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Monday, December 24, 2012

Detroit Olympics Update

Good news on Detroit's potential 2024 Olympic bid - the topic was the main focus of the program and discussion at the 2012 Southeast Michigan Summit, hosted by the Detroit City Council. Even better news - all the panelists and stakeholders present thought it was possible, and most thought it was a good idea to pursue! There is an incredible amount of work ahead of us, but at least the ball is rolling.

Speakers and Panelists at the Summit included: Councilman Charles Pugh; Ms. Susan Sherer (who led Detroit's efforts for the Super Bowl); Mr. Stefan Szymanski (Michigan professor of sports management); Mr. Dave Beachneau (Detroit Sport's Commission); Ms. Kathleen Lamako (SEMCOG); Mr. Marcell Todd (Detroit City Planning Commission); Mr. Bobby Smith (En Garde Detroit); and Dr. Syed Mohiuddin (Leadership Next, United Way).

At the end of the Summit, City Council President Charles Pugh even announced plans to add this to the Mackinaw Policy Conference agenda, and to put feelers out to other community stakeholders during the North American International Auto Show. Believe it or not, Detroit 2024 is now on the agenda!

Whether or not Detroit gets the Olympics, the investments and improvements needed for the Olympics are investments and improvements we need anyways. That being said, the Olympics would be a great way to celebrate a New Detroit in 12 years. Also, if the Olympics are a way to bring the world together, perhaps they will also pull Metro Detroit together in a way we haven't been in 40, 50 years. Our collective, united efforts will be needed to make a successful Olympics and a successful Detroit.

Here is a link to a presentation that has been reviewed with some key stakeholders and which was shared in part at the Summit:

Wednesday, December 12, 2012

A Historic Day - Will Right-to-Work Help or Hurt Michigan and its Workers?

History was made today in Lansing, as Governor Snyder signed into law several "right-to-work" bills that would make it optional for workers to contribute financially when they work under a union contract. After spending two years denying "right-to-work" was on his agenda, the Governor added it to his agenda and signed it into law in the space of a week during this lame-duck session.

Unions and "right-to-work" both have pros and cons, and there is a lot to discuss and assess on that front. First, however, a thought on the process itself:

  • Lame duck Republicans railroading this highly partisan, highly controversial bill through the Legislature with minimal discussion and no public input is a sham and a disgrace to Michigan; even if "right-to-work" is right for Michigan, such a bill should have gone through the proper channels and processes (I think a referendum would have been best); at best, this is a terrible precedent
  • There may be economic merits to "right-to-work", but the political nature of the timing cannot be denied; Republicans are taking a shot at weakening Labor and Democrats, sensing weakness given the loss of Proposal 2 (I couldn't vote for Proposal 2 to put union rights in the Constitution, but I didn't vote against it for that reason, because I didn't want Republicans to take its defeat as a sign that "right-to-work" had support)
  • The unions may have overreached by pushing Proposal 2, but it was more of a defensive measure than an offensive one in my view; given all of the anti-union legislation in the Midwest, from Wisconsin to Ohio to Indiana, it was only a matter of time before the battle came to Michigan; Governor Snyder could have shown true courage and leadership and taken a post-partisan stand by saying he would veto "right-to-work" legislation, but he never said that, and in the end, his reassurances that it was "not on his agenda" were hollow, as he supported "right-to-work" the second it came up anyways)
  • Like those other states, I fear this act which disturbs the balance of power is just the beginning of a long war; I'm afraid it will create a toxic environment in Lansing (perhaps to rival DC) and cause gridlock and uncertainty at a time when Michigan has many more pressing issues (e.g., Detroit, regional transit, taxes, etc.); as this struggle unfolds, our policies in Michigan may become disjointed and incoherent over the next decade; as a businessman, the Governor should have realized that if there is one thing that delays investments in job-creation and that businesses hate, it is uncertainty...
Okay, aside from the political mess and effects, here are some thoughts on the practical impacts:
  • Nothing will really happen for a few years; legislation will tie it up (even Governor Snyder is expecting some legal challenges)
  • Companies will certainly view Michigan more favorably when undertaking site selection exercises for their business; whether a geography is "right-to-work" is often a consideration for such companies, no doubt about it
  • That being said, Toyota or Volkswagen aren't coming to Michigan anytime soon; there is already too much auto production capacity in North America, their footprints are already elsewhere, so there is no reason for them to come to Michigan; I don't expect any other gigantic factories opening up in Michigan anytime soon either
  • With or without "right-to-work", unions really need to reinvent themselves; unions have a bad reputation in many places, and certainly, the way the system is setup, there are many inefficiencies and much room for improvement; solidarity is great, but for instance, perhaps unions should take another look at better integrating worker-by-worker performance-based incentive systems as part of compensation; also, maybe seniority should not be the only factor when layoffs occur (maybe other options should be considered, like some kind of rotations or an average decrease in hours, rather than layoffs)
  • Sure, unions will still be able to collectively bargain, but "right-to-work" will let workers "freeload" and benefit from the union but not pay the union, weakening them financially
  • If unions disappeared tomorrow, compensation and benefits would also go down tomorrow
  • "Right-to-work" is basically a step on the way down in a race to the bottom; Companies will typically pay workers as little as they can get away with (most think like Wal-Mart, not Costco); Governor Snyder indicated his impetus to support "right-to-work" was Indiana's passage of such a law earlier this year (the UAW rightfully feared his intentions in their misguided support of Proposal 2)...if all states adopt "right-to-work", then all states are just competing to have lower and lower wages; perhaps a national "card-check" law would level the national playing field; either way, we should be figuring out how to compete with Mexico and China (and not by lowering wages to their levels), rather than a zero sum game of shifting jobs between Midwestern states (and often paying hundreds of millions in tax incentives to do so)
  • Perhaps this law will have the perverse effect of making it easier for Unions to organize labor places (after all, if someone doesn't lose any money in dues, and only gains with higher wages, why not vote to unionize?)

Tuesday, December 4, 2012

Dealing with Detroit's Debt

I've never seen the momentum, buzz, interest, investment, and other indicators around Detroit as good as they are now. It is too bad that the actual City itself has never been in worse shape.

Detroit's financial woes haven't been real news for years, but it finally looks like it is time to pay the piper. Gridlock between the Mayor, the City Council, the City Attorney, and the State, as well as the elimination of the Emergency Financial Manager option, make bankruptcy an extremely likely outcome. As an extreme case, some folks are already suggesting to dissolve the City and merge it with Wayne County, or (even worse in my book) liquidate the DIA's (City-owned) priceless art collection.

We can hope that our elected officials and public servants sort this out, but I'm not optimistic. Unfortunately, there is not much ordinary citizens can really do at this point to stop the slow moving train wreck. However, there is one trick that it might be interesting for some of us to pursue.

On the way to Operation HOPE's Global Financial Dignity Summit last month in Atlanta, I read about one of the Occupy movement's new focus areas – debt. One tactic they are pursuing is to purchase outstanding loans of bankrupt folks (that typically trade for pennies on the dollar) and then forgiving them. I'm not sure what Detroit's bonds trade for, but I imagine they are deep in junk territory and severely discounted. Perhaps this could be a solution for Detroit as well. If the Detroit's citizens can buy and retire $1 billion (in face value) of debt/bonds for ~$50 million (I'm not sure what they are trading at, but even $500 million would be a deal, if offset by future tax credits), well that's a good deal in my book. Maybe the City could even reward Citizens who help it out through such a gift (e.g., by reducing property taxes for a certain period, or giving out lifetime free parking passes in the City)

Sunday, December 2, 2012

Governor Snyder last hope for regional transit?

Interesting piece in today's Free Press about the struggle to achieve (or re-achieve, as it were) a coordinated regional mass transit system:

I knew Detroit had a trains in the 1950s before our system was dismantled. I didn't realize the system connected Detroit with so many other cities.

"We had a very good transit system until then," said John Hertel, general manager of the Suburban Mobility Authority for Regional Transportation (SMART), which runs the suburban bus system. "We had a trolley system that went from Detroit to Port Huron, Flint, Ann Arbor and Toledo. And it was all gone by 1956."

Who knew?

I also didn't realize our trolley's went to Mexico City, where they are still in use.

"It's a crucial piece of the public transportation pie for metro Detroit, which has struggled to stitch together a cohesive transit system since 1956, when the last of Detroit's streetcars were decommissioned and sold to Mexico City, where they still are in use today."

Anyways, it seems like everyone is on board this time except the state House. Time to call your Representative and get them to play ball and pass the necessary bills. Federal support is available to help, so now is the time to for action on this.

I guess I wasn't following this issue too closely a decade ago, but apparently Governor Engler vetoed our last chance in 2002. Hopefully Governor Snyder takes this issue across the finish line. Too much is at stake.