Robots Haven’t Stolen Men’s Jobs, Capital Flaws Have

4.1.2For thousands of years, men toiled with nothing more than the work of human hands and draft animals. The vast majority plowed the fields and labored from dawn to dusk. Yet theirs was a life in tune with nature and they were well connected with their sense of God.

After 5,000 years of recorded history, man invented work through carbon based fuel. No longer was production bound by labor alone. Little by little, men’s minds were released from the drudgery of forging furrows in the fields. Year after year, the miracle of the industrial era happened upon us, and the minds of men multiplied output through new inventions of machinery.

Lives that at one time supposedly spanned centuries but that had devolved into just a few decades began to expand again as men were free to create new ways to increase life expectancy. And those lives, while freed from some of the past drudgeries and dreadfulness, were still filled with ever specializing forms of work.

As machinery thrust man into highly productive generations, items such as books that were once expensive luxuries became available to the common man, expanding his access to knowledge even more. And work that had once been deemed that of the most refined now began to thought of as the new drudgeries. These tasks would later be consumed in the information era. Yet, even as drudgeries continued to be eliminated from the workplace, more and more previous luxuries became commonplace, and the masses in wealthier countries began to live better than kings of old.

But they now provided to each other services that heretofore would have seemed frivolous luxuries of the wealthy. Life became ever more livable even while all continued to work. Only that periodically, sometimes without warning, economies would shut down and work would dry up for want of demand.

It seemed that economies were built on credit and that providers of credit could accelerate and decelerate the economy on their whim. They could also pick and choose to whom they would provide credit, and who would prosper from their decision. For when credit was available, man was ever increasingly finding new inventive ways of employment and services to expand livability of mankind. But when credit was pulled, these newly expanded, inventive forms of employment suffered.

Did machinery stop man from working? No, it allowed him to expand his portfolio of work. Did computers stop man from working? No, they exponentially expanded his capacity to devise new work. Did robots stop man from working? No, they eliminated new drudgeries and created opportunities to elevate livability to more of the masses.

Man will work to fill the limitless void of undiscovered livability upon the Earth. Yet the yoke of our capital system flaws must be lifted for that to occur.

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Filed under American Innovation, China, Full Employment, U.S. Energy Policy

Divine Law Suggests Technology Cannot Obsolete Labor, Only Direct It

industry_hightechSome say that the age of capital has arrived and that technology has made the labor of the high school drop out obsolete. It is this argument then that supports the idea that uneducated laborers should be paid a wage that does not sustain life. Yet the vast majority of the world does not exceed this poorly educated standard of learning. Are we saying then that the majority of the world should not exist? The creation of computers, while making the world vastly more productive, has not yet made mankind extinct.

The ability of a country to lift its people through education determines its ability to compete on the economic frontier of the world. The fact that only 4% of Detroit’s eighth graders can pass basic knowledge tests in math is an indicator of the abysmal condition of America’s system of preparation for competition on that economic frontier.

Yet, whether or not we are adequately preparing our nation for the leading edge of national production, we still are producing more humans. These humans have value, a value that is economically determined by our ability to educationally prepare them, but that has value nonetheless.

America continues to replace human capital with machinery and computers to compete with other parts of the world that still uses human capital at a much lower price. America has seen fit to add $15 per hour equivalent through regulation and set a minimum wage of $7.25. With our artificial barrier of $22.25 in a world with a median income of less than a dollar, technology must prevail.

Yet those are artificial barriers we set for ourselves that drive labor decisions in America. Therefore, we are content to give on top of those barriers an additional equivalent of $13 per hour to every citizen that we keep sidelined and unemployed. It is our artificial barriers that attempt to create obsolescence. However, even if we removed the barriers and reformed our abhorrent educational system as we should, America would still have a segment of our population unable to rise to the levels of knowledge required to compete for those jobs that are left with our $22.25 barrier.

Are we then divinely just in letting American labor sit idle while millions provide similarly educated labor in other countries to supply us our goods?

There is strength in Biblical verses about work. Several contain the context that men must work to eat. For instance:

1. Thessalonians 3:10

“For even when we were with you, we would give you this command: If anyone is not willing to work, let him not eat.”

Now if the Bible says if anyone is unwilling to work let him not eat, then if follows that if they are willing to work then they should eat. The laborer is not the owner of the work. The master of the work is the capitalist that has provided for the business owner.

1. Timothy 5:8 states:

“But if anyone does not provide for his relatives, and especially for members of his household, he has denied the faith and is worse than an unbeliever.”

How could God allow the servant of a master’s work to become an unbeliever and deny his faith because he cannot provide for his relatives simply because the master of the work does not provide a living wage? If God commands a man to work and to provide from that work for his family less he be deemed and unbeliever condemned to Hell, then God must want for this man to earn a living through honest work.

Ephesians 4:28 says:

“Let the thief no longer steal, but rather let him labor, doing honest work with his own hands, so that he may have something to share with anyone in need.”

Yet, we turn our backs on our failing schools, condemning millions to a life unprepared for honest work. We then turn them to the streets where high school drop outs and failed students cannot earn a living wage, and we force them into making a poor choice between public handouts and lives of crime.

The idea that a man can condemn another to work for wages beneath his ability to sustain life has been tread out through the ages and always ends in fallen governments and revolution. The Arab Spring happened because the world’s economic implosion brought food prices beyond the reach of North Africans. Just because men can lower wages below livability does not mean that God supports their power.

For the scripture of 1 Timothy 5:18 says,

“You shall not muzzle an ox when it treads out the grain,” and, “The laborer deserves his wages.”

The Bible is replete with verses that support the concept of work equating to a living wage. It certainly does not state that the laborer will become wealthy from his toil. Yet, it does support the idea that man should be provided through his toil his needs so that he may come to God in solitude with good prayer.

If this is so, then our leaders are called to come together to determine how all can earn a living wage through a community’s toil.

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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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Divine Law Calls for Full Employment with Living Wages

man-praying-knees
Balance of moderation is what is required yet the world’s system of governance drives us toward imbalance. It seems that moderation is not a natural state of governance, that man drifts toward either extreme. On the one hand, we have state sponsored religion that strives for moral imperatives yet enforces them through state regulation. On the other, we have separation of church and state that suggests natural law is a moral substitute for divine law, and yet natural law in the absence of divinity degenerates to survival of the fittest. It is toward one of these extremes or the other that mankind seems to find itself in tortured equilibrium.

Neither extreme provides the moderation necessary for a nation to prosper. In progressing, or regressing as it were, from one extreme to the other, a nation reaches its peak and then degrades over time into obscurity. Finding that optimum balance in the middle is what modern nations strive for but seldom obtain.

In America’s beginnings, a founding group of men, many of whom were Deists, sought to find a moderately balanced starting point that separated church and state but that maintained religiously derived principles in its laws. Yet these same religiously derived laws retained bigoted principles of slavery that were incorporated in the nation’s founding documents. Those principles had been hardened into centuries of state sponsored religious doctrine.

Over two hundred years, principles of separation of Church and State have progressed in America’s doctrine and laws, yet in so doing, they have also allowed the progression of the natural law of survival of the fittest, for they go hand in hand.Natural law does not allow for living wages for all men. Natural law does not allow for the raising up of community. If balance to a nation is to be restored, divine principles might be required, even while maintaining separation of the state.

The divine principle that must be adhered to is that of man’s ability to commune with God. If that were a true principle, then no law could be created that caused a loss of communion. If laws then were created that caused man not to have a living wage, that caused strife in his ability to provide the basic necessities of life sustenance, that in turn distract his communion, then these laws would necessarily be put down. Communion then is the driver for rights of man, and a living wage becomes man’s right. With this right, full employment changes from a fluffy goal not adhered to by our politicians, to a high priority of the nation. This is as it should be.

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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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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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Disability Has Decreased Our Unemployment from 10.2% to 7.5%!

Cumulative Foodstamp Disability vs Jobs

Unemployment exploded from 4.7% in 2007 to a high of 10.2% in 2009 before falling to 7.5% this month. Our government would have us believe that America is slowly on its way to fixing its joblessness problem. Yet, between 2009 and now, the percentage of Americans working has actually dropped from 59.8% to 58.5%!

Down from 63.7% before the economic implosion, 58.5% is the real number the government is touting as job improvement when our joblessness is actually worsening. If you think the way the U.S. government represents joblessness figures is purposely confusing, raise your hands.

Let’s break it down….

Since 2009, the U.S. population has grown 10 million from 305 to 315 million people. The number of working age people grew by 10 million during that time to 245 million people.

Multiplying 305 by 59.8% and 315 by 58.5%, the economy added 3 million jobs, not enough to keep up with population growth. So far, so good….

But if unemployed people dropped from 10.2 to 7.5% during that same time even though the percent of people working did not increase, what happened to this 2.7%, or 5.5 million people?

Well, states smartly put 4.7 million people on disability. States pay for welfare but the federal government pays for disability. So, at a cost of $2,500 per worker, states have geared up to pay private companies to dubiously transfer people that would have been on welfare to federal disability. Historically, 99% of people added to disability never leave it. The remaining unemployed have been absorbed by the welfare system.

Before anyone stands up to bash the current administration for obscuring how bad our economy really is, kindly settle your tushes back down and listen. This disability scheme has certainly been used as a buffer for the economic implosion, but it is not new to this administration. Since China opened its doors in 1979, our disability ranks have swelled from 2.3% of our workforce to 6.1%.

This is a hidden cost of owners of capital investing in jobs overseas. This is a hidden cost of Detroit’s economic policies. Unemployment is getting WORSE, NOT BETTER! MORE people are idle, NOT LESS! The economic implosion created a nation of disabled. If a broken spirit is a disability, perhaps the numbers don’t lie.

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Filed under American Governance, Economic Crisis, Federal Budget, Full Employment, Jobs

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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Filed under American Governance, American Politics, Bureaucracy, Economic Crisis, Free Trade, Full Employment, Jobs, Multinational Corporations, social trajectory, U.S. Tax Policy

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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