Thursday, February 28, 2013

Detroit's downsized vision

Recently Detroit unveiled a new plan to deal realistically with the problems inherent in a city that lost a million people.  While I applaud the plan for dealing head on with one of the city's core problems, I can't help but think that it is missing the point.  What do I mean?

The Detroit Works Project has a terribly formatted PDF you can download.  Therein it glazes over the biggest structural problem facing Detroit, and it isn't population loss (surprisingly).

From page 55.  Is the problem really a lack of high density residential areas in the city?

Comparing Detroit to Portland reveals that they are on comparable plains.  Indeed, the population density of Portland is 4,375.2 people per square mile, while Detroit has 5,144.3 people per square mile.

Is the problem really too much built up infrastructure due to population loss? <via James Griffioen>

Rather, the problem is structural.  In Detroit, people pay too much and receive too little in the way of services.  The city of Detroit cannot compete with its own suburbs, let alone other cities.  The city of Detroit costs a premium to businesses and residents in the way of higher taxes.  The city has an income tax and high millages.  In exchange for higher taxes the city provides fewer services like police and fire protection, good roads and schools, and overall public utilities.  Things people expect from their municipalities.  Leafing through the plan, I saw little mention of this.  Ironically the city of Detroit mirrors the Detroit automobile industry in that it is crippled by high labor costs.

Instead the plan takes the approach that Detroit can attract residents through form.

Detroit has room to offer many neighborhood types and lifestyle choices for residents who want to stay in the city, while welcoming new residents looking to make Detroit their home. - page 56

While I want to applaud the city for admitting that a big comeback is not in the cards anytime soon, it still seems rather myopic.  There is still chatter about a return of manufacturing.  From page 27:

Across the country, many have come to realize the critical role of manufacturing activity in promoting and sustaining innovation, especially in clusters where product and process are tightly linked, such as high-end apparel and biotech. Detroit has a unique combination of educational and medical institutions, information technology companies, low-cost industrial land, and an “industrial commons” that support manufacturing and industrial activity of all kinds. Detroit also has a skilled workforce, managers with operations experience, and broad design and engineering expertise among its residents. With proactive and coordinated investment, Detroit can remain an innovative hub for production. - Detroit Works Project pg 27

Sadly the idea of Detroit manufacturing the next generation of surgical tools and medical devices seems unlikely.  David Hume spelled it out over 200 years ago:

Manufactures, therefore gradually shift their places, leaving those countries and provinces which they have already enriched, and flying to others, whither they are allured by the cheapness of provisions and labour; till they have enriched these also, and are again banished by the same causes. And, in general, we may observe, that the dearness° of every thing, from plenty of money, is a disadvantage, which attends an established commerce, and sets bounds to it in every country, by enabling the poorer states to undersel the richer in all foreign markets.  - On Money

We see this happening today with the decline of US manufacturing and the rise of manufacturing overseas, notably in China.  Some cities were able to let go of their manufacturing past.  The sooner the better, really, as trying to hold onto manufacturing is not a sign of economic success.  Indeed, Detroit's halcyon fondness for the glory days of industrial manufacturing seems a mirage.

Having a plan that fosters a vision of how to shed manufacturing for an information economy seems like a better idea, but that too might be perilous.  How would Detroit compete for IT talent against Silicon Valley, Silicon Alley, and possibly a resurgent Silicon Prairie?  Can Detroit really be a hub for biotechnology when it competes with Madison Wisconsin and Minneapolis Minnesota?  And is Ann Arbor really a benefit to Detroit's ambitions for biotech?  Ann Arbor is about 40 miles away.  Would a biotech firm really move 40 miles from the University of Michigan's Life Sciences Institute?

Realistically it is hard to imagine Detroit successfully turning itself around without taking a hard look in the mirror and waging a battle with itself and its city services.  A more promising plan for Detroit would be a detailed reorchestration of the city's bureaucracies, especially in dealing with labor costs.  Cutting pay and firing employees is delicate business that should be handled thoughtfully in order to ensure that the services that residents pay for don't suffer.  I hate to sound cliché but the city needs to be leaner and meaner in providing services.  In a city where the unemployment rate stayed over ten percent for the last decade, labor costs should be low.  A Detroit with more to offer its citizens is a Detroit that has a realistic plan of avoiding becoming a ghost town.

So again while I applaud the Detroit Works project for at least taking a critical eye towards Detroit; it still falls short of the mark.

Hopefully within a week I will have a similar animadversion regarding Chicago and its failures.