Detroit’s Revival: Staying On the Right Track

by Carine Martinez-Gouhier:

“Maybe we can call this bootstrap nation, […] because Detroit is pulling itself and rising on its own initiative, its own energy, its own determination.”

Nolan Finley

The goal of the series of posts I wrote on Detroit was to show the positive in what was currently happening in the Motor City.

DetroitAfter years of political and union mismanagement, corruption, and cronyism, wealth creation was replaced by mayhem and debts. Detroit filed for Chapter 9 bankruptcy in 2013. The sight of Detroit’s fall from grace was not a pleasant one, but was showcased for the entire world to see: sharp and rapid decrease in population, some neighborhoods almost completely abandoned, blight all over the city, burned-down houses, no street lights, etc. While the media focused on the drama of a population government had failed, they–voluntarily or not, I won’t speculate on that—too rarely highlighted the fight of the part of the population working to keep Detroit alive and to revive it.

The people our group of bloggers talked to were usually not focused on what the government could do to help revive the city but they knew how it wasn’t helping, or when it was counterproductive. Most importantly, each of the Detroiters we talked to had a vision of how they could create wealth for Detroit. Their vision implied: thinking about the problems Detroit and Detroiters were facing; how to solve some of these problems; being proactive in pursuing a solution. No government intervention needed in this process.

That does not mean there is no place for government. Its role must be properly limited, but is essential, as we’ve seen. Property and individual rights have to be protected for people and businesses to be ready to invest in the city again.

For years though, an out-of-control government has exponentially increased spending and interventionist policies, increased property taxes to compensate for people fleeing the city, regulated how businesses could operate, where to build what. As of last year, while the city was desperately trying to encourage individuals and businesses to move back to Detroit, there remained 29 zoning classifications, countless regulations, licensing issues, and ordinances that make it difficult for businesses to open in the city. Said Nolan Finley on some ordinances: “in many ways we’re still our own enemies to revival.”

Not the least worrying is the fact that the city engages in the very trendy tendency of trying to engineer economic development. Steve Ogden, Director of Corporate Affairs and Government Relations for Rock Ventures LLC, defended the “investment” of taxpayer money in a stadium and light rail as 1) preceding the official bankruptcy, 2) something other cities do, 3) the fact that “people see that there is an investment to be made in the city.” “It’s a job creator at a time when we need to create every job in Detroit that we can,” he added. Is it more important to create jobs than to create wealth? A government program can create jobs without creating wealth. Indeed, a government-sponsored job program can actually destroy wealth, by wasting taxpayer money that could have been used more efficiently.

The panelists later argued that regarding these projects, taxpayer money only represented a small fraction of the “investment” while the rest was financed by philanthropy and the private sector. But that is still a fraction of the money that could have been better used. It could have funded another Rebel Nell, another start-up, another success story of productive individual we might never hear about because government thought they knew better how to “invest” this money.

One of the last projects we saw in Detroit was the Michigan Urban Farming Initiative. This nonprofit organization is financed by private donations. It rents part of a block of land to grow organic food. Its mission is unclear (its president told us they didn’t really have one). The organization is striving to bring organic food to their community and to educate its members on food options. One volunteer told us there was an “element of social justice” in what he was doing.

From what we could see, they were doing a very good job with the farming part: the basil smelled wonderful, and vegetables were numerous and appetizing. In fact, about 4,000 lbs. of produce were harvested in 2013. They sell (price is donation-based) their produce to the neighborhood, restaurants and markets. Here is the problem though: they had a hard time getting rid of everything they harvested, even when giving the produce away. To the question “do you think that maybe there is no real demand for what you are doing in this community?” they attributed the problem to a lack of trust due to the fact that they were white people coming from elsewhere in a community with different demographics. But it is hard to believe that people having a hard time making ends meet would refuse free produce. On the long term, they did hope to keep things as local as they can and to be financially sustainable.

Are the resources used in this project (labor, financing, time, land) used the most efficient way possible? Probably not. But this organization is not tied to efficiency as a for-profit would be. Sadly, neither jobs nor wealth are created here. Resources are only wasted. Granted, these are private resources and their owners are free to do whatever they wish with them. But the fact is that there is no wealth creation if the product of combining and using resources does not find enough consumers to make its production sustainable, or even attractive.

In contrast, the people of Brightmoor I mentioned in my previous post, while not necessarily creating wealth, worked for themselves: their neighborhood, their homes, their consumption. They were looking for themselves instead of thinking of engineering what others “must” need. That does not mean they were not eager to help one another, but simply that you have to help yourself, before you can help others. Startup entrepreneurs wanted to help too, but understood this had to be done through creating value for Detroiters and investors, not by telling them what to eat or how to behave.

Detroiters, in their willingness to help, should be careful not to replicate the government’s mistakes. Most individuals are capable of taking care of themselves when left free to work and to keep the product of their labor. They—not the government, not other people—are the best judges to make the choices that need to be made in their lives, and they have to be willing to make these choices. Only a limited government and a free market will allow them to fully take responsibility for their own life though.

Each little progress should be celebrated, but there is still much progress to go through for Detroit to get back on track. During my three days spent in Detroit, I met with individuals who wanted to take full responsibility for their lives and were acting accordingly. That is why I saw hope for the city, if only the mistakes of the past are not repeated.

Carine is a French national who immigrated to the United States to pursue her own happiness. She holds a Bachelor’s degree in business administration and a Master’s degree in American Studies (specialized in corporate social responsibility) and works in public policy. She is particularly interested in issues related to economic freedom and laissez-faire capitalism.

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