Call Detroit. Tell them bankrupt!!!

[Patman]

The biggest problem in the long-term in the schools. You can get young professionals and artsy fartsies to live in downtown and midtown, but as soon as they get married and start thinking about kids, those people are going to bolt for the 'burbs unless they can fix the city school system.

The reason a lot of cities hang on is because they constantly replenish with college students in its urban core. Without the universities Boston would likely be similar to Detroit as has been witnessed by general state migration patterns. So with that core you have a constant pressure to maintain a quality level regardless of what kind of urban hell may exist. What separates boston from Philly is that a racial pandering taint never took root in Boston, save bussing.

As for Detroit... Young and urban is just a facet. It's more an indicator. Detroit cannot just jump to the end solution. Many things need to structurally change in the political culture and its unclear its gotten there yet.

I'm reminded of correlation causation. Just because QOL regresses well with the number of TVs, giving everybody TVs will not bring identical QOL.

Business has to come first but if the plan is to continue to sacrifice them to local social democracy and corruptive practices the businesses won't come. You know, only so many times can you tell a person you are harming them for their own good.

Once (and it won't happen) the businesses come back in the people will want to return to the local core and shorten up the commute... But only after security is improved in those areas.

I think Detroit could come back, as in its doable, I just have no faith that people will get rid of various malfunctional precepts to allow that to happen.

If anything this should remind people and urbanists particularly, a government does not build a city, people do. People are the ones who keep in check to meet relevant needs and their the ones who will build whether its big money (buildings, urban housing) or small money (personal gardens and other micro and self investments). People have to feel it is worth their risk.

The real issue... You can't get around economics as long as you have a free society... People can leave. If you have an unfree society people won't try. Thinking you can milk them for your ideals is a form of slavery. You want them to do the best, leave them alone and let them build society.

In the end, Detroit shows the limits of coercion. That's what the social democracy is about, coercing others to provide for the desired results of a political class. In the end, if you coerce them to do things counter to a functional society, regardless of the morality of the ideal, it falls apart. Want a thriving society? Let people be free and let the pursue.

 

[walrus]

Re: Call Detroit. Tell them bankrupt!!!

In 1960 Detroit had the highest per capita income in the US. Guess that shouldn't be shocking looking at what used to be built there but still.........

 

[Bob Gray]

Re: Call Detroit. Tell them bankrupt!!!

I believe pensions are only $3.5-5 Bn of the $20Bn problem, although perhaps that's not the full extent. Regardless I think the city's problems are far deeper than most. The city is a run down sh ! thole aside from a few blocks downtown. Crime is rampant and 40% of the place is abandoned dwellings. The only two corporations left are GM and Quicken Loans which isn't enough to sustain a city of that size.

So the problem becomes what goes into Detroit to get it back on its feet? I personally can't see where the jobs are going to come from, and if there's no jobs there's no turnaround.

Yah, I think the retiree health care costs were beyond the pension amount, maybe another $6 billion or so I think I read somewhere. No easy way out of this for anyone involved. Just shows how badly things can go if good fortune turns to bad and things are run poorly.

 

[joecct]

Re: Call Detroit. Tell them bankrupt!!!

Yah, I think the retiree health care costs were beyond the pension amount, maybe another $6 billion or so I think I read somewhere. No easy way out of this for anyone involved. Just shows how badly things can go if good fortune turns to bad and things are run poorly.

Well, there was an article a week or so back that postulated the idea of the city terminating the retiree's healthcare and forcing them into the exchanges under PPACA.

IIRC when a company fails, the Pension Guaranty Board picks up the pension. Can they do that for public pensions?

As an out of the box thought, can we sell Detroit to Canada?

 

[Bob Gray]

Re: Call Detroit. Tell them bankrupt!!!

Well, there was an article a week or so back that postulated the idea of the city terminating the retiree's healthcare and forcing them into the exchanges under PPACA.

IIRC when a company fails, the Pension Guaranty Board picks up the pension. Can they do that for public pensions?

As an out of the box thought, can we sell Detroit to Canada?

A lot of other government pension programs don't provide health coverage to retirees, so it sounds like the Detroit program was on the generous side. Maybe if they cut the health care benefits in some significant way they can leave the pension payments more or less intact?

 

[MaizeRage]

Re: Call Detroit. Tell them bankrupt!!!

Wouldn't the new owner have to pay property taxes? Can't imagine it would be worth it to buy something there even for a $1.

Technically yes, but the people buying those properties don't. They can hold it for like three years without paying taxes before it is reclaimed. Worst case scenario is that they're out $1 if they can't find a way to flip the property in that time.

 

[bigmrg74]

Re: Call Detroit. Tell them bankrupt!!!

The biggest problem in the long-term in the schools. You can get young professionals and artsy fartsies to live in downtown and midtown, but as soon as they get married and start thinking about kids, those people are going to bolt for the 'burbs unless they can fix the city school system.

Yep. There's only a few schools there that are really worth a hill of beans, like Cass Tech. Other than that, the quality of schools drops down fast to where they're more or less holding pens for the day. Detroit needs to bring up the standards of those lower end schools to where parents would want to send their kids there because they feel like their kid will get educated there, not because they can't afford to send their kid to some other school.

 

[FadeToBlack&Gold]

Re: Call Detroit. Tell them bankrupt!!!

A couple other posters are right though, young and single would describe the residents of many inner city areas like Chicago, Denver, and Seattle. When they move on to the 'burbs or to other cities, others seem to move in.

Even if the city were to clean up it's crime and infrastructure problems, what further cripples Detroit's ability to attract more local startups and business relocations is stiff competition from suburbs like Southfield (where my employer is headquartered), Troy, and Auburn Hills, that have heavily invested in attracting businesses and being commercial centers for decades while Detroit crumbled. So even when a startup that would diversify the local economy comes along, they're not likely to pick Detroit to open up shop. GM & Quicken are the only major white collar jobs in the city, and while Gilbert's empire does span across 3-4 buildings around Campus Martius Park now, that's still not really diverse enough.

 

[Bill]

Re: Call Detroit. Tell them bankrupt!!!

In 1960 Detroit had the highest per capita income in the US. Guess that shouldn't be shocking looking at what used to be built there but still.........

There have only been Democratic mayors since January 1962.

 

[mookie1995]

Re: Call Detroit. Tell them bankrupt!!!

did i read that a judge the other day said they couldn't declare bk because it was against the MI constitution?!?! some people actual put in the constitution that you can not lower public pensions. no way, no how. put that IN the state constitution.

So the problem becomes what goes into Detroit to get it back on its feet? I personally can't see where the jobs are going to come from, and if there's no jobs there's no turnaround.

how about a casino?!?!

 

[Hammer]

Re: Call Detroit. Tell them bankrupt!!!

did i read that a judge the other day said they couldn't declare bk because it was against the MI constitution?!?! some people actual put in the constitution that you can not lower public pensions. no way, no how. put that IN the state constitution.



how about a casino?!?!

That ruling got put on hold today, and the statute regarding the pensions is probably going to get struck down in BK as well.

 

[Rover]

how about a casino?!?!

They're already got 3! Guess they didn't deliver what they promised....

I'm amused by the partisan spin on a city that's been dying for 60 years. Detroit's problems seem to mirror Michigans, which has been governed by people of all sorts of political philosophies over that time. Despite my liberal leanings, I have to say its possible some cities just won't make it.

Having said that, there are some things I would recommend post bankrupcy. 1) Consolidation. Hire out private contractors to tear down underutilized neighborhoods. Whatever they can salvage they get to keep. Resident who reside in one house in a neighborhood of empties have to move. Its unfortunate but the city can't keep up services to this wide of an area. 2) Start with what you know how to do. Plenty of foreign car makers are opening plants and increasing production in the US. Contact them and offer up a deal. You have a skilled workforce, plenty of available land, and can come up with a tax incentive agreement to make it worth their while. 3) Spruce up the place. There's a website called Forgetten Detroit that pictures all of the abandoned buildings. Its shameful to look at. Start with the inner core and slowly move out. If Downtown looks good (which I question, but whatever) what's the neighborhood next door look like? And the one after that? How about the waterfront? Guiliani did something like this in NY, where they'd run all the drug dealers out, fix up the place, keep a police presence there, and then go onto the next neighborhood. Eventually housing values will rise, and with it people will have more incentive to take care of the place.

Having said all that, I still don't like the city's chances. Places like Boston or NY have several advantages which start with a thriving metro area around them and several business clusters within and near the city. They are also tourist attractions, which Detroit ain't. You can expand when you have a good core. When your core is rotten, good luck.

 

[FadeToBlack&Gold]

Re: Call Detroit. Tell them bankrupt!!!

Having said that, there are some things I would recommend post bankrupcy. 1) Consolidation. Hire out private contractors to tear down underutilized neighborhoods. Whatever they can salvage they get to keep. Resident who reside in one house in a neighborhood of empties have to move. Its unfortunate but the city can't keep up services to this wide of an area.

Shrinking the size of the city limits will/should be the next political battle once the bankruptcy filing goes through.

2) Start with what you know how to do. Plenty of foreign car makers are opening plants and increasing production in the US. Contact them and offer up a deal. You have a skilled workforce, plenty of available land, and can come up with a tax incentive agreement to make it worth their while.

And assuming they come for a mere tax break (which I am skeptical of), where do they go once the tax incentives expire? Back to Alabama, Mississippi, Arkansas, Mexico, etc. where they don't have to deal with the UAW and labor is a fraction of the cost.

3) Spruce up the place. There's a website called Forgetten Detroit that pictures all of the abandoned buildings. Its shameful to look at. Start with the inner core and slowly move out. If Downtown looks good (which I question, but whatever) what's the neighborhood next door look like? And the one after that? How about the waterfront? Guiliani did something like this in NY, where they'd run all the drug dealers out, fix up the place, keep a police presence there, and then go onto the next neighborhood. Eventually housing values will rise, and with it people will have more incentive to take care of the place.

Forgotten Detroit is interesting to look at, but many of that guy's pictures are now several years old. Several of those buildings have been torn down, rehabbed, or are in the process of being rehabbed. On the other hand, you've still got eyesores like the Michigan Central Station, Packard Plant, etc. And yes, increasing police presence across the city will be important. If it takes the cops two hours to respond to a robbery, no one will move in.

 

[FlagDUDE08]

Re: Call Detroit. Tell them bankrupt!!!

Shrinking the size of the city limits will/should be the next political battle once the bankruptcy filing goes through.



And assuming they come for a mere tax break (which I am skeptical of), where do they go once the tax incentives expire? Back to Alabama, Mississippi, Arkansas, Mexico, etc. where they don't have to deal with the UAW and labor is a fraction of the cost.



Forgotten Detroit is interesting to look at, but many of that guy's pictures are now several years old. Several of those buildings have been torn down, rehabbed, or are in the process of being rehabbed. On the other hand, you've still got eyesores like the Michigan Central Station, Packard Plant, etc. And yes, increasing police presence across the city will be important. If it takes the cops two hours to respond to a robbery, no one will move in.

The trick with #2 is, as part of the rehab, to deal with UAW before the industry shows back up. You're absolutely right, though, that the tax incentives only provide something temporary. The city (and state, for that matter) needs to be open to adjusting its long term policy, especially if it can see that what they bring in is profitable. What also needs to be adjusted are the social programs. Certain people on here will read this as getting rid of them entirely, but that's not what I was thinking. We need to make sure that they are effective, and they do not have high dependence caveats upon certain population sizes. Most of all, DO NOT have one person pay for another. That will just cause the same problems that we had before. Call it whatever you want, but that eliminates the dependence upon population size.

 

[Rover]

Re: Call Detroit. Tell them bankrupt!!!

Regarding the labor issue, really how much more expensive is Detroit now vs the South? At some point don't they start to converge? Yes, opening up a plant in NYC is going to be costly, but I find it curious that Michigan residents are in a position to demand sky high wages. If the UAW is the problem, then again I'd certainly negotiate with them but if they don't want to play ball you'd have to go around them.

The reason why companies won't up and leave after the tax breaks expire is the tremendous capital it takes to build a factory and get it up and running. Its not like setting up a call center. Something like a factory is generally a long term commitment, and again they really need to sell the notion of a skilled labor force with experience in that particular industry.

 

[FlagDUDE08]

Re: Call Detroit. Tell them bankrupt!!!

Regarding the labor issue, really how much more expensive is Detroit now vs the South? At some point don't they start to converge? Yes, opening up a plant in NYC is going to be costly, but I find it curious that Michigan residents are in a position to demand sky high wages. If the UAW is the problem, then again I'd certainly negotiate with them but if they don't want to play ball you'd have to go around them.

The reason why companies won't up and leave after the tax breaks expire is the tremendous capital it takes to build a factory and get it up and running. Its not like setting up a call center. Something like a factory is generally a long term commitment, and again they really need to sell the notion of a skilled labor force with experience in that particular industry.

It may not be specifically the UAW, but unions are the ones that negotiated the bloated pensions that brought Dee-troy-it to this point in the first place. Granted, the fault is equally on the politicians that caved to these demands.

As to your second paragraph, that may be true in the short term, but not in the long term. Depending upon the scale, these companies usually have multiple plants across the country (or even the world), and in the long-term will look to expand to the best possible places. Let's consider the overseas jobs that your ilk consistently berates knuckledraggers about. It'd be the same thing as moving from MI to SC, only on a different scale. Do they up and leave the second a tax hike rails its way through legislation? No. However, they keep abreast of the situation and adjust accordingly. That way, when something like that is about to take effect, they're ready for it. Plus, those property tax breaks usually have 20-30 year terms on them, or else they wouldn't relocate in the first place because of the same reasons you just described for why they won't leave immediately.

 

[Rover]

It may not be specifically the UAW, but unions are the ones that negotiated the bloated pensions that brought Dee-troy-it to this point in the first place. Granted, the fault is equally on the politicians that caved to these demands.

As to your second paragraph, that may be true in the short term, but not in the long term. Depending upon the scale, these companies usually have multiple plants across the country (or even the world), and in the long-term will look to expand to the best possible places. Let's consider the overseas jobs that your ilk consistently berates knuckledraggers about. It'd be the same thing as moving from MI to SC, only on a different scale. Do they up and leave the second a tax hike rails its way through legislation? No. However, they keep abreast of the situation and adjust accordingly. That way, when something like that is about to take effect, they're ready for it. Plus, those property tax breaks usually have 20-30 year terms on them, or else they wouldn't relocate in the first place because of the same reasons you just described for why they won't leave immediately.

I don't think they're trying to get people to relocate. I think the goal is getting them to expand in Detroit. Where they choose to build a new factory is a somewhat different game than trying to get a company to relocate operations.

Beyond that they need to compete with a better workforce. Throwing down a plant in East Podunk, Mississippi and you may have some trouble getting enough quality people. Presumably people in Michigan have a decent education and there's a lot of people with experience building cars. This is very similar to the outsourcing vs domestic argument going on. As the cost of labor in China gets closer to the cost in the US, the deciding factor should be that Chinese products tend to be crap, which tends to happen when you use slave labor to manufacture goods. Eliminate unfair practices (currency manipulation, dumping, etc) and have a fair competition. Detroit needs to reduce the costs vs other car manufacturing places and then go toe to toe on quality of the workforce. If they can't do that then they get what they deserve.

 

[FlagDUDE08]

Re: Call Detroit. Tell them bankrupt!!!

I don't think they're trying to get people to relocate. I think the goal is getting them to expand in Detroit. Where they choose to build a new factory is a somewhat different game than trying to get a company to relocate operations.

Beyond that they need to compete with a better workforce. Throwing down a plant in East Podunk, Mississippi and you may have some trouble getting enough quality people. Presumably people in Michigan have a decent education and there's a lot of people with experience building cars. This is very similar to the outsourcing vs domestic argument going on. As the cost of labor in China gets closer to the cost in the US, the deciding factor should be that Chinese products tend to be crap, which tends to happen when you use slave labor to manufacture goods. Eliminate unfair practices (currency manipulation, dumping, etc) and have a fair competition. Detroit needs to reduce the costs vs other car manufacturing places and then go toe to toe on quality of the workforce. If they can't do that then they get what they deserve.

Don't fall into the trap that the workforce stays in one place. People have the ability to move as well. That's what my brother did for a manufacturing job from Buffalo to SC, and that's evidently what many of those in Michigan did. It has to be made to be a place where people want to go. Plus, it doesn't necessarily have to be immediately desirable from a standpoint of aura or weather. Look at places like North Dakota with the oil boom, or Watertown NY with Ft. Drum. Dee-troy-it already has something going for them, and that's infrastructure. As you suggested, downsize the city and effectively start over. We know the mistakes that were made, so let's do what we can to not make them again.

As much as I can understand your naïve ploy to eliminate unfair practices, you're always going to have that issue, and there's not much that can be done without adjusting your status to make it feasible.

 

[FadeToBlack&Gold]

Re: Call Detroit. Tell them bankrupt!!!

Regarding the labor issue, really how much more expensive is Detroit now vs the South? At some point don't they start to converge? Yes, opening up a plant in NYC is going to be costly, but I find it curious that Michigan residents are in a position to demand sky high wages. If the UAW is the problem, then again I'd certainly negotiate with them but if they don't want to play ball you'd have to go around them.

Michigan is right-to-work. Without getting rid of that (might be plausible with the current Republican control of the state government), I'm not sure how you'd do an end-zone run around the UAW.

The reason why companies won't up and leave after the tax breaks expire is the tremendous capital it takes to build a factory and get it up and running. Its not like setting up a call center. Something like a factory is generally a long term commitment, and again they really need to sell the notion of a skilled labor force with experience in that particular industry.

Right, which is why they would do the long-term math before building the plant, factoring in the sunset date on the tax cut/exemption, and the returns for some years thereafter, compared to moving or opening up another plant in the South. To not perform such an analysis would be stupid.

The number of locals who've even seen the inside of a plant (let alone worked in one) dwindles and gets older every year, so you can't necessarily count on industry labor experience as a selling point.

 

[goldy_331]

Re: Call Detroit. Tell them bankrupt!!!

Michigan is right-to-work. Without getting rid of that (might be plausible with the current Republican control of the state government), I'm not sure how you'd do an end-zone run around the UAW.

Don't you mean "not right-to-work"? You need to implement right-to-work to avoid unions.