Humiliating Detroit

Detroit Sign.jpg

As I’ve noted before, Detroit is all too frequently just a blank screen onto which people project their own personal bogeymen. So liberals see in Detroit racism gone wild, America’s comeuppance for its love affair with the automobile, and corporate greed. Conservatives see the ultimate end result of unions and where liberalism will take the US as a whole if it isn’t stopped.

There’s a bit of truth in all of these. The left would have us believe that having Democrats in charge of the city for so long had nothing to do with where it is today. But they reality is, they’ve got to own their piece of blame. Detroit certainly hasn’t been a bastion of conservative policy, that’s for sure.

On the other hand, Republicans should be aware that Detroit’s decline has been ongoing for quite a while, and there were definitely some mayors with R’s by their name who were in on the game. And economic forces shaped Detroit far more than they’d like to admit.

But ultimately what we see today is the left furiously spinning about Detroit (for example, see the book “Detroit: A Biography”) and the right trying to use it as a poster child for everything they hate. Yet on the right I can’t help but observe a particularly mean streak in the commentary, one that’s positively gleeful about Detroit’s demise. It’s as if, not content with letting the results speak for themselves about what happened under Democratic rule, the right seems determined to humiliate Detroit, reveling in its pain. It’s schadenfreude on steroids.

Let me highlight this. First Kurt Schlichter says that “Conservatives Should Point and Laugh As Detroit Dies.”

The agonizing death of Detroit is cause for celebration. It’s the first of the liberal-run big cities and states to fall, and we should welcome its collapse with glee.

Yeah, liberals, eventually you do run out of other people’s money.

The blue state model is a terminal disease, and Detroit is its poster child. Only this is one telethon where we should pledge that we won’t pay a single dime to keep the progressive party going a single minute longer.

Detroit represents the epitome of the blue state, Democrat machine liberalism that Barack Obama represents. Well, not one damn cent for Barry’s Kids.

Don’t hold back, tell us how you really feel. John Fund at the National Review is nowhere near vicious, but he does paint a target on Detroit’s art, basically arguing that the city should be forced to sell off its assets to satisfy creditors:

What no one wants to do, apparently, is sell the city’s assets. The city has largely unused parks and waterfront property that could be opened to economic development. The Detroit Historical Museum has a collection of 62 vehicles, including an 1870 Phaeton carriage and John Dodge’s 1919 coupe, that is worth millions. But the biggest sacred cow is the Detroit Institute of Art (DIA), one of the nation’s oldest and most valuable art museums. It has pieces by Vincent van Gogh, Henri Matisse, Andy Warhol, and Rembrandt. The Institute also owns William Randolph Hearst’s armor collection and the original puppet from the children’s TV show Howdy Doody.

The Detroit Free Press asked New York and Michigan art dealers to evaluate just a few of the 60,000 items in the Institute’s collection. The experts said the 38 pieces they looked over would fetch a minimum of $2.5 billion on the market, with each of several pieces worth $100 million or more. That would go a long way toward relieving the city’s long-term debt burden of $17 billion.

Let me get this straight. Instead of Detroit being $17 billion in debt, let’s sell off everything left that makes Detroit viable and end up still $14.5 billion in debt and still bankrupt. (Though only a few items were evaluated, they were clearly the handful of most valuable ones. Howdy Doody ain’t Van Gogh). Oh, yeah, that will help – if your definition of help is bailing out banks who loaned money to a city everyone has known is a basket case for many, many years. If those banks expected the art to be sold, they should have made the city pledge it as collateral.

Fund is right that Detroit does need to make tough choices about assets. I’ve made that argument myself. But the goal should be to create at a minimum a sustainably functional government and ensure the bankruptcy of the city of Detroit doesn’t undermine the broader region and state. Selling off secondary assets (and yes, Howdy Doody may be a good candidate) is worth pursuing if there’s cost/benefit. But saying that Detroit should sell off its regional cultural crown jewels is little more than an attempt to inflict counter-productive penance, to force humiliation upon the city. And it would also be completely unlike say a corporate Chapter 11 restructuring, which is designed to produce a viable firm on the other end and thus the most valuable assets are often retained.

Of course, Detroit’s own residents make it easy to act this way. A group of protestors referred to the bankruptcy filing as a “declaration of war,” saying that outsiders aren’t entitled to any say or even get the money back they loaned the the city, saying instead “the banks owe us.”

Still, have some compassion. It’s understandable Detroit’s residents are in pain and lashing out. Clearly they have tough medicine they haven’t reconciled themselves to taking. But there are better ways to respond to it. Andrew Biggs at the American Enterprise Institute took a more moderate path, suggesting that while a plain reading of Michigan’s constitution suggests it wouldn’t protect pensions in bankruptcy, there’s still reason to give pensioners some preferential treatment (thought not being made 100% whole, saying:

Does this mean that retired city workers should take the same haircut as municipal bond holders? I really don’t think so. Anyone loaning money to the city of Detroit was knowingly taking the risk that the city might not repay; that’s why bonds issued by Detroit paid a higher yield than Treasury securities, which are assumed to be riskless. As with any risk investment, sometimes it pays off, sometimes it doesn’t.

City employees, on the other hand, exchanged services today — along with employee contributions to their pension plan — for benefits to be delivered in the future. Sure, employees should consider the financial stability of their employer in its ability to deliver what is promised, but city employees seem to be a qualitatively different group than municipal bond holders.

This seems more rational type analysis and isn’t rooted in mean-spiritedness.

Though eager to point out how Democratic policies and corrupt Democratic politicians helped propel Detroit headlong in bankruptcy (which is certainly a valid political claim to make), having a vengeful streak only shows Republicans behaving in a ways that’s as hard hearted as Democrats say they are.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile.


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Emergency Manager Kevyn Orr shows promise

THE WALL STREET JOURNAL WEEKEND INTERVIEW August 2, 2013 Kevyn Orr: How Detroit Can Rise Again

"....His downtown office overlooks Detroit's restored waterfront and the redeveloped General Motors Renaissance Center. From this vantage point the city appears almost lustrous, and Mr. Orr exudes a contagious energy and optimism about the future. He plans to navigate the city out of bankruptcy by next fall, when his 18-month term expires, notwithstanding opposition from creditors who want to gut public services and soak taxpayers to get their money back.

The emergency manager's biggest challenge, however, isn't negotiating with creditors. Nor is it reviving Detroit's mid- and downtown business districts, which, he notes, have been growing from the "grass roots" without government planning......

"......One glimmer of progress is Detroit's revitalized midtown and downtown, where venture capitalists and private foundations are investing billions. Quicken Loans chairman Dan Gilbert moved his company's headquarters to Detroit in 2010 and has attracted 85 other companies to downtown through his Rock Ventures enterprise that provides office space for startups.

Rock Ventures alone has created 5,600 jobs in Detroit's urban core. Its posh M@dison building is an "incubator" for 32 tech companies, such as app developer Detroit Labs. It's the kind of place where young people in T-shirts and shorts chill in beanbag chairs with their laptops, while nearby a few guys play ping pong (without the beer).

Due to the youthful influx, Detroit's night-life and culture are experiencing a renaissance. Local entrepreneur Larry Mongo—whose celebrity scored him a bit part in Ryan Gosling's upcoming film "How to Catch a Monster"—recently reopened his 1920s-speakeasy-style Cafe d'Mongo's, which he had closed in the 1990s because of crime.

Some of the speakeasy's young Jewish patrons have revived a sleepy synagogue next door that five years ago was about to close. Today, it has 300 members and is planning a $2 million upgrade to its worship center.

"The untold story of Detroit is young people," says Mr. Orr. "The future's going to change. It already has. I met with two dozen entrepreneurs, two of them veterans from the Afghan war. One's a venture capitalist and one has a logistics company—and these are kids in their 20s who can go anywhere and are making it work."

Not far outside of Detroit's downtown business district is the emergent hipster colony of Corktown, where do-it-yourself, brew-your-own-beer types are fixing up cheap, rundown houses. The pioneers grow organic vegetables such as corn on nearby vacant lots. Corktown represents the frontier of civilization in Detroit.

Travel a couple of miles farther out, and the scenery begins to resemble the wild, wild West. There are no shopping centers or chain supermarkets. Sixty six thousand vacant lots and 78,000 abandoned or blighted buildings, including the old Packard factory, occupy 130 square miles of no man's land. Yards are overtaken by knee-high weeds. A house with unbroken windows and shutters is a rarity.

These neighborhoods were deserted over the last 60 years by white, middle-class families leaving for the suburbs......

".....One of the reasons Atlanta is thriving, Mr. Orr notes, is because its black mayors like "Maynard Jackson and Andy Young decided to bury the hatchet of division" and instead "focus on rebuilding the city."

Much of Detroit's dysfunction is also due to simple complacency. "For a long time the city was dumb, lazy, happy and rich," he explains. "Detroit has been the center of more change in the 20th century than I dare say virtually any other city, but that wealth allowed us to have a covenant [that held] if you had an eighth grade education, you'll get 30 years of a good job and a pension and great health care, but you don't have to worry about what's going to come."

But as it became increasingly clear this promise was unrealistic, "there needed to be some very nimble and agile thinking and leadership that was listened to," he adds. "There was nimble and agile thinking and leadership that was spoken—but nobody listened."

Due to a failure to adapt, "we lost our edge," and not just to the U.S.'s global competitors, but to challengers in the South like Atlanta, Chattanooga and Dallas. Atlanta offers a nice foil to Detroit.

Fifty years ago, "What was Atlanta? Atlanta was a small city that had a bakery. . . . I used to drive through Atlanta in the '70s when I was coming back from Michigan, '76 through '83, and Atlanta had peach tree hospital and the varsity drive-in restaurant." Now Atlanta is among the 10 largest economies in the U.S. Adaptive political leadership in Atlanta encouraged entrepreneurship and development.

So how does Detroit revive its hinterlands, which seem to be so hopeless?

Mr. Orr's strategy is to "put the key ingredients in place" and leave the city with a plan that will help "push out that development from the center of the city to neighborhoods." He points to the "Detroit Future City" plan, crafted by public officials, community groups, businesses and philanthropists, which calls for focusing on blight remediation, lighting and public safety in six demonstration districts. The hope is that growth will radiate outward.

Other major cities, like Washington, D.C., and New York, that had fallen into disrepair were revived slowly by neighborhoods blossoming and expanding. The challenge will be to create the atmosphere and ingredients that can nurture this growth.

While Mr. Orr is optimistic, he acknowledges that there is "a risk element" attached to ceding control back to the city's duly elected leaders whose corruption, neglect and mismanagement led Detroit into the abyss......."

Give it time - the beauty of US (relative) market freedom

Chinese investors betting on Detroit comeback, buy up real estate

Aussies lured by dirt cheap US housing market

Detroit draws real estate investors worldwide

Detroit Housing's for Sale, and Global Investors Want In

Bargain Homes Lure Buyers Worldwide to Detroit

It hasn't happened to Liverpool. Why? Central "planning" in Liverpool keeps the asking prices even for derelict properties, uncompetitively high. One of the beauties of the USA's historically prevalent system for urban development, is that prices are allowed to crash and recoveries are allowed to come from where they need to - the private sector.

Of course the world is so crazy these days that some liberal lefty administration in a US city will pick the failed British approach. Give it time.

That would be rather

That would be rather fascinating to see the Detroit model undermined, and replaced, with a more capitalist, free market approach. But I don't see a capitalist free market system being able to address the moral decay that has rot the city from the inside. It needs a religious component. It may be an opening for Christian, Jewish, & Secular Humanist evangelism to fill that role.

That said, I hope the aussie developer West Field is invited to have a role in planning. They've done a pretty good job in livening up malls, the Westfield Centre in San Francisco being the notable example. If things are done right, then maybe Detroit can share in the on the recent blessings of the midwest, Especially the prairie states out to the Rockies, in places like Utah, North Dakota, and Texas.

Why can't it have its own Minneapolis, or Chicago?

Cross and Switchblade

".... But I don't see a capitalist free market system being able to address the moral decay that has rot the city from the inside. It needs a religious component....."


And that's a grassroots, "Cross and Switchblade" religious component. "Establishments" are next to useless. That goes as much for a secular-humanist establishment as for anything else. Let the humanist psychologists and the evangelisers compete and see who gets the best results.

Then of course there are the "dark side" proxies for "belongingness"; gangs and violent religious movements.