Atlas Shrugged Comes to Detroit
In a perverse way, I’m glad that there are places such as Greece and Illinois. These profligate jurisdictions are useful examples of the dangers of bloated government and reckless statism.
There also are some cities that serve as reverse role models. Detroit is a miserable case study of big government run amok, so I enjoyed a moment or two of guilty pleasure as I read this CNBC story about the ongoing decay of the Motor City. Here are some excerpts:
Detroit neighborhoods with more people and a better chance of survival will receive different levels of city services than more blighted areas under a plan unveiled Wednesday that some residents fear may pit them against each other for scarce resources.
…[T]he boundaries of the 139-square-mile city aren’t receding. The plan also backs away from forcing the redistribution of what’s left of the population into areas where people still live and where the houses aren’t on the verge of caving in.
…Detroit’s population of about 713,000 is down about 200,000 from 10 years ago, according to U.S. Census figures, and has fallen more than 1 million since 1950. Some areas have fewer occupied homes than vacant ones.
…A 2010 survey found Detroit had 33,000 vacant houses and scores of empty, weed-filled and trash-cluttered lots.
How predictable, I thought. This is what happens when vote-hungry politicians adopt policies that reward people for riding in the wagon and punish the folks who are pulling the wagon.
Nearly Half of Detroiters Illiterate. Cause Apparently a Mystery.
A study funded by 10 major foundations reported yesterday that 47 percent of Detroiters are functionally illiterate–unable to read a bus schedule, fill out a resume, or make sense of the directions on an aspirin bottle.
When I checked back in 2008, Detroit public schools were spending $13,000 / pupil, which was then above the national average.
The report notes that half of the illiterate population has either a high school diploma or a GED. That’s beside the point. Virtually the entire illiterate population has completed elementary school, the level at which reading is theoretically taught. That’s seven years of schooling (k-6), at a cost of roughly $100,000, for… nothing.
The study mainly calls for adult education services to remediate the problem after it has occurred. Perhaps when the city’s illiteracy rate reaches 100 percent the recommendations will suggest replacing the failed k-12 monopoly with something more effective. Of course, by then who’ll be able to read them?
Terrorism and Security Systems
Terrorism presents a complex set of security problems. That’s easy to see in the welter of discussion about the recent attempted bombing on a plane flying from Amsterdam into Detroit. The media and blogs are poring over the many different security systems implicated by this story. Unfortunately, many are reviewing them all at once, which is very confusing.
Each security system aimed to protect against terror attacks and other threats involves difficult and complex balancing among many different interests and values. Each system deserves separate consideration, along with analysis of how they interact with one another.
A helpful way to unpack security is by thinking in terms of “layers.” Calling it security “layering” is a way of describing the many different practices and technologies that limit threats to the things we prize. (It’s another lens on security, compatible with the risk management framework I laid out shortly after the Fort Hood shooting.)
GM’s Last Capitalist Act: Filing for Bankruptcy Protection
It’s not as if we didn’t know this was going to happen to GM for a long time now.
GM’s bankruptcy announcement today is perhaps the least shocking news we’ve heard about the company in more than seven months. It might well be remembered as the company’s last act of capitalism.
If GM emerges from bankruptcy organized and governed by the plan created by the Obama administration, it is impossible to see how free markets will have anything to do with the U.S. auto industry. With taxpayers on the hook for $50 billion (at a minimum), the administration will do whatever it has to — including tilting the playing field with policies that induce consumers to buy GM or hamstring GM’s competition or subsidize its costs — in order for GM to succeed.
Thus, what’s going to happen to Ford? With the public aware that the administration will go to bat for GM, who will want to own Ford stock? Who will lend Ford money (particularly in light of the way GM’s and Chrysler’s bondholders were treated). Who wants to compete against an entity backed by an unrestrained national treasury?
Ultimately, if I’m a member of Ford management or a large shareholder, I’m thinking that my biggest competitors, who’ve made terrible business decisions over the years, just got their debts erased and their downsides covered. Thus, even if my balance sheet is healthy enough to go it alone, why bother? And that calculation presents the specter of another taxpayer bailout to the tunes of tens of billions of dollars, and another government-run auto company.
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