The moral of the story:
Even the best tax regimes are cannibalistic: Every tax is an incentive for the taxpayer to relocate to a more friendly jurisdiction. But tax rates are not the only incentive: Google is not going to set up shop in Somalia. Healthy governments create conditions that make it worth paying the taxes — which is to say, governments are a lot like participants in any other competitive market (with some obvious and important exceptions). The benefits of being in Detroit used to be worth the costs, but in recent decades millions of people and thousands of enterprises large and small have decided that is no longer the case. It is not as though one cannot profitably manufacture automobiles in the United States — Toyota does — you just can’t do it very well in Detroit. No one with eyes in his head could honestly think that the services provided by the city of Detroit and the state of Michigan are worth the costs.
The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit? This is not angels-dancing-on-the-head-of-a-pin stuff. People do not invest in firms, industries, cities, or countries they do not trust. Corruption makes people poor.
And here are some recent graphic images of the results, from (Michigan ex-pat) Amy Alkon. As went Detroit, so will go the country, if the Democrats get their way on a national level, as they did in Detroit.
[Late-morning update]
“Detroit is liberalism’s Nagasaki.” Except there’s nothing “liberal” about it.
FYI, my (major) corporation’s web filter thinks the linked site is “porn.”
Sorry, should have been more specific. The second link to the Detroit images.
Well, Amy will find that annoying. She provides relationship (and other advice), but it’s certainly not a porn site.
Perhaps she shouldn’t talk about drag queens in her content?
In the Motor City, they call those shots of decaying Detroit “ruin porn,” but the only sexual gropings shown or described are those of TSA agents on passengers. And I find that as annoying as hell that they’re blocking my site. Hear that from time to time about these dumb nanny filters. Like any kid over 6 can’t hack through that stuff.
Everyone seems to be hung up on taxes and on tax rates. HotAir.com has a link to this http://www.city-journal.org/2012/22_2_chicago.html talking about what is going wrong (rapidly) in Chicago.
The unions are partly to blame, but the article reminds us that Mayor Rahm’s precessor gave away the store for labor peace as part of a failed maneuver to get the Olympics. Public employee salaries and pensions are partly to blame, but the article claims that Illinois as a whole ranks low on per capita public employment. Taxes may be to blame, but apart from high taxes in Chicago, Illinois tax rates rank low among the states, but that may have to change if they are going to pay their workers.
The article concentrates blame on what many in the Right/Libertarian/Conservative/Tea Party Blogosphere call “The Chicago Way”, especially in connection with claims that President Obama is governing according to that model.
The article explains in lucid detail what I knew as a child from my parents and grandparents explaining the aldermanic system. The article, however, explains it better than I ever could.
I knew about the local alderman being the neighborhood “fixer”, the go-to person if there was any kind of problem in your neighborhood, but I never understood the mechanics of how much power an alderman had and how that perpetuated the one-party political system. It seems that the alderman is the city government “interface” with the wards or city neighborhoods, much like U.S. Senators are the interface between the Federal Government and the states, and like U.S. Senators at the state/Federal interface, a Chicago alderman wields both formal and informal power at the neighborhood/City Hall interface on a scale not practiced anywhere else.
Again, I knew about this growing up in Chicago, and all manner of stories and snarky Mike Royko articles joked about it at length, but this article really explains “The Chicago Way” in a concise and detailed way, and we among the Right Blogosphere would really benefit reading this rather than simply going on our own internal model of what we thinks it means.
The article is pretty much telling us that Chicago has a political system that comes closest to a lot of places in the Middle East and that political system is accounting for a lot of the hurt coming down on Chicago. It is not as simple as “public employees in Chicago or Illinois are coddled” or “Illinois is doing the stupid thing and raising taxes whereas Wisconsin is lowering (its higher) taxes.”
The claim is made, often in off-hand you-have-to-be-naive-not-to-know-it-isn’t true, that the Obama Presidency operates according to The Chicago Way, many of us thinking we know the Chicago Way is a matter of the style of bluster and intimidation the Obama people avail themselves of, without knowing what The Chicago Way really is, whether Mr. Obama practices or even can practice it at the national level.
For example, charges of political connections and cronyism are leveled at Solyndra. But is Solyndra really an example of The Chicago Way? Maybe the connection between alternative energy and political support for Mr. Obama is that Conservative business people don’t believe ideologically and philosophically in “Green Power” and hence hadn’t applied for the grants?
It is easy to throw around the charge about Obama-as-Chicago, but maybe it would take more life experience and contact people to know if the Green Power agenda is corrupt in the style of Chicago Politics, if it merely reflects incompetence with a strong sense of Left-Liberal “magical thinking” about the state of solar and wind tech, or if Solyndra (and others to yet happen) are the result of simple bad luck, of China throwing everything in subsidy into its solar and wind industry in a mercantilist bid to grab market share.
If there is an element of The Chicago Way in the Obama Presidency, it is helpful to better understand the reality on the ground in Chicago and whether Mr. Obama is practicing The Chicago Way, or maybe Mr. Obama is engaged in a failed cargo-cult simulation of The Chicago Way, because for him being an outsider, maybe even he doesn’t understand Chicago.
And before we start chanting taxes, taxes, taxes, unions, unions, unions, moochers-and-looters, moochers-and-looters, moochers-and-looters, maybe it would serve our cause to understand other factors contributing to the bad business climate in Chicago. As I said, the article I referenced was linked by HotAir which is one of the prime blogosphere sites, but the article seems to support some of our positions without the author being a card-carrying Right Blogger, and I highly recommend it.
Very nice article. I brings to mind a conceptual failing (of both conservatives and liberals in varying ways and degrees), that local control is good, and that power should be concentrated at the local level. Going back to the concepts of the framers, all concentrations of power, if unchecked, can lead to trouble, and each locality seems to have had a free hand in building power structues without reference to a consistent and proven model. A city councilman is just as likely to be a corrupt, power-mad idiot as any senator or EPA appointee, but there are fewer checks and balances at the local level.
My city is run by a pro manager. The council selects a purely ceremonial mayor from among themselves, but they function more like a board of directors. It is also a contract city, owning few “public” services of its own.
Obviously, my town never makes the news — that’s a good thing.
I can assure you that your town’s form of government is just as susceptible to corruption and mismanagement. My town (in the Chicago suburbs) has the same form of government as yours, and sadly, we regularly “make the news”.
Local control is good unless it includes outside money. It’s a lot easier to throw the goons out when everybody knows who they are and they don’t have enough [of other people’s] money to buy everyone off.
Local control isn’t necessarily good, which I think is a blind spot for a lot of people. A Greek city-state could be every bit as tyrannical as the Roman Empire, even though it was just “local” government.
“That government is best which governs least,” should be the operating principle at all levels. In most places local government is content with being in charge of sidewalks and stoplights. In other places (liberal cities) too many voters think local government should be making the decisions that state and federal government won’t, like what you’re allowed to eat, where you’re allowed to smoke, where your coffee beans have to come from, whether you can use a plastic shopping bag, and who is allowed to operate a hot dog stand.
Those are the voters who look at the Constitution’s restrictions on federal and state government and see a power vacuum that should be filled by their mayor, city council, and a host of powerful local government agencies waiting to be born. Those are the voters who stive to elect people to control city residents and make sure all the neighbors are making the right decisions and that local businesses are properly regulated and supervised. Those are the voters who are happy to see their local governments bloat, with a huge staff of city workers overseeing every aspect of city life.
Once any level of government is so empowered, corruption and dysfunction inevitably follow, and it can be more insidious at the local level because things there are most often done at the level of rulings and permits, often on a case-by-case basis. So instead of your industry group lobbying Congress, you have to suck up to some folks at city hall so they’ll let you open a bar in the building you just lease. If you don’t, your fate will be decided by some pain-in-the-ass busibody who thinks the area should be devoted to dance studios, or by a city councilman whose nephew wants to snap up the same location, or by a city official who thinks their cushy job at the permit office demands the rejection of a percentage of business permits, otherwise why have a permit office at all?
The only upside to the situation is that it’s very easy to vote locally with your feet, and people in Chicago, Detroit, and California are doing just that.
Illinois tax rates rank low among the states.
Here is the referenced report. Look at it Paul. IL went from 16th to 28th in ONE year. A change that dwarfs all other states. What do you think 2013 is going to show? Do you think businesses that are there now are guessing at it? Do you think ANY business that would be stupid enough to consider moving there would look at that chart and think twice?
Maybe the connection between alternative energy and political support for Mr. Obama is that Conservative business people don’t believe ideologically and philosophically in “Green Power” and hence hadn’t applied for the grants?
Paul, ideology and philosophy have nothing to do with it. It’s basic math. The numbers DON’T. ADD. UP. The key words in your quote above are “business people”. They generally are able to do the math. Which is why companies like Solyndra take the money up front.
Hey, don’t worry, Detroit is doing just fine.
Detroit is just pinin’ for the Fjords.
,,,or mabey pinin’ for GM….
The article has so many blatantly wrong or misconstrued arguments it is hard to know where to begin. There are so many fallacies… The countries with the longest tradition in Europe of having democratic socialist environments are the ones which are actually doing better. For example Sweden has a budget surplus and very low government debt. Then the author puts Germany in a separate category like they don’t have a democratic socialist tradition! Ludicrous. Then there’s the “Catholic crisis” argument which doesn’t apply neither to Greece (they are Orthodox) nor to Iceland (which is Protestant). Luxemburg and the Czech Republic are supposedly Catholic and are doing fine in economic terms. Spain had a low government debt as well (lower than the one in Germany or the UK). The problems in Spain started when the government bailed out insolvent private banks. One could argue that the main cause of the crisis was the historically low interest rates which caused housing bubbles. But none of the countries of the EMU have anything to do with the interest rates which are set by the ECB. Much less the smaller countries in the EMU which have little financial leverage to influence ECB policy. If they did there would have been no need for IMF bailouts the ECB would have just devalued the Euro.
The crisis in the peripheral countries of the EU is reasonably simple. With the enlargement to the East countries in the EU which depended on low labor costs to compete (e.g. Greece, Portugal, Spain, Ireland) found themselves competing against countries like the Czech Republic, Poland or Romania which had much lower labor costs and in several cases more well educated populations because of Soviet educational system influences. Many of the countries in crisis now have had historically terrible education systems so it is hard to justify paying them more to do the same. Another issue was that when the trade barriers with China were lifted these countries were the ones which suffered the most because they were the ones producing low margin labor intensive tasks. The only thing which could grow was the housing market and hence the bubble. For some reason the trade barriers for automobile imports were never lifted in the EU so there is little surprise when Germany or France are fairing better in the current environment than some of the peripheral countries which have no industry of the sort.
The US auto industry suffered from chronic under investment in new technologies or manufacturing methods, plus horrible mismanagement, so it is unsurprising that it is fairing so bad in the current market. One example is that the German division of General Motors was producing better engines (more efficient and cheaper) than the US division yet they were never used in the US. As for Detroit the situation is getting so ridiculous we may come to be close to the environment in the RoboCop movie. I suppose you can still get your 6000 SUX doing 8.2 MPG so everything is fine…
Ah yes, let’s talk about the great success of Saab! Oh wait…
Mr. Milenkovic –
“Conservative business people don’t believe ideologically and philosophically in “Green Power” and hence hadn’t applied for the grants?”
No. Conservative business people don’t believe in “Green Power” because for the most part – it doesn’t work, can’t work and never will work for extremely basic physical reasons such as, for example, the fact that taken as an average over the year the absolute maximum proportion of the time the Sun is in the sky (and visible) is 50%. And even when they are working, the power density of ground solar and wind power is appalling – for equally basic reasons.
I was watching “Question Time” on the BBC last week and one of the panellists pointed out that on that particular day, the whole of the UK was in a fairly stable high-pressure zone, which meant that every single one of the bird-and-bat-killing pieces of expensive, noisy, ugly junk known as wind turbines was inoperative. Every single one.
There are renewable power-creation methods possible (OTEC and wave power being among them, both of which have working pilot plants) but for some reason best known to themselves the watermelons don’t like those. Perhaps because they might actually work, and produce affordable energy?
OTEC and wave power have been researched since like the 1950s (well they were being researched even before that but the effort was less intensive). So far these forms of energy generation have proven to be uncompetitive and too expensive.
Wind power is actually cost effective as long as you use modern windmills in areas with a large wind resource. Solar is starting to get cost competitive but installation costs and inverters are still a problem.
Look at the numbers for Europe:
http://www.tobiasbuckell.com/2012/06/11/solar-pv-development/
The growth has an accelerating curve in their.
Those aren’t numbers Bob. They’re monty python words, crying out.
I think it wonderfully ironic that the film “Robocop” –disparaged by Detroit boosters for its distopic view of their fine city– nevertheless portrays a city that is in better shape than its real counterpart.
Which is probably why the real city is putting up a statue to the fictional hero. Something to aspire to, I guess.
Bob-1: Sure, small-scale ground solar on people’s roofs is somewhat viable. But relying on solar power for a large proportion of a country’s requirements means that the lights go out at night.
And one interesting point IMHO is that the estimated payback time for one of these installations is optimistically 10 years – which means, bearing in mind that the house’s value will not be increased by as much as the cost of the install, that if you move within that time you lose money. Thus reducing social mobility, which suits the elites just fine.
One more thing: Solar panels are maintenance-intensive for the extremely simple reason that they only work properly when they are clean. And they are very large indeed, for the power supplied.
Having said all that I’m actually a fan of the idea of solar power – where it belongs, which starts about 300 miles up.