Archive for the 'sprawl' Category

Health care can’t save Michigan, or I told you so part 3…Michigan’s future, and some photos

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In May of 2008, I read an article regarding the expansion of the area’s hospitals, and the growth of the health care industry in general.  At the same time, I also wrote about how I had viewed this as a potential problem for a long time. The idea, at the time, seemed to be that Michigan’s, and in particular, metro Detroit’s, economy could be saved by health care. And, so the growth of the local hospitals could put more people to work. Former automotive employees could be retrained to work in the health care industry. Best of all, the health care industry was largely immune to the ups and downs of the economy. People always need health care! And with our aging population, we’d have an ever increasing supply of patients.

What wasn’t often mentioned was that Michigan, and again, metro Detroit in particular, was losing population at the same time that the hospitals were expanding. The problem with the health care as savior plan, was no different than the belief that the housing market, or the commercial real estate markets would keep growing despite a declining population. From my conversations with industry “experts” and from reading and watching the local news, it was obvious that many people, whom I had generally assumed knew more than me, couldn’t imagine a Michigan any different from the one they were living in in 2005 or so. The real estate markets were booming, the health care industry was booming, and the Big Three seemed to be doing not to terribly bad (other than maybe Ford). If one only looked at the surface, things may have looked so-so in Michigan, but if you were to have looked a little deeper, things looked like they were going to become downright horrible. The population had been stagnant or declining for a while. Michigan was one of the few states in recent history with this distinction. We were far too heavily dependent on an ailing industry with a broken business model, whose employee’s pay rate was not based off of market forces in any way, and whose management teams couldn’t seem to see past the ends of their noses, or a least past the next quarterly profit report. And we kept on building, and moving further from Detroit, using used tax payer money to help build infrastructure for new developments, while our old infrastructure crumbled. It angered at least a few of us, that no one seemed to be able to (or at least didn’t want to) see that a declining population whose economy was based on one broken and declining industry, and whose current investments were being made on new, and largely unneeded infrastructure, was doomed to failure, and soon.

In my business, when I asked questions about the, seemingly huge, number of new housing developments being built in the middle of nowhere, I was constantly told things like,  “our projections show that we can build like this indefinitely”, and “as fast as we build them, people buy them”. Were are these people coming from, I would ask. The answer was usually something like, “a lot come from Detroit, or from older suburbs”. Apparently, no one thought to follow this logic to the end of the line. If Detroit has been losing population for 40 years, and people move from Detroit to Dexter, who is buying the house in Detroit so that the purchase in Dexter can be made? People were buying houses in Detroit at the time, but obviously less than were leaving Detroit. The problem was simple. You can not expand the number of houses if the number of people is going down, with out driving prices down. But what was such an obvious sign of trouble at the time, is that prices were rising, and people were sure they would keep rising.

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So Michigan had a declining population, dependent on a downsizing industry with a broken business model, that had already been laying off large numbers of employees for years, an over saturated residential and commercial real estate market, and of course a largely under educated work force. But, we need not fear because the health care industry was going to save us. We’d all become doctors, nurses, assistants, or administrators, and we could just all be at the hospital all the time, either taking care of someone, or being taken care of by someone else. It’s the logic that seemed to be used by the Big Three for a while. For quite some time, almost all television advertising was directed toward their own employees. Who advertises to themselves? I’ll pay you, and you can then give it back to me in exchange for the thing you just made, that I paid you for. Maybe if we just make a chain letter, and send it to all of our friends, we can all get rich!

Unfortunately, a market based economy requires more than one or two industries to work. And so, it was always obvious, that unless something fundamental changed in Michigan, that we couldn’t depend on the health care industry to save us. As it turns out, the health care industry isn’t immune to downturns in the economy after all. It should have been obvious all along. If you are out of a job, or have no insurance, do you put off medical care and procedures? Of course. And if there are less people in the state, are there less potential patients? Of course. Michigan, like any other state, can’t depend on any one industry to keep the economic engine running. It takes a progressive, and diversified economy to be successful. No one knows for sure what the next big industry will be. Who predicted Google? At the time, most people thought search engines couldn’t possibly make money, and yet online advertising, has been a growth industry for years. Trying to create a plan for the future, based on the past, is unlikely to work. Sure the past holds lessons to learn from, but the future remains unknown. What Michigan needs to do is to put a priority on education, entrepreneurship, and quality of life. Of course Michigan’s broke, so it’ll be very difficult for the government to do what is needed, but the real change needs to come from the citizens who live there. If Michigan becomes a holdout of stodgy, grumpy, and angry citizens, that resists any change at all costs, then the downhill slide will continue for decades more. But if the cheap living can attract a new younger and more progressive generation, then Michigan may have a chance.

Suggested New Year’s resolution for Detroit

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With 2009 upon us, and the current economic situation not looking good, it’s time for Metro Detroit to make some New Year’s resolutions of its own.

Everyone knows about Detroit’s problems, and by the looks of things, the entire state is in big trouble. Detroit is not alone, however, and just like individuals, small businesses, and corporations, the city is in competition with other Metro areas, to attract (and keep) the best people and companies. Many states and cities around the country are facing very tough financial outlooks. There’s no way for Detroit and Southeastern Michigan to avoid the tough times ahead. What the area can do, however, is work together to make smart investments and chart a course for a better future. As individuals we can, in tough times, hide our money under a mattress, or make investments in our future. We can keep our fingers crossed that the job we’re in will exist beyond next week, or that the social safety net we’re relying on will be there tomorrow, or get additional training to prepare ourselves for better paying jobs in the days ahead. Corporations that fail to invest in new technologies, stop marketing, or fail to invest in there employees will be far behind their competitors that do make those investments when the economy recovers. Similarly, an area lacking a decent education system, infrastructure, and basic services, will lose out to the areas that have been making smart investments over the years.

Detroit’s got crumbling infrastructure, a pathetic school system, unreliable city services, and lacks a comprehensive transportation system. In fact the whole state has infrastructure problems and no mass transit other than a hodgepodge mix of bus systems. The area’s rapidly aging population is going to have problems getting around, particularly in the winter. Services and housing are far apart with few options for moving between them. Michigan’s mantra could be “No car?  Tough shit!” Most areas in the state lack any kind of cohesive urban center, and most have no viable plan to create one.

I could go on, but I, and others have regularly bitched, moaned, ranted, and reported on the area’s problems. So what will Detroit and the rest of Michigan do about it? Who knows…probably not much judging by the past, and the unwillingness of most to embrace change. Detroit, and Michigan, are in desperate need of change. The area needs to become better. A plan needs to be formulated and pursued, no matter how difficult. Michigan needs more than just slackers who have high tolerance for mediocrity, more than a population heading quickly for retirement (if such a thing exists any more). Detroit needs young, energetic, motivated, entrepreneurial and educated individuals who will not only embrace change, but make it happen.

So my suggested New Years resolution for Detroit is: “Stop being such a crappy place.”

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Do what Cleveland does…

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After watching Making Sense of Place: Cleveland, I was reminded of something I’ve said over and over. Metro Detroit is in competition with all of the other metropolitan areas in the country for today and tomorrow’s young and educated population. At one point in the episode it was stated that the city had two choices: “entice this desirable demographic with the ammenities and lifestyle they desire, or hand them suitcases,” because if Cleveland couldn’t provide them with what they wanted, they’d head elsewhere.

Metro Detroit is facing this same problem, and until everyone gets on board…the decline will continue.

One of the most interesting aspects of the episode was the continuing cycle of building and abandonment. Newer, outer ring, suburbs always think they are going to be immune to the problems of the city, or now, inner ring suburbs. But the fact is, it catches up eventually. What was once the new hot place, eventually becomes a struggling area of despair. It is one of the reasons commutes continue to grow. Living in Lake Orion, and working in Dearborn makes no sense, but people do it. But tough times and crime know no borders. Someone always has to buy your old place before you move to your new place. It’s unsustainable. Now outer suburbs build massive high schools. Tomorrow, those same communities are trying to close schools, and condense their school system due to a declining school population.

New infrastructure follows the ever outward migration, paid for by the general population’s taxes. The infrastructure continues to require maintenance regardless of the ability to fund it.

So what do we do? So many think this cycle is just as it should be. But it’s incredibly expensive. It’s wasteful. It makes it hard to create real communities. It creates dangerous social divisions. The rich live here, and the poor live there. Running from our problems is not a solution to the problem. It is the problem.