Detroit’s Bankruptcy

On January 19th I found myself standing on a street in the downtown of one of America’s most troubled cities: Detroit, Michigan. My father and I were entering the Cobo Center for the Detroit Auto Show (or as it is formally known, the North American International Auto Show). The Cobo Center harkens back to a time when Detroit was in much better shape than the sorry state in which it exists today. It gets its name from Albert Cobo, a man who ran Detroit during an era when it was among the wealthiest big cities in America. During the 1950s (when Cobo ran the city) and the 1960s, the auto industry that was based in Detroit was booming as well. Ford, GM, and Chrysler were on the forefront of the global automotive industry, producing cars that consumers desired from the moment they saw them.

Detroit and the auto industry lost its way in the years after. In the case of the automobile business’ decline, a look at any brand will demonstrate this downward spiral. In 1959, Cadillac was producing an eye-catching (and today highly collectable) range of cars that were seen as dream cars to many Americans. By the early 1980s, the same GM division was peddling such disasters as the Cimarron, which shared an uncomfortably high percentage of components with the Chevrolet Cavalier. Pontiac, which in the 1960s had seen huge success with the GTO, in the early 2000s was producing such monstrosities as the hideously ugly Aztek – which was an uneasy mix between a people carrier and an SUV.

However, the lengthy walk I took through the Cobo Center demonstrated that the US automobile business is returning to the glory days of its past. Ford had on display a range of cars that once again can take the fight to the imports and win. Lincoln’s new lineup shook off the “old man’s car” image that is too closely associated with the once prestigious brand. Chevrolet introduced their new Silverado and Corvette, both of which were greeted with strong reviews.

Detroit’s comeback happened because the auto industry was run by people who understood that offering a good product will turn around a business. Alan Mulally and Bob Lutz are two of the recent leaders of the automobile industry who understand this. Lutz’s book Car Guys vs. Bean Counters is an excellent read that explains how he led a turnaround at General Motors. That turnaround and the similar one Mulally led at Ford are success stories our whole country should be proud of. One would expect that the fortunes of Detroit, the city so closely tied with the fortunes of the auto industry, would be on the upswing as well. This fairly reasonable inference is very far from the reality.

The drive back to Cleveland revealed the extent of Detroit’s peril. The Michigan Central Station, a colossal 500,000 square foot beaux arts tower, stood in decay with its windows broken and its rooms long vacant. A mile or two down the freeway showed bridges with the homeless living under them and rows of abandoned homes.

Shortly after my brief visit to the Motor City, Michigan Governor Rick Snyder announced that the city was to be temporarily taken over by the State to fix the financial disaster facing the city. Despite this, on July 19, 2013, Detroit declared bankruptcy. Dave Bing, the city’s mayor, introduced a plan that would, as Reuters put it, to salvage what remained rather than launch a comeback. The unemployment rate in Detroit is 16%, nearly double that of Michigan as a whole. The dire seriousness of this situation becomes clear when Detroit’s unemployment rate is compared to other major cities:

 

Seattle                        4.0

Salt Lake City            4.1

Austin                        4.8

Columbus                  5.7

Boston                       5.9

Fort Worth                 6.0

Orlando                     6.5

Dallas                        6.6

St. Petersburg           6.8

New York                  7.7

Indianapolis              8.4

Washington DC        8.5

Cleveland                 8.7

Detroit                      16.0

 

 Large swaths of Detroit are simply abandoned. What was once the heart of America’s industrial might is crippled by abandonment, financial difficulties, and a population less than half of what it was in 1950. Services are suffering as well. It takes the police an average of 58 minutes to respond to a call.

The same idea that turned around big three has the potential to turn around Detroit: If you want people and businesses to come to your city or state, offer them a good product. In Detroit, high crime, substandard education, and high taxes were not a compelling product to either businesses or prospective residents. Elsewhere in the US business is booming and unemployment is down. In Florida the once bleak real estate market is on the upswing. Texas has a firm hold on two of the new century’s most important industries: wind energy and private spaceflight. The spaceflight company X-Cor moved from California to Midland, TX in the past year and Texas now produces the most wind power of any US state. In North Dakota and Nebraska, the unemployment rate is under 4%. As the above graphic shows, a city can have a strong economy as well. Seattle, Columbus, Boston, Orlando, and many others are big cities with an unemployment rate less than half of Detroit’s miserable 16%.

The bankruptcy may be a blessing in disguise. It will give the city a chance at a fresh start. A good first act of this new beginning would be to remake the city as a business friendly one. Encourage businesses to move to the city, and they will bring people with them. More demand for housing (which would be aided by the demolition of abandoned homes) would not only solve some of the vacancy problem but it would also bring in new construction jobs and drive up home values. A broader tax base would give the city money for police, fire, and utilities as well as helping the city to pay down its debt.

This may be the end of an era for Detroit, and it is a sobering one at that. But it could be the rise of a new beginning for the motor city. It’s up to City Manager Kevyn Orr, Mayor Dave Bing, and Governor Rick Snyder to make this happen.

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Why the Dream of the Future Declined and Why we Must Bring it Back

There was a time not all that long ago when the future was in vogue. Following the Second World War, there was a remarkable period of forward thinking visions of tomorrow. The 1964 World’s Fair in New York City emphasized this more than any other single event with perhaps one exception (which we will get to shortly). Centered on a globe-shaped sculpture called the Unisphere, the exposition featured pavilions depicting various visions of the future. States from across America showed the best of what they had to offer. The country’s most innovative companies also displayed their visions of the future. General Electric had a huge building called Progressland where audiences saw a presentation about the future of electricity. Coca-Cola built an amazing structure recreating a mountain peak, an Asian marketplace, and a rain forest. General Motors’ pavilion promised a future of travel to the moon and under the ocean as well as the technology of the city of tomorrow. Americans got their first glimpse of modern robotics in the form of an animatronic Abraham Lincoln.

Today the site of this remarkable exposition is an out of the way park in the middle of New York City. The Billy Jean King Tennis Center and the neighboring Arthur Ashe Stadium play host to the US Open once a year. In the mid 1980s there were plans to convert the roads around the site to a Formula 1 race circuit (a concept that had been tried successfully in Montréal) but these plans fell through. A walk through the site of the World’s Fair today reveals that most of the pavilions are gone. The former space park is now a science museum. The New York State pavilion, with its distinctive flying saucer towers, lies in disrepair.

The other climax of this remarkable era wasn’t a single event but rather an amazing burst of innovation. The Space Race fueled this optimistic attitude about the future. Until one night in 1957, the very idea of human made objects traveling in space was a distant dream. Suddenly, with the launch of Sputnik, it became a national priority. By the opening years of the 1960s the United States had followed the Soviets into space and by the middle of the decade would be firmly in the lead. Heroes were made:  John Young, Neil Armstrong, Buzz Aldrin, Michael Collins, Harrison Schmitt, Alan Shepard, and John Glenn to name a few.

Today the United States has no manned space program. In order to use the International Space Station that the US helped build, American astronauts have to ride aboard a Russian spacecraft. There is a purveying attitude in America today that seems to be resigned to the idea that the future that belonged to us in 1964 now is firmly in the hands of the Chinese, or the Germans, or to any other country that is making advances.

Another idea that exists in our society is that the forces that created that futuristic dream were fundamentally evil. In the media of this era, a mix of political correctness gone too far and self loathing takes on our society have created a situation were many are dangerously misinformed. Many people in Hollywood and in the news media have made their fortunes telling the American people how misogynist or racist or anti-gay they are. In these presentations on the flaws of our nation they point to such events as people opposing same sex marriage or the use of racial slurs or the attempted restriction of late term abortion. These events are used as evidence as to why our country is so intolerant. While there have certainly been events of homophobia, misogyny, and racism in our country, the analysis that this makes America fundamentally bad lacks any perspective. In the Middle East, people are put to death for no reason other than that they happen to be gay. In parts of Asia, women are treated like property and are the subject to brutal abuse. In Israel and Palestine, groups of people try to kill each other based on the belief that the sins of past generations give the current population a license to commit horrible crimes. There are people all around the world suffering from discrimination that make such trivial events as a racial slur uttered in public or a black panther party member standing outside a voting booth seem irrelevant. We as a nation are often told of the evils of corporatism in this country and yet this supposedly evil capitalistic society invented the national park as we know it and has led to the resurgence of many endangered species since environmental legislation was passed in the 1960s and 70s.

The case has been made that the decline of the optimistic and innovative American spirit is closely linked to the gradual eroding of independence. There is much evidence supporting such a link. In 1964, when the World’s Fair was showing visitors visions of tomorrow and NASA was building the Gemini program, the unemployment rate in this country was under 5%. Poverty in America was well on the decline for years before the War on Poverty was declared.

A tax policy that is punishing to most businesses except the few who can afford a few well-connected lobbyists combined with a welfare system that does little to lift the poor out of poverty has has disastrous results. The simultaneous presence of this with a media that casts a scorning eye on American culture and values has caused major damage to the health of our society.

The fact is that American society is one that has historically fostered growth, independence, innovation, and self-initiative. But this is gradually disappearing. In the coming years, our country should elect leaders who will reform programs that are causing this decline. I refuse to believe that it is impossible to redesign our welfare system so that it lifts people from poverty without making them dependent; I refuse to believe that the US is no longer a place for innovation and entrepreneurship and I fundamentally reject the notion that our recent hardships are part of an irreversible decline. A quick look at our history shows us what made us great. If we elect people who restore these wonderful characteristics of our country to their proper importance, then they will make us great once more.


Madness in the Land of Lincoln

The position of Illinois governor is not one associated with those who are law abiding. Rod Blagojevich is currently locked away in prison for a wide assortment of crimes, including an attempt to sell a senate seat vacated by Barack Obama when he became president. Blagojevich, a Democrat, came directly after George Ryan. Ryan was released from prison after being convicted of corruption in the wake of a licensing/bribery scandal. Dan Walker, the Democratic Governor from 1973-1977, did a lengthy stint in prison for fraud. Otto Kerner, who was governor in the 1960s, also went to prison. In his case it was for bribery.

Today in Illinois, Pat Quinn is the governor. Unlike the individuals mentioned above, Quinn has managed to stay within the law, which puts him above average in comparison to Ryan and Blagojevich. In comparison to other midwestern governors however, he is subpar in almost every category.

Debt is a mounting problem in the Land of Lincoln. According to a recent article by the Huffington Post, pension debt alone costs the state $5 million per day. Incredibly, Pat Quinn was delighted to hear this news because it had previously been $17 million per day. Although the state received $1.3 billion more tax revenue than the government predicted, the state is still $6.1 billion in the red for this fiscal year. This deficit mess led both Fitch and Moody’s to downgrade the state’s credit rating in June of this year.

The unemployment rate in Illinois stands at 9.1%, a rate far higher than the 7.6% national average. The outlook is no better when compared to other midwestern states:

North Dakota 3.3%
South Dakota 4.1%
Iowa                4.7%
Kansas            5.5%
Ohio                7.1%
Wisconsin       7.1%
Michigan        8.4%
Indiana           8.5%
Illinois             9.1%

Springfield’s Democratic leadership hasn’t done much to help this problem. In January 2011, the Democratic controlled legislature approved a 67% tax increase. There is a new plan being floated in Springfield that would replace the flat-rate income tax with a progressive tax structure. In the name of “fairness” they are raising taxes on wealthier residents and businesses of Illinois. But is that really fair? On the surface it appears to be but a closer look indicates otherwise. Illinois is, outside of the urbanized Chicago area, mostly a rural landscape dotted with small towns. Most of these towns are built on small locally owned businesses or franchises. A tax hike affecting small businesses will force many to think twice about their company growth, fearing that expansion would put them in a higher tax bracket and cost them more than it would be worth.

Big Business isn’t healthy either. In 1893, Richard Sears and Alvah Roebuck joined in Chicago and created a retail empire, which remains based in Illinois to this day. But its future in the state may not be secure. In late 2011, Sears was considering a move to Ohio. Only a multi million-dollar state government giveaway prevented them from doing so. Thus, Sears remains in Illinois for now. In 2013, Jimmy John’s announced a move from Illinois to Florida in the wake of a corporate income tax hike championed by Pat Quinn.

This blog is called Ohio Perspective for a reason. I believe that Ohio (and the Midwest as a whole) is a microcosm for America. The plight of Illinois is similar to the one Ohio faced in the not too distant past. As mentioned in a previous column, Ohio solved these problems. The budget is balanced, joblessness is down, and taxes are lower. This is not confined to Ohio. Michigan has come back from the brink in recent years. New York has launched a strong initiative to bring business back. Across the country there are states seeking bipartisan solutions to the many problems facing them.

The other element of Ohio’s success is that job creation is the issue that people care about. The success seen in Ohio is due in part to the fact that people of both parties at the state and local level realized that job creation should be the number one priority. Unemployment is at the center of numerous other problems facing society. Drug use, crime, homelessness, and other issues all relate to unemployment.

Illinois represents an opportunity for the Republicans in 2014. Despite Pat Quinn’s “Facts are stubborn things to Republicans” quote at the 2012 Democratic Convention, the facts are on the side of the GOP. If they want to succeed in the future, they should go to Illinois and ask the people there to compare where their state is to where Ohio is.

If the Democrats are smart, they will change the direction of their party. Unfortunately, it seems like many Democrats do not see the problem. This point was driven home by the presence Quinn had at the Democratic National Convention. But the Republicans also have a problem:  They are ignoring their biggest success stories. The GOP should look to the Governors mansions, not the Capitol, for their new leaders.


Gettysburg: 150 Years Later

One hundred fifty years ago near a small town in Pennsylvania, the Civil War was at its climax. In 1861 the pro slavery south seceded from the United States due to the fear that the emergence of anti-slavery Republican president Abraham Lincoln would lead to the end of what was euphemistically called their peculiar institution. This “peculiar institution” was nothing less than the enslavement of an entire race of people that the southerners deemed inferior.

Slavery was once considered a necessary evil. Thomas Jefferson spoke of it as a moral wrong, and yet he himself owned slaves. The feeling was that the institution was dying and that its end was inevitable. Washington, Madison, Monroe, and the founding fathers shared this belief as a group. This hope proved to be a lost cause when the cotton economy of the south exploded with the invention of the cotton gin. This attitude became so pervasive in the south that in Arlington, Virginia a slave owning plantation existed within sight of the Capitol dome. This plantation was owned by none other than Robert E. Lee.

In the southern part of the country the African American population was brutally enslaved, allowing a small southern upper class to have a firm grip on the power in the region. They sought to expand their way of life westward.

One hundred fifty years ago the demise of this horrific institution commenced near a small town in Pennsylvania. Robert E. Lee’s confederate forces had invaded the north. If they had emerged victorious from the chaos of Gettysburg it is no exaggeration to say that the torch of liberty may have been extinguished.

A pivotal point in this decisive battle was reached on a previously unremarkable hill called Little Round Top. A then obscure Union general Joshua Lawrence Chamberlain and his Maine-based regiment were surrounded by the 15th Alabama Regiment. The future of the United States was in Chamberlain’s hands. He supposedly said to his men “Stand firm, ye boys from Maine, for not once in a century are men permitted to bear such responsibilities.”

Chamberlain and his men did indeed stand firm. They defended the small hill at Gettysburg. Robert E. Lee and the Confederates were defeated in the horrific battle in that small Pennsylvania town. In two years the confederacy (and the brutal system it represented) lay in ruins. Robert E. Lee surrendered to the union and slavery in America was abolished.

July 4th has a special meaning for the idea of freedom. On July 4th, 1776, our founding fathers gathered to write a document the likes of which had never been seen before in the world. The Declaration of Independence was a truly revolutionary document. Few today realize the bravery it took for the founding fathers present that day to sign it. They faced execution for treason if caught. Many of them suffered huge loses in a variety of forms in the following years of the Revolutionary War.

July 4th also has a much less prominent meaning. Thanks to the courage of men like Joshua Lawrence Chamberlain, the America that emerged on July 4th, 1863 was one that was dramatically different than the one that existed only a week earlier. The entire dynamic of the Civil War changed. It is uncommon in history to find a figure with such courage that is as unknown today as Joshua Chamberlain. Hopefully, he will become less obscure, because his story is truly remarkable.


Storm over Texas: Wendy Davis, Rick Perry, and the Changing Politics of Abortion

On June 25, 2013, Wendy Davis, previously an obscure Texas state senator from Fort Worth,  stood on stage for an amazing eleven hours to oppose Texas Senate Bill Five, which would increase regulations on abortion clinics and ban abortion after twenty weeks. After being stopped from speaking on a technicality, a mob of protesters entered the chamber, angrily shouting down the bill in a “people’s veto”. The bill passed, but the vote was illegal on the count of it being held a few minutes after midnight.

The liberal leaning mainstream media hailed Davis as a hero who stood up against a bill prompted by the hatred of women. They also hailed her as a likely candidate for governor in 2014 and stated her rise was indicating that Texas was transforming into a blue state. When Rick Perry pointed to Davis’ own life as evidence to support his side he was attacked as an anti-woman bigot. The GOP was painted even more as a party of misogynists.

There are several holes in this argument. Firstly, the media claimed that the bill would close all but five abortion clinics in Texas. In truth it would force all but five abortion clinics in Texas to upgrade their facilities to meet the new regulations. The other misleading talking point coming from the media (particularly from MSNBC) was that the bill was prompted by a desire to reduce the rights and freedoms of women.

The true motivation behind SB5 was to respond to the recent activities of Dr. Douglas Karpen. Earlier this year four former employees of the Aaron Women’s Clinic that Karpen runs stated that activities similar to those of Dr. Kermit Gosnell in Pennsylvania were a regular occurrence; most notably they accused the clinic where they had previously been employed of delivering live, viable babies and killing them, a practice which is against the law in Texas (and everywhere else in the United States for that matter). Karpen is also accused of being responsible for the death of teenager after a botched abortion. It is clear that women were being exploited in this clinic and others like it. The response of the state legislature was to subject abortion clinics to the same health regulations as any other surgical center.

It was with the 20-week ban that the legislature stepped into territory that could be called with some merit part of the war on women. The Senate rejected this when it was proposed on a national scale and the bill was strongly condemned by President Barack Obama, who is one of the strongest supporters of reproductive rights. Wendy Davis is being called an American hero for stopping it. America is a country that celebrates anyone who stands up for what they believe in. This belief is part of the American fabric; it is why John F. Kennedy’s Profiles in Courage was such a success. One’s courage does not depend on one’s political view. Abortion opponents such as Marjorie Dannenfelser or Lila Rose exhibit similar courage.

The outlook in the medium and short term for the pro-choice position is not as rosy as the media would report. A recent poll from Gallup released on May 23 of this year reported that Americans now tilt pro life by a nine-point margin. By contrast, in 1996 the country leaned pro choice by 23 points. The trend is against the pro-choice movement at the moment. Wendy Davis’ courageous stand was commendable. However, her side is, in contrast to what the mainstream media says, on the decline.