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Ed Driscoll

It’s Gotta Work This Time!

July 27th, 2013 - 2:17 pm

Last week in the American Enterprise Institute, James Pethokoukis asked “Must there always be a Detroit?” Along the way, he noted the decades-long penchant of city’s local government for spending taxpayer dollars on giant building projects, which they thought would  jump-start the increasingly exhausted city:

Yes, Detroit has been atrociously managed, as Edward Glaeser documents in Triumph of the City. Faced with the decline of US auto industry, Mayor Coleman Young, who led the city from 1974 through 1993, decided the city’s salvation was to be found in building things rather than “trying to attract smart, wealthy, entrepreneurial people.” In the 1970s, for instance, Detroit built an expensive new hockey arena for the Detroit Red Wings and then rented it to the team at bargain rates. In the 1980s, it built the People Mover monorail, what Glaeser calls the “single most absurd public transit project in the country.” The $350 million Renaissance Center created millions of square feet of new office space, a complex eventually sold to GM for $100 million.

It’s the ultimate example of Reynolds’ Law on a giant Soviet-style scale: If we just subsidize nice buildings, nice big businesses will be sure to follow! And hey, if not, at least the local politicians would benefit from the kickbacks and featherbedding, so that’s something.

Even after the downfall, the city’s politicians still haven’t learned their lesson; Geoffrey Norman of the Weekly Standard spots “Denial in Detroit as City Plans $400 Million Taxpayer Funded Hockey Arena:”

The city of Detroit is unable to light or police its streets but it can provide circuses on ice for its (mostly unemployed) citizens.  While the city may have declared bankruptcy just the other day, as Chris Isidore of CNN reports:

… financial crisis hasn’t derailed … plans to spend more than $400 million in Michigan taxpayer funds on a new hockey arena for the Red Wings. 

Defenders of the plan say that it is part of an overall economic development scheme and will “provide jobs.”  The people of Detroit used to build things.  Cars and truck, chiefly, and the rest of the world marveled at the city’s ability to turn them out.

Now … the citizens and the city are idle and broke.  With a new hockey stadium (soon) to console them.

Cold comfort.

Of course, if Detroit’s politicians actually wanted to begin the nurse the virtually dead city slowly back to health, they could implement Shikha Dalmia’s advice in the Washington Examiner. “Until the city’s politicos treat its humble entrepreneurs with the same respect they show big investors, Motown’s second act will never arrive:”

Every mayor for the last two decades has tried to jump-start Detroit by reviving its crumbling downtown. In the 1990s, Dennis Archer erected stadiums and casinos. His successor, Kwame Kilpatrick (now serving time on federal extortion and racketeering charges) hosted mega-events.

The current mayor, Dave Bing, has been too bogged down in Detroit’s fiscal quagmire to propose anything grand. But a group of rich investors led by Dan Gilbert, owner of Quicken Loans, is spearheading a massive effort to bring businesses, hotels and residents into the city.

Gilbert has pumped close to $1 billion to relocate his headquarters in Detroit and scoop up real estate for stores, hotels and apartment buildings. Whole Foods recently followed suit as did Moosejaw, a retailer for outdoor apparel.

But these ventures have been seduced by massive subsidies. Whole Foods’ local partner received $5.8 million in state and local grants as well as sizable tax credits. Still, the business editor of Forbes declared two years ago that, thanks to Gilbert, green shoots were beginning to sprout in Detroit.

Since then, however, things have only gotten worse as more residents have fled and city services have deteriorated. Why? Because these shoots were Astroturf, not a spontaneous response to actual need. Worse, they were a wealth transfer from the average taxpayers to the rich who patronize these high-end stores.

Indeed, even as Forbes was praising Detroit’s artificial green shoots, city regulations were busy nipping the real ones like Pink FlamInGo, a Latin-fusion food vendor responding to real market demand.

These regulations barred street vendors from selling any hot fare except hotdogs (but without sauerkraut) and that only in 16 approved locations. Pink FlamInGo built a roaring business by ignoring these rules — until the city shut it down.

Inside of MSNBC’s Bizarro World studios, its anchors are alternately saying that Detroit is a conservative or libertarian city. Perhaps it’s time to make NBC’s fantasies a reality, as Detroit has less and less to show for 60 years of increasing “Progressivism.”

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Gosh, from the example of Detroit, one might conclude politicians are economically-illiterate doofuses and/or money-grubbing crooks who'd be running 3-card monte games if they weren't in "public service." Thank Gaia we've got Obamacare to disabuse us of that notion, eh?
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