whose life supply of economic blood is the thinnest. They die first.

Detroit is America’s problem to fix.

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Filed under American Governance, American Politics, Capitalism, China, City Planning, Class warfare, Full Employment, Jobs, Racism

Solving America’s Energy Needs Will Take Better Government, Not Less Government

wind-energy-2We search for systemwide solutions that will minimize the cost of competition and that will maximize each citizen’s contribution to society. Many suggest that we eliminate government from the equation and let perfect competition work its way through the economy so that all will have the opportunity to contribute. Yet, America has anything but perfect competition.

The reason Thomas Paine’s pamphlet was so important to the Revolution was that it laid out in clear, laymen’s terms the true purpose of government in the evolution of society to be that merely as a representative extension of man through a larger society and not an ordained right of an individual to rule other men.

It was inspired by and dedicated to the writing of James Thompson’s “Liberty” that exclaimed society should not exist in the extreme of every man for himself. This is to a greater or lesser extent what we have today, built on the economic structure of imperfect capitalism. Why imperfect? many reasons….

One involves our energy system. It’s history is anything but perfect competition as you may know. In the beginning, utilities were something of wild west type competitors. Some emerged through mergers but most went the way of petitioning government to set up regulated monopolies to avoid duplication of assets. What then developed were cost plus entities that served local geographies. Some made better economical choices and were better run than others, resulting in much lower costs to their customers than might be experienced just 50 miles in either direction

And grids were designed to manage a local infrastructure as well. For protection against blackouts, utilities connected to each other and began to devise ways to allow physical power to flow between utilities, but the emerging transmission line structure was haphazard and contained many bottlenecks.

Much later, within the past couple of decades, a means to sell excess power to other utilities as a profit center developed, but it was hampered by several physical and political realities. First, power flows through least resistance physically and not by how utilities sell it. Therefore, there are few financial reasons to fix bottlenecks to the grid. Second, utilities are not purely for profit, they are cost plus, and do not have real competitive reasons to optimize profits, only to ensure they make annual targets to meet dividends and to allow the regulators to grant further expenses to continue building and expanding the utility. Therefore, the nation’s true supply optimization does not occur in a regulated environment.

And with such a regulation hindered system, no utility has the economic incentive to build electric grids to areas that could house wind or solar farms to sell to other utilities. And no utilities have the regulatory incentive to buy from such an economically optimized, national asset. For their incentive is not to optimize profits but to meet barely and consistently their annually set, regulated cost targets so they may increase next year’s costs and gain additional “plus” for their investors who invest for the consistent dividend returns.

America is not designed for perfect competition regarding a major segment of our energy needs. We have been hamstrung by government systems of regulation from the beginning and no outlet exists to fix this monstrosity but by redesign of the government infrastructure.

These are the simple facts that cannot be covered up by free market rhetoric. Every problem must be managed within the complexity of a systemwide solution set that pursues societal optimization.

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Divine Law requires Private Land to Be Placed in Highest Use Toward Full Employment

kingThe idea of land ownership, capitalism, and money all tie back to Divine Law. In the progress of man, nomadic cultures were replaced ultimately with communities that stayed in placed to work communal land. These cultures eventually developed into kingdoms typically governed in the physical realm by kings that derived power from the spiritual realm governed by priests.

Feudal systems developed in which land ownership was deemed the divine right of kings. These concepts were similar from Polynesia to Europe. In many societies, the use of land was partitioned off to lords under kings. Yet property rights came from gods through kings to their minions. The idea was that the minions required enough land to provide for their families and to provide tribute to rulers to be used in governance and in defense. These earlier forms of land use supported the idea of divine law.

In the 17th century, this idea of property rights was challenged in Europe. John Locke’s ideas of property, expounded in his Two Treatises of Government, written in 1690, were as basis of modern property rights. His ideas were of God given rights to property that were not derived through the king but were derived directly from God.

His idea was that man’s cultivation and improvement of land was what intertwined the divine nature of land with man’s improvement to make ownership of that land his. Locke’s ideas that land use must be in accordance with God’s permissible use of land were then developed into the modern land ownership laws we have today.

America, and most other countries, have land ownership which is not allodial, or complete. Instead, we have fee simple land, or land that is owned by us at the pleasure of the state. Our land is not completely ours but is ours as long as we submit to the dictates of the state, pay taxes for instance. The concept was derived from Locke’s concept that land held in private should be able to produce for the good of society or be turned back to the state.

Nonetheless, great estates were created both in England and later in America, as governors of lands seized from the indigenous peoples of America were first given in fee ownership to governors and other high ranking originating families of America’s colonies. And taxation of land, the justification of holding land for higher use, became highly differentiated between owners of vast estates and those of small plots.

Examine taxation of private lands owned by vast land owners versus those small plots in town for instance. Why is it that small home owner plots owe vastly more per acre than huge land holdings owned by elites? In order to maintain such small fee simple plots then, the owner of such plots must provide a much greater land use to pay the land taxes or subsidize those taxes from other sources in order to maintain ownership of their paltry estate. Yet the same is not true for the vast land owners of land that is not developed.

This inequity in land taxation then is a means by which wealth is acquired, kept, passed on to heirs. Land, minerals, metals, raw energy, and other resources derived from the land such as lumber, these are true wealth. Money is simply a place holder in the distribution of true wealth and transitory wealth such as that added by mans labor to combine with the offspring of land into products.

Our elite then aspire to acquire and maintain true wealth, including vast acreage of land. Much of this land held as assets then is not tilled or developed and thus could not be held for long if it were not for inequitable taxation. This concept of excess land holdings went against Locke’s concepts of inalienable rights to land.

It is the development of raw materials that spring from land, combining them with man’s labor, that create transitory assets such as cars and houses, those assets that eventually return to the earth.

Capitalism is the combining of assets in equity, land, raw materials, and their place holders of money, with funds borrowed on the promises of future labor to create transitory assets such as automobiles. This system relies on owners of real wealth to provide it as a guarantee of the success of enterprises that develop transitory assets.

Owners of real assets then are paid a portion of the transitory assets, or their place holder of money, for use of their real assets in the venture. Generally, this portion of transitory assets or money is then retransferred into the acquisition of more real assets, thereby increasing the holdings of land and other real assets by the real asset owners. This is how capitalism concentrates wealth.

Since at the start of the American revolution, we had a concentration of real wealth by just a few land owners, with more than 60% of Americans at the time non-land owners, this capitalism system then continues to concentrate wealth. Then every three decades or so, economic crises occur that redistribute wealth somewhat and the process begins again.

If, as Locke suggested, land, capital should be in the hands of those that will develop it for the good of society, why then are we subjecting our nation to the whims of vast capital that sits dormant while millions suffer in idleness?

Modern capitalism then should consider how owners of real assets within a nation put those assets to highest use for the benefit of a nation.

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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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To Grow Detroit, Invest in People

18eatonacademyTo grow a city, one must have a blueprint…one that organizes the resources, that multiplies livability, and that increases the vitality of the city as it is progressively implemented each generation.

Detroit’s original blueprint was one of an iron muscle, people living in close quarters to their factories, with all basic amenities of a roaring blue collar town close by and with the energy of community in the forefront.

The definition of livability continues to adapt to the evolving way we interact with each other. The blueprint for a “New Paris of the Midwest” will be different than Detroit’s original footprint. In a way, the blight that has affected a third of Detroit’s acreage is a silver lining that makes way for a new, more vibrant Detroit.

Now, real, functioning structure must be laid atop the blueprint. The city must have the working infrastructure of commerce and community. Detroit must have functioning roads, trash removal, police, fire, EMS, courts, city planning, administration, and all of the means of governance that allow the city to efficiently grow, minimizing artificial impediments.

For a city to prosper economically, the city’s culture must be amenable to growth, to collaboration and innovation. Its people must want to share in the fruits of their labor so that everyone who contributes to the multiplying wealth of the city prospers as well. And the city must be inviting to all who would venture in with new ideas and capital.

With the rudiments of success in place, the city must commence preparing its people for growth. Each person is an asset that brings value to the city. How each person is molded as they pass through the infrastructure of the city from birth through adulthood will determine the wealth potential of the city.

A child can be nurtured through city’s infrastructure complex and can come out the other side ready to earn $250,000 a year contributing to the city’s growth. That same child can be trampled through the system and come out the other side a negative burden in the city’s welfare. The efficiency and focus of the city’s infrastructure in placing that child on a higher plane of earning potential then determines the ultimate wealth of the city.

Multiply the average preparation value of each child times the number of children exiting the preparation system and you can predict the direction of the city. If the average preparation value falls below a sustainable level, the value of the city will fall. I suggest that allowing a city to graduate only 22% of its students with only 2% ready for college is well below the level to sustain a city’s wealth.

No amount of Downtown facades will correct the deficiency of the city’s engine of growth, its people. Detroit, it is time to set your infrastructure on course with a thriving path.

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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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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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Filed under American Governance, American Politics, American Schools, City Planning, Full Employment, Job Auction Plan, Job Voucher Plan, Jobs, Racism, social trajectory

If Detroit Will Follow these Principles, Detroit Crime will Drop

crimeDetroit’s future hinges on reducing its high crime rate to allow newcomers to venture back into the city. The city has restructured its police department, putting more police on the streets, and has adopted state-of-the-art multifaceted programs that other cities like Chicago are implementing to mitigate youth violence, yet crime persists. Modifications to the status quo will not affect crime quickly enough to curb what has become a violent roadblock to Detroit’s future. What is required is a radical departure from past practice. Detroit needs a major step improvement toward a safer community if it is to recover.

The city is collapsing in debt and depopulation. Yet, a radical departure from the status quo seems almost too dystopic a medicine to take, even for a city that faces bankruptcy. Detroit is just as polarized as the country over how to reduce crime, and Detroit’s community reaction to past police performance has been a divisive obstacle to major change. So without a clear path forward, radical change seems daunting. However, a comparison of the extreme right and left views of America’s think tanks regarding crime suggests that while their viewpoints may differ, the similarities of their stances indicate that a clear path forward might be possible.

While their solutions may be different, they both speak of the same root causes of crime. They couch them differently for each side’s solutions must fit the entirety of their differing political views. Therefore, each side focuses on different symptoms of the root cause, and their solutions focus on resolving those different symptoms. A holistic solution, however, must encompass the root of each extreme’s problems and solutions.

What do conservatives suggest is the root cause of crime? The Heritage Foundation suggests that crime is the outcome of failing families. They cite numerous studies that show that crime is committed most by those raised without fathers. Yet, the Heritage Foundation seems to negate the nexus between crime and poverty.

The Cato Institute supports the Heritage Foundation’s conclusion regarding single parent families stating that, “the relationship is so strong that controlling for family configuration erases the relationship between race, low income, and crime.” Yet the Institute also states that both violent crime and property crime are highly related to economic conditions.

The National Academy of Sciences agrees with their positions regarding single-family households and further suggests that jail policies, which create a lack of young, marriage age males in a third of Black families, excessively exacerbates the problem of fatherless homes.

The progressive think tank Economic Policy Institute does not disagree that dysfunctional families lead to crime. In fact, EPI suggests that dysfunctional families lead to poor school performance, high dropout rates, and then to crime. Yet EPI suggests that poverty is the root cause of disruptive families.

The liberal think tank Economic Policy Research reasons that dropouts do not qualify for 90% of jobs, leading to high unemployment, and argues that unemployment is directly correlated to burglary, rape, robbery and assault.

The progressive think tank Center for American Progress supports EPI’s claim that poverty is a root cause. They point to President Clinton’s policies as having been the solution that drove a drop in crime rate more than any other time in U.S. history. They state that lack of work, lack of police on the streets, high poverty rates, a shrinking middle class, underperforming schools, and lack of affordable housing was a combined reason for higher crime rates that Clinton’s policies corrected.

The above examples suggest that conservatives focus on the destruction of the family as the root cause of crime, without then connecting the impact of extreme poverty and lack of hope for any change of circumstances to the destruction of the family. The examples also suggest that liberals point to social disruption caused by poverty as the root cause of crime without acknowledging the breakdown of family as a key component in that social disruption. But both political parties are just emphasizing aspects of the root cause and solutions that align with their party’s platform. Detroit, however, must cut through the political clutter and create a bold solution that will reverse the city’s plight now.

To create a clear path forward, Detroit’s factions must agree on principles of crime reduction. In the spirit of survival, acknowledging that each sides understanding of the issues may not be mutually exclusive, is in order. By doing so, the left and right might agree to the bold solution that meets each other’s political needs while restoring the City of Detroit. Disregarding for the while how to achieve them, the following principles are critical to Detroit’s crime transformation and should be supported by Detroit’s bold solution:

.1. Families remaining intact
.2. Detroit’s single-parent families gaining community support
.3. Detroit’s youth having safe and successful learning opportunities from pre-school through high school
.4. All teens graduating from Detroit’s high school, functionally literate
.5. Teens delaying marriage, cohabitation, and child rearing until financially secure
.6. Kids having financial and social alternatives to crime during school years
.7. High school graduates having a reasonable expectation of a living wage job if they choose to work after
high school graduation
.8. High school graduates from all socioeconomic backgrounds that academically qualify, having access to
college
.9. In the decade that Detroit is transitioning to a culture of less crime, the existing subculture of
crime that has grown in a vacuum of viable alternatives, must be curbed through both preventative and
policing means.

Once clear principle are in place, a bold solution set that will meet them fast enough to sustain Detroit will be the commitment that is required by all that would have Detroit recover.

These principles outlined above must now be added to those of Detroit’s other stakeholders to achieve a holistic solution that meets the needs of all stakeholders, not the least of which are the 700,000 citizens who are struggling each day to raise their families in a hostile, crime filled environment in which 60% are either victims or witnesses to crime.

After years of decline, Detroit’s murder rate has risen for several years, peaking at 411 in 2012. Detroit is named the most dangerous city in America. If following the principles outlined above will curb Detroit’s high crime rate but Detroit is the most dangerous city in America, then a gap should exist between the stated principles and how well Detroit fares against them.

How well does Detroit compare to principles for low crime?

Principle 1. Keep Families intact

From 9% in 1960, 80% of families in Detroit are single parent today

Principle 2. Give community support to Detroit’s single-parent families

Detroit communities have been damaged by blight and depopulation. Detroit is focusing on bringing communities back together and Corporate sponsors such as Ford have prioritized investment in community development. Organizations from Jewish Federation to Goodwill organize to support single parents. Yet, 40% of single parent families in Detroit are living in poverty.

Principle 3. Ensure all students pass each grade proficiency and are safe from pre-school through high school

Mt. Elliot neighborhood is listed in top 25 most dangerous neighborhoods in America. Chances of being victim of a violent crime in any one year is 1 in 9. Organizations like Take Action are actively working to reduce violence against Detroit Youth. Yet only 4% of Detroit eighth graders can pass minimal standards in math and only 22% of Detroit kids graduate from High School. 79% of Detroiters do not want their kids to attend Detroit Public Schools. Detroit has formed an organization, Excellent Schools Detroit, committed to bringing Detroit’s graduation rate to 90% by 2020.

Principle 4. All teens graduate from Detroit’s high school functionally literate

.47% of Detroit Adults are functionally illiterate.

Principle 5. Ensure Teens delay marriage, cohabitation, and child rearing until financially secure

Since 1990, Detroit’s teen pregnancy rate has been cut in half to 103 per 1,000, yet is still 300% higher than the national average of 31. Detroit ranks #1 of American cities in the rate of unmarried births.

Principle 6. Kids having financial and social alternatives to crime during school years

In 2012, Detroit youth unemployment was 42%.

Principle 7. High school graduates having a reasonable expectation of a living wage job if they choose to work after high school graduation

.50% of Detroit’s workers age 25 and under that have jobs make minimum wage.

Principle 8. High school graduates from all socioeconomic backgrounds that academically qualify, having access to college

In 2012, only 2% of Detroit’s graduating seniors were deemed capable of performing college level work.

Principle 9. In the decade that Detroit is transitioning to a culture of less crime, the existing subculture of crime that has grown in a vacuum of viable alternatives, must be curbed through both preventative and policing means.

In 2012, the Police union spokesperson stated that Detroit is the most dangerous city in America and to enter at your own risk. He said that police officers are understaffed, overworked, demoralized, and sometimes fear for their lives. The department has reorganized to emphasize gang management.

Mitt Romney, son of Michigan Governor George Romney and recent presidential candidate stated, “for those who graduate from high school, get a full-time job, and marry before they have their first child, the probability that they will be poor is 2 percent. But, if those things are absent, 76 percent will be poor.” Detroit’s kids must have the opportunity to acquire the three ingredients that Romney says will put them in the 98% probability of making it out of poverty.

With such recent Detroit statistics, Detroiters should agree that drastic actions are required. What is needed is a bold, new plan.

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Detroit Must Now Roll Up Her Sleeves and Attack Her Root Problems

wayneCity lights continue to be an issue in Detroit. No matter how much effort is seemingly thrown at fixing them, half the city stays in darkness. Yet lighting is only a visible symptom of Detroit’s crumbling infrastructure. The same infrastructure problems that can be seen by Detroit’s citizens in broken lights exist below in the belly of the city’s networks.

Detroit is barely surviving on high cost, obsolete infrastructure that was constructed in its heyday to meet the needs of a million more people. Old infrastructure can be maintained and replaced but at increasing costs as time goes on (compare Detroit’s maintenance to maintaining an old car).

Detroit’s small population cannot continue to indefinitely maintain its large, failing infrastructure without increasing city taxes. Yet, Detroit taxes are already the fourth highest of any city in the nation, and 47% of the population is already not paying their property taxes. Many say they refuse to pay taxes because they are not getting the services that their infrastructure is supposed to support (a catch 22).

Without growing Detroit’s population, the city cannot repair its infrastructure, and infrastructure becomes another cause of spiraling city failure. A minimum population that is growing and paying taxes, therefore, is not only needed to manage growing city pension costs, but also to maintain the city’s infrastructure and to ultimately reduce infrastructure costs through reinvestment.

So, how does Detroit reverse the trend and grow its population? And since the city is already years into deficit spending, how does it accelerate growth to a minimum sustainable population? Millennials have been targeted as a group that will populate the downtown district. They have lost interest in owning homes and gentrification can create livability standards that will attract them. Yet, their increase will not be at a rate great enough to thwart the city’s deficits. Gentrification is not a solution to a citywide problem. Creating an attractive downtown might create a functioning commerce district but it does not impact choices to live in other parts of the city. Downtown reinvestment has been tried now for 40 years in Detroit without success.

Some Detroiters hope that that low cost citywide housing and a recovering America will combine to reverse the city’s exodus. Citywide, housing prices have precipitously dropped to the extent that they have slowed depopulation. Those wanting to leave Detroit cannot sell their houses for enough to leave, and low prices have brought some newcomers to Detroit.

Yet, crashing home prices are a horrible alternative for attracting population back into the city. Besides devastating Detroit’s citizens, falling housing prices devalue the city’s tax base that it needs to increase. While the fire sale of homes has brought balance to the population, the massive difference of home prices between Detroit and its suburbs is still not enough to bring people back.

If Detroit wants to save itself from fiscal suffocation, the city cannot hope that downtown reinvestment or housing price equilibrium will save it. Detroit must finally deal with the root causes that devastated the City’s population. For now that the city sits below a minimum population for recovery, only fixing its root causes of depopulation will help it to repopulate.

Certainly, loss of autos and ammo started the slide, and highways and FHA insurance provided the means of white flight. Detroit was dealt several suffocating blows that would cause its minimal sustainable population to drop from 1.8 million to perhaps 1.2 million from these two factors alone. But Detroit’s depopulation has been unlike any other city.

While Detroit’s suburbs were engaging in economic transformation along with the rest of the country, Detroit missed the opportunity in its midpoint of depopulation to bring in new innovators to change its business profile. Cities like Akron and Pittsburgh stopped their rustbelt bleeding through investment in new, job-based innovation and came back to life. Yet, key investors in the Detroit metro area instead sought reinvestment outside the city proper, choosing instead to invest in entertainment branding within the city. Sports and commerce brands are important to a City’s livability but these investments did not add enough to the city’s tax base to survive without adding businesses that could support a minimum population.

So, part of the city’s fall can be explained by a lack of restructuring the city to attract new business. Yet, other cities that failed in this mission simply stabilized at a smaller size without imploding as Detroit did. Detroit’s white flight, however, was greater than any other city. Detroit’s black population continued to grow from the 1970s until the 2000s, but the city’s white population dropped to 7.8%, leading the city’s drop in population from 1.8 million to 700,000.

Detroit has a unique history of racial prejudice due to its 20th century migration patterns and its development of institutional racism in response to its dramatic increase in Southern migration. Repeated efforts by many thoughtful civic leaders failed to turn the tide of how Detroit would repeatedly manage racial conflict. The result of years of missed opportunities to repair the city’s racial tensions resulted in a Detroit whose negatives now overwhelm its positives.

The average citizen that wants to raise their family in safety, to give their kids a decent education, to see their kids get a decent paying job, and to watch their children then settle down in town to raise their grandchildren, this average citizen simply could not see a way to continue his basic American dream in Detroit, and sought refuge outside the city.

Detroit became overwhelmed with crime. Violent crime expanded and now dots all parts of the city. Detroit’s schools have failed the city miserably. Half the city’s population is functionally illiterate and lacks the skills needed for the types of jobs that some see as the savior to city revitalization. Revitalization cannot ignore the base of Detroit’s citizenry or the root issues of education and crime will remain unresolved.

Jobs that could provide a living wage are not available to current residents. This broken pattern that causes city flight must now be reversed in a city that only graduates 22% of its kids and that has the highest crime in the country. Without vastly reducing crime and undertaking massive restructuring of the city’s schools to create successful outcomes, and without creating livable wages for the city’s high school graduates, no urban planning or investment will reverse the city’s loss of population.

Ok, so let’s get to work. Detroit can be the first city in the nation to reverse such a trend. Detroit MUST be the first city in the nation to reverse such a trend for its own survival. The institutional and structural impediments that have kept the City from struggling back must now be removed. Root causes of Detroit’s plight must now have bold solutions that attack root causes. A system-wide solution that supports all of Detroit’s citizenry must now be employed.

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