Posts tagged with: detroit

Various forms of government intervention negatively affects economic vitality in many ways, however few policies impact the market as directly as wage laws. The $15 minimum wage law in Seattle dramatically influences determinants of business owners’ hiring practices. In many cases, wages are the highest economic cost in the production process, making hiring new employees a risky endeavor. Regardless of size, businesses of all scales must turn profits to stay operational and risk potential losses each time they hire new associates. Extra government mandates and regulations only make this natural market process more onerous.

While wage laws intend to immediately increase pay for the working poor, they severely hinder not only full time employment, but employment itself. Government mandated wage policies erect an artificial economic barrier that increases the supply of, but reduces the demand for, labor. Minimum wage mandates, contrary to their original intent, directly harm the groups they are designed to help. Government intervention in business typically aims to cure certain social ills, but the Utopian desire to cure humanity of all suffering leads to various economic distortions, sending false signals to consumers and producers. This is especially evident in wage policies.

Minimum wage laws primarily target the working poor, about 2% of the working population. Typical of intrusive government intervention, rather than having little to no effect, the laws have an active negative effect. As a labor demographic, the poor are least likely to possess marketable skills necessary to higher level employment and often rely on low-wage, unskilled jobs before developing their talents. When government forces business to pay above the market rate for unskilled work, this results in unemployment of the poor. Minimum wage laws price the poor right out of the labor market and rob them of work that may potentially lead to greater opportunity. African American communities particularly suffer from wage controls. Noble Prize economist, Milton Friedman, dispelled the incorrect perceptions of minimum wage laws in the 1960s and 1970s saying, “the most anti-negro law on the books of this land is the minimum wage rule.” The workers who retain their employment undoubtedly benefit from such wage increases, but at the expense of others. (more…)

Both my parents grew up in Detroit, and my childhood was filled with great trips to visit family for holidays and in the summer. The downtown Hudson’s store was always a destination. One of my aunts worked there, and it was the place to shop. Our trips always included a stop for a Sander’s hot fudge ice cream puff as well. My sisters and I played endless games on the stoop of my grandmother’s home, and a few miles away, rode bikes up and done sidewalks neighborhood sidewalks with our cousins.

That Detroit doesn’t exist anymore. What was once a thriving and beautiful Midwestern city is now a place struggling to remake itself. Harry Veryser, economist and professor at University of Detroit Mercy, has a few ideas as to how Detroit just might make a comeback, and why it ended up the way it is now.

 

When we hear about church “outreach ministries,” we often think of food pantries, homeless shelters, and community events. But while these can be powerful channels for service, many churches are beginning to look for new ways to empower individuals more holistically.

For some, this means abandoning traditional charity altogether, focusing their ministry more directly around recognizing the gifts and strengths of others. For others, like Evangel Ministries in Detroit, it involves a mix of many things, but with a particular emphasis on the power of entrepreneurship to transform lives and communities.

Hear their story here, in a video produced by Made to Flourish:

For Evangel, it’s not just about meeting immediate needs through traditional channels, but about teaching work skills and financial literacy, teaching congregants on the details of permitting, and even in some cases providing investment capital for particular businesses. (more…)

detroitDetroit home owners are being put out of their homes, but it’s not because of bankers. Then by who?

It’s the Detroit city government seeking to collect back real estate taxes. There are always tax foreclosures, but foreclosures are growing from 20,000 in 2012 to an expected 62,000 in 2015. Who is putting poor people on the streets in Detroit? The government.

There is a twist here based on the fact that Detroit homes have an old (and therefore way too high) assessed valuation that the taxes are based on. So for the homeowners, it’s easier to let the property go into a tax foreclosure and then buy it back at a tax sale than it is to pay the overdue taxes based on assessed property values that have fallen 70% in recent years. People follow incentives.

We have a narrative in America stating that all financial evils come from the banks. Even Scott Burns used his space to hammer the banks for the 2008 collapse. His proof: The fines that large banks have paid to the government. (more…)

Blog author: etrancik
Wednesday, July 23, 2014
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Detroit WaterAs I was poring over the morning news the other day, it seemed to me that every few days there is another water crisis somewhere; whether it’s California’s drought, or more recently the controversial decision in which the Detroit water companies shut off the water supply to over 15,000 customers. But are we really looking at water regulation, appropriation, and the morality of shutting water off in the correct light?

Let’s start with some of the basics: Water is essential for survival. Water needs to be purified. But, how is this done? In most cities water companies or public utilities offer the service of collecting the water, filtering the water, and pumping it to our homes. How should a service like this be supported in a market? It should be supported by rewarding the provider of that service with a profit, so that they have an incentive to efficiently use their resources, and make it available to the widest range of people possible. To not pay, would be stealing from the water companies. (more…)

innovation educationIt is not often that Sojourners president Jim Wallis puts forth ideas that align with those of the Acton Institute. However, in a recent interview, Wallis (touting his new book, Uncommon Good: How the Gospel Brings Hope to a World Divided) said that he recognizes that there are three keys to ending poverty: work and economic activity, innovation, education. He also says his hometown of Detroit has a big lesson to teach us:

Detroit shows that the government isn’t enough,” said Wallis. “The book talks about how we’ve got to talk about the common good as societal ethic which means our congregations, our neighborhood organizations, our non-profits, the private sector … and government.”

What Wallis is talking about, of course, is subsidiarity: the tenet of Catholic social teaching that says the smallest and closest entity to a problem should be the one to take care of the situation. A family raises a child, not the state. A school board decides curriculum, not the national government. Wallis wants to split issues and ideas into “conservative” and “liberal” camps, but really there are only good ideas and bad ones. For instance, he says personal responsibility is a “conservative” fix for poverty, and “social responsibility: taking care of not just ourselves but taking care of each other” is a “liberal” idea. Yet both of these are part of subsidiarity: we take care of ourselves, our families, our neighbors, our communities. (more…)

This past Saturday, I attended the Alleviating Poverty Through Entrepreneurship (APTE) 2014 summit. APTE is a student group at OSU in Columbus, OH, and they put together a wonderful cast of ten speakers on the subject of the future of social entrepreneurship. With seven pages of notes (front and back), I unfortunately cannot cover every detail of the conference, but instead I will briefly focus on a theme that recurred throughout the afternoon: private, often for-profit, solutions to public service problems facing the poor.

APTE brought together an impressive lineup of speakers for two rounds of individual presenters, followed by a Twitter Q&A, with a panel discussion on the city of Detroit in between the two groups: (more…)

Acton Institute Senior Editor Joe Carter joined host Darryl Wood’s Run to Win show on WLQV in Detroit this afternoon to discuss the issue of income inequality from a Christian perspective. The interview keyed off of Carter’s article, What Every Christian Should Know About Income Inequality. You can listen to the entire interview using the audio player below.

250px-Bankruptcy_monopolyAaron M. Renn’s reflections on the implications of Detroit’s bankruptcy are worth reading, especially as relate to the DIA, a topic of some previous interest over the last year or so:

In the case of the DIA, the city owns the museum and the collection. Hence the question of whether or not art should be sold to satisfy debts. If it were typical separately chartered non-profit institution, this wouldn’t even be a question.

At this point, I’d suggest cities ought to be taking a hard look at whether they own assets like museums, zoos, etc. that should be spun off into a separate non-profit entity. Keep in mind, the tax dollars that support the institutions can continue flowing to it. But this does protect the assets in the event of a bankruptcy.

I think Renn’s advice is spot on, but I would also caution that Detroit’s experience might not be replicable elsewhere. As DIA director Graham Beal put it previously, the DIA’s dilemma is “singular and highly complicated.”

How many cities own art collections worth potentially billions of dollars? Not too many, I’d suspect. And just what would the motivation be for city governments to reduce assets that could be leveraged in bankruptcy negotiations? What is in the best interest of the institution may not be in the interests of the city government and pensioners.

The DIA might be something like Detroit’s “Get out of Bankruptcy Free” card. (Or if not “free,” then less scathed than otherwise. And that’s not counting the loss of cultural treasures, of course!) But even so it’s a card that can only be played once, and it’s a card that other cities might not have.

Blog author: jballor
Tuesday, December 10, 2013
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Most commentators, apart from Virginia Postrel and the like, seem to think that it would be tragic for the city of Detroit to lose the art collection at the Detroit Institute of Arts (DIA) in the city’s bankruptcy proceedings. I agree that liquidating or “monetizing” the collection and shipping the works off to parts unknown like the spare pieces on a totaled car would be tragic.

Diego Rivera - Detroit Industry MuralsBut at the same time, there’s something about the relationship between the DIA collection and the city government (not to be confused with the people of the city itself) that would seem to warrant the city government’s loss of this asset. When you are a bad steward, even what little you have will be taken from you.

Now one could argue about the details of the DIA’s day-to-day operations, the compensation package for its director, and so on. But apart from these details of stewardship of the DIA itself, the real object lesson in bad stewardship has to do with the city government. Rife with structural corruption, cronyism, and incompetence, the city has been unable to provide the basic services and protection that it is responsible for, despite the best efforts of so many individuals working within the city government. So when the city cannot do the primary things it needs to do, it should lose the privilege of overseeing the secondary things, at the very least until it proves itself to be a responsible steward.
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