A Detroit News story today about an effort to reform a Detroit Public School caught my eye. The story was about Osborn High School, where only 4 percent of students passed the math and writing portions of the Michigan merit exam last year.
Did you know what the graduation rate in Detroit Public Schools is? 37.5 percent! The lowest in the country. Continue reading
Filed under Editorial, Public Education
Kudos to Portfolio magazine writer Ryan Avent for challenging the flawed consensus among economists about the government’s role in declining post-industrial cities.
We published a New York Times article several weeks ago from economist Edward Glaeser who that said migration away from Rust Belt cities was healthy in terms of economic efficiency. Any special government aid to Rust Belt cities such as Detroit would only delay necessary economic mobility.
This is how the argument goes: basically, the faster people leave Buffalo and Detroit and Ohio and Indiana and their high unemployment rates for growing areas with lower joblessness, the better for everyone, because unemployment is an inefficient use of resources. This has been the general consensus among economists.
Filed under Editorial
Every so often, Forbes creates a new list of cities: America’s Most Miserable Cities, America’s Fastest Dying Cities, ect. They do this because, consultants tell them that online readers like lists. Also, then their magazine gets press in each city’s newspaper.
Not surprisingly, Rust Belt cities usually aren’t portrayed too favorably.
Cleveland was featured as the magazine’s #4 most miserable city in January, behind Chicago (?!?), in what was one of Forbes’ biggest stretches. The reasons for Cleveland’s misery? High annual snowfall and the possibility that Lebron James might leave the Cavs. Very scientific. Continue reading
Filed under Editorial
Let’s have a discussion. First, I wanted to announce that Rust Wire has purchased a domain. We can now be accessed simply by visiting www.rustwire.com. Also, in the coming weeks we will be undertaking some improvements to our site. The content will remain the same or, hopefully, will improve as we reach larger audiences and expand our partnerships. Thanks to Youngstown’s Tyler Clark for the assistance.
Secondly, this got me thinking.
I’ve often heard people refer to Rust Belt cities as “dying.” This has always made me bristle.
I lived in Youngstown for a year and it is as qualified as any city for doomsday histrionics. But more than 30 years after the collapse of the steel industry on which the city was founded, Youngstown is still a city. It still has a functioning government. In fact, it’s regional economic product remains in the multi-billion dollar range. People still eat at the same restaurants as their parents and grandparents did, in many cases.
What do we mean when we say a city is dying? What does a dead city look like? I’ve heard people postulate that Detroit is dying. But it remains the nation’s 22nd largest city. Is a dead city empty? Will Detroit ever be completely empty?
I know a lot of Rust Belt cities prefer to think of themselves as shrinking. This is probably a more accurate discription, in my mind.
Any thoughts on this?
Filed under Editorial
Something about the auto bailout really rubs people the wrong way.
Even here in Cleveland, a stone’s throw from two major plants and a short distance from Detroit, mention of the auto bailout will not pass without grumbling. “We’re rewarding incompetence,” people say. Or “bankruptcy is the best option.”
I can understand the frustration of seeing your tax dollars funneled to enormous corporations with uncertain chances of survival. What I don’t understand is, where’s the outrage over AIG and CitiGroup?
Everyone knows that The Big Three have their problems. But at least we can’t say they were directly responsible for our current economic crisis. When we bail out auto companies, at least we know that money is going into the pockets of working, middle-class families.
With AIG, we don’t know where it’s going. Nobody knows. Bonuses. Florida vacations. They still don’t know exactly how much money they lost trading fractions of home mortgages from they don’t know who, they don’t know where.
The bailout of AIG, by the way, was a far more costly than the auto bailout. Right now it’s about $39 billion to $185 billion, assuming the second auto bailout is approved. Those are both hefty price tags, but $185 billion seems like a lot to me to save a company I had never even heard of 6 months ago. That’s, like, half of the Troubled Assets Relief Program. That’s, like, what we’re going to spend on infrastructure in Obama’s stimulus bill. For one insurance company: AIG.
Now, it was argued, that the banks had to be saved. And I understand wanting to protect the assets of their investors. It was also argued that the auto companies were too big to fail.
But what if the U.S. government could have allowed AIG to fail and used government money to reimburse investors? Perhaps, it would have been cheaper. Perhaps, more responsible insurance companies would enter the market to replace AIG just as it has been suggested that foreign auto makers would replace domestic.
The Big Three, people argue, aren’t good at what they do. They are being outcompeted by the Japanese. And maybe that’s true.
But if AIG made a car, I wouldn’t drive in it. AIG is really, really bad at what it is doing and so is CitiGroup and so was Bear Stearns. They were meant to manage and invest money. Now they don’t have any. What is that but utter and complete failure? I drive a Ford and it isn’t my dream car, but at least it gets me to the grocery store.
Not all banks are insolvent. Pittsburgh-based PNC bank did the right thing and they are prospering. Local credit unions did the right thing and they did it without paying their executives exorbitant bonuses. These companies are surviving because didn’t take enormous, irresponsible risks.
The Big Three, I will argue, are in a sense victims of the larger crisis created by bankers. Maybe GM wasn’t smashing performance records before our economy went into free fall, but they were producing cars, and maybe more importantly, trucks and SUVs. In doing so, they were merely responding to consumer preferences and profit incentives. And it’s hard to argue they weren’t good at building trucks.
Then, gas prices doubled in a matter of months and nobody wanted to buy trucks anymore. That’s a tough hurdle to navigate, when it takes about one year to bring a new vehicle to an assembly line. Shortly after that, the credit crunch struck and nobody could borrow money to buy cars or trucks.
Now, we’re looking at the possible bankruptcy of all our major car makers. Probably most of our parts suppliers too. What would that mean for the country? Three million jobs, it was estimated. Given the collapse of the American auto industry, some experts predicted, even foreign auto makers operating in the U.S. would not be able to maintain their chain of supply and would be forced to cease operations for at least one year. This would increase foreign and domestic car prices 15 percent, analysts predicted.
Meanwhile, what does this do to the state budget of Michigan or the city of Detroit? How much do social programs to support the newly unemployed cost compared to the bailout? Would the social fabric of those communities survive? How much would it cost the government if a city like Detroit or a state like Michigan failed?
Auto workers could be retrained, it has been suggested, but for what? What do you retrain tens of thousands of auto workers in Detroit to do during these economic times? They can’t all be nurses. Should they all move? How would that be organized and paid for? What city could absorb them? It would be a Katrina-scale disaster. Where are their FEMA trailers?
In a philosophical sense, it’s fine to oppose the auto bailout. I respect people who respect the laws of the markets and the economy. But don’t turn around and tell me it’s OK to bailout banks.
We have taxpayers subsidizing banks so they can throw them out of their homes and that’s not good for anybody.
Filed under Editorial
