no third solution

Blogging about liberty, anarchy, economics and politics

For Sale: Detroit

October 26th, 2007

Well, parts of it, anyways.

Recently the City of Detoit has hatched some plans to sell off a fraction of its 6,000 acres in parkland. My first thought is that this approach should be the default for any government — local or otherwise — which finds itself in financial distress. My recommendation here may seem counterproductive, since the sale of these lands would (at least for the short term) strengthen government, but the ultimate goal is to get the government out of the business of owning land, altogether. Of course the right to secession ought not be denied – but given the choice, I think many abolitionists would be willing to pay for it, a topic I’ll discuss in greater detail at a later date.

But enough of my anarchist digressions. Of course the various government factions, as well as the affected citizens are torn over what to do with the parks, many of which embody the very definition of “blight.” Keep in mind that three- and four-bedroom colonials are selling for less than $20,000 right now — if they’re selling at all, which is nominally about the same as they sold for 30 and 40 years ago. Adjusting for inflation (via EH.net) they’ve lost between 80 and 94% of their value.

Inflation Adjusted Housing Values in Detroit 1966-2006

Unfortunately the bottom line is that city parks cost money to operate, and the city is out of money. New taxes could be levied, except for the fact that Detroit’s delinquency rate is the highest in the nation, and their taxes are already among the highest (if not the highest) in the State of Michigan, and its population among the poorest.

That pesky fact, however, doesn’t stop the squabbling over what to do with the parkland, how to do it, or which parks to sell.

“My initial impression is there’s enough vacant land without hitting the publicly owned parkland” to build new housing, said Abe Kadushin, principal of Kadushin Architects Planners Inc., which worked on the Woodbridge Estates development east of the Lodge Freeway near Warren.

“Parkland is a very important and necessary resource in a revitalized neighborhood.”

Ahhh yes. The “there is no shortage of land therefore we shouldn’t get rid of our parks” argument. But not all land is of like quality — it is not homogeneous, even though by outward appearances one burned down shell of a once stately victorian appears like any other, and one overgrown patch of weeds reclaiming nature from the grips of urban blight is indistinguishable from the next. But might I also point out that there is practically nothing about Detroit that is “revitalized” once you go a block or two in any direction from the Casino, the University, or Comerica Park/Ford Field.

There may be plenty of vacant, vacated, or abandoned land in Detroit, but the quality unique to these parks is that they’ll require far less demolition than light industrial, residential, or commercial sites. Moreover, they’re located generally within or near existing neighborhoods – a point not to be overlooked if developers want to build more houses. It’s tough enough to sell houses in the D, but tougher yet to sell them in the middle of an industrial park just because that’s where the “vacant” land was located.

Although, you could always dress them up and call them “lofts.”

But Who Will Build the Bridges?

October 12th, 2007

The Ambassador Bridge is the most important thoroughfare in terms of trade between Canada and the United States – and its in the news of late, because some people would like to build another bridge nearby, to augment the traffic capacity and alleviate congestion. The row of course, is a battle between the public and the private sectors, with at least one private financier willing to undertake the $1 Billion (USD) investment to build another international bridge across the Detroit river.

Experts suggest that the cost will be about $1B regardless of how the financing is obtained – and that the cost of construction will eventually be covered by the bridge’s tolls. Except, that’s not entirely true. When the government builds the bridge, the cost of construction is financed by taxpayers either through higher excises or reductions in other goods or services provided by the government. The government then collects the tolls, and spends that income on maintenance and upkeep, or socks it into the general fund. It never returns to the taxpayers in the form of return, or dividend, or profit. In fact, the very taxpayers who paid to build the bridge will have to pay the toll in order to use the bridge. Whereas when a private company builds the bridge, the funds are obtained from investors willing to take a risk, in the hopes of earning a future return.

Ambassador Bridge from Detroit

One such man is Manuel J. Moroun, who has owned the Ambassador Bridge through the Detroit International Bridge Company for some three decades. In fact, the bridge has been privately owned since it opened, 78 years ago.

The success of the DIBC, however, doesn’t prevent people from chastising Mr. Moroun’s company, or private enterprise in general:

“This man is making billions of dollars on that bridge.” said Raymond E. Basham, a Michigan state senator and a Democrat, who said that only a public bridge could ensure the structural inspections and domestic security needed. “When it comes to dollars and cents, there is every incentive for him not to tell us if something is wrong. We have an obligation for the safety of people.”

No, Mr. Basham – you must’ve flunked economics. The Ambassador Bridge’s private owner has every incentive to A) not let things go wrong, and B) to right them immediately. Case(s) in point: Private firms inspect and certify the bridge annually, which reports are made available to both governments, and private security guards were hired in the wake of 9/11. Moreover, just because the bridge is held privately doesn’t (or need not) exempt it from probably thousands of regulations, fees, taxes, and jurisdictional oversight from state or local governments. But this is the typical, anti-capitalist point of view, where the evil capitalist is financially and economically near-sighted – always willing to forego the future for the present, which passes for enlightened public policy these days.

Yet everything we know about capitalist entrepreneurs suggests otherwise, their very essence is a greater time-preference, and willingness to accept risk, which allow them to undertake investments which won’t break even until some time in the distant future, if they ever do. Entrepreneurs, by their very definition are those people who will forego the present in favor of the future, but this hack of a politician paints him as an extortionist – a mere opportunist. Futhermore, there is absolutely no reason to presume that mere public ownership will prevent disaster from striking, as we’ve recently seen in Milwaukee, where:

[L]awmakers diverted billions of dollars in transportation money from road work to pet projects.

The President of the DIBC, Dan Stamper, makes this argument:

“To the people who say that they’re uncomfortable with this being private, I say, ‘We are a success story.’”

Yes, Mr. Stamper, I agree that the DIBC is septagenarian success which is now being assailed by the “what-if-everything-goes-wrong-and-there’s-nothing-you-can-do-about-it?” argument, which is facially absurd. Some people shudder at the idea of having a privately operated bridge of such tremendous economic importance. But the bridge didn’t become privately owned overnight – the most important thing to consider is that as a private bridge it became the single most important trade artery between the U.S. and Canada, during 80 years of service.

Here’s to hoping that the DIBC maintains its ownership of the Ambassador Bridge, and that they are allowed to construct and operate another concurrent span.

Michigan-Mania

October 11th, 2007

Several Michigan lawmakers are now facing recall votes for their role in passing the recent tax hike. I hope they all lose their jobs, but morevoer, I hope nobody replaces them. That’s too much to ask for, though.

After learning he was a recall target, [Steve] Bieda said today: “We’re facing some huge challenges in this state. We’re trying our best to accomplish these changes. Some of them are painful and some of them are uncomfortable to do. But we have the responsibility to balance the budget and the responsibility to put the state back on sound financial footing.”

No, Mr. Bieda. You had the responsiblity to run the State with a balanced budget, a task at which you and all of your colleagues failed abysmally. These changes are only painful for you insofar as you might be recalled, or may not be re-elected next time around.

The Teamsters are, well, being Teamsters. What’s new? The current attempt to exercise unauthorized power over others is happening at the casino down the street from my Alma Mater.

The Saginaw Chippewa Indian Tribe, which owns and operates Soaring Eagle, may take the position that the NLRB has no jurisdiction.

This was my first inclination – that they’re grasping at straws if they think they can get away with this. The Casino is one of the better paying non-manual-labor employers in the entire County of Isabella. Every year, college students line up for lucrative jobs as ushers, dealers, and bartenders at the resort. And the ones who are selected are in turn, paid far more than they’d make elsewhere in town. Unfortunately, the article cites that the NLRB has usurped tribal sovereignty since 1984, effectively allowing for unionization. As if it weren’t bad enough that we gave them all smallpox, and took all their land, and killed all the buffalo…

Finally, the potential libertarian victory – however small – Michigan’s House is attempting to repeal (to an extent, and conditionally) the law which requires motorcyclists to wear helmets. Riders who want their Fabio-esque locks to trail in the wind behind you, you’ll have to pay an annual fee – in addition to your license and registration fees – prove that you carry a certain minimum amount of insurance, have attained 21 years of age, have at least two years of riding under your belt (how this is determined?) and take a safety class. Whew!

Unfortunately, it will probably be vetoed (again) by our Governess. So much for “representative” government.

no third solution

Blogging about liberty, anarchy, economics and politics