Woodward Avenue

How does a rust belt city relaunch itself? How can the stakeholders of Detroit, Cleveland, or Milwaukee begin to reinvent their cities and get on a track that leads to greater prosperity, health, and educational attainment that can eventually result in opportunity and quality of life for the urban majority? 

The factors that led to Detroit’s crisis were extended and multiple — loss of manufacturing jobs, white flight, collapsing city revenues, sudden decline in the public school system, city government mismanagement and corruption, and state and federal neglect, to name several. And the crisis has extended over many decades. Tom Sugrue documents that the seeds of decline began earlier than the standard narrative — white flight was well underway in the 1950s (The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit). The 1967 uprising was a major punctuation mark in the process, but it was an effect as much as a cause of the decline.

So what can be done today? A key part of the puzzle is bringing good jobs back into the city. This is why there has been so much excitement about the decisions by Compuware, Quicken Loans, and Blue Cross/Blue Shield to relocate their headquarters back into the city. The impact is substantial — something like 10,000 jobs have been brought back into the city, with more to come. Along with the jobs comes a flurry of collateral developments — student interns who come to love the city, demand for housing, new restaurants and cafes along Woodward, and a significant multiplier of jobs associated with these new service businesses.

There is a lot of purposiveness in these business developments, with a good portion of civic-mindedness in the mix. These business leaders wanted to make a difference in the city of Detroit, and their decisions about where to locate their companies help to carry this out. There is a deliberate effort on the part of this group of new-economy business leaders to attract innovative companies to the corridor. Detroit has a long tradition of creativity and the arts. Business leaders want to extend this tradition in the direction of innovative high-tech startups that can take root in Detroit. The goals for the Madison Building restortation illustrate this goal — beautiful open-design space for innovative companies that should strike synergies in the coming years. Twitter opened a Detroit office in the building in the spring.

It’s not simply Michigan chauvinism to say that Detroiters are resourceful. This is an important resource for the future for the city. But the people of the city need some concrete things in order to turn their talents into success — jobs, healthcare, decent education, and better urban transportation.

A leading land use planner for one of the auto companies offered a theory about Detroit’s eventual recovery to me about ten years ago. His theory was that the key to success is the recovery of tens of thousands of professional jobs in the core of the city. At its peak in the 1950s he estimated that there were perhaps 150,000 such jobs in the city of Detroit, and this constituted an economic engine for the city through direct and indirect economic effects. At the low point in the 1990s he estimated that this number had fallen to perhaps 20-30,000 jobs — not enough to support the development the city needed. He projected that if the city could return to 80-90,000 well-paying professional jobs, almost all its other problems would be solvable.

The steps taken by major and small companies in the past five years to locate their operations downtown are a very significant step towards that goal. It seems likely that the three major relocations into the city have resulted in 8-10,000 jobs in the city, and these workers are adding a lot to the vitality of the city as well.

So that’s part of the reason why Woodward Avenue is a happening place today. There are appealing cafes along the street serving lunch to workers in the Compuware Building, there is Motown music blasting from an informal market across the street, and there is a sense of a lively urban environment. What will it look like in ten years?

Priorities for tax dollars

There is a very strong impulse in many state legislatures to cut taxes, no matter what the cost is to the state’s ability to provide essential services for its citizens.  The Michigan League for Human Services draws attention to the consequences of this impulse when it comes to the welfare of the children of Michigan.  MLHS is the publisher of an important report on the state of children’s welfare in Michigan, and this report is a really important contribution (link).

The Michigan legislature is proposing to speed up a reduction in Michigan income tax rates by a few months, resulting in a loss of tax revenue of about $90 million. This change will make only a very small difference for each individual Michigan tax payer, whereas these tax revenues could have made a large difference for a number of important public priorities.

Gilda Jacobs, president & CEO of the Michigan League for Human Services, comments on the “opportunity cost” that this decision creates for the children of the state — the things we give up by making this decision. “While this is being touted as a tax break, for most people it is not a decrease. Most of us will barely notice this change in light of the big increases that hit low- and moderate-income households the hardest starting in tax year 2012.”

To consider the public policy issue fully, it is necessary to ask a fundamental question: how else could that $90 million have been spent as base budget?  What is the opportunity cost of this policy change?

Here is a list of items that could have been funded for that amount, and the investment would have had a meaningful impact on the children of the state.

  • Implementing the governor’s Infant Mortality Summit recommendations to combat Michigan’s high infant mortality rate at a cost of just $16 million. According to Kids Count, Michigan is among the 10 worst states in the country with African American infants at triple the risk of white infants.
  • Expanding Healthy Kids Dental nearly statewide to the half-million Medicaid-eligible children who may otherwise lack access to dental care.
  • Sending 24,000 preschoolers to high-quality early education centers.
  • Restoring the Earned Income Tax Credit to 11 percent of the federal credit. It will drop to just 6 percent of the federal credit, down from 20 percent, starting in tax year 2012.

The Earned Income Tax credit has been a major issue for the MLHS because of the potential this program has demonstrated in addressing poverty.  It was one of the victims of the tax restructuring that took place in 2011 in Michigan, with significant negative consequences for poor families.

Any of these items would have a substantial impact on the welfare and life prospects of thousands of children in the state.  So how can it be considered rational to prefer to provide a tax break of $15 for millions of taxpayers rather than rejecting the change and investing the money in projects like these? 

It would seem that the answer is fairly straightforward: the policymakers do not assign a high priority to issues like infant mortality, kids’ dental health, or access to preschool education for poor families. The value of cutting taxes trumps the possible benefits that would derive from not doing so — even though the value of the tax reduction is negligible for the typical taxpayer.  It’s hard to see how this can be considered good policy.

Michigan’s recovery?

The Mackinac Policy Conference brings forward something new this year — optimism. The state of Michigan has been hammered in the past eight years by the upheaval of the auto industry and the national trauma of the global financial meltdown. Unemployment has been substantially higher than the national average, the city of Detroit has hemmorhaged deficits, and the state’s levels of support for higher education, K-12, and community health have plummeted.

The annual policy conference of the Detroit Regional Chamber of Commerce has reflected a lot of this bad news for the past eight years. This year, though, the mood seems to have changed. There is optimism being expressed that Michigan is on the road back to growth and a higher level of prosperity. Presidents of the University of Michigan, Wayne State University, and Michigan State University talk about the impact created by university research (about two billion dollars annually, producing lots of new discoveries and patents). The Governor talks about reform of government and a business-friendly environment thanks to several recent tax reforms, and talks about the importance of education at all levels. And business leaders, including Bill Ford Jr., talk about the recovery of Michigan’s businesses and innovative manufacturing. Michigan has the foundations in place for a more prosperous future. 

So how much credibility does this new optimism have? A few measures are certainly positive. The state’s unemployment rate is dropping to almost the national rate, about 8.5%. There has been a degree of jobs recovery, though still only a fraction of the 800,000 plus jobs the state has lost. Engineering and medical discoveries are finding their way into new businesses from Detroit to Ann Arbor to Houghton. The state’s budget is somewhat more favorable than in previous years, including a likely increase in higher education funding by several percent. 

And yet it is also true that several factors are unchanged or even worse. As the Governor mentioned, eight Michigan cities are “distressed,” with emergency managers or consent agreements in place. The inequities suffered by the state’s African-American and Latino populations in health, education, and employment continue unabated and often unnoticed. The unemployment rate in Detroit is astronomical, especially for young people. Municipal tax revenues have plummeted because of changes in state revenue sharing and across-the-board declines in property values. And the state still has a low rank when it comes to college educated adults. The tax reforms created by the Governor and Legislature were certainly business-friendly, but they were regressive in the extreme, with significant reductions in services for the elderly and the poor. And the Citizens Research Council frankly states that it isn’t possible to assess the net effects of the tax reforms on jobs and quality of life. 

So the interesting question for me is to consider how much of the currently more favorable trajectory can be attributed to wise decisions and plans by policy makers and business leaders, and how much is simply the result of a new roll of the dice in the national economy. So far I haven’t been convinced that there are high-octane strategies for growth, either nationally or regionally. There are some circumstances that clearly impede growth and economic recovery — corruption, unmanageable bureaucracy, predatory actions by powerful private actors, and cronyism, to name several. So addressing these frictions impeding economic development makes logical sense. Likewise, promoting education and talent is surely favorable to economic progress, and enhancing the infrastructure (roads, rails, bandwidth, airline hubs) surely helps too. But Michigan has done almost nothing in the second group and little in the first group. 

So once again, is there a basis for confidence in thinking we now have a set of policies that are steering us in the right direction? Is there a basis for optimism about the effects of our policies and priorities? I’m not so sure. 

It is interesting that the keynote speech at Mackinac was by Tom Friedman, presenting the main ideas of his current book, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back. And though he insists that his view is optimistic at the national level, it’s hard to square that with the substance of his argument. He argues that the global interconnected world requires constant re-creation of ourselves and our practices, especially in the economic sphere; and that the US is not rising to this challenge. This doesn’t really sound like optimism. 

The path I’d like to see our state pursue is one that respects the demands of social equity as well as growth, so all Michiganders benefit from the progress we seem at last to be experiencing. That will require more explicit choices than we’ve made to date. And it will require re-investment in social goods that have been reduced in recent years. 

The safety net in Michigan

Poverty in the United States has increased measurably in the past ten years, and this is particularly visible in the state of Michigan. (Here is a webpage provided by the Michigan Department of Human Services with some basic information on poverty in the state.)  State departments of human services and non-profit organizations alike are being stretched by the need for poverty-related services — food assistance, childcare, heating assistance, job training, and the like. So how good a job are we doing to ensure that poor people in the United States have reasonable access to the necessities of life?

In general, the answer to the question seems mostly to be — not a very good job. The amount of money available for services to the poor is under pressure in most state legislatures. The processes through which low-income people need to pass in order to apply for assistance are confusing and needlessly lengthy. And the “front doors” for providers are highly decentralized, so the potential recipient of assistance needs to conduct a lengthy search simply to find a possible source.

The United Way of Southeast Michigan is a highly capable social service agency that is genuinely committed to helping to improve the situation of Michigan’s poorest residents (link). Here is a UWSEM report on the status of basic needs of the population in Michigan.  The report is worth reviewing in detail.  One point stands out very starkly — a strikingly high percentage of the state’s population falls in the status of poor or near-poor.  The report provides a very legible description of the composition of the 40% of Michigan’s population who are “at-risk”:

This is a truly sobering statistic: two out of five residents of Michigan fall within the groups of the persistent poor, working poor, newly poor, and potentially poor.

One of the United Way’s current priorities is to do a careful review of the system of assistance as a whole in the state. Generally, their finding is that resources, agencies, and strategies are highly fragmented in the state, so it is easy to guess that the provision of services is somewhat sporadic and inefficient. More importantly, their analysis shows that over a billion dollars of federal assistance to individuals are left unused year after year — at a time when the need for assistance is greater than it has ever been.  (This report should appear on the UWSEM website sometime soon.)

It’s worth looking closely at the data compiled by UWSEM. Over $34 billion are expended on assistance to the poor in Michigan, with over 55% of the funds coming from Federal sources ($19.9 billion). The state’s own resources represent roughly half that amount ($9.4 billion).  Foundations and private resources make up the rest.  Second, these $34 billion are expended through a large number of state agencies — treasury, school aid, public housing, the department of human services, etc.  And finally, the funds flowing from these multiple agencies then re-aggregate at the level of the users in a variety of basic categories of need: workforce development, housing, family preservation, food, cash assistance, and healthcare.

There are several key conclusions that emerge from the UWSEM analysis. One is that this is a process that is plainly designed for providers and auditors, not users. The idea that the system of social services should be streamlined in such a way as to allow maximum access for eligible residents is clearly not the guiding design principle.

A second point is that the system is needlessly complex for the user. It should be possible to streamline services and application processes in such a way as to increase the impact of available resources for eligible people.

A third point is that it should be possible to use the Internet to significantly increase the accessibility and transparency of the system. It should be possible for the poor person to enter a single “portal”; enter his/her information into a database; and find out on one screen what programs and benefits for which he/she is eligible.

In short, it would appear that there are significant opportunities for public “safety net” providers in Michigan to increase the efficiency and reach of their services with some intelligent redesign of the delivery systems.  And we certainly need to make sure that the billion dollars of unexpended federal benefits find their way to eligible citizens.

(Here is a nice example of how universities and communities can work together to address the issues of poverty that their region faces (link).  This collaboration between Western Michigan University and various organizations in Kalamazoo, Michigan is aimed at providing easy access to data about poverty and well-being in Kalamazoo that can help guide programs and resources towards effective reduction of poverty.)

Taxes on business

What is a fair level of taxation for businesses in a state? How much should businesses pay relative to individuals in supporting the services provided by government? How should we even begin to answer this question?

The question is easier for individual taxation, since there are only a few possible alternatives: a flat rate income tax or a graduated income tax; more reliance on income taxes or consumption taxes; a tax system that attempts to shelter the most vulnerable in society or a tax system aimed at stimulating profitability and economic growth, ….  For individuals, the fundamental principle is clear: each individual should pay a share of the costs of government based on income, perhaps moderated by a graduated rate.

But with businesses the issues don’t seem as clear. Businesses in a state have a clear economic interest in the services provided by government, from fire and police protection, to preservation of the environment, to provision of a skilled and well-educated workforce.  Business should pay its fair share in supporting the necessary costs of the state; but what is a fair share? And what is “necessary” when it comes to state services?

The situation is even more complicated when we bear in mind that business activity is itself an important source of good for citizens. More business activity means more employment and income. More jobs and wages mean more demand for services and products of all kinds — and more income for people employed in those goods and service industries. Business disinvestment leads to significant hardship for citizens. A tax system that discourages business activity is harmful to the economic wellbeing of the state and its citizens. So business tax rates ought to be high enough to support a fair share of the costs of government, but not so high as to discourage business investment.

And the latter point in turn requires comparison with other feasible locations for business activity. If Michigan and Ohio assess business income at significantly different rates, we should expect some flow of investment from one to the other.

The state of Michigan is an interesting current example. Michigan’s governor, Rick Snyder, has proposed a major change in the structure of business taxes in the state. He proposes abolishing the Michigan Business Tax, enacted only a few years ago, and replacing it with a 6% corporate income tax that applies only to the largest businesses and corporations in the state. This reform is promoted as one that is needed to simplify the tax obligations of businesses and to improve the business attractiveness of the state for future investment, and it has been welcomed with enthusiasm by the business community.  (According the the Tax Foundation’s State Business Tax Climate Index, Michigan ranked 17th in 2010 and 2011 in the Tax Climate Index overall and ranked 48th on the corporate tax index, based on the existing Michigan Business Tax; link.)

Often tax reforms are put forward under the banner of “revenue neutrality” — the rules are changed and simplified, but the “before” and “after” rules collect the same amount of revenue. This reform in Michigan is distinctly not revenue-neutral. In 2009 businesses in Michigan paid $2.6 billion under the Michigan Business Tax. Sales taxes collected $8.8 billion, and personal income taxes collected $6.0 billion.  (These data are presented in a 2011 report of the Citizen’s Research Council in Michigan; link.)  In 2013 it is projected that the flat corporate income tax, when fully implemented, will collect only $749 million — a decline of over 1.2 billion dollars in tax revenues for the state compared to the $2.0 billion estimated under the Michigan Business Tax if applied in that year.  (These estimates are provided in a February 17, 2011 report issued by the Michigan government; link.) This amounts to a greater than 60% reduction in the taxes paid by businesses in support of the general fund.  And this shortfall is being addressed in the state’s fiscal plan through adjustments in the structure of individual taxes: pensions would be taxed for the first time and Michigan’s Earned Income Tax Credit would be abolished. In other words, a billion dollars of tax reductions for business are being paid for by sacrifices by pensioners and poor people.

So here is a question worthy of discussion: are Michigan businesses being asked to pay their fair share under the revised business tax policies? Is 6% enough? Were businesses significantly over-taxed under the Michigan Business Tax? Should the corporate income tax be applied only to the small subset of businesses in the state that qualify, or should it be applied more broadly? And is a 6% corporate tax rate competitive with other states?

Let’s look at the competitiveness question. It is broadly asserted by leading business organizations in Michigan that businesses pay too much taxes for the state to be competitive, and that 6% is about as high as the rate can go without losing investment to other states. But the facts appear to be otherwise.  The Tax Foundation provides annual data on corporate income rates by state (link). Here is the Tax Foundation data, ranked by the highest bracket.  (A number of states have a graduated rate, so small businesses pay lower rates.)

State corporate income tax rates (ranked by hightest bracket)
source: Tax Foundation
http://www.taxfoundation.org/taxdata/show/230.html
State Rates Brackets(a) Rank
Iowa 12.00% $250K 1
Pa. 9.99% $0 2
D.C. 9.98% 0 3
Minn. 9.80% $0 4
Ill. (c) 9.50% $0 5
Alaska 9.40% $90K 6
N.J. (b) 9.00% $100K 7
R.I. 9.00% 0 8
Maine 8.93% $250K 9
Calif. 8.84% $0 10
Del. (a) 8.70% $0 11
Ind. 8.50% $0 12
N.H. (a) 8.50% $0 13
Vt. 6% 8.50% $25K 14
W.Va. 8.50% $0 15
Md. 8.25% $0 16
Mass. 8.25% $0 17
La. 8.00% $200K 18
Wis. 7.90% 0 19
Nebr. 7.81% $100K 20
Idaho 7.60% $0 21
N.M. 7.60% $1M 22
Ore. 7.60% $250K 23
Conn. 7.50% $0 24
N.Y. 7.10% $0 25
Kans. 7.00% $50K 26
Ariz. 6.97% $0 27
N.C. 6.90% $0 28
Mont. 6.75% $0 29
Ala. 6.50% $0 30
Ark. 6.50% $100K 31
Tenn. 6.50% $0 32
Hawaii 6.40% $100K 33
N.D. 6.40% $50K 34
Mo. 6.25% $0 35
Ga. 6.00% $0 36
Ky. 6.00% $100K 37
Okla. 6.00% $0 38
Va. (a) 6.00% $0 39
Fla. 5.50% $0 40
Miss. 5.00% $10K 41
S.C. 5.00% $0 42
Utah 5.00% $0 43
Colo. 4.63% $0 44
Nev. 0.00% 45
S.D. 0.00% 46
Wash. (a) 0.00% 47
Wyo. 0.00% 48
Mich. (a)
Ohio (a)
Tex. (a)
Note: In addition to regular income taxes, many states impose
other taxes on corporations such as gross receipts taxes and franchise
taxes. Some states also impose an alternative minimum tax.
(a) Michigan, Ohio, Texas, and Washington do not have a corporate
income tax but do have a gross receipts tax with rates not
strictly comparable to corporate income tax rates. 
(c) On January 12, 2011, Illinois increased its corporate income
tax from 7.3% to 9.5%, retroactive to January 1, 2011. Illinois’s rate
includes two separate corporate income taxes, one at a 7% rate
and one at a 2.5% rate.
Source: Tax Foundation; state tax forms and instructions.

The 6% rate proposed for Michigan falls at the bottom end of this ranking; 35 states have higher rates, extending to 12% in Iowa; four states have a 6% rate; and nine states have a lower rate.  It would appear that a 7% or 7.5% rate would still leave Michigan in a competitive position when it comes to the corporate income tax.  This would result in an additional $200 million in revenue — and would permit significant dollars for the Earned Income Tax Credit.  So a larger share from business would permit a better outcome for poor and working people.

But the really difficult question is the “fair share” question: how should the costs of government be allocated across individuals and businesses? What principles of equitable contribution are helpful in addressing these issues?  And how would we try to judge whether Michigan’s corporate tax reform plan results in a fair allocation of the costs of government across individuals and business?

(Here is an interesting post by Donald Barrett and James Steele on “Are Corporations Paying Their Fair Share of Taxes?”.  In a word — no!)

Urban and metropolitan problem solving

 

The issues that almost all large American metropolitan regions and cities are facing are important and messy. Here is a short list: racial segregation, concentration of poverty, poor health and nutrition, poor schools, crime and violence, and disaffection of young people. These problems are important because they hold back the personal lives of millions of Americans living in poverty and degraded urban neighborhoods. And they are messy because they are multi-causal and interconnected. Each problem feeds into another, and it is generally difficult to say what kinds of policy changes and plans would lead to eventual improvement. These are “wicked” problems (link) that require planners to work with complex and unpredictable processes in an effort to improve Cleveland, Chicago, Oakland, Miami, Houston, Kansas City, and Detroit.

There is another reason why urban and metropolitan problems are hard to solve — the lack of political will to seriously address the problems in a long-term and sustained way. State legislatures often have an anti-urban bias. Regions often embody conflicts of interest between suburbs and city. Jurisdictions are often more concerned about their own narrow interests than in finding workable regional solutions. And the Federal government often fails for decades to mount serious and realistic urban strategies. So the result is often stasis — nothing happens.

One aspect of the challenge is the availability of timely, reliable data about a region’s health and performance. City governments collect a lot of data about health status, land use, and crime; but they are often reluctant to make their information available to researchers and the public. Foundations and individual researchers undertake studies focused on one problem or another; but often the reports are difficult to find and difficult to compare.

So we might hypothesize that the situation would be improved if there were an active, well-resourced clearinghouse for regional data from a wide range of sources: census, municipal departments, academic studies, land use surveys, and environmental surveys. Ideally these data sets would be managed by a professional staff who are able to integrate the various sources into a query-based GIS system, and ideally the data sets themselves would be publicly available (subject to appropriate privacy conditions). this kind of regional data warehouse would not directly solve the problems the region faces; but it would give a clear understanding of the scope and distribution of the problems that need to be addressed; it would provide an empirical base for proposed policy solutions; and it would provide a baseline for eventually evaluating the policies that are adopted.

Fortunately, there are good examples of exactly this kind of effort underway in various regions around the country. One such effort is underway at the Community Research Institute, part of the Johnson Center for Philanthropy at Grand Valley State University in Michigan (link). The Institute focuses primarily on several counties surrounding Grand Rapids, but it is also preparing to expand its coverage to other parts of Michigan. With a foundational database linking US Census data geographically, the Institute attempts to provide geographically linked data down to the neighborhood level. Here is an example of a map of the teen birth rate in neighborhoods of Grand Rapids (link). The Center has developed a general tool, MAPAS, that can serve as a platform for integrating and presenting a wide range of social data sources (link).

 

 

A similar effort is underway in the Detroit metropolitan region, under the rubric of Data Driven Detroit (link). D3 is attempting to create this kind of publicly accessible, spatially presented data warehouse for the city and the region, and the early results are promising.  Here is a report on a recent study conducted by D3 on housing stock in Detroit (link).

So how can data sources like these be folded into good planning efforts for urban and metropolitan progress? The city of Detroit under the leadership of Mayor Dave Bing is just beginning an important planning effort that ties into the need to adjust the cityscape to the dramatically smaller population it now contains. This effort is called the Detroit Works Project (link), and it is explicitly committed to data-driven decision making and planning.

Another effort that is underway is the Integration Initiative within Living Cities (linklink). Detroit is one of the cities that has been funded within the program.  Here is how Living Cities describes the national project of the Integration Initiative:

The Integration Initiative builds upon Living Cities’ 20-year history of investing in cities. It acknowledges both the power and limitations of the neighborhood as a lever for change and seeks to drive a broader perspective that recognizes the role systems and regions must play in securing economic opportunity for low-income people.

The Integration Initiative will provide at least $80 million in grants, loans and Program-Related Investments (PRIs) to five regions to help them tackle the greatest barriers to opportunity for low-income residents, including education, housing, health care, transit and jobs. Living Cities and its members are making a total investment of $15 million in grants, $15 million in PRIs and $50 million in commercial debt. PRIs are flexible, low-cost loans provided at below-market rates to support charitable activity.

In order for a project like this to succeed, it needs to be based on solid empirical data.  It is crucial for the progress of metropolitan Detroit, and other cities around the country, that the region succeed in creating a unified regional data source.

 

Opportunity index

It would be very interesting if we had something we might call an “opportunity index” that could be applied to young children to estimate their probability of later success in life. The idea would go along these lines: Take some measure of adult success — perhaps graduation from college or success in attaining a skilled job or career by the age of 30. Then identify a series of societal developmental factors that enhance the probability of the outcome. Finally, construct an index of these factors for each child that estimates the overall likelihood of success for that child. The logic is analogous to identifying risk factors for heart disease: given this set of factors, the individual’s likelihood of O is p.

The positive opportunity factors might include things like this:

  • Quality of schools
  • Reading level at grade 5
  • Presence of caring adults and mentors
  • Quality of family environment
  • Adequate nutrition
  • Adequate housing
  • Adequate family income
  • Access to healthcare

There are probably redundancies here; public health professionals and education specialists would need to chime in. But suppose we’ve got some set of factors that can be scored 1-5, and suppose the index aggregates the factors to an overall estimate of probability of success. Maybe it goes along these lines: children with low scores in all factors (1) have only a 20% likelihood of success. (I.e. some children survive even crushing adversity; but it is only a small percentage who do.) Children with a 3 score have a probability of success of 75%. And children with the top scores have a probability of success of 95%. (I.e. students with good schools, high reading levels, great families, and affluent circumstances are almost certain to succeed.)

Just supposing we had such an index, what would it tell us when we applied it to a large population of children? The index collects societal factors that influence the child’s likelihood of success, and the aggregate index is intended to correspond to the overall likelihood of success. So looking at the distribution of the likelihood of success over a population would be sort of a CT scan of the opportunity structure that is presented to children in different social locations: affluent suburb, poor inner city, declining suburb, farm community, … And we could then look at the index as a way of measuring “opportunity equity.”

My suspicion is that the result of this thought experiment would be pretty shocking. The factors that individually contribute to success are likely to covary by neighborhood, income, and race. It is therefore likely that whole schools full of children are likely to have similar scores. This suggests that there are gross inequalities of probability of success by race and poverty status. And this would highlight what is really a glaring source of injustice in our country: the likelihood of life success varies enormously by race and affluence.

Further, since the factors mentioned here are external social factors which are simply presented to the children, there is no sense in which we could maintain that these differences derive from things the child is responsible for. So, in other words, these gross inequalities of opportunity and outcome are fundamentally unjustifiable.

I’m led to this set of thoughts as a result of spending some time with young people in Detroit. The high school and college graduates I’ve been acquainted with display a remarkable set of talents and aspirations. They are on their way to success in whatever way we choose to define that term. And yet their own stories demonstrate what a difficult road it has been for them, and how many of their peers have been left behind. Fewer than 50% of Detroit school children go on to graduate from high school. Violence, hunger, homelessness, indifference, and illiteracy have prevented so many of their brothers and sisters from achieving the same kind of success. These are system characteristics, not individual failings. And these are the objective obstacles to opportunity that simply must be eliminated.

Truth and reconciliation commissions

When does a society need a process of “truth and reconciliation” along the lines of such processes in South Africa, El Salvador, and Argentina?  Here are some recent examples of truth and reconciliation processes:  the fate of the “disappeared” in Argentina (link); Indian Residential Schools in Canada (link); Korean War civilian casualties (link); Liberian civil conflict (link); lynchings in the US South (link); and, of course, the Truth and Reconciliation Commission in South Africa (link).

The general theory of TRC is that a society is sometimes grievously divided over events and crimes that have occurred in the past, and that honest recognition of those crimes may lay a foundation for reconciliation within the society. Here is a summary statement of the purpose of a Truth and Reconciliation Commission from the South African Ministry of Justice:

… a commission is a necessary exercise to enable South Africans to come to terms with their past on a morally accepted basis and to advance the cause of reconciliation.

But what more can we say about what facts might trigger the need for a TRC process?

First, such a process is only invoked when there is a serious history of injustice within the community, leading to a situation in which one group has been badly treated by other groups or powerful institutions.  The stakes need to be high for current members of society in order to justify establishing a TRC.

Second, a TRC process seems to be most needed when the consequences of the past injustice persist into the present: the bad things that happened in the past continue to burden some groups in the present.

Third, there is an implication of abiding resentment and rancor within the current population. The injustice of the past continues to be a source of emotional division between members of the relevant groups. This is the reconciliation part of the agenda: by honestly confronting the facts about the past injustices, the groups subject to this treatment may be in a better place to resolve their rancor. And more practically, honest recognition of the past may lead to concrete steps in the present to restore the interests and rights of affected groups.

Fourth, there is a common feature of violence and subjugation in the instances where TRC processes have been invoked to date: pogroms, mass killings, lynchings, and other forms of inter-group violence.

So what are some important examples of historical circumstances where TRC is called for? There are many:

  • The expatriation of French Jews by the French government into the hands of the Nazis, leading to the deaths of thousands of people from this community.
  • The Rwandan genocide.
  • The Argentine military’s policy of “disappearing” large numbers of its opponents, involving secret imprisonment, torture, and murder.
  • White violence against black people in the American South, enforcing white power through lynchings, shootings, and violent intimidation.
  • Organized ethnic cleansing and mass murder in Croatia, Bosnia, and Slovenia.
  • The fact of slavery as practiced in the United States through Emancipation.
  • The crimes of death squads in El Salvador in the 1980s, including a degree of US support and involvement.
  • Robert Mugabe’s use of ZANU-PF paramilitary thugs in Zimbabwe to maintain his political power.

Here is the immediate question of interest in this posting: how do the facts of northern race relations fit into the parameters of truth and reconciliation?  In the Detroit area the Michigan Roundtable for Diversity and Inclusion is calling for a Truth and Reconciliation Commission to honestly examine the history of race and residence in the region (link).  The Roundtable states that —

The establishment of a Truth and Reconciliation Commission, inspired by the process that took place in South Africa, will allow us to develop an appropriate understanding of past injustices and to envision constructive remedies to create a new regional culture of fairness, equal opportunity and prosperity.

(Here is a link to the Facebook page for the organization in which the initiative is launched.)

So let’s ask the crucial question: are the patterns of racial segregation and inequality of opportunity that are unmistakably involved in most US large cities an appropriate cause for a process of truth and reconciliation?

In many ways the answer appears to be “yes.” Urban segregation was and is a source of massive injustice for black Americans.  It embodied a quasi-permanent pattern of inequality of opportunity and outcome on African-American citizens.  It was the result of specific but often hidden social practices that embodied a pattern of white privilege.  And these practices sometimes involved actual and threatened violence.  So entrenched discrimination and segregation constitute social harms that meet most of the criteria mentioned above, and the truth about the underlying mechanisms is not widely known.

In short, most honest observers would probably agree that the history of racial segregation in Southeast Michigan reflects serious injustice and continues to inflict harms on people in the region today.  These harms include disproportionate levels of poverty, unemployment, inadequate education, and differential health outcomes.  And many would agree as well that social injustices of this magnitude need to be addressed openly and honestly.

The map of the Detroit metropolitan area below represents a measure of “neighborhood opportunity” across the region.  It is published in an important report, “Opportunity for All,” by john a. powell and the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University (link).  What it documents in a very visual way is the current effects of past and present practices of residential segregation: the areas of high African-American population line up very precisely with the areas of low “neighborhood opportunity”.  (Here is a keynote address by john a. powell to the Michigan Roundtable for Diversity and Inclusion (link) that lays out the data in great detail.)

So a sustained and honest effort to uncover and disseminate the historical causes of these patterns of racial segregation in the region is a positive step forward.

What is perhaps more difficult to answer is the question of efficacy.  Do these TRC processes actually work?  Do they succeed in changing attitudes in the populations in which they operate?  Do they help communities develop more harmonious and collaborative approaches to the problems they face?  And does “truth” lead to “reconciliation” in a significant number of cases?  The Michigan Roundtable conducted a survey of racial attitudes in Michigan in 2009, and one question in particular stands out.  In 2009 56% of residents said that we will have racial equality “in 100 years” or “never,” compared to 48% in 2008.  In other words, well over half of all Michigan citizens despair of achieving racial equality within five generations.  And 68% of African American citizens in Michigan expressed the same lack of hope.  We need to do better than this at achieving real racial equality; the question is, whether the proposed Truth and Reconciliation Commission can help us move forward in practical and effective ways.

More on jobs and people in Michigan

Olivier Blanchard and Lawrence Katz did an important empirical study of regional adjustment to employment shock in 1992 (link). Here is their central conclusion:

“We have shown that most of the adjustment of states to shocks is through movements of labor, rather than through job creation or job migration.” (54)

In other words, they find that the US labor market is fairly well integrated, and an extended period of unemployment and low wages leads workers to seek new opportunities in other regions. (Here is a recent book by Katz and a collaborator; The Race between Education and Technology.)

What implications does this have for Michigan? Let’s say that Michigan’s unemployment rate will adjust to approximately the national rate by 2020, and that the national rate will recover to 6% by then. This implies 6% unemployment for Michigan, compared to 14% today. Let’s assume that less than half of the recovery comes from new and imported jobs. What does this imply for out-migration and population loss for the state?

The arithmetic is straightforward. There are currently about 4.2 million jobs in Michigan and 681,000 unemployed workers, for a labor force of about 4.9 million. (Here is a page of data from the Bureau of Labor Statistics for Michigan; link.) What would it take to bring Michigan’s unemployment rate down to 6% by 2020? Here is one solution: 150,000 new jobs and 250,000 out-migrants from the labor force. And assuming that each worker has one dependent on average, this means a loss of about 500,000 people from Michigan’s current population of about 9.9 million–for a total population of 9.4 million in ten years.

This is a significant but not overwhelming loss of population — about 5%. And the number of jobs required on this scenario is moderate and achievable — 150,000 new jobs in ten years. This amounts to about 4% jobs growth per year.  We can make some educated guesses about the demographics of the population that leaves the state — they are likely to be young, they are likely to have children, and they are likely to be better educated than the general population. So the economic and social impact of this exodus is likely to be greater than their 5% share of the general population. But all of that conceded, it would appear that there is a reasonably achievable pathway for Michigan to dig itself out of its current crisis.

So let’s get serious about preparing the ground for a healthy recovery; let’s enhance K-12 education, extend the reach of university attainment, improve the quality of life in our cities, and get serious about redesigning our state’s fiscal system.

Michigan’s population loss

Earlier posts have raised the possibility that Michigan’s jobs crisis will lead to significant population loss (link, link, link).  The basic idea is this: Michigan has lost more than 800,000 jobs since 2002.  Its population in 2002 was about 10 million.  The current unemployment rate in the state is about 15%, or just under.  In order to bring the unemployment rate back to the 2002 levels (~6%), roughly 800,000 jobs need to be created; or else the working population needs to decline by about that much.  Assuming one dependent for each worker, that amounts to a loss of about 1.6 million people.  Other combinations are possible; create 400,000 jobs and only 800,000 Michigan residents would leave; etc.

So what is the situation of out-migration today?  Here are some recent reports over the past twelve months:

  • Detroit News 4/2009: Eight-year population exodus staggers state (link)
  • AnnArbor.com: 89,844 residents lost 2005-2008 link
  • CrainsDetroit 12/23/09: population falls below 10 million; low birthrate and high out-migration responsible link
  • Michigan State University report on population loss 12/09 link
  • Toledo Blade: Michigan is tops in 1-year population loss 12/09 link
  • Detroit Free Press: Rochelle Riley, City’s rebirth at risk over lack of births link
  • Data Driven Detroit: data sources on population in Detroit link

And where are Detroit metro families going?  Here is a map Forbes published (link) showing the destinations in 2008:

Notice that almost all the lines are red, indicating out-migration.  Compare that with the pattern of migration for Seattle:

And Chicago:

In other words, a significant amount of out-migration has already occurred in Michigan, and there is no indication that this process will slow down.

In fact, some observers have argued that Michigan’s population losses have been less than expected in the past 18 months because of the generally bad economic conditions in other parts of the country (and because of the difficulty of selling a house).  But if this is a factor, then we should expect an increase in out-migration when job creation takes hold in other parts of the country.

There is another worrisome part of this story: the fact that the best-educated and most talented people are likely to be the first to go.  They are nationally competitive with skills that can bring value to employers in other parts of the country; so population loss is likely enough to be talent-drain as well.

It is hard to find any political or business leader in the state of Michigan who believes that it is possible to create 100,000 new jobs a year in the state over a prolonged period.  This seems to imply chronic high unemployment in the state for a very long time, with all the features of poverty, poor health, and low quality of life that comes along with this scenario.

So is there a different possible future for Michigan that assumes a different paradigm: a smaller population; smaller cities; but a more robust and diverse economy and a higher overall standard of living?  Is it time, perhaps, to be planning for a smaller but more prosperous and healthy state?

There are many serious challenges that this transformation would create.  A declining population implies a declining tax base; so state and municipal revenues would decline as well.  School systems were built for a certain level of capacity; take 15-25% of the children out of a school system and you have a funding crisis in the schools as well.  Detroit’s Mayor Dave Bing is grappling with the need to consolidate the land area of the population served by the city of Detroit, in order to achieve a balance between resources and needs.  And, of course, the state would continue to lose representation in the House of Representatives.  So designing a strategy for “smaller, healthier, wealthier” is not simple.  But it may be time to begin thinking along these lines.

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