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.

Detroit’s Revival: Making the Renaissance City Beautiful Again

by Carine Martinez-Gouhier:

“Speramus meliora; resurget cineribus”

“We hope for better things; it will arise from the ashes”

Detroit’s motto 

In my previous posts, I tried to show that current initiatives trying to revive the city of Detroit were led by individuals and that the less government is involved, the better their chance of success.

The Renaissance CityMany of the Detroiters I talked to are eager to share a sense of pride in their city, and because they love their city, they want it to be reborn, which includes making it more beautiful, as beautiful as it used to be. Some of you might even have seen this in the form of two very public initiatives: a Chrysler Super Bowl commercial with Eminem and a video clip by Kid Rock.

I noticed this goal – to make Detroit beautiful (again) – in different individual initiatives. The first one being in different art projects, such as the Grand River Creative Corridor. Numerous paintings and graffiti are lining the streets near Rebel Nell’s offices. Rebel Nell’s Amy Peterson explained that there exists some kind of implicit code in the graffiti world: if someone is painting a beautiful graffiti, no one touches it. Hence several of her neighbors in the area were eager to have nice graffiti to try and prevent defacement of walls.

Brightmoor is yet another example. The neighborhood is considered one of the most blighted areas in Detroit. Yet, the few blocks we visited, though certainly not perfect, seemed peaceful and had some charm. Our host explained that when they first arrived, the area was covered in weeds everywhere. A group of neighbors cleaned it up and, she said, they saw progress almost immediately: “If you can keep an area clean and free of crime for 4-5 months, you generally win the battle.” The area comprises about 15-21 blocks. People from outside neighborhood don’t wander here, our guide told us, not even criminals.

She took us for a drive around the neighborhood. A lot of houses are nicely decorated with beautiful gardens. A few houses are still abandoned though. Usually the abandoned houses have nice paintings on them: “Once you put color on something, this is somebody’s baby, you don’t touch it.” She also explained that it is better visually for children, and also a way for them to know which houses are abandoned.

All of this is of course done through the initiative of local residents. We passed an abandoned school. It has been abandoned since 2006,—that is eight years ago. They wish they could use the building; they tried in vain to get government authorization. A billboard indicated the building was for sale. So the building remained unused, inaccessible, and unmaintained. What individuals such as our guide could have done with the building, we will never know. This former school creates blight in an area where the residents desperately fight it, because government does not seem to be able to sell the building, but does not maintain it, or would not let the residents take over.

Detroit used to be a gorgeous city, with historic art deco skyscrapers. Indeed, those are still visible downtown, although not always in good shape. We were told that people tend to focus on rehab of old buildings, instead of demolishing and constructing something new, a sign that Detroiters want to give Detroit her old glory back. Yet, the blight of some buildings is still very visible downtown, contrasting with the idea of a city starting anew.

These are just a few of some visible signs of a tentative revival of the city. Though some may find the initiatives either naïve or pointless – this should be the subject of another discussion – my point here is that again, we see people taking their destiny into their own hands and managing a serious situation without asking the government to the rescue. The neighborhood we visited in Brightmoor is an especially good and impressive example.

I will wrap up this series in a final post on general conclusions on my visit on what is currently going on in Detroit.

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). She is particularly interested in issues related to economic freedom and laissez-faire capitalism.

Detroit’s Revival: Individual Rights, Not Anarchy, Will Support Rebuilding Efforts

by Carine Martinez-Gouhier:

My previous posts describing a reemerging Detroit took the stance that the city’s revival will only occur when the government retreats to the sidelines—a position that was vindicated by the experience of every entrepreneur I met, whether large or small.

Rubble in DetroitThat said, there are some areas of law where the government cannot retreat from without risking all gains Detroiters have made. In case you hadn’t guessed, I am talking about the enforcement of basic criminal laws.

At the start of my tour of Detroit, I was eager to see Fireweed Universe City, a community of anarchist squatters who have taken over an abandoned area of the city to make it their own, on their own terms. Could some kind of organized anarchy be the future of Detroit? Alas, organization and anarchy rarely go together: we never visited the place as apparently the anarchists became unreachable when time came to plan the visit.

The signs of organized, or rather adulterated, anarchy are everywhere in Detroit. Some regulations are enforced, even those that impede change and growth, yet others are overlooked, even those that pertain to violations of basic criminal statutes.

At times, this blind eye can seem like a blessing, perhaps a compassionate response to those trying to make a living in harsh conditions.

Detroiters, for example, practice ridesharing on their free time (both day and night) to make extra money. One woman we talked to had goats in her backyard. Each goat yielded a gallon of milk a day. She told us that Animal Control ultimately turned a blind eye to a practice that is not allowed.

In another instance, the police look the other way when some people use fire hydrants because they cannot be connected to the water system.

Yet, much of this inconsistency seems to come from an allergic reaction to too much government intervention. After years of lavish spending and corruption, the resulting bankruptcy of Detroit has left its mark: neighborhoods without street lights, hour long wait times for the police to come when called, a disproportionate number of crimes remaining unsolved, firefighters fighting fires with holes in their boots. The list continues.

Heck, in some circumstances, Detroiters have had no choice but to take responsibility themselves.

While the partial retreat of government may allow Detroiters to start businesses more easily or to cope with the situation, anarchy is not the solution for Detroit to renew with prosperity. Government does have a role to play, albeit a very limited one–that is, to protect the individual rights of life, liberty, and property.

According to Council Member James Tate, there are 40 to 50 square miles of abandoned properties in Detroit. Buildings and houses are simply left behind by their owners who fled to the suburbs or further away. The properties are left to rot and be reclaimed by nature. Generally, everything that can be stolen inside disappears, everything including copper wires and cables. Houses are often torched down. There are 30 fires a day on average in Detroit. In his book “Detroit: An American Autopsy” Charlie LeDuff reports one firefighter’s narrative: “In this town, arson is off the hook. Thousands of them a year, bro. In Detroit, it’s so fucking poor that fire is cheaper than a movie. . . And the old lady living next door, she don’t have insurance, and her house goes up in flames and she’s homeless and another fucking block dies.”

In one of my previous posts, I mentioned that a security card was necessary to access elevators of the Madison Block. While security keys in hotel rooms are generally for floors with penthouses and luxury suites, I was surprised to see that the Greektown Hotel required the use of your room key to access floors for any kind of room.

“If the city isn’t safe, it cannot and will not rebound,” said Detroit Police Chief James Craig. The Manhattan Institute has been working in coordination with the Police Department for a few years now, to implement a “Broken Windows” policing strategy: “The pilot programs, implemented in collaboration with the Detroit Police Department and community groups, aim to stem the rise of home invasions by increasing the felt presence of the police, engaging community members in problem solving, and focusing special attention on the neighborhoods’ most at risk offenders.”

Innovators and investors who want to help rebuild the city of Detroit need to know that they can work and live safely, and that the fruit of their labor will not be robbed or will not go to waste in a bureaucratic state that only makes their life more difficult. Anarchy is not a friend of determined Detroiters.

As we will see in my next post, many communities and individuals are willing to help fuel the effort by helping make Detroit beautiful again.

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). She is currently a research associate at the Texas Public Policy Foundation.

Detroit’s Revival: Individual Initiatives Can Do without Government Interference – Part 2

by Carine Martinez-Gouhier:

In part 1 of this post, we saw that the revival of Detroit happens to kick off at a time when government tends to be less intrusive. This is no coincidence: when entrepreneurs of all kinds feel free to take risks, everyone can benefit. High tech startups are but one example of entrepreneurs hard at work to rebuild the city. Rebel Nell is another, though quite different example.

Detroit SkylineThe ladies that run and operate Rebel Nell are another example of innovation turned into private initiative, turned into opportunities for Detroiters.

Amy Peterson and Diana Russell once stumbled upon a piece of graffiti paint that had fallen off a wall on which several graffiti had been painted over time, one above the others. The piece beautifully revealed the layers of colors of all the graffiti that had covered the wall. They had an idea: repurposing the piece of paint into a piece of jewelry.

The founders had something additional in mind though: they wanted to help homeless women. Through this social enterprise, they would train them in the trade of making jewelry, educate them in areas such as finances, and help them become independent women, empowering them with self-esteem through work.

The name of the company is representative of these strong-willed women. They wanted a name that would represent strong women well. As an example, they thought of Eleanor Roosevelt, whose father had given her the nickname “Little Nell.” They thought that she deserved a stronger nickname though, and Rebel Nell was born.

The company was formed as a L3C: Low-profit Limited Liability company. It was not very difficult to start the company according to Amy Peterson and she likes that this form of company focuses not on financial gains but on social gains. “But we want to be sustainable; we are not asking for handouts,” she adds. Peterson is not originally from Detroit, but she says Detroit gave her a shot at her dream job, so she wants to “return the favor.”

Rebel Nell currently employs and pays five women. The founders do not give themselves a salary though. Karen, one of the women who work there, tells me that it takes on average 36 hours from start to finish to make one pendant. “It’s a great place to work!” she tells me spontaneously.

There are plenty of entrepreneurs with innovative ideas, who are making a difference in Detroit. Detroiters are eager to seize the opportunities when they present themselves. Independence and a better way of life are the best incentives. Ridesharing drivers are another good example, as I mentioned in my first post, or as this video, make by the Texas Public Policy Foundation, shows. But government has get out of the way:

“I don’t want to be on welfare, I didn’t want to be on welfare and this [ride-sharing] was an option… I don’t need the government to take care of me for a short period of time when I am able-bodied and there is something that I can do, so if there’s a job out there that I can do, let me do it…”

If there are so many entrepreneurs in Detroit starting innovative projects and finding financing, why is it that Detroit still has a long way to go?

In a panel organized by State Budget Solutions and the Manhattan Institute and titled “Detroit Rising: How the Motor City is Rebuilding and Returning to Greatness,” Steve Ogden, Director of Corporate Affairs & Government Relations at Rock Ventures LLC (whose founder and chairman is Dan Gilbert), underlined that in a city almost literally in ruins, 29 different zoning specifications were indeed barriers to redevelopment. James Tate, Council member for District 1, added that “issues with licensing are even more of a challenge.”

Innovative Detroiters can make a real difference to save the city, and are already trying to, but government has to get out of the way. They know that in order to have a sustainable, profitable business, they have to come up with a product or service that will be in demand. They do not need the paternalistic hand of government to tell them what they should do. The only thing they need from government is to play the only role it should play: protect individual rights and the rule of law. I will deal with this problem in my next post.

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). She is currently a research associate at the Texas Public Policy Foundation.

Detroit’s Revival: Individual Initiatives Can Do without Government Interference – Part 1

by Carine Martinez-Gouhier:

“[The] comeback in Detroit started several years ago, outside of municipal government, outside of the public sector . . . The comeback is going on in spite of the way government was operating.”

— Michigan Gov. Rick Snyder, September 2013

“This effort is not centrally-planned, it’s market-driven.”

— Editorial Page Editor of The Detroit News Nolan Finley, July 2014

Detroit was once a proud industrial city, the Automobile Capital of the World. When the situation started to go south for a number of reasons that are beyond the scope of this series of posts, a lot of people were quick to claim that capitalism had failed, that the free market had betrayed Motown, leaving her abused and worn out. In fact, far from a failure of the free market, Detroit had become the epitome of government and unions gone wild.

Opportunity Made in DetroitToday, faced with a bankruptcy that shed light on billions of dollars in outstanding obligations and unfounded liabilities, authorities have given up enforcing some of the hurdles the city initially imposed on Detroit businesses and inhabitants, giving a breath of fresh air to entrepreneurs with a creative sense of how to revive the city. These entrepreneurs were central to our blogger group’s observation of Detroit.

Our first visit took us to the Madison Block, and the Detroit Venture Partners (DVP). The Madison block is so named after the Madison Theater, which reopened after being bought by Dan Gilbert, Detroit’s most important investor today. Our host at DVP told us the number of startups had increased quickly since they opened in 2011; they ran out of space and had to expand to the entire block. The goal is to “create density for startups.”

People are focused on their projects in this “ecosystem to invest.” Offices look like your typical high-tech open space: we are in Detroit, but inside, it could be Austin or the Silicon Valley. Among the logos we saws were those of Grand Circus, Microsoft Ventures, BoostUp, and Twitter. We were introduced to a couple of startups–both what we would call social enterprises.

“It was always about giving back first,” says Lisa Cupp, Chief Marketing Officer at Chalkfly. The startup sells office supplies online. For every order you place, you can choose one teacher (not a school, but specifically a teacher) that receives 5% of your order. She explains that they want to make a difference in education. Chalkfly was named one of the 10 “2014 Brand Innovators Made In America Top Brands To Watch.”

Another social enterprise, BoostUp, helps you finance a project. They partner with companies that match up your savings towards your purchase. Although not originally from Detroit, BoostUp benefits from being close to automakers, with whom the startup has partnered. In both cases, Detroiters are helping Detroiters, privately.

Detroit Venture Partners have an “all-digital strategy” and describe themselves as “risk-taking freedom fighters” and “creative business builders, not money managers.” The expression “change the world” appears a couple of times on their website. But what about Detroit? Are current government policies encouraging entrepreneurship? “Mostly, people and investors are excited by a city that is changing,” says our host.

He takes us to other buildings in the block, to see Detroit Labs, and Bizdom. Detroit Labs is where the Domino’s Pizza ordering app was born. Inside, offices are modern and people are hard at work. I can’t help but notice that each office is accessed using an elevator that is activated with a security card though.

Detroit entrepreneurs may well be incentivized by a changing city, yet I insist: “But how bad are regulations here? You may love a place, but if regulations prevent you from starting a business, you either don’t start it or start it elsewhere.” There is indeed a “feeling of a ‘new frontier’” in Detroit Jake explains, but regulations, red tape, the weight of the government machine could still be an impediment he adds, mentioning a story about having to make 60 trips to city hall to get a permit to sell tacos in a food truck.

As a result of this flourishing environment for startups, Detroit is often referred to as a tech hub. But savvy tech apps are not the only kind of personal initiatives that are moving Detroit these days. That is what we will see later this week in part 2 of this post.

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). She is currently a research associate at the Texas Public Policy Foundation.