Category Archives: Economy

Against marriage, against the family: The platform of Michigan’s Republican Party

December 23, 2011 was the day Governor Snyder signed into a law that stripped the domestic partners of many public employees of their health benefits.  It was also the day I finally lost patience with Gov. Snyder.  I’ve appreciated the Governor’s reluctance to pander to the bottom feeders known as ‘social conservatives’ that dominate his Republican majorities in the legislature.  But in signing this bill the Governor finally gave in to his party’s worst instincts, revealing that he’s just been paying lip service all along,  happy to discard his veneer of tolerance when it became politically inconvenient.

Why they are doing this?  We’re an easy target, and making our lives difficult is an easy way to score points with the vocal & significant percentage of the Republican base that hates us.  They can’t undo Lawrence v. Texas, they can’t ban us from serving in uniform any longer, & they can’t round us up & put us in concentration camps.  This seemed like the easiest way to put us in our place.  This has zero to do with saving money, by the way.  That excuse is a fig leaf for Republicans like Snyder, who know that outright bigotry no longer plays as well with the public at large.

(I focus specifically on Republicans because on the domestic partner benefits issue there were exactly one Democrat apiece in the House & Senate who voted for the domestic partner benefits issue:  Sen. Tupac Hunter & Rep. Richard LeBlanc.  No Republicans in either house voted against.)

Republican voters, and the leaders they elect, like to paint themselves as defenders of marriage and of the family.  I think we are getting better at emphasizing that ‘social conservative’ leaders don’t give a damn about saving marriages or families, they just want to punish people like me for the unforgivable sin of finding romantic happiness. Our task is to heighten the cognitive dissonance experienced by Republicans like my cousins on one side of the family, who love watching shows like Glee and have never made me or my partner feel unwelcome, but who want to sidestep the consequences of the votes they cast.

Our ability to fight back is further constrained by Michigan’s political dynamics.  We are clustered in safe Democratic districts so Republican legislators have no reason to even acknowledge our existence.  They have nothing to lose – certainly not our votes.

In this we have a lot in common with black Michiganders, though I know a lot of black people bristle when sexual minorities draw comparisons between our situations.  Like black Michiganders, we are almost entirely a Democratic constituency.  The rage at PA 4 that has erupted in majority-black communities reflects their realization that with all three branches of state government in Republican control, they are effectively powerless. When the anti-PA 4 activists complain that the act subverts the democratic process, they forget that the democratic process is no friend to them, either: Majoritarian democracy has no inherent protection for minorities.

And we accept it.  The political impotence of Michigan’s sexual minorities is partly a function of our learned helplessness.  But it’s also partly due to our own apathy.  For lots of us, especially when we’re young and uncommitted and have so many other pressing concerns, marriage equality and the family are abstract concepts. And it can seem frivolous to donate money for causes like marriage equality when sexual minorities in so much of the non-Western world face more severe challenges in their own societies.

I myself have been guilty of apathy.  While I supported marriage and adoption equality, neither was much of a priority to me until I finally ended up in a committed long-term relationship & started to have something economic at stake.  Once I began to face decisions about health insurance, tax deductions, estate planning, I began to understand why I could no longer sit on the sidelines.

Last Wednesday two examples of grassroots political activism were juxtaposed in a way that I found both illustrative and frustrating.  One was, of course, the SOPA/PIPA blackouts.  My Facebook feed erupted in a way I don’t think I’d ever seen before, with anti-SOPA/PIPA posts from what seemed like half of my contacts.  Not since the Obama campaign had my Millenial peers, in particular, seemed so politically engaged.

The day of action at the state Capitol protesting the domestic partner benefits ban, in contrast, seemed to get hardly any attention at all except from certain LGBT  organizations like Equality Michigan & Affirmations.  Even the gay football team the Michigan Panthers, who I follow on Facebook, didn’t make a peep.

I felt a wee bit guilty for not taking the day off work to join the protest. That feeling grew stronger when at the day’s end, I read the post* by autBar’s owner Keith Orr reporting back on the event:

(I)f we are going to make an impact, we need more than the 250 people who showed up to work for the cause… (W)e need our straight allies to “come out of the closet”. They need to be active and vocal about our civil rights.

But we can’t expect it of them if we don’t do it ourselves… (I)t felt very real chanting “Gay Families Matter”.

But we need a bigger “family”…

We have to make them care.

And we have to get our friends and family to care.

I agree with Keith Orr that we can do better.  Today, we’re getting another chance to get it right, as a lesbian couple in Hazel Park sued to overturn the state’s ban on adoption by unmarried couples.  You know Attorney General Bill Schuette, whose hatred and contempt for people who aren’t straight is unsurpassed among state elected officials, will fight this suit every step of the way.

If you’re upset by this post and starting to feel a bit guilty yourself, head over to one of the following websites and donate to one or more of the organizations who are fighting hard against the Republican legislature’s agenda of hate:

And if you live in a state legislative district represented by a Republican, or you yourself are a Republican, it’s even more important that you contact your Republican legislator or your party leadership to let them know that what they are doing is not OK.  It’s time to stop systematically undermining families and condoning hate. The Party has to do better.

*H/T the Ann Arbor Chronicle

The November 2011 BLS report

While everyone else is busy gnashing their teeth and tearing their hair about Detroit’s insolvency and the cancellation of light rail plans and the myriad other bleak Ghosts of Christmas Yet To Come, let me instead point you to a cheerful Ghost of Christmas Present, in the unlikely guise of the BLS’ latest state unemployment report.  Here’s a rundown of the 11 states with the highest unemployment rates in November 2011:

  • Nevada – 13%
  • California – 11.3%
  • District of Columbia – 10.6%
  • Mississippi, Rhode Island – 10.5%
  • Florida, Illinois, North Carolina – 10%
  • South Carolina, Georgia – 9.9%
  • Michigan- 9.8%

That’s right.  No fewer than 7 Sunbelt states (8 if you count D.C.) have higher unemployment rates than Michigan including two states that were until very recently economic development darlings, North Carolina and Georgia.  Also for the first time in many years, to my knowledge, we’ve moved ahead of Illinois. This remarkable progress was driven by the biggest drop in unemployment of any state, -0.8%.

The usual caveats apply:  this just reflects a change in how many people are actively seeking work and doesn’t reflect all the poor souls who just gave up and left the labour force.  No one will deny we have plenty of those.  I’m not by nature an optimist.  But I’ll take the good news where I can.

Barlow v. Miller

So there’s been, as Supergay Detroit puts it, “a little bit of a shitstorm” over Toby Barlow’s piece for the Huffington Post, ‘”Detroit,” Meet Detroit.’

I don’t actually disagree with Barlow — if I were to take a job in the tri-county region, I would want to live & work in the city of Detroit.  I always encourage acquaintances to consider living in the city and applaud when they do.  I’m quick to correct outsiders when they make blanket generalizations about living in the city.  So I agree with him when he writes:

(Y)ou can’t have a region without a center… It is not just some idealistic dream, it’s an economic necessity… (I)t’s the straightest path to getting your property values back… (I)f you’re in Southeast Michigan, you’re from Detroit. It’s your brand. So deal with it. When companies are thinking of relocating to the region, bringing jobs here, the perception of Motown is the biggest thing that matters. And when companies start thinking of relocating away from the region, the health and reputation of Detroit has a certain undeniable weight. Those companies aren’t going to listen when you say “Come on! We’re different! We’re Troy!” They may have fallen for that in the past but now they know the truth. Detroit is right here, front and center, our inescapable fact.

But then Barlow kind of shot himself in the foot with this: ‘Seriously, nothing good ever came out of suburbia.’  God only knows what kind of damage control his employer, (suburban-based) Ford, has been doing on that statement alone.  (Although they appear to keep him on a pretty loose leash.)  A sloppy, ill-considered attempt at tongue-in-cheek?  With that sentence, a perfectly good sales pitch fatally devolved into a city-v.-suburbs debate, and naturally, suburbanites with an axe to grind pounced.

Barlow is a fairly recent transplant to Michigan but you’d think even he would have recognized that “Detroit v. the suburbs” is a tired, fifty-year-old argument that no one on either side has ever won.  It’s an argument that, for that matter, nobody would even be having if Detroit were not perpetually in crisis.  (I’m pretty sure there is not a similar feud between, say, New York City and Westchester County.)  And it’s not an argument Detroit proper can ever win.

Toby Barlow’s heart was in the right place with this essay, and 90% of it is right on target.  He would have done well to have left the 10% that everybody is all riled up about on the cutting room floor.

Like me, SupergayDetroit fundamentally agreed with Barlow.  And I nodded in agreement with some of what he had to say, too:

(T)he fact is, if you don’t live in the city, if you don’t put up with the bullshit along with the glory, then you ARE a suburbanite.  The biggest lesson I learned when I moved to Detroit was that living in Detroit was a completely different experience than just hanging out in Detroit.  And you can’t fake it and you can’t learn it from the outside and it is almost impossible to create authentic, meaningful, non-douchebaggy change unless you live here.

Supergay starts to lose me, though, with a personal anecdote:

I was having a drink with an old acquaintance a while back. someone who knew me from my store back in the Ann Arbor days and who now lives in Royal Oak.  He was doing what I call the Suburban Shuffle … getting in on the street cred of Detroit while trying to rationalize staying in the ‘burbs.  The old, “I’d move to Detroit except …” And I said listen, nobody who lives in Detroit has any superpowers.  But they did make that leap, and they take the bad with the good.  So don’t expect a pat on the back because you tool down I-75 for the fun stuff and then tsk-tsk from the comfort of your fake loft when the latest calamity strikes.

I can’t recall the last time I had a conversation like this.  The closest I’ve come is discussions with parents with young kids, or expectant parents.  I’m thinking specifically of my cousin Kate, who was raising 3 kids in Farmington Hills, and of a former colleague who had moved from Southwest Detroit to Plymouth after her marriage and was planning to have children.  Both of them were perfectly upfront about the fact that they would not consider parenting in the city with young kids, which I feel is a pretty solid excuse:  living in Detroit is not always a cakewalk even without the demands of parenting.

Where I HAVE witnessed it, it is companies using the Detroit ‘brand’ as a marketing device, the prime example being Chrysler’s marketing campaign.  THAT is the douchebaggery Supergay is talking about:
There’s a lot of cool stuff going on in Detroit right now, and it hasn’t always been this way.  And suddenly it’s cool to say you’re a Detroiter.  I do believe there are Detroiters “in spirit,” but at the end of the day you don’t get to use Detroit to validate yourself without fully committing.

So what IS the status of the suburbanite who loves Detroit but won’t or can’t move to the city?  Or who just loves where they live (because frankly our suburbs are pretty great if you’re into that kind of thing)? Well, I think you are “A Suburbanite Who Loves Detroit.”  Or a “Detroiter in Spirit.” It’s not an aspersion, it’s just a fact. I know a TON of people who fit that description. Please, do stuff in the city, work to make it better if that’s what you believe in, say good things about it.  And be honest and unapologetic about your level of involvement.  I think you’ll find everyone appreciates that.

At first I wondered if Supergay is maybe building a wee bit of an imaginary problem with this argument, because again, I do not personally know a lot of suburban residents running around claiming to be hard-core Detroiters.   He is much more active in city boosterism than am I, so again, he may meet lots of these kinds of people.  For everybody else, it seems like hair-splitting.

But then it occurred to me:  Maybe I was one of those people SGD was talking about, racking up visitor hits to this blog in part due to the way I throw around my Detroit references.  Am I a douchebag because I no longer work, live or pay taxes in Detroit — only did it for a year or so, in fact — but still blog about it?

Hmm.

And I thought:  You know what?  I don’t give a shit.

Let me explain why:  I moved to Ann Arbor for school, because it made no sense to me to commute forty miles each way every weekday.  I stayed in Ann Arbor after I finished school because it was University of Michigan, not University of Detroit Mercy, where I was offered a job, and once again, a daily commute from and back to Detroit made no sense.  In theory, I could eventually take a similar job in my field at, say, Henry Ford Hospital or Wayne State, but I’d do it because it made sense to me professionally, not because of a deep and abiding desire to “save Detroit.”

Ann Arbor residents like myself have been studiously ignoring the rest of the state, including the city of Detroit, for most of the city’s history.  I don’t see how that has served Detroit very well.  I’m paying attention and blogging about it because my partner lives there, I still spend a lot of time there each week (not to mention a small fortune on gym fees, parking, gas, food, drink & recreation), & I enjoy it.  My partner & I relish the increasingly frequent occasions when, while we’re walking someplace in the city, motorists from the suburbs (often black) pull over to ask us for directions.  But when people ask me where I live, I tell them Ann Arbor because, well, that’s the truth.  (I am still, arguably, a douchebag, but there are lots of other reasons that might be the case.)

The idea that suburbanites might somehow be benefiting from unearned street cred, associated with Detroit, may irk Detroit residents.  Supergay may have a point when it comes to rich celebrities (Kid Rock, Eminem) and companies (Chrysler) where image and branding is everything.  But I think Detroiters have enough problems already without getting all territorial and (as Rabbi Miller would put it) “Coleman Young” about what’s Detroit & what isn’t & is somebody pretending-to-be-cool-when-they’re-really-just-a-poseur.

Next post, I’ll jump back to Supergay’s & Toby Barlow’s side, and take a crack at Rabbi Jason Miller’s equally problematic response.

A couple of upcoming protests


Ambassador Bridge owner Matty Moroun

The sleeping giant of pinko activism is finally stirring after 2 years of numb paralysis in the face of Tea Party dominance.  At some point, college students, the long-term unemployed and others who have the time to spare to dedicate to sustained hell-raising finally gathered the motivation to start organizing and demonstrating to protect the interests of what has become known as the 99%.

I’m too busy these days to post on this blog, let alone demonstrate in my class interest, but I’m pleased to see a critical mass of people emerging who are willing to do so.  Here in metro Detroit we have plenty to get riled up about.  While I personally think it would make a lot more sense for Occupy Detroit to be occupying, say, the Oakland County administrative campus in Pontiac or the State Capitol, there are a couple of upcoming events in the D that I thought worth publicizing:

1) Action Against the Detroit International Bridge Company,  October 27 (today!), 5-6pm, at 18th and Lafayette  near Ste. Anne’s Church.  Further details available at the Facebook event page.  The event is organized by BridgeWatch Detroit.  Here’s some background, if you need it, on why the DIBC is perhaps the most pernicious organization in Detroit.

2) Rally Opposing Bus Cuts, Friday, 10/28, Grand Circus Park, 3:30pm.  Transportation Riders United Executive Director Megan Owens writes that participants will:

(M)arch to the Rosa Parks Transit Center, handing out action alerts along the way, then over to SMART HQ and the Spirit of Detroit at the C.A.Y. Municipal Center for a short rally around 5pm where bus riders, advocates (including me) and others will speak.

It should be a great opportunity to keep the pressure on Mayor Bing to improve DDOT service and remind the legislature why they need to follow the Governor’s recommendations…   (on public transit)

Really, you don’t have to be a raging lefty like myself to get behind either of these causes.   Please post a comment or email me if you end up attending either and report back on your experience!

Squelching

I trash Richard Florida a lot on this blog, but I like a passage from his column this week at the Atlantic:

Jane Jacobs identified almost exactly the same dynamic when I asked her some years ago why only a handful of places pioneer innovations and unleash the creativity of their residents, while most are content to sputter along, stagnate, and even die. “Each and every community,” she told me, “is filled with lots and lots of creative and innovative people.” The trouble is with a small core of people she dubbed “Squelchers,” who are instinctively opposed to doing anything new or different. Unfortunately, these people are often a town’s business and political leaders. You’ve probably seen them in action; maybe you’ve even bumped up against them yourself.

Only a handful of places are endowed not only with a great research university, but a culture that tolerates and actively encourages risk-taking.

Florida gives Tree Town a shout out, noting, “There are cities in the once-dying Frostbelt — such as Ann Arbor, Madison, and even Pittsburgh — that have built new knowledge and creative economies around their great universities.”

I think this is important because, from the view on the ground here, Ann Arbor is full of squelchers.   Most of our area’s success stems from the constant influx of brilliant people coming in from all over the world to work and study at the U.  But they are counterbalanced by a vocal segment of long-time residents who fear the city’s increasing density and congestion, and a micromanaging city bureaucracy that attempts to regulate everything within its grasp.  Recent examples abound, such as the planning advisory committee that failed to relax the city’s restrictions on multi-family dwellings, or the zoning that prevented a small business from expanding the range of merchandise it sells, to cite two.

There’s been a lot of discussion in the urbanist blogosphere recently on the role of community input on planning and development, catalyzed, I think, by Ryan Avent‘s The Gated City (which I will eventually get around to reading and posting about).  Alon Levy has had a couple of excellent posts on the topic.   Mary Newsom summarized the key question with particular succinctness:

(W)hat if the public really doesn’t want any development at all? A survey from The Saint Index found that 79 percent of Americans said their hometown is fine the way it is or already over-developed. Some 86 percent of suburban Americans don’t want new development in their community. The anti-development sentiment is the highest in six years of Saint Index surveys.

So if you try to involve the community and listen to what they want, do you end up with a plan that forbids growth? How smart is that? Should planners heed community wishes, even if they know what the community wants is impossible or imprudent?…

The challenge for planners, it seems, is first to educate people on the repercussions of their choices and then, to show them choices for other ways to develop: tree-lined urban streets, with shops and shop windows on the sidewalks, to choose one example. But the planners can’t stop there. Step Three has to be to make sure the supporting ordinances and standards require the good and disallow the bad.

Having seen the effects of Detroit’s sclerosis on that city, I am vigilant for the signs of similar sclerosis that are emerging in Ann Arbor.  Indeed, while it suffers from its own inertia in many ways, I see Detroit benefiting from an increasing sense of adventure, flexibility and openness among its residents in terms of land use and planning — attitudes lacking in Ann Arbor.  Channeling community activism and local governance in a positive and productive direction, away from the reflexive squelching that increasingly prevails, will be one of the great challenges facing Ann Arbor in the 21st century.

4 reasons to vote Bob Ficano out of office

Wayne County Executive Bob Ficano has got a lot of unwelcome publicity in the past week due to the enormous hole he dug for himself with the Turkia Mullin scandal.  (If you’re not local, or otherwise need to get caught up to speed on how Mrs. Mullin snagged herself a nice windfall courtesy of Wayne County taxpayers, let me steer you to the Detroit Free Press’ coverage & Jack Lessenberry’s op-ed on the scandal.)

Having read Oakland County Executive L. Brooks Patterson the riot act on this blog on more than one occasion, I figure it only fair to call out Mr. Ficano.  And this isn’t the only reason why Wayne County voters ought to replace him.  Let me recount some others:

1. First of all, it appears the Mullin case is only one of a number of other questionable cases involving separation payments to former Wayne County employees under Mr. Ficano.  For further detail, check out Sandra Svoboda’s story in this week’s Metro Times.

2.  These generous payments to Ficano appointees have taken place at the same time that Mr. Ficano has been laying off and instituting furlough days for rank and file county employees.  I’m not terribly sympathetic to public sector unions, but they have every right to be outraged that Ficano’s appointees are getting lavish payouts when they are being asked to sacrifice.

3.  The Aerotropolis.  Mr. Ficano ‘s been hawking the I-94-centered Aerotropolis for years.   From what I’ve read of the aerotropolis, a concept aggressively marketed by its originators John Kasarda & Greg Lindsay, it seems like a half-baked idea with little evidence that it generates the type of metropolitan economic growth its supporters claim it can.  (See the New York Times review of Kasarda & Lindsay’s book for a more detailed and nuanced discussion on this topic.)

Mr. Ficano’s embrace of the Aerotropolis is part of a bigger problem:

4.  A misguided sense of economic policy, which he shares with former Governor Granholm.  One thing I do appreciate about L. Brooks is his refreshing bluntness.  His initial reaction to state tax incentives for the Aerotropolis was to call them “another example of the never-ending torrent of legislative bullshit out of Wayne County.”  L. Brooks ended up coming around to Ficano’s side on the issue, but I think he was onto something with that characterization.   I think giving tax breaks to businesses to locate in the area around the airport, just because Mr. Ficano got sold on the Aerotropolis idea, is a lousy idea that only contributes to a race to the fiscal bottom between state and local governments.

It’s not just that Ficano has embraced special tax cuts on this particular pet project:  it’s that they seem to be his economic development tool of choice.  A 2009 quote says it all:

“If you’re going to consolidate anywhere in the world, you can now come here, because you are going to get tremendous tax breaks,” Ficano said at the time.

This is not a visionary long-term economic development policy.   Just because it is (sadly) popular among state and local officials across the country does not mean it is smart, appropriate, or good for metro Detroit.  Unlike Governor Snyder, who has waged war on tax incentives, Mr. Ficano has not yet recognized this.

Metro Detroit more than ever needs the best leadership it can get.  Sadly, between Mayor Bing and Mr. Ficano, it’s still not getting it.  Hopefully this will be the straw that breaks the voter’s back and leads to shakeups in the next elections.

The homeownership racket

The Detroit area has the dubious distinction of having lost more home value than any other large metropolitan area in the country.  Metro Detroiters are acutely aware of the consequences:

In metro Detroit home prices… are roughly 38% below their 2000 levels.

Other cities that have home prices below their 2000 levels when the index was set at 100 are Cleveland, which has an index of 98.88, and Las Vegas, which has a 95.6 level. Metro Detroit is at 62.

While other metros are slowly beginning to recover, we are not: “Home prices in metro Detroit were down 2.8% from April, according to the S&P/Case-Shiller home price index. The only other city to see a drop in prices over April levels was Tampa with a 0.6% decline.” And there’s no end in sight:

Detroit home prices posted sharp declines during the first 6 months of 2011, according to a new report.  And the decline is expected to continue during the next 6 months.  Clear Capital reports Detroit’s home sale prices were down 19.8% during the first half of the year compared to the first six months of 2010… Alex Villacorta with Clear Capital… says Detroit’s home prices are expected to dip another 4% between now and end of December.

L. Brooks Patterson loves to crow about how sprawl has supposedly helped Oakland County, but you won’t hear him admitting how overbuilding helped to destroy the wealth of OC homeowners after the housing bubble popped.

It is no coincidence that Detroit’s rate of homeownership was the highest of the nation’s largest metros in the mid-20th century.  Detroit’s culture of homeownership is tied hand and foot to its high levels of segregation.  It has been amply documented how realtors exacerbated white flight from Detroit neighborhoods beginning in the 1950s;  they deliberately stoked fear among white homeowners with rumours that blacks were moving in and would bring down home prices.  They profited from the resulting turnover as entire neighborhoods flipped within the course of a decade.  Other aging industrial metropoli with large black populations, like Chicago and New York City, were protected from such rapid turnover partly by their lower rates of homeownership; renters simply did not have as much at stake financially in their neighborhood, and were less overcome by panic.

Federal housing policy was the catalyzing agent that allowed Detroit’s metropolitan area to sprawl uncontrollably after World War II; it was the Kevorkian that enabled the region’s economic suicide.  And federal housing policy, under both Democrats and Republicans, continues to wreak havoc on Detroit.

But what role exactly does the government play in homeownership?  “The United States spends more than $100 billion annually to subsidize homeowners,” explain NYU business professor Viral V. Acharya and a number of his colleagues in a New York Times op-ed. These expenditures, Acharya et al continue, are a significant driver of the federal deficit: “according to the Congressional Joint Committee on Taxation, these tax breaks add up to $700 billion in lost government revenue over the five-year period through 2014.”  Joshua Green, formerly of the Atlantic, elaborates:

Even before the 2008 financial crisis, the government assumed the credit risk on most loans, which allowed banks to offer better rates, but ultimately left taxpayers footing the bill when the housing market collapsed: $138 billion and counting.

During the crisis, the government became even more involved in the mortgage market by rescuing Fannie Mae and Freddie Mac and agreeing to backstop larger loans… Today, the government backs 95 percent of new loans, leaving taxpayers more exposed than ever.

Many Americans have come to regard cheap mortgages as an entitlement.

And yet it’s not clear this fire hose of money has done much to increase the total level of American homeownership, Acharya et al suggest:

According to data collected by Alex J. Pollock of the American Enterprise Institute, a comparison of homeownership among economically advanced countries shows that the United States is in the middle of the pack, which suggests that subsidizing housing with tax breaks is neither a necessary nor a sufficient condition for a flourishing housing market. Rather, these subsidies enabled people to borrow more than they could afford so they could buy houses bigger than they needed…

Felix Salmon agrees that “there’s not even any real evidence that the deduction actually increases homeownership, rather than just artificially making houses more expensive to buy.”

Yet why is the deduction so popular?  One big problem is that a lot of Americans think they benefit from the tax treatment of mortgage interest more than they do, a belief perpetuated by misguided liberals who claim it helps low-income people attain the American dream. But  according to Adam S. Posen of  the Peterson Institute for International Economics, “This part of the tax code incentivizes speculation and borrowing, rather than investment and saving. It is very regressive.” Acharya et al write,

Renters get no breaks; homeowners get tons of them… homeownership policies and mortgage subsidies in the United States benefit the rich a lot more than the poor. For example, the economists James Poterba and Todd Sinai recently estimated that the benefits from the mortgage interest deduction for the average homeowning household that earns between $40,000 and $75,000 were about 10 times smaller than the benefits that accrue to the average household earning more than $250,000. These policies increase income inequality instead of reducing it.

Felix does a bit more of the math:

Households earning more than $200,000 a year account for less than 10% of the returns, but get 30% of all the benefits. And households earning more than $100,000 a year get 69% of all the benefit. The mortgage-interest deduction might be a middle-class tax break, but realistically it’s an upper-middle-class tax break…

He concludes, “Homeownership, especially during times of high unemployment, does more harm than good.”

If we capped federal loan limits for guaranteeing mortgages as well as the amount of interest that could be deducted, most homeowners would not be affected, only those that spend most lavishly on their homes.  As usual, the homebuilders  lobby for distortionary policy that encourages sprawl.

The banks do their bit to make a bad situation worse:

Lenders historically have treated residents of cities and rural areas as riskier than those who live in the suburbs… Poverty rates are higher in urban and rural areas. Potential borrowers tend to have lower credit scores and less money saved for down payments. In other words, lenders may charge higher rates on average because borrowers in these areas disproportionately pose greater risks.

Professor (Brent) Ambrose (of Penn State) said that determining the value of properties was also a challenge. Mortgage loans are secured by the value of the borrower’s home. The methods that lenders use to judge the value of a home, however, are best suited to the suburbs, where clusters of broadly similar houses allow easy comparisons… (I)n urban areas there can be too much noise in the data – large numbers of different kinds of homes in close proximity. The result is that lenders are less confident about the quality of their collateral…

Contrast our experience with that of Texas.  Slate’s Annie Lowrey cites one ingredient of the recipe for Texas’ economic resilience amidst the rest of the country’s recent contraction:

Texas kept its housing-finance regulations tight. As Alyssa Katz noted last year in The Big Money, Texas has had a longtime commitment to ensuring that homeowners make significant down payments and do not use their houses like piggy banks. The rules bar Texans from taking out home-equity lines of credit worth more than 80 percent of their mortgage. They also ban “cash-out refinancings,” which add to homeowners’ debt.

As a result, Texas never had a housing bubble.

Jonathan Chait echoes Lowrey’s account:

The best explanations for Texas’s success, other than its proximity to Mexico and resulting high levels of immigration, is (sic) genuinely good housing policies. Texas had tight lending requirements that prevented the inflation of a housing bubble, and it maintains loose zoning rules that allow for lots of cheap housing.

Adam Posen suggests other reforms:

Create a national tax leaning against land price swings: Local governments collect taxes already on all real estate transactions. The rates should increase when prices rise faster than population and income growth in an area (and decrease when prices rise slower). The revenue from the additional variable taxes should be transferred from booming markets to depressed communities. This would counteract large swings in housing prices and in local government spending…

Set a minimum mortgage loan-to-value ratio and have it vary over the business cycle: A simple rule that all mortgage lenders must require a minimum 20 percent down payment would restrict both speculation and exploitation of consumers. This ratio should automatically increase in boom times, but never go lower.

There’s arguably a silver lining to this catastrophe.  Kurt Metzger points out that, if nothing else, we now have some of the most affordable real estate in the nation.  What’s terrible for Metro Detroit’s homeowners is potentially enticing for those looking to buy a home here.

Full disclosure:  As I’ve previously noted on this blog, I own my home.

“Where are you going to find 100,000 square feet?”

AnnArbor.com’s Paula Gardner describes a problem most Michigan cities would love to have:

It’s easy to celebrate upon hearing the assertion from Barracuda Networks that it wants to hire up to 500 new employees and acquire or build a 100,000-square-foot office in downtown Ann Arbor…

But it also begs the question posed by developer Ed Shaffran: “Where are you going to find 100,000 square feet?”

AnnArbor.com reader Bernie P. had an idea:

Brownfield @ Broadway / Maiden Lane – COULD BE purpose built for a Barracuda campus to hold 500 people with parking, shopping, etc, etc.

Bonus is that it is within walking distance of AATA stops from the park & ride at Plymouth / US23.

As I already wrote in response to his comment:  I could not agree more.

Before I moved out near Arborland, I lived off Maiden Lane on the north side right next to the huge abandoned brownfield at the corner of Broadway and Maiden Lane.  Surrounded by chain link fence, the property has reverted to prairie and looks like something you’d see in Detroit, not Ann Arbor.

Lower Town is probably the most blighted part of Ann Arbor.  The student ghetto is blighted too, but at least has a high population density;  Lower Town, largely divided between unkempt university parking lots and the property I’m writing about, just feels empty.  It’s a puzzling failure of land use, since it includes ample parkland along the Huron River and sits in the heart of the city, smack in between the prime real estate of Kerrytown and the University’s sprawling North Campus.

As I noted in my comment responding to Bernie P., the site has a number of advantages for a corporate campus of some size.   It would presumably be much cheaper than downtown real estate, while offering access to the river and, as he noted, AATA’s #2 bus.  The biggest problem would probably be opposition from homeowners on Broadway, but steps could be taken to minimize adverse impacts on their neighborhood.  And the most immediate neighbors on the other three sides of the site are either commercial, rental housing, or university parking.   It’s not quite as glamorous as downtown, but certainly better than developing on the city’s outskirts.   And providing space for employee parking would be infinitely easier than downtown.

Am I missing something?  Anybody know why this site has been idle for so long, besides the lousy real estate market?

Hostel Detroit

Several weeks ago I contacted Emily Doerr, the redhaired UofD student who founded Hostel Detroit and near-instantly catapaulted to local celebrity.  While Doerr graciously agreed, she and her crew have been plenty busy not just getting the hostel up and running, but responding to press inquiries from all over the country, including the New York Post.  No wonder it took them a while to respond!   But respond they finally did this week.

While I doubt they need additional exposure from a D-lister like me, I wanted to share Hostel Detroit General Manager Michel Francois Soucisse’s responses to my questionnaire.  So without further ado:

Getting there/around

1. Do you anticipate your guests coming with or without cars? For those not driving:  how do you anticipate they will get there, & how will they get around?

Many of our guests so far have been international travelers without automobiles. Once they arrive, a few different options are available to them. There are a few nearby taxi-cab companies and bus routes, but the best way to see Detroit is by bicycle. Our city is enormous, so often walking isn’t feasible. Driving in a car, even as a passeger, often doesn’t give you the chance to appreciate all of the gorgeous details and textures Detroit has to offer, so to that end we have on-site bike rentals. They’ve been incredibly popular.

Basics

3.  Any guests yet?
We opened our doors for business April 15th and so far the bookings have been steady. We’ve been fully booked on several occasions. During Memorial Day/Movement  weekend, we created twelve plots in our big backyard for guests to camp out and they did. We sold out the yard, and I camped out with them. It was a blast.
4. How did you choose this particular site?
North Corktown is beautiful. It’s town & country. We’re just off downtown but we have so many trees and well maintained fields. We have a beautiful view of the Michigan Central Station, possibly our most iconic ruin. We have absolutely wonderful neighbors, a great landlord, and the building fit the bill, so it was a no-brainer.
5. Do you have a time frame in which you expect/hope to turn a profit?
Hostel Detroit is a non-profit organization, but we’ve been able to pay our bills so far! All jokes aside, we’re very fortunate to have people with such good heads on their shoulders running the financial side of things, and I can’t emphasize enough how much the community has contributed.

Amenities

6. Do you plan to provide food eventually?  A bar?
For the moment, we have no plan to expand into an area where we’d be serving food or alcohol. We like to think that our Hostel will actually be encouraging many of the businesses we love in the city. I think we’ll let our friends handle the food and drinks, and we’ll take care of the beds.

Collaborators

7. Are you partnering with any other businesses in this project? 
Yes. Often. We look forward to continuing our involvement with the many businesses that have shown us so much love. We’ve really had tremendous support within the Detroit business community and we can’t wait to embark upon more joint ventures with them, big or small.
8. How has your experience been with getting city permits & approvals? Lots of red tape or not too bad?
Whenever you start a business, be it a for-profit or a non-profit like us, there are eight hundred million hoops to jump through and papers to sign and inspections to be had; there’s always red-tape. But there are also wonderful, dedicated people working for the city who are as thrilled as we are about the Hostel and who are committed not only to its survival, but to its success. They’re the ones who made it bearable, they’re the ones who made the red-tape not seem so bad.
9. Are you getting much in the way of donations yet?
Absolutely. On all levels. From financial support to materials. The other day, we asked our Facebook community to borrow a lawn mower for the day as we didn’t have one yet. Within hours, a generous donor dropped off a brand new electric lawn mower; its wonderful. All you have to do is look at our donor plaque on the outside of our building to see the broad array of people and businesses who’ve helped us come into being, we’re very lucky.
10. Anything else I didn’t ask about you’d especially like to share?
We at Hostel Detroit are so excited to be a new, active part of our city and part of what I call molecular activism for it. The conversations around our dinner table have been wonderful, enlightening and very validating.These are conversations that perhaps wouldn’t be happening otherwise. I can’t tell you how terrific it is to see so many different kinds of people from all over the globe talk about what an exciting, mesmerizing city this is, and to see them begin to understand our history and our hearts.

For out-of-towners, or locals looking for a staycation, you can find a wealth of additional details on HostelDetroit.com.  There’s a superb and thorough FAQdetailed directions to the hostel from various points of origin, and an up to date events page.   I encourage everybody else to head over to Facebook and “Like” it.

For other Hostel Detroit coverage:

Richard Florida’s Top Cities for Recent College Grads

The ubiquitous Richard Florida’s latest concoction is a ranking of the “top cities for recent college grads.” Oh, where to begin?  I tend to roll my eyes at Florida, the Rachael Ray of urbanism.  But being a fairly recent (2006) college grad myself, and one who has had plenty of second thoughts about the choices I’ve made, this particular effort caught my eye.

Some of the top-ranked cities on Florida’s list make sense to me: Denver (#17), San Diego (#9), Seattle (of course) (#8), and #1 Washington, DC, which is consistently one of the best job markets in the country.  Others strike me as ridiculously unaffordable for most new grads (or anyone else, for that matter):   Los Angeles (#19), Boston (#6), New York (#5), or San Francisco (#2).  As Florida explains, “We decided not to include an affordability variable because we thought the key was to get that critical first job and launch your career — even if you have to double or triple up with roommates.”  And eat Ramen.  And skip a gym membership.  And postpone opening a 401(k).   And getting a second job as a prostitute on the weekends.  I started out earning $25,000 a year in my first job.  It was a challenge, and that was in very-affordable Lansing.

As I’ll discuss later, some of these cities make sense if you are going into a particular field, but otherwise it seems insane to me that a recent college grad would just show up in San Francisco or New York without a job lined up unless they had affluent and wildly indulgent parents, or a significant other who could help them float til they found work.  Honolulu (#18) gave me an especially good laugh — Florida is forgetting that Mom & Dad are going to expect visits on Thanksgiving or Christmas, and that airfare is going to add up.  And God forbid Grandma should die, because then the last-minute flight there and back for the funeral will set you back three months’ rent.

A more viable option in Florida’s list is to be to go from one college town to another — or just to stay where you are, which is what I did twice (once after earning my bachelor’s and again when I finished my master’s degree). In order of increasing rank, Florida suggests Charlottesville, Raleigh, Lincoln, Columbus, Bloomington, Boulder, Baltimore, Columbia, Durham-Chapel Hill, Boston, Madison, and Austin.  As Florida notes:

College towns like these have highly-skilled, resilient economies that have been among the best at weathering the economic crisis. They are great hold-over place for grads thinking about their next move, whether it’s the job market or onto grad school.

One nice thing about this particular ranking is that it does not dismiss flyover country or cold-winter cities: see 23. Fargo (#23), Lincoln, Nebraska (#20); Iowa City (#12); or Columbia, MO (#11).  And bigger isn’t better, on this list:  tiny Bloomington and gritty Baltimore are several spots ahead of LA.

How does this measure up with my own experience?  What is most striking to me is what cities are missing; for example, the Twin Cities, Chicago, & Nashville are all surprisingly MIA.

The unemployment rate appears to have knocked off a lot of places.  The default choice for my friends from my undergraduate alma mater, Michigan State University, has been Portland (OR, not ME), but it didn’t make Florida’s list, probably because of its poor employment outlook.  Atlanta, where I almost moved in 2006 (due to family connections there), is missing as well, likely for the same reason.  The choice of data source, the most recent American Community Survey, seems to have doomed Ann Arbor, which normally does so well in Florida’s various rankings. The most recent ACS numbers are from back in 2009, when Ann Arbor’s unemployment rate was still a bit higher than most of the cities on this list.  (Another variable in Florida’s ranking is the cost of renting, which is rather high in Ann Arbor.).  Ann Arbor’s and Atlanta’s absence highlights the fact that the employment outlook, as measured by the ACS, is not a very consistent indicator, since it changes so much over even just a few years.  Atlanta’s job market was on fire when I graduated in 2006, for example; likewise, before fall 2008,  Phoenix, Las Vegas, Charlotte, and a host of cities in Florida (the state) all seemed unstoppable.  Now they are struggling, and places that were deeply out of fashion a couple of years ago (Pittsburgh?) boast some of the best employment rates in the nation.

Ultimately, this is kind of a stupid exercise, because the best city for you to be in depends on your career path.  For my friends pursuing dance, art, musical theater, opera or fashion, NYC was practically the only choice; for those in acting, LA or NYC; for publishing, NYC again.  (Who really is able to find a job in publishing these days, though?)  For IT, you go to San Jose (#7 on Florida’s list) or San Francisco (#2).  For public affairs, you either go to DC (#1) or (for Michiganders) Lansing.  And in this economy, if you have a job offer with a company, you go wherever it is.  What kept me in Ann Arbor last year after I finished my master’s degree, apart from my partner, was a job offer, not my innate passion for the place.  (As much as I love my Prius-driving, organic soymilk-drinking, granola-eating, parks-obsessed little People’s Republic…)

If you are a gay guy or a lesbian, then you have some additional considerations and REALLY have to do your research.  By a number of factors, including affordability, having  lots of gay men, and reasonable proximity to family, Columbus or Chicago would have been great options for me.  I had a really big chip on my shoulder about Chicago when I graduated, because it seemed expensive (compared to the Lansing area, where I’d gone to college), the winters are even nastier than in Michigan, and — worst of all — everyone I knew from my hometown seemed to move there after they finished school.  In retrospect, though, it would have been a good fit, especially given how much value I place on public transit today.  (Speaking of which, I would have added a public transit variable to Florida’s formula, since you can save so much when you are young and cash-strapped by going without a car.)

Finally, my climate preferences have changed significantly.  Back when I was in college, I spent the freezing winters constantly walking from one end of campus to another, between work, school and extracurriculars.  In contrast, I spent summers either studying abroad or shuffling around in a T-shirt and shorts.  So I swore I wanted to go someplace with milder winters.  Having to arrive at the office without being soaking and stinky is a consideration that did not weigh so heavily back then.  Now that I’ve had four years of commuting to work in business attire, I’ve gained a new appreciation for cooler weather.  I’ve declared most of the Sunbelt off limits, since I sweat like a hog in the summer.  Many complain of the fog, the rain and the constant chill of San Francisco or Seattle, but it sounds AWESOME to me.  Washington, DC:  I love you, honey, but I hate your summers.

I’ll give Florida credit for acknowledging a statistic which more than any other renders moot rankings like these: “Don’t feel too bad if you’re moving back to your parents’ house. According to a widely-reported recent survey, that’s where some 85 percent of your classmates are headed too.”

Readers, what do you think about this list?