Go check out my blog at: www.blogspot.com for more articles and commentary. I recently watched Michael Moore’s “Roger & Me” which chronicled Moore’s many humorous attempts at gaining an interview with then General Motors CEO Roger Smith. The documentary depicts Smith’s total incompetence and irrational mindset in managing the fast-declining auto giant. Along the way we get to see the various laid-off employees being evicted from their homes. Even back then in 1989 it was clearly obvious that Flint, Michigan and Detroit, by extension was in a state of decline. Trash-filled streets, boarded-up homes and businesses-it was all there for the world to see. Was it always like that? What factors contributed to these cities-Detroit and Flint-becoming ghettos? The most obvious factors responsible for the creation of ghettos are: Rent control, welfare, zoning laws, non-diversified economies, and questionable programs such as the Community Reinvestment Act.
I associate the word “ghetto” with cities like Philadelphia, Newark, Baltimore, Detroit and Cleveland. Clearly these places have seen better days. White flight was usually the reason given for these cities’ falling into disrepair. It was theorized that white folk fled to the suburbs to escape the soaring crime rate, the noisy neighbors and the lack of a suitable golf course. When the pattern is reversed gentrification occurs-white folk swoop in to the slums and buy up all the properties for pennies on the dollar and in the process force out all the poorer tenants who cannot afford the higher rents. In this respect rent controls serve to limit reinvestment and improvement upon residential properties. A landlord would be foolish to spend sizable funds maintaining and upgrading property knowing that he could not recoup his investment as a result of rent controls. Where rent controls are in place properties usually fall into disrepair.
Public welfare, if misused, can cripple the individual’s desire to attain a better education and a higher station in life. In Great Britain, for example, whole families for several generations subsist entirely on government subsidies. Apparently there is no stigma attached to being unemployed and shiftless. Several years ago I took a trip with a friend to New Orleans (before Katrina)a few days before Mardi Gras. We drove around and saw all the touristy destinations-the mausoleums, the French Quarter, the bars and restaurants… My friend then casually informed me that practically everyone in Louisiana was on welfare, corrupt, and constantly scheming for a way to cheat the government, if not their fellow citizens. I was astonished by his comments but unfortunately they were corroborated by other long-time residents who I knew casually. The universal advice, however, was to never, under any circumstances, trust the Louisiana Police.
The reason that is usually offered for Detroit’s descent into poverty is its over-reliance on the auto industry for economic stability. The fault lies at the feet of the urban planners and politicians. Any high-school graduate is smart enough to know not to place all of his eggs in one basket. The obvious answer here is diversity in the commercial sectors-it is all very clear in hindsight. The city leaders in Detroit should have offered tax breaks to other promising industries, similar to the way being offered to hybrid automobiles and solar panel manufacturers. The economic incentives must be designed to function like an economic magnet that draws in new industries. In this manner a city can create a brain pool and it can develop a multitude of areas where it demonstrates expertise and excellence. We saw this when all the pc makers and various dot com startups flocked to San Francisco-all of a sudden it was the place to be if you wanted to raise capital and exploit the power of the internet. The local economy flourished, tax revenues increased and everyone was basically happy (well, at least until the dot com meltdown).