DETROIT, Michigan (MI): an Abstract
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DETROIT, Michigan (MI): An Abstract Detroit is a significant case study of urban decline. To understand the fundamental issues in Detroit one must understand the symptoms of urban decay. Urban Decay is the process in which a functioning city, falls into disrepair; its major symptoms are de-industrialization, depopulation, restructuring, abandoned buildings, high local unemployment, fragmented families, political disenfranchisement, crime, and desolate, inhospitable city landscape.1 Detroit’s urban decay, (as with many other cities afflicted with urban decay) has no single cause, rather it was the result of inter-related socio-economic conditions to include: urban planning decisions, poverty and its causes among local populace, construction of freeways and rail lines that by-pass afflicted areas, de-population by suburbanization and real estate neighborhood redlining, among others.1 In addition to these issues, other symptoms unique to Detroit that further exasperated its urban decay, included: significant and intense racial tensions (including two race riots 1943, 1967), extreme corruption and mismanagement, and Detroit’s inability to severe its economic ties to the auto industry. The decline of Detroit wasn’t one thing over another, rather it was a lethal cocktail that brought the economic powerhouse of a city to its knees. In examining the City of Detroit during our Field Studies Program, we should: (1) evaluate how enduring philosophical, historical and contemporary issues contribute to the current state of the city; (2) aim to understand how the environment presents a strategic challenges to governance and planning for the city; (3) seek to understand and think critically about how the strategic thinking, planning and decision- making of federal, state and local leaders in response to the urban crisis affect the lives of its citizens; and (4) understand how the use of resources and strategic planning will aid in the re-building of a failed city. Some of the Field Studies objectives we will explore in Detroit will be: (1) U.S. Economic System and Government Institutions: The Detroit Economy & Its Economic Stability (2) Education: Elementary Education in Detroit (3) The Historical Exposure to Detroit’s Geographic, Ethnic, Religious and Social Groups 1 http://en.wikipedia.org/wiki/Urban_decay THE FREE MARKET SYSTEM: For the free market system objective, our goal is to expose you to the success and failure of the U.S. economy due to different reform policies (i.e. the environmental reforms, land use and tax systems reforms among others). We want to show how the encouragement of private enterprise and individual initiative are crucial to maintaining economic success in the free market system. We also want to expose you to the government’s efforts to create favorable investment climates, curbing corruption where it exists, and spurring balanced trade. In complement to the strategic planning and ideas of industry and enterprise there exists the workforce, who labors and puts industry’s ideas into action. We want to show you the independent roles of labor and management in negotiating pay, working hours and conditions, and other benefits associated with employment. We also want to expose you to the factors underlying industrial and agricultural production, and how environmental protection has altered each; and the role of environmental protection plays in pulling industry and the free market system into a new direction. Overview of Detroit & the Free Market System: The Auto Industry Crisis, Policy Reform, Recession, and Rebirth During the Detroit Field Study we will visit General Motors and Ford; however, prior to our visit the reference guide will provide you with an opportunity to explore the external and internal factors that contributed to the American Auto Industry Crisis, to include: global environmental policy initiatives (i.e. the Kyoto Protocol), the Great Recession, peaks in gas prices resulting from the 2003-2008 Energy Crisis, and the Subprime Mortgage Crisis. While the environmental initiative propelled the economy forward into an era of green technology, the culmination of the growing pains and the other external factors negatively impacted the stability of the marketplace. Many companies and products did not survive this tough economic environment, including General Motors and Chrysler who eventually filed for bankruptcy and was later bailed out by the federal government. As events continued to unfold, the City of Detroit eventually filed for bankruptcy as well (with no bail out by the federal government) with over $18 billion dollars of debt. Declaring bankruptcy allowed to the fallen city of Detroit to rebuild, and the reference guide hopes to help you understand how this was possible. Questions to Consider: - How do Ford and GM face the economic challenges in the world? - What is the American auto industry strategy for competing with foreign companies? What are the challenges in the international auto market? - How has the government management of the bailout happened? Has it been an effective relationship between the auto companies and the government? - How are the auto companies reacting to the demand for cleaner and more affordable energy for cars in the U.S. / in the world? The Auto Industry Crisis, Deindustrialization, Unemployment, & the Rise of Crime The decline of the auto industry and the deindustrialization of Detroit gave way to mass unemployment. The demand in the labor market also moved from skilled labor, to automated labor, to educated labor, and from unionized domestic labor to outsourced cheaper labor. These drastic shifts in demands for talent, severely impacted Detroit’s minority and industrial workforce, many of which never obtained a degree because previously education wasn’t a requirement to make a decent living. Prior to the 1970’s people working in Detroit were able to obtain middle class status by working in the auto plants, without ever attending a formal institute of higher education. Now the same groups of people could no longer compete in the new job market because they lacked the formal education needed to advance economically. With almost 50% of the population unemployed, the economic vacuum gave way to the drug economy and a spirit of crime. This rough period of time created a cultural shift within Detroit from the working class mentality, to the have-not mentality, where crime and poverty became a regular way of life. Declaring Bankruptcy, Tackling City Challenges, & Laying Out a Strategy for the Rebirth of Detroit Bringing in Investors Detroit once a major industrial city, which has now declared bankruptcy with over $18 billion dollars of debt, faces the major challenge of trying to cultivate favorable investment climates within the city and to encourage private enterprise and individual initiatives to create economic opportunities within the city of Detroit. Tackling Population Decline and Restoring City Services Detroit leadership also faces the challenge of trying to grow the population. In the 1950’s with the auto industry booming, Detroit had over 1,800,000 residents, now after the decline of the auto industry and suburbanization, Detroit now has a population of about 700,000 residents. This means that Detroit faced a population decline of about 1,100,000; when the residents and businesses began to flee Detroit they took the tax bases and jobs with them (mostly to the suburbs). This decline in tax revenue and economic opportunities affected the municipal structure and ability to provide government services. At some point, 40% of the city’s street lights didn’t function which lead to an increase in crime rates, and the average wait time for police to respond to a call was 58 minutes in Detroit, where the national average was 11 minutes. City leadership has to develop a strategy to regrow the population, so that it may increase it tax base, generate revenue, and continue to provide basic city services and honor its pension obligations to Mapping Detroit population migration; click the map to go to its retired population. Forbes magazine’s interactive map of American Migration. Tackling the Challenge of Infrastructure Additionally, Detroit’s infrastructure was built when it had a population of about 1,800,000 people, now the population is 700,000 sprawled across the large city of Detroit. City leadership is having a hard time providing city services like public transportation, street maintenance, trash collection, street light repair, etc. across 142.9mi2 (370km2) of land with a marginal tax base and a population of 700,000 (a significant number of which are unemployed). In September 2009, 335,231 people were unemployed as of December 2014, the number has dropped to 150,419. In the city presentations we will hear about what’s next for Detroit. Take note how far apart the houses are from one another and what type of challenges this may present in providing city services with a poor budget. Does this look like an urban major city to you? Detroit’s Economy in 2008-2010: The Great Recession & the Automotive Industry Crisis An Introduction The American Auto Industry decline seems to be a repetitive event that happens over the course of some years, as its financial stability is so closely linked to the financial stability of the banking system, and its ability to approve loans. In the 1920s, banking failures dotted the rural landscape of the country as the new wave of industry and commerce constricted the traditional lifeblood of agriculture. In 1925, 617 banks failed in the United States, by 1930 the number rose to 1,350, and in 1931 that escalated to 2,293. With each failure came an obliteration of many people's life savings, which began to spread fear throughout the country that the banking failure would spread throughout the nation and become unstoppable. Similar to the conditions of 2008 – 2010, a combination of events were brewing between the 1920s and 1930s; 1929 saw the great stock market crash, and 1930 brought with it a new tariff and onerous tightening from the Federal Reserve.