97 Matching Annotations
  1. Jan 2024
  2. Dec 2023
    1. you can see it all the time it's 00:41:37 unbelievably it's unbelievably painful we look at all the our institutions
      • for: polycrisis - entrenched institutional bias, examples - entrenched institutional bias - bank macro economic policy - lobbyist

      • paraphrase

        • James provides two examples of major institutional bias that has to be rapidly overcome if we are to stand a chance at facilitating rapid system change:
          • Bank of England controls macroeconomic policies that favour elites and not ordinary people and
            • these policies are beyond political contestation
          • In the normal political system, lobbyists through the revolving door between the top levels of the Civil Service and the corporate sector bias policies for elites and not ordinary citizens
  3. Jun 2022
    1. Numerous studies have shown thatthe fiscal state’s rise in power made a major contribution to the pro-cess of economic development. The new receipts did in fact make itpossible to finance expenditures that proved indispensable not onlyfor reducing inequalities but also for encouraging growth. These ex-penditures included a massive and relatively egalitarian investmentin education and health care (or, at least, a much more massive andegalitarian investment than any previous); expansion of transporta-tion and other community infrastructure; the replacement income,such as retirement pensions, necessary for supporting an aging popu-lation; and reserves, such as unemployment insurance, for stabilizingthe economy and society in the event of a recession.1

      See especially P. Lindert, Growing Public: Social Spending and Economic Growth since the Eighteenth Century (Cambridge: Cambridge University Press, 2004).

      Ample evidence has shown that increasing taxes in Western countries along with the states' power to use it during the majority of the 1900s not only reduced inequalities but encouraged growth.



  4. Nov 2021
  5. Oct 2021
  6. May 2021
  7. Mar 2021
  8. Feb 2021
    1. The intellectual cesspool of the inflation truthers

      Powerful Headline (words) from a Washington Post article under Economic Policy. WORDS.....! Words..... When you study Legal Theory you learn that "words" play a significant role in all aspects of social order.

      Controlling the rhetoric with consistent narrative

      This statement simply implies the use of consistent narrative (story) to allow control of the rhetoric. Narrative can be viewed as believable while Rhetoric is a general pejorative. When the rhetoric is mis or dis-information the narrative must be credible.

      Main stream media (MSM) has held a long-term standing across the world as being credible. This standing is eroding. It has eroded considerably over the last 25 years among critical thinkers and the general population has started to take notice.

      I question everything from MSM especially when narrative is duplicated with identical rhetoric across known government media assets. History is a wonderful thing when searching for Truth. Events in historical time periods can be researched, parsed and studied for patterns based on future evidence and outcomes.

      Information "Spin" is real and happens for one purpose, that purpose is to benefit a position, agenda, person, plan, etc., by manipulating (advertising, PR, propaganda) information. Spin is difficult to refute without hard facts. Spin has a short-term shelf life, but that is all it needs to chart a new course, set the "ball" in motion so to say.

      History allows Truth to overcome Spin.

  9. Jan 2021
  10. Dec 2020
    1. ReconfigBehSci @SciBeh (2020) For those who might think this issue isn't settled yet, the piece include below has further graphs indicating just how much "protecting the economy" is associated with "keeping the virus under control" Twitter. Retrieved from: https://twitter.com/i/web/status/1306216113722871808

  11. Oct 2020
  12. Sep 2020
  13. Aug 2020
  14. Jul 2020
  15. Jun 2020
  16. May 2020
  17. Jun 2016
  18. Apr 2016
    1. The city of Detroit faces a catch-22: It must modernize to attract residents, but in order to modernize, it needs residents as a tax and community base.

      That is the premise of Bill Adler’s article for Grist, which takes Detroit’s conundrum a step further in recognizing an important trend for growth: Going green.

      Adler compares Detroit to other cities across the country, including Portland, Oregon, in analyzing how Detroit can grow and attract more residents, in particular Millennials — the new young urban professional.

      Detroit’s weather, crime rate, lack of adequate emergency services, high tax rates, and lack of transportation — among other things —conspire to keep the city unattractive. So how to change that?

      Greening is important, Adler writes. Part of that is urban density, now recognized as an environmental good for reducing carbon emissions. Detroit has a density of about 5,100 people per square mile, closer to suburban-style cities like San Jose than it is to other industrial-era cities, like Chicago (12,000) or Washington, D.C. (10,000). Its current density is slightly higher than Portland, Oregon, which has been recognized for its urban planning and its attractiveness to Millennials and entrepreneurs.

      Detroit has existing infrastructure to support greater density, and can do more — expanding public transportation, investing in urban neighborhoods like Midtown and Corktown, expanding renewal efforts to other potentially up-and-coming areas, and turning itself into an incubator or business hub for certain business segments, such as biotechnology — could help the city become attractive to new residents.

      Residents also need jobs, and Detroit does have them, with 232,000 existing jobs and just 169,000 employed Detroit residents. The problem there is that many of Detroit’s high income workers commute into the city from suburbs, while Detroit’s urban poor commute out for minimum-wage positions. Further, the city’s transportation structure is car-centric due to its early years, and it is behind the times in implementing public transit.

      Detroit does have one thing in stock that could be very attractive to home buyers: Architecture. The city has Tudors and Italianate and Romanesque Revival mansions in stock and for sale. However, the surplus of beautiful homes is actually another detriment, right now, as homes are bulldozed lest they become a magnet for crime or fire hazards.

      All hope is not lost, Adler writes, noting that other cities (he calls them Legacy cities) facing similar problems have managed to bounce back, or are in the process of doing so, among them Chicago, Baltimore, St. Louis, and Brooklyn.

      But first, Detroit needs to figure out how to bring in people who want to live in the urban core, and provide them with the services necessary to stay.

  19. Nov 2015
    1. Detroit may be America’s largest broke city; it may have experienced tremendous population and job loss — but against the odds, there are still people who want to move to this former industrial hub.

      This long feature story and series of personality profiles in the Detroit Free Press identifies five specific types of people moving into Motor City: Urban explorers, property seekers, native sons and daughters, entrepreneurs, and empty nesters.

      This article profiled individuals who fit all of those categories in trying to create a picture of what Detroit is now, post-bankruptcy filing, and the kinds of people dedicated to bringing it back.

      One pair of entrepreneurs moved to Detroit to open a restaurant, planning to capitalize on Detroit’s local food and urban agriculture movements. Deveri Gifford said: "The DIY attitude is what we really loved about the city. The fact that the city is broke really contributes to that DIY attitude because there's this perspective of 'No one else is going to do this, so if I see a problem I'm just going to fix it.' "

      Another couple is moving home to Detroit, where they both went to high school. Although they’ve lived elsewhere, they wanted to return home and be part of the rebuilding effort in their city. One works for Teach for America, and the other is in manufacturing.

      Retiree Maria Urquidi saw an opportunity to be part of the change in the city, and help it come back. She liked the idea of “coming up with brand new solutions” to fix problems. Detroit was also a much more affordable option for Urquidi, who worked in New York state. She was also attracted to the city’s architecture, and multitude of available, beautiful homes.

      Lesley Daley, a Londoner, was also attracted to the city’s architecture, and its history. Daley called the city “a secret” and said that she has not experienced many of the negatives perceived by outsiders, such as packs of stray dogs.

      Other people had varying reasons for moving to Detroit — from civic duty to a sense of opportunity and a desire to be closer to the urban core. They have experienced negatives — one couple had their car stolen, crime is a problem, and social services are lacking. But this group overwhelmingly says their experiences have been positive, and feel it is a good moment to influence change.

      One young mother, who boomeranged back to the city after college, said she sees opportunity for her child.

      "… He sees a lot of things he shouldn't be exposed to, especially at such a young age. But what I'm going to instill in him is that you have the power to change this. Are you going to be the one to complain about this, or are you going to be the one to change this?" she said.

      Edit: Although this is a personality profile/feature piece and not a hard policy topic, it is important to our group's work in that by identifying the people who are moving to the city, we can isolate some potential policy areas to emphasize as recommendations for Detroit. For example, the restaurant-owning couple values urban and local agriculture. The city can then implement policies to foster that culture, and with those policies in place potentially attract more people. By recognizing the values and priorities of potential residents, the city can shape its policy to be more attractive.

    1. G.Nelson

      In their article, “Cartographies of Race and Class: Mapping the Class-Monopoly Rents of American Subprime Mortgage Capital,” Elvin Wyly, Markus Moos, Daniel Hammel, and Emanuel Kabahizi illustrate that in order to understand the subprime housing crisis of twenty-ought, one needs to understand the structural inequalities of class-monopoly rent. The understanding of class-monopoly rent has not gone away, but has shifted from a local landlord to an international landlord that regulates the renter upon the predatory practices of subprime lending. Variable rates, expensive fees, and asymmetrical information controls the tenants, like that of the 1960s land-installment contracts.

      The group quickly illustrates the process of creating and packaging subprime loans. A bank or mortgage company to a borrower draws up a mortgage; that loan is quickly sold off to a Government Sponsored Enterprise (GSE); in return, the bank or mortgage company receives cash to make more loans. The original loan is, then, pooled into Collateralized Debt Obligations (CDOs) and Mortgage Backed Securities (MBS) –which are backed by Wall Street Investment Banks—and are sold around the world to various public and private institutions. The group highlights that at the time of rising home prices, the risk of a default is limited and the financial impact on the bond (MBSs and CDOs) is relatively mute. The bank could force a new mortgage, and the equity that was in the home would go to generate more income for the bank or, essentially, drop the homeowner and force them to become a renter.

      In 1995, the Subprime markets accounted for $65 billion, but by 2006, the markets mushroomed to $625 billion. In 2007 a rush of delinquencies, defaults, and foreclosures, along with decreasing home values, created a credit crunch in the economy and chipped away at the confidence of the investors of MBSs and CDOs. This left the U.S. government vulnerable in which the Federal Reserve took dramatic action to buy up MBSs and of unknown values and government bonds to free up banks’ balance sheets.

      Instead of taking blame within the financial markets, industry-defenders blamed the imperfect markets, the consumers for taking out more than they could manage, and the attempt by institutions to help more individuals then the markets could handle. The group illustrates, however, that institutionalized racial inequality because of credit-worthiness and lending practices are to blame for the systemic credit crunch of the twenty-ought.

      Risk-based pricing --a theory that determines that an individuals ability to borrow and at what rate—has been the basis philosophy of financial markets of the last twenty years. However, the group illustrates how the philosophy has come under attack recently, and provides anything but the rosey picture that it once promised. The theory only deters moneylenders from lending to minorities and low-income individuals by providing a justification of denial to entry.

      A social problem of the lack of access to homeownerships for the “underserved” (minorities and low-income individuals) gradually brought about State and Federal regulations and programs to assist homeownership for the underserved. Within the 1960s, for minorities to build up credit worthiness and equity for a bank to justify a mortgage --even if the minority already had the sufficient income to justify a mortgage—the minority would utilize a land-installment contract. This path towards homeownership often carried higher premiums. Within the 1980s, a series of laws made specific types of loans and lenders exempt from regulatory practices (337). Through the 1990s, federal and state regulators maintained the effort of providing traditional mortgages to the underserved, but at the turn of the century, small lending firms, which were backed by Wall Street, began to provide loans that were not restricted by state and federal regulations. Asymmetrical information, lack of knowledge by the consumers, led many to believe that this is the only way for them to own a home. These small lending firms were bought up by national banks and accounted them as subsidiaries, which allowed the bank to carry the exempt status in its subsidiary firm and continue the predatory practices, but now at this time, in a much grander scale. The loan restriction of the 1960s –which stems from racism-- has only transformed itself back to loan restrictions of today because of the predatory lending that is justified by the risk-based pricing theory.

      I am illustrating the foresaid points of the article in my annotation to emphasize the foundation of racial-lending practices that span decades within the U.S. financial system. This will be imperative to tie into the financial credit crisis of 2008, and how municipalities suffered from this sort of practice.<br> G.Nelson

    1. “Can Detroit Rebuild Its Middle Class?” from the National Journal, Tim Alberta (2014) http://www.nationaljournal.com/next-economy/america-360/can-detroit-rebuild-its-middle-class?mref=scroll

      In this fascinating article by Tim Alberta (2014) from the National Journal, there is a focus on rebuilding the middle class of Detroit with the image of diversity and self-sustainability. The underlying ideology is that a strong middle class is the key to a thriving city. There are currently 2 Detroit’s: one that portrays a downtown revival with new condos, business, and breweries, and the other that resembles a “zombieland,” completely lacking inhabitants (Alberta, 2014). Alberta (2014) says that the city’s biggest problem is a lack of residents. People are needed to build the middle class and restore the economy. Even though there is a boom of new businesses, it has not been enough to draw people to live in the depressed and abandoned neighborhoods. Reasons that young and educated workers do not want to live in Detroit is because crime is off the charts, the public school system is one of the worst in the nation, and the city’s public services are significantly lacking (Alberta, 2014).

      The rebuilding attempts that are taking place are multi-faceted. City and state officials are trying to rebuild the middle class by luring educated, professional immigrants to the area. Non-profits are working to retain the graduates of Michigan’s universities. Additionally, non-profits are providing job-training and connecting employees with in-demand industries. Business organizations and coalitions are diversifying and trying to destigmatize Detroit as a manufacturing only city. Rebranding the city is considered an especially important step (Alberta, 2014). Doing this will reinforce the importance of education that was once not unnecessary to get a manufacturing job in the city. Millions in investment dollars are going into technology and the energy industry to attract a young and diversely educated workforce. “To build a long-term economic base, Detroit, like a low budget baseball team, must develop and retain homegrown talent” (Alberta, 2014). Once the middle-class is stronger, more money will be available for governmental services like schools and public works, and the city will fully start to heal.

    1. Breunig, C., Koski, C., & Mortensen, P. B. (2009). Stability and punctuations in public spending: A comparative study of budget functions. Journal of Public Administration Research and Theory, 20:703-722.

      This article published in the Journal of Public Administration Research and Theory by Breunig, Koski, and Morentsen presents a longitudinal study of stability and punctuations of public spending in the United States and Denmark. Breunig et al apply Baumgarnter and Jones’ disproportionate information processing model as a theoretical basis for this research. (The disproportionate information processing model was presented in 2005 by Baumgartner and Jones as a more general model of their punctuated equilibrium model/theory). In addition to the two countries being compared in this quantitative study, the spending patterns across different subcategories of public budgets in the areas of health, education, transportation, military, etc. are analyzed (Brenig et al, 2009). Their findings align with what Baumgartner and Jones predicted would occur universally with spending punctuations; “political decision makers either ignore or overact to information signals from their surroundings. This results in a distinct pattern of both stability and punctuated change in policy outputs often measured in terms of public spending indices” (Brenig et al, 2009, p. 704). A pattern of kurtosis was reflected across multiple subcategories of public budgets in both countries. Kurtosis is represented in a diagram as long periods of flat, incremental change with sharp punctuations that spike rapidly and then quickly return to equilibrium (Brenig et al, 2009).

      The usefulness of this study in looking at the situation in Detroit, Michigan and its fiscal crisis is that it helps explain the unprecedented fiscal punctuation that occurred in 2013. Because the policy makers did not make the small, incremental changes to respond to the changing demographics and economic environment that affected the city’s budget subcategories, the largest municipal bankruptcy in US history occurred. Who knows if the crisis could have been averted? However, punctuated equilibrium theory does help us understand why. The data presented in this article by Breunig et al (2009) reminds me of a pressure cooker; if the incremental changes do not occur- to let off steam, then there will be an explosion. This article also made me realize that a good way to study public policy is through budgetary punctuations; these punctuations are either the result of an overreaction or poor planning on the part of policy makers.

    1. G.Nelson

      In her article, “Government Budgets as the Hunger Games: The Brutal Competition for State and Local Government Resources Given Municipal Securities Debt, Pension and OBEP Obligations, and Taxpayer Needs,” Professor Christine Chung provides an eye opening and thorough analysis of Detroit’s economic woes. She summarizes the latest statistical findings, which illustrates the severe loss in residents, property blight, crime rates, the maximum statutory limit of taxation reached, citizen flight, and the loss of jobs. Moreover, she illustrates the budgetary debt constraints that have ballooned to more than $18 billion, which helped prompt Detroit to file for bankruptcy; the debt to revenue ratio will only increase over the next few years; bondholders are expected to lose a substantial amount of their investment from the bankruptcy. Chung illustrates that the City’s collapse preceded by an incremental decrease in jobs. From 1970 to 2012 the number of jobs declined from 735,104 to 346,545 (Chung 666).

      She illustrates that Detroit is not an exceptional case, but there are numerous municipalities that are struggling to pay debt and other obligations, e.g. pensions. Currently, out of the participating states and localities, only $2.35 trillion has been set aside to pay pensions, health care, and OPEB promised to public sector employees; however, the actual estimated cost is around $3.5 trillion: more than $1 trillion in unfunded obligations (Chung 669).

      Because of Detroit’s financial instruments used to manage their budgetary obligations, they took a high stake wager on interest rates, and when the rates declined, “Detroit lost catastrophically on the swaps bet” (Chung 670). Some municipalities have used derivatives to win, but others, e.g. Orange County, California and Jefferson County, Alabama, have lost or struggled with the financial instruments.

      Chung posits that the Dodd-Frank Wall Street Reform and Consumer Protection Act does not go far enough to protect stakeholders or prevent from imprudent financial-decisions-makers from erring in how they utilize risky financial instruments. She finalizes her article with the following regulatory recommendations, which should provide a clearer picture of a City’s budget, obligations and revenues: "(i) requiring compliance with uniform accounting standards, so that stakeholders can get a better sense of the state of state and local government budgets; (ii) creating a data collection resource and oversight body to help identify and manage risks associated with complex instruments, (iii) creating a data collection resources and oversight body to help identify and management risks associated with public employee compensation (particularly pensions and OPEB), and (iv) expanding the reach of the fiduciary standard to a broader range of stakeholders involved in local government financial decision-making, including public officials, underwriters, and derivatives counterparties.” (Chung 671)

      Honest politicians, clear and transparent accounting, and realistic demands on the City’s and State’s resources are needed, even at the cost of upsetting some constituents. A norm can be redeveloped that can help Cities create stability and longevity.


    1. Binelli, M. (2013). “Chapter 11, Politics.” pp. 229-51. Detroit City is the Place to Be. New York, NY: Picador.

      Mark Binelli gives a good portrayal of the political upheaval that surrounded the bankruptcy of Detroit in Chapter 11 of his book, Detroit City is the Place to Be. At a time when a fiscal crisis was iinevitable, Detroit needed leadership that had experience, innovative ideas, and a vision for the failing city. Kwame Kilpatrick was elected the mayor of Detroit in 2002 and left in handcuffs in 2008, charged with 24 federal felony counts of mail fraud, wire fraud, and racketeering (Binelli, 2013). The Democrat mayor was not only stealing money from the city, he was stealing the trust of the citizens remaining in the economically devastated region. After an interim major, Democrat Dave Bing was elected in 2009 as the city’s highest ranking official. Bing was a former Detroit Piston and an auto-parts supply company owner (Binelli, 2013). Although Bing was seen as the exact opposite of flamboyant and charismatic Kilpatrick, his lack of public administration skills did not serve Detroit well.

      Adding to the punctuation of bad leadership at the city level, Republican Rick Snyder became Michigan’s governor in 2011. In trying to attract new business to the state, Snyder embraced supply side economics by lowering corporate taxes by more than $1.5 billion dollars per year. He made up for the cuts by minimizing aid for higher education, reducing K-12 funding, and raising the tax rate for pensions. When cities around Michigan were at their breaking point, the state and federal government were reducing aid to local governments (Binelli, 2013).

      In 2011, Governor Synder adopted the Emergency Financial Manager Law as a state response to the economic condition of cities around Michigan. Detroit’s City Council and Mayor Bing remained in power but all budgets would have to be approved by a nine person oversight board (Binelli, 2013). The city was required to cut payroll and lay-off public workers (in a city with one of the highest unemployment rates in the nation), sell off city assets, and outsource departments (Binelli, 2013). Gary Brown, Detroit City Council pro-term, said of the consent agreement between the city and the state of Michigan, it is a “great deal… if you look at the fact that we don’t have anything to bargain with, we don’t have anything to negotiate with, we’re down to the ninth hour, we don’t have any cash and we don’t have any leverage”(Binelli, 2013, p.251).

      Obviously, the political climate around the Detroit Bankruptcy of 2013 was a contributing factor to this economic punctuation like none ever seen in the United States.

    1. Cities are susceptible to a variety of shocks, including income. And when income shocks, and resulting population shocks, occur, where are those losses felt most significantly?

      That is the question that Guerrieri et al. try to answer in “Very Local House Price Dynamics: Within-City Variation in Urban Decline: The Case of Detroit.”

      The authors compare Detroit to other cities, most completely Chicago, in examining population decline by neighborhood affluence level according to the Guerrieri, Harley, and Hurst (GHH) model. In the GHH model, “individuals are endowed with either high or low income and all individuals have a preference for living around richer neighbors.”

      It is assumed that richer neighbors and neighborhoods have lower crime, greater access to entertainment and amenities, better schools, etc. The model’s predicts that a population increase will gravitate toward the poorer neighborhoods near the wealthier neighborhoods in order to take as much advantage as possible of the increased amenities (called “endogenous gentrification” in GHH).<br> Likewise, when a city loses population, GHH predicts the population declines should be greater in poor neighborhoods than rich, and that fringe neighborhoods, near the rich neighborhoods, will have the greatest losses of both population and income.

      To test this, the authors examined 207 census tracts in Detroit based on the 1980 Census, tracking through 2009. The data was obtained from the 1980 Neighborhood Change Database and the 2005-2008 American Community Survey.

      The results in Chicago largely held with the GHH model, but in Detroit, the model was not consistent. In Detroit, the formerly rich neighborhoods experienced the largest income decline, as poor residents migrated in and the wealthy left the city. Meanwhile, the populations contracted the most in the poorest neighborhoods. Neither of these results were consistent with the model or comparison cities. There was also a demonstrated effect on housing prices, with fairly consistent housing appreciation rates across the different neighborhoods, although the poorer neighborhoods had slightly smaller increases. This, too, was inconsistent with Chicago’s changes, where poor neighborhood home prices appreciated much more than in rich. This inconsistency was not explained by the data.

      Understanding who left Detroit, and where those losses were felt in terms of neighborhoods and income demographics, is important to our project as we examine the tremendous system-wide shocks that have rocked Detroit over the past few decades. This data examine those population and income losses at an extremely micro level, accounting for neighborhood and amenity shift, which is important as we look at the whole city and greater region in which it resides.

    1. G.Nelson

      In their article, “Detroit’s Bankruptcy Settlement will not solve the city’s problems,” Gary Sands, Laura A. Reese, and Mark Skidmore depict core problems associated with the budgetary woes of Detroit, and list four possible scenarios that can happen to Detroit. The group provides a brief descriptive-statistical overview of the decline of Detroit. Since the 1950s, Detroit has lost more than 90% of the manufacturing jobs, and since 2000, employment in downtown has fallen 30%. Real estate has lost an average of 48% since the high in 2006. The number of residents has decreased by more than 60 percent since 1950s.

      The Group illustrates that the shrinking tax base, extremely underfunded pension liabilities, and shrinking public services, coupled with a racial divide and poor public leadership sets Detroit apart from other municipalities that are suffering similar financial stresses. Detroit is usually noted for being the “most racially segregated US metropolitan area” (Sands 2).

      Detroit has functioned as a “vendor regime,” where subsidies are issued to private businesses for urban renewal and redevelopment efforts. The private businesses are seen to benefit more than public interests, however, and this has led to “instances of mismanagement and public corruption.”

      The overall goal of the bankruptcy is to bring about a financial viability and recovery; however, the group believes that latter is unlikely, but the bankruptcy will focus on how bondholders, pensioners, and other liabilities will be paid out and by how much.

      The Group predicts four likely scenarios for Detroit: i) “Municipal operations could be reduced to the barest essentials, including only the services that could be supported by a realistic budget that ensures the City is able to maintain fiscal balance. ii) Many, even all, public sector functions of the residual Detroit could be taken over by other governmental entities, including newly-created local or regional authorities or by the county or state. iii) Detroit could be dissolved as a municipal corporation with the more viable areas incorporating as smaller municipalities (The State of Michigan has recently used this approach to dissolve two small, insolvent public school districts). In some instances, the more viable areas might be annexed by adjacent suburban municipalities. The balance of the Detroit territory would revert to Wayne county control. iv) The city becomes a de facto colony, with its resources exploited primarily for the benefit of others. This scenario has considerable currency among Detroiters, but it may be the least likely of the potential outcomes. In reality, for most suburbanites, Detroit offers little of value.” (Sands 3)

      The group posits that the city will definitely be different in the future, but the hope and dream of an imminent recovery is unlikely. Racism, mistrust, and antipathy will be issues that need to be overcome.


    1. “Organizational Implosion, a Case Study of Detroit, Michigan” by Staci Zavattaro

      Zavattaro, S. M. (2014). “Organizational Implosion A Case Study of Detroit, Michigan.” Administration & Society, 46(9), 1071–1091. http://doi.org/10.1177/0095399714554681

      In this article, Zavattaro (2014) looks at the case study of Detroit through the framework of organizational implosion. Zavattaro (2014) calls the Bankruptcy of Detroit an organizational implosion, which for purposes of this case study, means that the internal organization of the Detroit municipal government had an inward collapse. An implosion indicates that there were negative events outside the organization and adverse personnel actions within the organization, causing an “implosion” that will have lasting external effects on the organization and the citizens of Detroit (Zavattaro, 2014, p. 1076). In terms of Punctuated Equilibrium Theory, this implosion is the climax of the punctuated events that lead to the Bankruptcy of Detroit in 2013.

      Zavattaro (2014) gives a brief history of Detroit, stating that the city once had the highest median income and home ownership rate in the country. However, by the 2014 Census, the poverty rates of Detroit were some of the highest in the country at 20.4%, meaning over 20% of the population earn less than $10,000 per year (Zavattaro, 2014). From a purely methodological standpoint, I presume that the poverty rate is probably even higher because there is a large homeless population in Detroit that would be difficult to include in the Census. The reason the poverty rate is so important is because it directly affects tax receivables for the city government.

      Detroit’s implosion has been building over the last two decades because of the following reasons: an economy dependent on a single industry, deep-rooted racial tensions, and a history of governmental corruption (Zavattaro, 2014). City administrators and elected officials played a key role in Detroit’s implosion, or bankruptcy punctuation (Zavattaro, 2014, p. 1073). The former mayor, city manager, and assistant city manager have all been sentenced to prison for corruption reasons pertaining to the city’s management of financial resources (Zavattaro, 2014). Because the government of Detroit fostered a culture of unethical behavior and hired employees under this premise, the actions of individuals were able to affect the organization as a whole. Additionally, since the members of the city government were using “rhetoric inconsistent with reality”, they increased the chances of an imminent implosions by lacking transparency and covering up their corruption to the public (Zavattaro, 2014). This organizational incompetence only aggravated the environmental punctuations, such as citizen flight, declining property values, and high unemployment.

      Administrators of Detroit repeatedly ignored the rising economic crisis of the city, especially in regards to pensions and healthcare…even going so far as telling the public everything was good (Zavattaro, 2014). In 2006, Mayor Kilpatrick experienced a $300 million budget shortfall, yet refused to raise taxes. There was a healthcare cost increase of $78 million, up 46% in three years, and a pension payout due to police and firefighters of $177 million, up in the same three years from $120 million (Zavattaro, 2014). That is almost $200 million in additional payments at a time when the economy was declining, and the mayor refused to attempt to raise additional revenue. This could be seen as really the first policy punctuation that directly lead to the bankruptcy.

      In conclusion, looking forward for Detroit means rebuilding on so many levels, including citizen trust in their government. For a post-implosion Detroit, Zavattaro states that a new equilibrium will be found and the city government will rebuild. “Once implosion happens, rebuilding naturally takes place. Ideally, administrators should encourage meaningful citizen participation in this process and can envision new uses for old lands and buildings” (Zavattaro, 2014, p. 1087).

  20. Oct 2015
    1. Several problems plague the city of Detroit, including an exodus of its residents and business to other cities, regions, and states. This article, written before Detroit declared bankruptcy in 2013, proposes that one of the potential solutions to Detroit’s problems is for the city to merge with its suburbs and surrounding counties.

      Since 1950, 1.2 million people have moved out of Detroit’s city limits, leaving Detroit with a population of 684,799 people in 2013. Meanwhile, the surrounding counties of Oakland, Macomb and Wayne, as well as the city, combine for 3.9 million people.

      Salon writer Edward McCelland proposes that a merger could create a megacity, as seen in the cities of Miami, Indianapolis, and Toronto. The increased tax base would bring in more funding for the various government agencies, from road maintenance to public schools to police and fire departments, while suburbanites would benefit from the efficiency of a single local government and from increased stability in the region, which would make it more attractive to businesses and outsiders looking to move in.

      Detroit is the poorest city in the United States, with a median household income of $27,862 in 2013, half the national average. Although the city has lost 1.2 million people, it is still the same physical size, with the same number of roads and miles of sewer. Residents are few and far between, but the city’s high crime rate indicates that crime still must be solved, necessitating a police force (police and fire services are 60 percent of the city’s budget, McCelland writes). Property tax revenues decreased 20 percent from 2008-2013, even as the city has among the highest tax rates in Michigan.

      Much of the flight out of Detroit has been white people, looking to escape Detroit’s urban problems and racial disparity, leaving the core destitute and heavily populated by black people and other racial and ethnic minorities.

      Among the challenges of combining the surrounding suburbs and the city are racial tensions, remnants of the 1967 race riots. The tension and resentments, which go both ways, would need to be surmounted before the city could evolve to include its surrounding neighborhoods.

      The article ends on a hopeful note, recognizing that the ‘new generation’ seems to exhibit fewer racial biases and be more open to integrating the region. However, there is still a long way to go before the city forgets its scars.

    1. G.Nelson

      I am utilizing this weeks article review to assist us and expand upon Meagan Jordan’s article, “Punctuations and Agendas: A New Look at Local Government Budget Expenditure.” Also, I’d like to link her analysis of intergovernmental aid and developmental expenditures together, and illustrate how a Community Development Block Grant (CDBG) grant can have an influence on the local budget, via political and economic influence upon the decision-makers and, thus, the agenda.

      A Community Development Block Grant (CDBG) is a grant from the Federal government to assist in the funding of certain projects with stipulated mandates, and the state, then, awards a part of the grant to a local municipality or government to aid in economic growth and, or a revitalization project. This can have an impact of local budgets.

      The City of Royal Oak, a suburb of Detroit, provides a “Guide To Compliance with Section 3 Requirements: Employment Opportunities For Low Income Residents of Royal Oak.” The purpose of this guide is to provide the Federal mandated requirements and information associated with HUD-funded project, specifically CNBGs, to the civilian contractor. Within Section 3, employment preference is mandated to first seek and hire low-income residents or businesses within the Metropolitan Detroit area. This mandate will cover any contractor that receives more than $100,000 from the City of Royal Oak.

      To identify the individual or business to be preferred under this mandate, Section 3 list the following factors: The individual is a recipient of public housing or a housing choice voucher, and lives in the Metropolitan Detroit area with an income less than 80% of the area median income (AMI); the business is 51% owned by a Section 3 individual, 30% of the employees are Section 3 individuals, and 25% of subcontractors under the contract are Section 3 businesses.

      Strict penalties are enforced upon the individual or business if found non-compliant and neglects to remedy the non-compliant issue. The individual or business may have their contract cancelled, face legal and equitable remedies for a contract default, and be suspended from future HUD contracts.

      I will investigate further into how CDBGs dictate and change the local budget and politics of Detroit, specifically, after the 2013 bankruptcy.


  21. ntserver1.wsulibs.wsu.edu:2062 ntserver1.wsulibs.wsu.edu:2062
    1. In this article from the Journal of Policy Analysis and Management, Meagan Jordan (2003) applies Punctuated Equilibrium Theory (PET) to local government budgeting and agenda setting through a quantitative study of large city expenditures over a 27 year span. Jordan argues that PET is an applicable policy to agenda setting at the local level because changes in the agenda and budget have a more direct effect on citizens than changes at the state and national level. Equilibrium is where local administrators want to stay because it makes the most sense politically (Jordan, 2003, p. 345). However, changes in the agenda equilibrium signify changes in the agenda priority.

      Jordan hypothesized that punctuations and equilibrium at the local level followed a leptokurtic distribution; this basically means there are mostly periods of sustained equilibrium followed by sharp punctuations of change which return quickly back to equilibrium (2003, p. 347). This explanation for a leptokurtic distribution when using PET for policy analysis at the local level is because the most important political goal for local administrators is to maintain a stable tax base. Stability is found at equilibrium. Jordan (2003) compares the city to a market model of competition. Because of the close proximity of cities to one another, people can easily move if they are not feeling well served by their local government. If people move, especially the middle-class, this greatly affects the stability of the tax base.

      Another factor that affects the expenditures of local governments are policy decisions that come from higher levels of government (Jordan, 2003). An influx of investment in local programs through grants and other sources from the state and federal level cause punctuations. Cities with the highest dependency on these intergovernmental funds have more punctuated fluctuations (Jordan, 2003, p. 350).

      Jordan (2003) separated expenditures into two policy typologies: allocational and non-allocational. Allocational expenditures are those that the city are required to have in the budget every year; they include police, fire, and sanitation. Changes in allocational expenditures rarely occur, therefore, allocational expenditures contribute to equilibrium. Non-allocational expenditures are capital expenses and maintenance costs that arise for maintaining parks, highways, and public buildings (Jordan, 2003, p. 354). This typology of expenditures can have the greatest effect on large punctuations, as well as they are the most contested items on the agenda.

      Overall, Jordan found that expanding PET to local government expenditures was a good fit that strengthens the theory. Jordan (2003) also found that in predicting what non-allocational items are coming to the agenda process can help local administrators prepare for punctuations with contingency planning. Local budgets are most prone to changes in the agenda, and therefore PET is a very useful theory at the local level (Jordan, 2003, p. 358).

    1. G.Nelson

      In Matt Egan’s article, “Dr. Doom: This ‘Time Bomb’ Will Trigger Next Financial Collapse,” illustrates how the man, Nouriel Roubini, who predicted the 2008-09 financial crisis is predicting the next financial crisis. The next financial crisis will be a “liquidity time bomb.” After the 2008-09 financial crisis, the Federal Reserve created liquidity in the markets by buying up illiquid assets through quantitative easing. Quantitative easing is a policy were the Federal Reserve buys up troubled assets through the creation of dollars, i.e. debt creation. An illiquid asset is something, like a bond, that is not easily tradable, especially in a time of crisis.

      Egan illustrates that in 2010 and 2013 the financial markets were shocked by illiquidity. Even with the mentioning of the Federal Reserve’s intent to someday cut back or cease their Quantitative Easing program, the markets reeled and temporarily crashed.

      Paradoxically, the Federal Reserve’s policy of providing liquidity in illiquid market situations has only exasperated the liquidity problem by magnifying the situation from the dollars created to buy up illiquid financial instruments.

      Egan illustrates three reasons for illiquid markets: Herding behavior, bonds are not stocks, and banks are missing in action.

      Roubini is depicted as stating, “ironically,” the federal reserves policy of money creation, has created financial bubbles, and has ballooned asset prices in valuation higher than where they should be. As more investors rush into illiquid investments, such as bonds, the likelihood of a crash becomes more palpable, and the carnage that will come from such a collapse, will reverberate throughout the world. This is where the article ends, and I illustrate the bigger impacts and depths of the liquidity crisis

      The liquidity crisis illustrates a small underlying problem associated with the 2008-09 financial crisis: the Federal Reserves policy of bubble creation and destruction since the 1930s. A Keynesian philosophy of economics originated in the 1930s, and is finally illustrating the cogitative fallacy associated with growth via a debt-based fiat-monetary system. This has big implication for the availability and strength of the US Dollar in the near future, and impacts everyone and everything around the world from mom and pop in the US, municipal bonds, corporate financial systems, to the factory workers in China. I am focusing on the broader macro picture, so you two can illuminate the direct impact of the financial problems that arise therein.


    1. Although Detroit has faced decades of decay, this piece in The Economists posits that the city need not continue to decline if it can manage to create economic diversity, in the patterns of other cities like New York, Boston, Pittsburgh and Baltimore.

      The authors write that a newly diversified economy could help Detroit rebound and become stronger in the wake of its collapse.

      The article has a short summation of Detroit’s rise and fall, beginning with the growth of the auto industry and accompanying housing boom and population explosion.

      According to the article, since the 1940s, the decreased cost of moving goods fell 90% in the 20th century, which meant that firms no longer needed to group together in order to access deep markets, and could leave for places with cheaper land and labor. That trend saw the auto companies themselves moving out of town. Families have hopped on the trend, too, leaving the city for suburbs and new communities. Detroit’s downtown became a shell with too many factories and homes for the depleted population to sustain, thus precluding new construction and attracting new people, who are poorer and less educated than those who left town. That left the local tax base eroded, which led the government to cut public services and raise taxes, and eventually necessitating borrowing to stay afloat. Bad government, too, played a role — which brings us to Detroit circa 2013.

      But the authors are not entirely pessimistic. They cite cities like Boston, New York and London, all formerly industrial cities that faced difficult economic situations from 1950-1980 but have managed to bounce back, with a combination of a diverse economic base, a pool of skilled workers, adaptation to technology, and educational opportunities.

      New York saw its textile industry vanish in the 20th century, but was able to capitalize on the expertise that remained to become a fashion hub, and adapt to new fields, like media and finance, to grow.

      Pittsburgh and Boston, meanwhile, benefitted from technology and life-sciences, while Andrew Carnegie and Andrew Mellon left something greater in Pittsburgh than Henry Ford left in Detroit: Universities.

      It will take effort and a massive undertaking to steer Detroit in a new direction, and the authors may not be entirely convinced that such a thing is even merited (early on, they question the need for cities at all). But they are optimistic that Detroit has the potential to change its course.

      Our group has refined our theme and will focus on Detroit as a case study in economic policy. We will examine the reasons for the fall of Detroit and how that fits into one (or more) political policy theory, and how the city can rejuvenate itself predictively within that theory and based on current research. Our approach will include both macro and microeconomics and economic policy in the examination of that theory and this city.

    1. I chose this article by William Sites in the Urban Affairs Review from 1997 because it give a theoretical explanation of Regime Theory as it relates to local governments, economic growth, and politics. In looking at economic policy from a macro to micro analysis, specifically on how the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 affected local economic policies, it is important to understand the dynamics of policy change at the local level. Regime Theory is a well-known and well-used theory in urban studies to research public policy through the lens of local government.

      Urban Regime Theory seeks to explain how local policy is shaped by the regime or political group in power (Sites, 1997). Development policies, which are put in place at the local level, have a huge influence on economic growth. In this article, Sites (1997) uses Regime Theory to look at the connection between urban development policy and politics at the local level in regards to the evolution of cities. The three regimes that build or maintain political partnerships at the local level are pro-growth, progressive, and caretaker (Sites, 1997, p. 537). The two main regimes are pro-growth, which uses market-oriented policies for urban growth, and progressive, which focuses on community-orientated development for economic progression. Caretaker, the third regime, avoids policies influencing development and focuses on fiscal stability and maintaining basic public services (Sites, 1997). In comparing these to the major political parties at the state and national level, pro-growth would be Republican, progressive would be Democrat, and caretaker would be most like Libertarian.

      In this journal article, Sites (1997) uses New York City as a case study to show how 3 different successive mayors had three different regimes, and how they uniquely affected economic and housing policies. The mayors are Edward Koch, pro-growth, from 1978-1989, David Dinkins, progressive, from 1990-1993, and Rudy Giuliani, caretaker, from 1993-1998 (Sites, 1997). Even though this appears to be a great case for Regime Theory based on the chronology of regimes, Sites describes how the theory does not explain all the policies that were put in place, counter to the desires of the regime in power. Sites (1997) argues “local development and housing programs have been strongly oriented toward market interests irrespective of political administration” (p. 538).

      Even though Regime Theory does not account for all policy causality in the case of New York, Sites claims that it is still a very useful analytic theory. Public officials lack direct control of the economy and therefore have to align coalitions of support to influence urban development in the way the administrators feel is the best outcome for their city. This political alignment and specific regime of pro-growth, progressive, and caretaker are the foundation of studying local policy through a Regime Theory framework.

    1. Women entrepreneurs are coming out strong in recession recovery, according to this piece, which is based on the 2015 State of Women-Owned Businesses Report, commissioned by American Express OPEN.

      Women entrepreneurs account for 30% of all enterprise in the United States, according to the report, which was released in May 2015. That is a 9% increase from 21% of all businesses in 2007. Women-owned firms have also surpassed their pre-recession levels of revenue and employment growth. The report estimates that there are more than 9.4 million women-owned businesses in the U.S., generating nearly $1.5 trillion in revenue and employing more than 7.9 million people.

      The industries with the highest concentrations of women-owned firms are health care and social assistance, educational services, and administrative support and waste management, as well as ‘other’ services, which was not defined.

      In addition to looking at data since 2007, the study also examined women-owned businesses since 1997. Since 1997, women-owned business have increased by 74%, grown revenues by 79%, and added an additional 847,000 jobs to the economy. Minority women are also responsible for a significant portion of small business and jobs. In 1997, 17% of women-owned firms were also owned by minority women, while in 2015 minority women own 33% of all women-owned firms.

      The study also noted the states and cities with the fastest and slowest growth in the number of women-owned firms between 1997 and 2015. Georgia has the fastest growth in women-owner firms, while Alaska has the slowest growth.

      Portland, Ore., was in second place as a city with the highest combined economic clout for women-owned firms.

      The study’s methodology was based on U.S. Census Data, specifically from the business census, and the Survey of Business Owners, which is conducted every five years, in years ending in 2 or 7 (1997, 2002, 2007). It also incorporated changes to national and state GDP.

      This report had a lot of data, but was light on suggestions for what to do with and how to interpret the data. Although fascinating, I would have liked qualitative perspective to balance the information and provide more concrete examples of what kinds of businesses women helm and what can be done to help them gain more ground.

      Our policy area will examine the changes in economic policy since the Great Recession. The increase in women-owned business and the economic clout of those business is important when examining policy, especially when it comes to small-business lending, family leave policies, healthcare and other issues many women are affected by, perhaps disproportionately to men. Women may have different economic and entrepreneurial needs than men, which should be taken into account when crafting policy to aid them.

    1. G.Nelson

      Blanchard, Dave. “Manufacturers’ Big Squeeze Puts Pressure on Supplierss.” Industry Week/IW 262.5 (2013): 40-41. Academic Search Complete. Web. 10 Oct. 2015

      In light of the recession, Dave Blanchard explains in his article, “Manufacturers’ Big Squeeze Puts Pressure on Suppliers,” manufacturers are looking for ways to shore up cash flow. Large companies are looking to expand their payment arrangements to their suppliers for services and, or products rendered from 45 to 70 days. For the small to mid-sized suppliers of larger companies, this can greatly affect the smaller company’s cash flow and profits. Smaller companies may go to commercial lending companies, banks, and request a “factoring” service. Factoring is when a bank or lending institution looks at the accounts receivable and lends the company 70% to 90% of the value therein. The bank or lending institution will, then, usually charge 1.5% to 5.5% of the “total face value of the invoice.”

      Blanchard illustrates how one company in the plastic industry utilized this banking technique of factoring to expand the growth of the company domestically and internationally. I find some issues with this technique of factoring, though. If any company is relying on credit markets and tools to grow or finance the company, the company is instantly losing 1.5% to 5.5% of potential profit to banking fees. Since the big companies are rearranging their finances due to the recession, is a small to mid-sized company trying to grow when the headwinds of a recession is attempting to push them back? A couple of questions that are not directly being answered in this article: since the big companies are expanding their payment arrangements to shore up cash flow, will this drive the big company to expand business? Will this expansion help the suppliers? Or is the factoring by small and mid-sized just a domino effect of the debt crisis of 2008-09?

      Even though this article is short, the article illustrates the creativity that is within the financial markets, but also illustrates the potential risks of easy debt through creative financial mechanisms. Part of the issue that caused the 2008-09 crisis was debt, specifically derivatives. Even though factoring is --assuming-- to be limited to 45 to 70 days, commercial or investment banks my be able to bundle an amalgamation of factorings by multiple companies to sell to investors of debt, and if one company, or more, defaults on the factoring because a larger company defaults on their payment to suppliers, the underlying value of the amalgamated-bundle of factorings would default and result in a domino effect; thus, a 2008-09 crisis would once again rise up to smack the GDP down.

      Does the Dodd-Frank Act account for this? My next article will be Dodd-Frank specific.


    1. The recession that officially ended in June 2009 continues to impact how small businesses acquire financing and support, but some companies are stepping in to fill that void.

      Banks previously held many small business loans, but increasingly those same businesses are turning toward their community and crowdsourcing, including community Sourced Capital (CSC), a Seattle company that aims to raise funds from community members who want to support businesses by providing money for interest-free loan. Projects typically range from $5,000-$50,000, which are the hardest to get bank funding for due to the amount of due diligence required. People who want to support the business can buy squares through the CSC website for $50 each, a zero-interest loan to the business. If the campaign is successfully funded, the business owners start paying back “Squareholders” soon afterward, and have up to three years to repay the full amount.

      Lending was a role that used to be fulfilled by banks, in particular community banks for small businesses. In many areas, community banks have been swallowed up by larger banks, ending the relationship-driven lending model as small businesses have to compete with far-away banks who have many priorities and may not consider a small pasta shop in Seattle to be among them.

      CSC’s Square Model was founded by four classmates getting MBAs at Pinchot University, a Seattle institute that emphasized social justice and sustainability. CSC joins the rapidly growing crowdfunding market, which globally raised $16.2 billion in 2014, according to Massolution, a crowdfunding and crowdsourcing research firm.

      So far, CSC has loaned about $838,000 to 50 local businesses, most of them in the Seattle area — although its new partnership with the state Department of Commerce, Fund Local, aims to address the lack of access to capital for small businesses, particularly in rural and underserved areas. CSC and the Department of Commerce hope to support at least one company from each of Washington’s 39 counties.

      Even if it doesn’t hit all 39, success in just half could be an economic boon for the state, said Maury Forman, the senior manager with the Department of Commerce who’s overseeing the program. If 20 counties participate and the average loan is $25,000, that’s half a million dollars in the state’s local economy, he said.

      Alternative sources to bank funding for small business is important for our policy area (economic policy) in that we will examine the changing economy since the recession and financial crisis — much of it due to loan actions — and the small business economy is a vital part of that equation.

      — Amelia Veneziano, 10/5/2015

    1. G.Nelson

      Rugy, Veronique de. "The Municipal Debt Bubble." Reason 42.8 (2011): 20-21. Academic Search Complete. Web. 5 Oct. 2015.

      In Veronique Rugy’s article, “The Municipal Debt Bubble,” she posits that the municipal bond markets are heading for a “housing-like crisis,” and with federal-incentive policies and private investors looking for a safe heaven from current market turmoil, the municipal bond market will be turning into an unsustainable financial-bubble, like that of the 2006 housing bubble.

      Since the 2008 financial crisis, she states, the demand for a safe haven has pushed investors into the municipal bond markets. Municipal bond markets are relatively safe and attractive in a time of financial uncertainty: “[T]he default rate for municipal bonds has average .o1 percent annually” (Rugy). This was the perceived notion on U.S. housing mortgages before the housing crisis of 2006. Rugy illustrates that if a state or local government wants to increase spending, they must issue bonds. Bonds have been utilized to fund projects ranging from stadiums, schools, bridges, to museums. Since 2009, however, they have increased by 800% and have recently been utilized to cover “basic operational expenses” (Rugy).

      In 2009, the federal government created “The Build America Bonds program, part of the American Recovery and Reinvestment Act of 2009” (Rugy). Rugy illustrates that this program was utilized to subsidize local and state infrastructure programs. Through this act, the federal government directly paid part of the interest on the municipal bond, and with private investors seeking a safe heaven from corporate bonds, and tax incentives of investing in muni-bonds, the supply of municipal bonds where quickly bought up by private investors. Private investors, along with state and local officials, believe that if the banks were “too big to fail” then surely the municipal bonds would be “too big to fail.” Rugy illustrates that this assumption has lead to risky municipal bonds being issued to localities that are near bankruptcy, like Detroit an