Wednesday, July 22, 2009

Detroit Update: No Major Grocery Stores, Bankrupt School System, $11,000 Average Priced Homes

1. DETROIT (CNNMoney.com) -- Detroit is one of America's largest cities, but there isn't a single grocery chain store within the city limits. Spurned by national retailers, Detroit's nearly 1 million residents instead rely on independent stores run by local entrepreneurs for their most basic needs. But for those entrepreneurs, staying in business can be a struggle.

2. DETROIT (WSJ) -- Detroit's public-school system, beset by massive deficits and widespread corruption, is on the brink of following local icons GM and Chrysler into bankruptcy court.

Even after millions of dollars in budget cuts in the spring, including 29 school closings and thousands of layoffs, the district started the fiscal year this month with a $259 million deficit. To meet payroll and pension obligations, the district has had to seek advances on state funding and other stopgap measures.

DPS's enrollment -- which largely determines its allotment of state funding -- is about half what it was in 2001, as suburban districts and charter schools have siphoned off tens of thousands of students. By this fall, DPS will have 172 schools open and more than 100 vacant. Meanwhile, the high-school-graduation rate is 58%; coupled with the enrollment losses, only about one-quarter of students who start high school in the district graduate from it in four years, according to outside estimates.

3. According to the Michigan Board of Realtors, the average price home in Detroit through June of this year fell to $11,268, a 42% drop from last year's average price of $19,448 during the same period.

24 Comments:

At 7/22/2009 11:09 AM, Anonymous Anonymous said...

You reap what you sow.

 
At 7/22/2009 11:32 AM, Anonymous Anonymous said...

Q. Who's your daddy?

A. My uncle Sam.

 
At 7/22/2009 11:42 AM, Anonymous Benny The Libertarian said...

This shows that culture trumps everything. Unless there is a solid work ethic and public institutions are large not corrupt, a region, a city, a country will fail.
On the other hand, a country with a solid work ethic and relatively honest public sector will advance.

 
At 7/22/2009 11:44 AM, Anonymous Anonymous said...

$11,000 for a house
No supermarkets
Dilapidated neighborhoods
A population with non-educated children

Sounds like a 3rd world country

This is Obama's socialist agenda.
We need to stop it before the rest of the country CHANGES into this.

 
At 7/22/2009 12:47 PM, Blogger Patrick said...

Call me crazy, but shouldn't manufacturing entrepreneurs be flocking to Detroit? Skilled, displaced workers (albeit unionized with high wage expectations), cheap housing, and what should be an accommodating government offering investment incentives. Seems like fertile ground to me.

 
At 7/22/2009 1:05 PM, Blogger QT said...

"an accommodating government"

Really?

 
At 7/22/2009 1:16 PM, Blogger marketdoc said...

What amazes me is that many Michigan residents (MP excluded?) still love their politicians like Carl Levin and Jennifer Granholm. If this is not a case for "change" then I don't know what is.

 
At 7/22/2009 1:20 PM, Anonymous Benny The Libertarian said...

Patrick:
It is culture. You want to get shot dead? Send your kids to schools with gangsters? Have employees who are not dedicated to the job?
The first thing every culture or group has to do is not demand entitlements, but ask, "How can we behave in such a way that we become valuable to the prevailing economic system?"
In an odd sort of way, a highly socialized group and individual response determines success in a free-market system.

 
At 7/22/2009 2:11 PM, Blogger QT said...

Benny,

Detroit has lost 50% of its population since 1950 and is heavily dependent on one industry. The city is not likely to recover any time soon.

For the last 60 years, government policy has been focused on helping declining American cities. Perhaps, we should be looking at another approach.

 
At 7/22/2009 2:17 PM, Anonymous Anonymous said...

http://www.freep.com/article/20090722/NEWS15/90722031/Dems-to-test-support-for--10-minimum-wage

another great idea in michigan...

 
At 7/22/2009 2:21 PM, Anonymous Anonymous said...

Wow! What a great philosophical discussion! I agree this city is what excessive unionization and socialism lead to. The industries that offer good jobs go bankrupt and crime takes over.
JCarr

 
At 7/22/2009 3:30 PM, Blogger Patrick said...

QT,
It looks like your article mentions some tax abatement credits that can be granted. I don't know exactly how easy it is to get them or whether they are even granting them to the right businesses, but my guess is that if you went to the city and said you were going to open a factory and asked for a tax holiday and expedited permits they would be happy to work with you. There are still things being made in this country and Detroit sounds like a place you could do it for less than anywhere else. Even if you ignore taxes the land and labor should be cheap because no one wants it or has a better job as an alternative.

Benny,
I'm not even talking so much about bringing new people in as keeping existing ones there. Presumably, these people can't move or they would already be gone. They are just waiting for someone to fix things. You could cherry-pick the best and hardest workers left and avoid the scenarios that really hurt the automakers.

The major obstacle that I don't know about is labor laws. If you were hiring factory workers would you be forced to go union or can you hire anyone willing to work? If you have to go union then my theory is pretty much shot, as there are few mfg'd products that can support $40/hr labor or whatever the union rate is.

 
At 7/22/2009 3:59 PM, Anonymous Anonymous said...

Patrick,
Manufacturing is essentially dead in every state with a strong union presence. I don't see that changing. Why would you put up with a union when you don't have to? No tax break in the world is worth the knowledge that you can be shut down by a union with its ever-increasing demands. Detroit, in fact, taught the Japanese that.

Detroit grew by drawing a pool of workers from the South. The South, with its right to work legislation, can, and is, doing precisely the same thing today.

 
At 7/22/2009 4:00 PM, Blogger QT said...

Patrick,

The city's 22.8% unemployment rate is among the highest in the U.S.; 30% of residents are on food stamps. Unfortunatley, there is very likely no way back from this.

Centres dependent upon manufacturing like Detroit and Cleveland have not faired very well in the past 30 years while cities like NY and Boston have become centres for ideas and prospered. Future economic growth is most likely not going to come from manufacturing.

Did the death of distance hurt Detroit and help New York?

 
At 7/22/2009 4:20 PM, Anonymous Anonymous said...

This is Obama's socialist agenda.
We need to stop it before the rest of the country CHANGES into this.


-Yeah because all of this happened in the last 6 months.

 
At 7/22/2009 6:47 PM, Anonymous Benny The Libertarian said...

QT-
Interestig article, but I don't know about the advice to educate people who can move out of declining cities.
BTW, I think an American boom in manufacturing is coming, but it will take 20 years. At some point, Chinese production will be more expensive than American production (Japan already there).
The Far East economic miracle means they will eclipse us.
But other parts of the globe do not have as dedicated workers and working infrastructure as the Far East. Manufacturing may shift back to USA, pushed along by an anemic greenback.
In that scenario, Detroit, with cheap housing and factory space, may have some sort of revival--but only if they can offer safe streets, good workers, honest government, reasonable
taxes etc.
BTW, they have been flattening houses and buildings in Detroit for years--prairie hens and red foxes are common in the city now. Maybe buffalo will be next.
Also, save for crime and corruption, retirees might go to Detroit for the cheap housing. $11k for a house?
Then, you could survive on Social Security.

 
At 7/22/2009 8:15 PM, Anonymous Anonymous said...

Benny:

http://www.theonion.com/content/news/area_man_uninterested_in_creating?utm_source=a-section

http://www.theonion.com/content/video/china_celebrates_its_status_as?utm_source=a-section

http://www.yuwanmei.com/

 
At 7/22/2009 9:58 PM, Blogger QT said...

Anon. 8:15,

Got to love the Onion News Network especially #2 item. Thanks for the smile :-D

What was the topic again? Ah well, who cares.

 
At 7/22/2009 11:30 PM, Anonymous Anonymous said...

-Yeah because all of this happened in the last 6 months.

Detroit has been a Democrat party fiefdom for more than 60 years! This is what the unrestrained application of Democrat party policies looks like.

Newt Gingrich made this point years ago.

 
At 7/23/2009 7:56 AM, Anonymous John said...

This is exactly what happens when Democrats and unions control a city. Unfortunately, many Detroiters continue to vote for the very people who have contributed to their problems.

 
At 7/23/2009 10:58 AM, Blogger Angela said...

@Patrick:

Despite the violence and welfare, there are indeed plenty of honest and good people here who would happily accept employment. A guy who owns a Subway here told me he gets 40-50 applications every single day.


But the unions and the tax structure make the concept of moving here ludicrous instead of lucrative.

 
At 7/23/2009 6:52 PM, Anonymous Mika said...

Many comments here focus on symptoms and consequences. Some blame the victims. I do not see here any reference to the primary cause of Detroit's demise: white flight. Beginning in the fifties, the whites abandoned the city and took their businesses and their capital with them. With no tax base, the endless cycle of deterioration continued. I know - I'm from Detroit and witnessed it all firsthand.

 
At 7/25/2009 12:05 PM, Blogger 1 said...

"Some blame the victims"...

You mean the victims of robbery, vandalism, and gang thuggery, right?

"I do not see here any reference to the primary cause of Detroit's demise: white flight"...

Ahhh yes, some of the victims...

You didn't expect people who could leave that crime ridden construction of liberalism to hang around and be victimized more did you?

"I know - I'm from Detroit and witnessed it all firsthand"...

So you didn't partake of that, 'white flight', right?

From the Ludwig Von Mies Institute: At the top of the list of America's Most Liberal Cities is Detroit, Michigan. Detroit, with half the population it once had, and with a quarter of its land vacant or abandoned, is indeed a monument to liberalism. Although the city is financially bankrupt, it is able to find big bucks to subsidize marquee events and to underwrite billion dollar giveaways to professional sports teams...

 
At 8/22/2009 11:13 AM, Blogger lynette said...

Who would like to join in to do something about Detroit's lack of a large grocery store? There are optional store format's that would eliminate theft which is the biggest problem. We could also generate jobs.

 

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