Detroit Needs a Bolder Plan

The Brookings Institution recently unveiled “The Detroit Project”, a plan to revive Detroit, in the New Republic. Brookings' plan has good elements and recognizes some important realities, but also has key gaps. It relies excessively on industrial policy and conventional approaches that are unlikely to drive a real turnaround in America's most troubled big city.

On the plus side, Brookings does a great job stating why Detroit's fortunes will take a long time to reverse, possibly a generation or more. As they note, “Detroit’s leaders must manage expectations. It took half a century for the city to get this low. It won’t turn around in a four-year political cycle.” Authors as prescient as Jane Jacobs and as conventional as Time were talking about Detroit's decline as far back as the early 60s. Turnaround won't happen in six months or even six years. Given the political preference for election-cycle results, this means strong and courageous leadership will be needed, a point they also stress. Sadly, that's a commodity that has long been in short supply in Detroit.

Brookings is known for their promotion of regionalism, and this plan predictably follows that prescription. Clearly, rationalization of investment policy on a regional basis is needed. The Detroit region is losing population, yet the long range transportation plan calls for huge amounts of spending to widen roads on the fringes. That makes no sense. People and businesses in Detroit keep moving out as the cities and suburbs they once inhabited fall into ruin under a regime of failed stewardship and the endless search for new greenfields to exploit. It's like prospectors skipping from one clapped out mining town to the next. If they want to do that, they shouldn't expect the rest of us to pay for it via federal funds – either to build the new or to clean up the mess in the ghost towns they leave behind.

They also recognize the need for improved governance, including potentially state receivership for failed institutions. (They did not, however, give due credit to new Mayor Bing for the change and new leadership attitude he has already brought to the table). Suggestions like a focus on brownfield remediation and managed shrinkage were on point, as was the recognition that significant federal assistance will be required. Given the depths of the problems in Detroit and Michigan, the city and state are not going to be able to do it alone.

The plan also rightly notes that “Detroit will have to become a different kind of city, one that challenges our idea of what a city is supposed to look like, and what happens within its boundaries.” Very true. Unfortunately, much of the rest of the Brookings prescription failed to meet that challenge.

Brookings' plan relies heavily on analogy to other post-industrial cities, especially in Europe, which makes it difficult to be sure exactly what they are recommending at times. Even to casual observers, these cities are far different from Detroit. For one thing, Detroit is huge. The region, if one includes Ann Arbor and Windsor, Canada, is over five million in population – more than double the size of Brookings comparison areas.

Places like Turin and Bilbao also have radically different built forms, history, culture, and are virtually racially and ethnically homogeneous compared to Detroit. Even the measurements of European success need to be redone. Neither Italy nor Spain represent role models since both have fared worse than America in the current downturn. These countries (and cities) are aging rapidly, with some of the world’s lowest birthrates.

Their US examples of Toledo and Akron (i.e., greater Cleveland) are hardly bright and shining lights of economic or demographic success. Since 2000, Akron has lost nearly 10,000 people and Toledo over 20,000. Toledo's 11.4% unemployment rate exceeds the nation's. These aren't even Ohio's biggest cities, much less dominating the state's economy the way Detroit does Michigan.

Brookings also all but ignores a lot of the root issues of Detroit's problem. Firstly, they fail to make a point about healing America's most poisoned race relations, arguably the signature issue of Detroit. Racial tensions and inequity have perpetually bedeviled America. Making progress in Detroit won't be easy, but is an absolute prerequisite to progress. Perhaps shared economic struggles will finally provide a common interest around which to build some form of racial rapprochement.

Most glaringly, Brookings has nothing at all to say about Detroit and Michigan's tax and regulatory regime, its failed management and labor cultures, or its dysfunctional state politics. Brookings' desire to stay on good terms with the establishment might inhibit their ability to speak freely, but these problems must be confronted.

It is impossible to ignore this witch's brew of policies and attitudes that is totally toxic to economic development. It’s a classic case of ignoring the elephant in the room. Until these blocking and tackling matters are addressed, Detroit is going to remain kryptonite to business expansion. In Forbes 2009 list of the best states for business, Michigan ranked 49th.

Instead of improving the terrible business climate, Brookings proposes a top-down industrial policy, explicitly stating “local government (or NGOs, even) can play the role of industrial planner. That is, they can look across the map and find instances where research institutions and manufacturers should collaborate on new ventures.” And they say “public money” is needed to retool old industries and advance new ones. The government in Detroit can't even manage the delivery of basic city services. None of the region's levels of government have performed well on their core competency, so why would we believe these entities would be effective venture capitalists or industrial planners? This is a recipe for epic rent seeking and an economic Waterloo on a grand scale.

Their suggested industries for Detroit are a tired looking roster of the same ones everyplace else is chasing: green industry, life sciences, advanced manufacturing, and university technology spin-offs. With such a crowded playing field – 49 out of 50 states are chasing life sciences, for example – it is hard to discern the Detroit region’s distinctive capabilities in any of these areas apart from automotive related R&D and manufacturing. Sure, they'll get some slice of the pie in these growing markets, but unlikely enough to turn the ship around or create a true innovation cluster.

Public-private partnerships do have a strong role to play in Detroit's economic development. This includes looking for sectors where it can realistically compete and win, and looking to create the infrastructure and conditions necessary for them to flourish in terms of facilities, talent attraction, legal and regulatory frameworks, regional business culture and practices, and more. It's about creating fertile soil, not picking winners.

However, assistance to the restructuring auto industry was clearly required. Without federal aid, GM and Chrysler would have been liquidated. They still might, but given the importance of that industry to our economy, it is probably worth doing what we have to do for now. But we should recognize that getting in was a lot easier than getting out will be, and that the end result might still be failure or Soviet style zombie companies that survive only as wards of the state.

Lastly, the praise of rail transit by Brookings – the cook book solution du jour for cities – is puzzling. Again, Detroit is shrinking and needs to shrink more. Trains work best when people are commuting to a central point, but jobs have been disappearing from the core of Detroit for generations. Today barely 4.5 percent of area employment takes place in the urban core, among the lowest percentages among the nation’s top 50 cities.

As with fringe highway expansion, the last thing Detroit needs is even more infrastructure. It has too much already that it can't afford to maintain. Taking on a costly new rail transit system with both high capital expenditures and significant ongoing operations and maintenance costs is a dubious proposition – particularly when the existing bus network is on the verge of a near shutdown. The biggest game changer from an infrastructure perspective – new highway crossings to Canada to strengthen Detroit as the premier gateway to Canadian international trade – is not mentioned.

So while Brookings gets a few key pieces of the puzzle right, ultimately their solution is too standard issue and lacks the boldness and innovative thinking needed to tackle the core problems and create a realistic prospect for renewal.

In the next installment tomorrow: a better plan for Detroit.

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.