Detroit Streetlights - coming to a city new you? - image WXYZ
Detroit is the latest shining example of why the belief that the Government can “pay to fix” anything is nothing more than a fairytale. The fact that without private enterprise hiring workers, who both pay taxes (assuming the corporate tax rate is low enough and that small businesses are not saddled with massive regulations), which allows governments to run in the first place – seems to be lost on those who favor the theory that the government can continue to fund projects – even those deemed untouchable.
Detroit dimmed the lights on neighborhoods where crime and blight are the worst. According to Bloomberg News (via San Francisco Chronicle): “Detroit, whose 139 square miles contain 60 percent fewer residents than in 1950, will try to nudge them into a smaller living space by eliminating nearly half its streetlights.”. The article notes that other U.S. cities have shut off the lights to save money, from California, to Illinois (Bloomberg) – a possible trend for those cities that have previously relied on both Federal and State aid in the form of “Stimulus” funds.
The Mayor of Detroit, Dave Bing, has proposed a budget that eliminates and privatizes some of the cities essential services. According to the Detroit Free Press: the human services department will be cut, and transportation and lighting will be handled by private firms.. There is a slight snag to finalizing this budget, the Detroit law department suggested that the State owes Detroit revenue sharing and unpaid water bills from the fairground (Detroit Free Press) However, can the State afford to reimburse Detroit, considering the State depends upon income from taxpayers, not unlike the city and the Federal Government?
The Federal Government under the Obama Administration has made several promises to Detroit in the form of “Bailouts” (Taxpayer funded programs – with an increasing loss private sector jobs, and fewer tax payers).
In 2009 The Detroit Free Press, suggested that Mayor Bing would fix the situation of blight in Detroit – where thousands of vacant properties exist. The premise was to demolish the property and encourage new businesses and housing – some were skeptical that it would work, however, “ the Free Press noted: “Even so, Bing's got the bucks to start: He's been promised more than $20 million from the Obama administration.”
However, according to Crain’s Michigan’s incentives for businesses (a glossary) includes public funding and loans – or Government bailouts, at the State level, with little thought to the consequences of spending tax payers dollars to entice (not necessary secure) private business, that, essentially failed.
The Federal governments intervention in the Auto Industry (General Motors, American-Government-Union owned) also did little to improve economic conditions in Detroit. From: Open Market.org.
The federal government poured billions of dollars into Chrysler, which then went bankrupt and now is in the process of merging with Fiat. But Chrysler may never revive, thanks to absurdly generous compensation for the company’s union employees. The Obama Administration has refused to cut union wages substantially, though it had no compunction about ripping off the pension funds and other lenders who loaned money to Chrysler to try to keep it afloat. Even union members seem surprised by how little they were asked to sacrifice. (The Administration is also seeking to rip off GM bondholders to benefit the union).
Moderate Democrat Mickey Kaus, who reluctantly voted for Obama, notes that the federal bailout may yet fail because of Obama’s failure to reduce excessive labor costs:
“Before the deal, Chrysler’s UAW workers made $28 an hour. After the deal, they’ll make $28 an hour. They gave up a scheduled increase in wages, plus a couple of scheduled bonuses. That explains why Chrysler’s Belvidere, Illinois workers told TV station WIFR that ‘the plan is not nearly as drastic as they expected.’…. If Chrysler workers were paid, say, not $28 an hour instead of $24–still not bad–the firm might actually have a ‘chance for long term success’ through charging lower prices. But that wasn’t a sacrifice Obama was ready to ask (even if Belvidere workers were apparently willing).”
In addition to leaving General Motors and Chrysler saddled with excessive costs and union ownership, Obama harmed them by radically ratcheting up federal CAFE fuel-economy standards, which affect them more than their foreign competitors. 50,000 jobs could be lost. And his global-warming regulations will destroy countless jobs and cut “household purchasing power,” reducing auto sales and Chrysler’s chances of survival.
That fact-based op-ed treats the heart of the problem – a problem that is not only Detroit’s, but affects all urban areas in the United States – the Administrations belief that the Government will be able to do anything, Unions are reasonable and acceptable (See Wisconsin’s Recall of Governor Scott Walker for daring to institute a law designed to allow public employees an opt out of union participation), and that bailouts, from public to private (states and cities to individual unemployment compensation) somehow works. The problem, with over half the tax base in the nation gone, and companies seeking tax relief and relief from increased business regulations (Health Care Mandates to Green Energy Mandates – and costs associated) heading out of the country, or putting a hold on hiring, there is little funding to the Federal, State and Local governments. It is, in effect, trickle down government economics run amok.
The solutions are neither new, nor surprising: encourage private enterprise by reducing corporate tax rates, and excessive regulations – as it stands now – the United States cannot compete with other nations. Any form of welfare and or unemployment compensation (which is taxed) should include a requirement to either attend work training (college or school), and or work for the State (See FDR’s building of parks and infrastructure though “workfare”) - Make Union participation at any level, in any field, optional. In this wise, those employees working at an Auto Plant making $28/hr in union wages, might work alongside those non-union members making $24/hr – however, when the union strikes, and or goes into negotiation, those who are non-union do not suffer the consequences. Neither does the business who will continue to operate, and be able to continue to both union and non-union – thus saving the business, the tax base for both the City, State and Federal governments and perhaps, just perhaps, getting enough income to turn the lights back on.
Caveat on Unions: Not all unions are “bad unions”, there are times and industries which are hazardous to one’s health and a Union is necessary in order to keep wages even, and the job safe (even with OSHA) – however, those unions where one owns a master’s degree, or work in “white collar” jobs (i.e. government employees such as clerical staff, etc.), are completely unnecessary.
For the government to involve itself in private industry, no matter which side of the aisle one stands, is the worst economic decision made for the nation – it has been done repeatedly throughout our history, and it has repeatedly failed.
To recap: Private businesses, equal more taxpayers, which provide the Local, State and Federal Governments with enough money to continue to run effectively. The Governments (all combined) to do have any other source of income than the taxpayer – simple.
