WSJ Suggestion for Detroit

[BankruptcyGuy]

Granted, P.J. O'Rourke is a satirical writer, but this does have some parcels of truth to it.

http://online.wsj.com/news/articles/...roit+hong+kong

[GUSHI]

Leave Belle ISle alone, how about dig up the east side and make a island of that----make that your new Hong Kong, and hire a private securtity to police it,

[Dan Wesson]

Yeah let's have some more of that trickle down prosperity.

[Novine]

Detroit's already played this game with Neighborhood Enterprise Zones. Did that save the city? No.

[mwilbert]

The proposal is not feasible in the world we actually live in, and it is hard to know exactly how it would work out if it were somehow carried out, but to compare it to NEZs as they were actually implemented in Detroit is like comparing an elephant gun to a peashooter.

[Jimaz]

Both Wall Street and its Journal have jumped the shark after their driving the entire planet into The Great Recession. Get over yourselves. You've already achieved your incredibly overreaching irrelevance. Stop trying to exceed your failure.

Go away. You're conspicuously not helping. Stop pretending to do so.

[Novine]

"The proposal is not feasible in the world we actually live in, and it is hard to know exactly how it would work out if it were somehow carried out, but to compare it to NEZs as they were actually implemented in Detroit is like comparing an elephant gun to a peashooter."

Why? The NEZs were implemented in the areas of the city that were considered viable. If they didn't lead to significant development in those areas, what makes anyone think they'll work elsewhere?

[Gistok]

"...no sales tax; no VAT; no taxes on capital gains, interest income or earnings outside Hong Kong; no import or export duties; and a top personal income-tax rate of 15%."

I think that what mwilbert was alluding to was that Hong Kong goes wayyyyyy beyond what a NEZ does....

[erikd]

"The proposal is not feasible in the world we actually live in, and it is hard to know exactly how it would work out if it were somehow carried out, but to compare it to NEZs as they were actually implemented in Detroit is like comparing an elephant gun to a peashooter."

Why? The NEZs were implemented in the areas of the city that were considered viable. If they didn't lead to significant development in those areas, what makes anyone think they'll work elsewhere?

The assertion that tax reduction could lead to the revitalization of the city is, at the very least, ignorant, and in reality completely moronic.

Taxes are not the problem in Detroit. The lack of basic city services in Detroit is the problem.

Even if it were possible to change federal and state tax laws to exempt Detroiters from paying taxes, it wouldn't change a fucking thing.

There are plenty of people investing in the viable areas of Detroit. The problem is that there are huge swaths of Detroit that are not viable for investment, and this has nothing to do with taxes.

The property taxes on a $500 house in the hood are not a deterrent to investment. The fact that the police don't show up when a scrapper rips out all the new wiring in your $500 house is the deterrent for investment in the city.

Detroit doesn't need any kind of special exemptions and treatment, we need the same basic city services that are taken for granted everywhere else in the developed world.

The solution is not difficult, radical, or innovative. Provide the same basic city services in Detroit that are common in the rest of the first world, and many of the other problems will take care of themselves.

[Wesley Mouch]

...Taxes are not the problem in Detroit. The lack of basic city services in Detroit is the problem. ...

You're getting warm. Why do we lack basic city services in Detroit?

[mwilbert]

"...no sales tax; no VAT; no taxes on capital gains, interest income or earnings outside Hong Kong; no import or export duties; and a top personal income-tax rate of 15%."

I think that what mwilbert was alluding to was that Hong Kong goes wayyyyyy beyond what a NEZ does....

That is exactly what I was referring to. If you made Detroit into a true tax haven, guaranteed to last for a long time, that was also part of the continental US, I am pretty confident it would make a huge difference in the economics and population of the city.

That isn't going to happen. Congress isn't going to uniquely favor Detroit over every other location in the country, and a program of this type has to be tightly targeted. The benefit comes because you attract a whole bunch of tax and regulation averse people and companies into one place; if you have many such places you dilute away the effect. Also, such a program would have a huge cost in terms of Federal revenue, and it is hard to imagine Congress coming up with a way to pay for it.

People propose stuff like this because they have ideological axes to grind--either they would like to demonstrate how low taxes and regulation would lead to utopia, or they need some kind of proposal to address the problems of a place like Detroit without the actual governmental intervention they abhor, and they don't care whether the proposal is politically impossible to accomplish.

[That Great Guy]

If we build up the tax base by regional taxes to pay for Detroit by getting Wayne, Oakland and Macomb to pay for the Detroit debt, we will be prepared for when the good paying Union jobs come back, if they come back?

[Richard]

Detroit's already played this game with Neighborhood Enterprise Zones. Did that save the city? No.

The problem was it was not really a zone as they would pick one building and call it a zone,so one owner would control the entire neighborhood by sitting on it,enjoying tax benefits and a low cost speculator game.

If they had declared that one building along with,say,10 blocks surrounding as a zone and used the millions sent back in neighborhood stabilization funds it may have been a whole different story.

[coracle]

If we build up the tax base by regional taxes to pay for Detroit by getting Wayne, Oakland and Macomb to pay for the Detroit debt, we will be prepared for when the good paying Union jobs come back, if they come back?

How about Detroit paying for the debt by living within its means and not borrowing from the future? Isn't Wayne the next one up for bankruptcy? If my Oakland County City fails and needs financial help Detroit wouldn't give a shit about it. The best future for Detroit is to have a perpetual EM or some type of unelected management payed for on results. As "for when the good paying Union jobs come back," plan around it; it ain't going to happen.

[Wesley Mouch]

...snip...That isn't going to happen. Congress isn't going to uniquely favor Detroit over every other location in the country, and a program of this type has to be tightly targeted....snip...

This argument hits at the core of the debate. If you believe that Detroit was targeted and unfairly deprived of its economic oxygen, then it makes sense to craft a targeted solution.

What I believe is that Detroit was no more targeted than any other city -- but that we were less well prepared to handle the storm.

MV is correct that this won't fly not because its not a good idea for Detroit, but because why should the residents of Jefferson County AL, FallsCreek RI or Stockton CA not get the same benefits. Or Chicago and IL. They have massive civic pension debt. Let's make the Loop a Hong Kong zone too.

Thus, this won't happen.

But it should happen. Libertarians like me believe that if we simplified our taxes and regulation to minimal levels, we would see Hong Kong economic benefits that would do more to solve poverty than we've accomplished with the 'War on Poverty'.

Is this simply an attempt to allow multinational corporations to rule? No. In fact the edge given multinationals if their ability to navigate countless rules and regulations, and their ability to kill innovative small firms who just cannot scale up to do so.