Detroit should have gone "cold turkey"

[Willi]

An interesting take on why Detroit will continue to FAIL.
Many great in-depth insights to why Detroit is still drunk and stumbling.

http://www.entrepreneur.com/article/227509

[YounginDetroit]

I liked this article, though Im as pro-Detroit as you can get, its true Detroit has to figure out a way to get out of its 1950s economic mindset. I understand that unions were necessary to begin with but what theyve grown to be is embarassing. Detroit needs to learn to become competitive in a business sense. Sayin Detroit would never recover is a little harse given that the city is going throhgh such a massive change right now. But I get his point I think will figure out a way to learn from its mistakes and soon. But when he refered to Detroit becoming that brother in law who does nothing but borrowmoney its true, but that was the old Detroit better times are ahead.....hopefhlly

[313WX]

I completely agree with the sentiment of that article.

Unless you're making good money at the Big 3 and nearing retirement, or unless you graduate from one of Michigan's universities with a high GPA and a STEM degree, it's best to get out of Detroit and Michigan right now. Its best days are behind it.

[Hypestyles]

free enterprise relocated factories thousands of miles away- so went the jobs. Yay capitalism.

[Honky Tonk]

free enterprise relocated factories thousands of miles away- so went the jobs. Yay capitalism.

AND the tax revenues. But let's increase mine, and tax retirees, so people can have free water and housing, and TGG can get a free bus ride.

[Willi]

It's easy to be optimistic, cheerlead, and say nice things about Detroit, but the article got to the heart of the matter , the harsh reality of many its woes, and spoke the truth about Detroit.
Great article for discussion, a catalyst for change.

[FormerDetroiter]

This article needs to be updated. It was written 7/19/2013. Although I'm no longer in Detroit to observe what's been happening. I do read and I have many friends and family member there who keep me informed.

[BankruptcyGuy]

I think the article was a little simplistic. Detroit is not nearly the only city with obstinate public employee unions. And Detroit's population loss was exacerbated by a lack of first-generation immigrants; I read a study that showed that 19 of the 20 largest cities in the United States would have lost population would it have not been for an influx of first generation immigrants.

I think the financial stability board will do more to help Detroit than people think. New York [[which is a heavily-union town as well) relied on it to keep spending in check. One of the biggest changes will be that Detroit can no longer accelerate revenue, defer expenses or rely on capital sales to balance its budget. If revenue is down, expenses will have to follow. How Duggan handles that will be the most interesting issue in Detroit over the next 10 years.

[Scottathew]

AND the tax revenues. But let's increase mine, and tax retirees, so people can have free water and housing, and TGG can get a free bus ride.

Exactly what I was thinking while reading the article. Although, I don't think wholly subsidizing mass transit would be a bad idea. It might be much less expensive than funding road improvements.

[Lowell]

Simplistic indeed. The author muddles Detroit [synonym for the American auto industry] and Detroit [Metro Detroit] and throws their problems on Detroit [the City of].

The Detroit [city] failed in terms of bankruptcy because its revenue didn't keep up with its costs. What he ignores is that this was fueled by its tax-generating middle class and businesses moving away to Detroit [Metro Detroit outside the city] and the decline Detroit's [American auto industry] product quality. Detroit [city] bears some blame at the leadership level but it is relatively minor compared to the above factors.

These event left Detroit [city] in the care of Detroit's [metro] non-taxpaying but tax-consuming poor, disabled, felon and ex-felon population. If this imbalance is not addressed Detroit [city] will fail again.

The author never mentions that 300K population elephant in the room. Instead he can only offer:

The hard choices of lower salaries, reduced services, trimmed pensions and re-investment need to me [sic] made, but it looks like there is little political will to achieve those ends.

Sorry, been there, done that and you can keep doing that until you hit minimum wage and it still won't keep up with the cost servicing those in need who cannot pay.

[Hermod]

This is why Franklin D. Roosevelt, labor's friend, was opposed to public employee unions.

[corktownyuppie]

Simplistic indeed. The author muddles Detroit [synonym for the American auto industry] and Detroit [Metro Detroit] and throws their problems on Detroit [the City of].

The Detroit [city] failed in terms of bankruptcy because its revenue didn't keep up with its costs. What he ignores is that this was fueled by its tax-generating middle class and businesses moving away to Detroit [Metro Detroit outside the city] and the decline Detroit's [American auto industry] product quality. Detroit [city] bears some blame at the leadership level but it is relatively minor compare to the above factors.

Good points. If we were talking about the Metro Detroit region as compared to the city of Detroit, you'll see that in aggregate, we are actually in pretty good shape economically.

But as you mentioned...

These event left Detroit [city] in the care of Detroit's [metro] non-taxpaying but tax-consuming poor, disabled, felon and ex-felon population. If this imbalance is not addressed Detroit [city] will fail again.

I alluded to this in previous posts, but I'll state it more concisely. Battling this is a 2 step process:

[[1) The city cannot be ruled by criminals and those who are consuming more than producing. The Financial Stability Board is the solution to this, though it doesn't get a lot of airplay. [[for example, can anyone name even 2 people on the board?) But they will be the hammer that puts a stop to any of the nonsense from the past.

[[2) Then people need to remediated to become productive members of society, or they will have to leave or get left behind. In South Dakota, you can now make $20/hr. working at McDonald's in the new oil production cities of northern US regions. The opportunities to be uneducated and make a healthy income exist. But they don't exist here and will not for a very long time, if ever.

[wazootyman]

I completely agree with the sentiment of that article.

Unless you're making good money at the Big 3 and nearing retirement, or unless you graduate from one of Michigan's universities with a high GPA and a STEM degree, it's best to get out of Detroit and Michigan right now. Its best days are behind it.

Out of curiosity, where do you propose to move to?

[iheartthed]

I think the article was a little simplistic. Detroit is not nearly the only city with obstinate public employee unions. And Detroit's population loss was exacerbated by a lack of first-generation immigrants; I read a study that showed that 19 of the 20 largest cities in the United States would have lost population would it have not been for an influx of first generation immigrants.

I think the financial stability board will do more to help Detroit than people think. New York [[which is a heavily-union town as well) relied on it to keep spending in check. One of the biggest changes will be that Detroit can no longer accelerate revenue, defer expenses or rely on capital sales to balance its budget. If revenue is down, expenses will have to follow. How Duggan handles that will be the most interesting issue in Detroit over the next 10 years.

I agree with most of this comment. Particularly, if Detroit doesn't start to attract blood from outside the region then it does not have much hope for revival.

[Willi]

IF people who come here have little money to begin with,
want to live in cheap housing and live a simple, no frills, subsistence life style,
awash in art, music, bohemianism tendencies - then the financial base will be poor.

Can't tax what isn't there to begin with......hence a cyclical process of poverty continues.

[iheartthed]

IF people who come here have little money to begin with,
want to live in cheap housing and live a simple, no frills, subsistence life style,
awash in art, music, bohemianism tendencies - then the financial base will be poor.

Can't tax what isn't there to begin with......hence a cyclical process of poverty continues.

Immigrants have the highest rates of entrepreneurship.

[casscorridor]

Calling this guy a charlatan would be an understatement.

[Willi]

People don't get rich overnight, it takes a TREMENDOUS amount of work and time.
Should Detroit have to wait an entire generation , 30-40 years worth to prosper ?

[EastsideAl]

What a load of ill-informed ahistorical ideological crap that article is. First of all, as Lowell points out, the article's author completely conflates "Detroit" [[as a journalistic shorthand for the American automotive industry) and Detroit, as in the City of Detroit, whose problems have many roots other than the decline of the auto industry.

The author, in the thrall of his anti-labor ideology, also seems to have missed the fact that historically the period with the highest unionization rates matches with the greatest income equality and growth rates this country ever had. Organized labor was a major force in building the American middle class, a middle class that could afford to buy the products "Detroit" was producing. As unionization rates have slid, incomes for most Americans have stagnated or retreated, inequality has grown tremendously, and the middle class has begun to shrink, look where we have ended up. In a Wal-Mart, dollar store, work 3 jobs, rent [[lease) your car because you can't afford to buy it, economy.

The only place where I agree with this author a little bit is that I think the post-Reuther UAW made a tremendous mistake when they followed the auto companies down the dead-end road of protectionism [[against companies with organized labor forces in their home countries), and particularly when they didn't fight to organize the U.S. plants of foreign car makers. But that's more a discussion of internal union politics and the politics of trade than it is a discussion of organized labor itself or the history of the City of Detroit [[not "Detroit").

[iheartthed]

People don't get rich overnight, it takes a TREMENDOUS amount of work and time.
Should Detroit have to wait an entire generation , 30-40 years worth to prosper ?

Yes, unless you know where to kidnap a 300,000 productive, taxpaying citizens that we can drop into Detroit to accomplish the goal. If you know where they are I'll bring the duct tape and rope.

[313WX]

Out of curiosity, where do you propose to move to?

Any growing place with a diverse economy...

[BankruptcyGuy]

The author, in the thrall of his anti-labor ideology, also seems to have missed the fact that historically the period with the highest unionization rates matches with the greatest income equality and growth rates this country ever had. Organized labor was a major force in building the American middle class, a middle class that could afford to buy the products "Detroit" was producing. As unionization rates have slid, incomes for most Americans have stagnated or retreated, inequality has grown tremendously, and the middle class has begun to shrink, look where we have ended up. In a Wal-Mart, dollar store, work 3 jobs, rent [[lease) your car because you can't afford to buy it, economy.

The slide in unionism long, long predates income stagnation. Correlation does not imply causation.

I'd point a finger at rising health care costs taking up a large percentage of overall compensation gains. That portion of compensation does not improve net worth. Additionally, in this state, a larger and larger percentage of our revenues are simply transfer payments from the employed to those receiving pensions and health care from the state and its subsidiaries.

This is not to blame those receiving the benefits; they asked for something and received a promise. Politicians simply refused to fund, in some cases to any extent, the cost of the promises they made. That is an ENORMOUS hole to dig out of. While we're doing that, real incomes aren't likely to rise.

[Hermod]

Immigrants have the highest rates of entrepreneurship.

He was talking about the "hipsters" moving in that DetroitYes creams its jeans over. He wasn't talking about immigrants looking for an opportunity [[which is what built Detroit).

[ghettopalmetto]

This article is pure rubbish. More promotion of race-to-the-bottom, low-wage, anti-unionism.
Even a point the author celebrates--the location of Saturn in Spring Hill, TN--is no more. Such a terrific idea to be in a low-wage state, that GM found it wholly unnecessary. And Ford was *never* headquartered in the City of Detroit--is that because the UAW was too powerful in the early 20th century? LOL.

Agreed that the author conflates "Detroit", as in the auto industry, with the City of Detroit. That his juvenile analysis makes this glaring mistake results in nothing but confusion and hysteria for the rest of the piece. It's hard to take this guy seriously when he confuses correlation with causation...there simply isn't any evidence to support his opinion.

[canuck]

Dime-a-dozen articles like this one are totally predictable. Detroit is the perfect target for op-ed writers with an agenda.