84 Matching Annotations
  1. 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

  2. Oct 2020
  3. Sep 2020
  4. Aug 2020
  5. Jul 2020
  6. Jun 2020
  7. May 2020
  8. Jun 2016
  9. 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.

  10. 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).

  11. 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.


  12. 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 and Los Angeles. This sort of risky loans operation is what fueled the housing crisis of 2006.

      Like the 2006 housing crisis, investors have started to hedge, protect themselves, from a muni-bond crisis. Investors can purchase Credit Derivative Swaps (CDS) as an insurance against failing bonds. The price of CDS can be indicative of the underlying assumptions that investors have toward bonds, and recently, the prices have been increasing, just like what happened before and during the 2008 financial crisis on corporate bonds.

      Rugy believes that there will be a muni-bond crisis in the near future. Since her article, Detroit has been in an annual bankruptcy process that has written off muni-bonds, costing taxpayers billions. Similarly, Puerto Rico has had muni-bond problems, which is tied in with US muni-bonds. If enough muni-bonds fail, a domino-like effect will overwhelm not just the U.S. economy, the global economy, as well, like that of the 2008 crisis. This time, however, the Fed is more limited in resources and jurisdiction to limit the financial fallout.


    1. Title: "Do housing bubbles generate fiscal bubbles? Evidence from California cities" Author(s): Razvan Vlaicu and Alexander Whalley Source: Public Choice, Vol. 149, No. 1/2, Public Choice in a Local Government Setting (October 2011), pp. 89-108 Stable URL: http://www.jstor.org/stable/41483725

      “Do housing bubbles generate fiscal bubbles? Evidence from California cities” appeared in Public Choice in 2011 and was written by Vlaicu and Whalley. These authors sought analysis of how the housing market is connected to the local city budget. Vlaicu and Whalley hypothesized that government officials pay close attention to the housing market because property tax and sales tax are two major revenue streams for local government (2011). This article looks at city level data from California between 1993-2007 to analyze the effect of house prices on city government policy.

      Property taxes are levied on the assessed property value rather than the fair market value of the property. Because of the constraints of assessing property values, there is usually a 2 year lag for assessed values to reflect market conditions (Vlaicu and Whalley, 2011). Additionally, some states, such as Florida and California, have legislative measures that restrict a city’s ability to change property taxes by increasing assessed values. Because of Proposition 13 in California, there is a hard cap that limits property value increases to only 2% a year (Vlaicu and Whalley, 2011). California did see an increase in property tax revenues, even with Proposition 13, because of the increase in home sales. As properties sold in California, the assessed amount was based on the new sales amount; property tax revenue increased because of the increase in property transactions. Between 1996 and 2006, the median housing price tripled in value (Valicu and Whalley, 2011).

      However, their research shows that the connection between the housing bubble climax in 2008 and the budgetary stability of cities in California were not overly interconnected. Unlike the federal government, cities must operate on a balanced budget. The results from the multiple statistical test performed by Vlaicu and Whalley show that when governments have an increase in property tax collection, they cut back on other tax receivables. There cannot be a huge windfall of money in a balanced budget without increased spending that may not be sustainable. Additionally, because the housing market is closely correlated with other economic factors (i.e. employment rates, education level, etc), an indicator of city budgetary policy is more connected to the overall economy. Sales tax is a larger portion of a city’s budget and much more susceptible to a volatile economy. All of this data implies that the housing bust of 2008 itself had little impact on city spending in California. The overall economic recession has more of an effect on local and state tax revenue than housing market changes (Valicu and Whalley, 2011).

  13. Sep 2015
  14. ntserver1.wsulibs.wsu.edu:4181 ntserver1.wsulibs.wsu.edu:4181
    1. "Remains of the Progressive City? First Source Hiring in Portland and Chicago" by Greg Schrock. Urban Affairs Revew, 2015, Vol 51(5)649-675

      This journal article looks at a progressive policy, First Source Hiring, in terms of urban development as an alternative to the growth-oriented model. The progressive model focuses on a more equitable development for all rather than just urban expansion and upward mobility for a few. In the 1970’s and 1980’s, First Source Hiring was an urban progressive policy that required private sector contractors or those receiving economic development subsidies to work with publically sponsored employment and job training programs to hire the unemployed residents of that city first. The goal was to directly benefit community need and local unemployment rates (Schrock, 2015, p. 649-650). The program was used by many cities but was phased out by a changing economic and political culture in the 1990’s (Schrock, 2015, p. 650). This article looks to explain the First Source Hiring experience for current community planners with whom a resurgence in progressive policies is occurring (Schrock, 2015, p. 651).

      First Source Hiring was first implemented by Portland, OR in 1978. The policy emerged from a combination of local and federal initiatives. Under President Carter’s Targeted Job Demonstration Program in 1979, 10 cities around the country participated, including Portland. A key component of this federal program was for communities to implement targeted opportunity strategies that included incentives or mandates to influence how government contractors hired their labor force (Schrock, 2015, p. 652-654). Opponents of the program, which included some unions, claimed the hiring policies infringed on their members’ ability to make a living. The 1990’s brought a changing political atmosphere; cities saw an onslaught of growth oriented, entrepreneurial mayors that replaced the progressive mayors of the 1980’s. Racial quotas and affirmative action were also being attacked during the 1990’s; First Source Hiring was added to these policies as discriminatory (Schrock, 2015, p. 655).

      Schrock uses archival sources and interviews to support his premise that institutionalization is the key factor in whether a policy can be resilient to changing circumstances and has the ability to influence future actions (2015, p. 655). Policies must imbed practices and goals that are adopted by stakeholders both inside and outside of government. The degree to which a policy can be institutionalized depends on the level of adversity and the supporter’s amount of resources. Chicago had a large number of NGOs with the resources necessary to carry on the progressive ideals, even though the Chicago First Hiring policy was officially ended in 1991. Because the policy had been institutionalized, aspects of the Chicago First policy are carried on to this day in other economic and development policies. First Source Hiring is still legally a policy in Portland, OR; however, due to the fact that it bounced from agency to agency, there has been no enforcement of the policy since the early 1990’s (Schrock, 2015, p. 662). Therefore, the key is not IF a policy gets adopted, but HOW it is adopted, that can predict its effectiveness and viability over time (Schrock, 2015, p. 670).

    1. G.Nelson


      Kerkhoff, Matthew. "The Fed's Dilemma." The Fed's Dilemma. Financial Sense, 11 Sept. 2015. Web. 28 Sept. 2015.

      In Matthew Kerkhoff’s article, “The Fed’s Dilemma,” he examines what the Federal Reserve will do, in regards to interest rates (leave put or raise rates), when they release their FOMC Statement at the end of September 2015. Kerkhoff utilize market indicators, such as the GDP quarterly reports, jobless claims and job growth, corporate profits, tax revenue collected, personal income levels, consumer spending, consumer sentiment and confidence, yield curves, to illustrate to the reader that the U.S. economy is in a relatively strong position, and this should be a positive indicator for the Fed to start to raise rates.

      Kerkhoff illustrates that the Fed has two components in which they primarily utilize as indicators to move rates or keep rates constant: “Maximum employment and price stability --defined as 2% inflation” (Kerkhoff). In regards to maximum employment, Kerkhoff utilizes the U-6 rate, “a broader measure of unemployment that includes discouraged and underemployed workers,” is relatively high (Kerkhoff). Moreover, wage growth, an individuals salary, is less than ideal, and is not showing significant growth. The Fed is, also, missing the second mandated component to raise rates: Inflation. Kerkoff depicts that domestic inflation is relatively stagnant, hasn’t moved much since 2012, and the deflationary pressures from around are working to keep domestic inflation down. Furthermore, the IMF and World Bank requested the Fed to withhold from raising rates, stating that it could have adverse affects to the many countries and markets that are currently struggling.

      If the Fed were to raise rates, Kerkhoff hits on a key point about the ramifications that could ensue. A higher rate means a stronger U.S. dollar, which means the products manufactured within the U.S. are more expensive to foreign consumers. This, in turn, would lower future growth, and also, create stronger deflationary pressures, but this time from within the U.S. Kerkhoff only brushes slightly on the issue of currency wars, however, by stating that other countries are working to devalue their own currencies in order to drive growth” (Kerkoff). This move by other countries to devalue their dollars acts as a catalyst for other nations, investors, individuals, and groups to flood into the U.S. dollar to protect themselves from devaluation, thus, causing more deflationary pressure upon the U.S. economy.

      At the end of September, Kerkoff sees that the Fed could go either way in how they deal with interest rates --leave put or raise rates. In the past, Kerkoff illustrates, the Fed has worked to raise rates to control a growing economy, but this time they are simply trying to maintain a “’normative’ interest rate policy” (Kerkoff). It is unusual to have rates near zero when the economy looks so “robust.” Kerkoff believes it’s best for the Fed to raise rates because of the strength of the U.S. economy, and the mandated components do not involve global growth.


    1. “The Economic Impact of Stray Cats and Dogs at Tourist Destinations on the Tourism Industry,” written by Diana Webster with support from Cats and Dogs International (CANDi), draws a connection between animal policy and tourism, particularly for American and Canadian tourists. It asserts that countries with more humane and efficient animal control laws will have more robust and successful tourism industries.

      Webster writes that tourist destinations have a lot to lose if animals appearing to be homeless, ill, or dangerous are highly visible at tourism destinations. Based on a survey CANDi conducted of more than 1,200 U.S. and Canadian tourists, about 41% of tourists were less likely to return to destinations where they had seen stray animals, and about a third said they would report the experience to hotel or resort management, the tourism booking company, their friends and family, and on social media.

      Of those 1,200 respondents, 63% of U.S. travelers and 61% of Canadian travelers has encountered stray cats and dogs on their most recent trips outside of the U.S. and Canada. For many of them, the experience was mostly emotional, although concerns about issues like public health, zoonotic disease (diseases that can be transmitted from animals to people, like rabies), personal security, and biodiversity are also important when considering feral animal populations.

      Webster claims that the impact of stray animals on tourism could be in the millions of dollars for countries like Mexico and other destinations for North American tourists who are accustomed to pets as family, and not seeing them starving and ill.

      Webster writes that some international tourist organizations engage in mass killings of stray animals before tourist season in order to hide the problem, but it is not a viable solution; the best solution, she writes, is sterilization through spays and neuters.

      To that end, she encourages companies who profit off tourism in these areas to partner with government and animal control efforts. Many of the countries are developing nations, and do not have the resources or the institutional capabilities to handle this complex problem alone. Webster cites several examples, including hotels working with veterinary organizations for spay-neuter clinics, “cat cafes” to give stray cats safe places with food and water, and airlines helping to transport vets and support staff to these areas for spaying, neutering, and medical care.

      Creating and sustaining economic development is complex. Tourism is an important part of that cocktail, though certainly not the only part; however, tourism only works if people enjoy the experience, and heartache over ill or starving animals doesn’t lead to fun experiences.

      It is important to consider a multitude of factors influencing tourism, from cost and experiences to personal security, before implementing it as a primary economic development engine. Although I felt that some empirical data was lacking, this article shines a light on an area many probably don’t think about: The impact of animal policy on tourism and economic development.

      — Amelia Veneziano

    1. G.Nelson

      Swagel, Phillip. "Legal, Political, and Institutional Constraints on the Financial Crisis Policy Response †." Journal of Economic Perspectives 29.2 (2015): 107-22. Web.

      Phillip Swagel, former Assistant Secretary for Economic Policy at the US Department of Treasury, discusses in his essay, “Legal, Political, and Institutional Constraints on the Financial Crisis Policy Response,” that the US policymakers response to the 2007 and 2008 financial crisis was shaped by the limited legal authority and tools available to the US Department of Treasury and the Federal Reserve at that time, and how new tools and authority –access to public money and greater jurisdiction-- were made available because of the financial crisis’ “’unusual and exigent’” stresses upon the broader US economy (Swagel 107). The new tools and authority of the Treasury Department and the Federal Reserve were not imminent, but required the crisis to unfold more seriously, so that the policymakers could realize the economic emergency as more of a pressing issue and pass legislation that would grant the Fed and Treasury Department more tools.

      The Treasury Department and the Federal reserve had the following tools at the ready, pre 2007 and 2008 crisis: Discount window was available for banks in need, discount in the federal funds interest rate, FDIC backing, and encouragement for investors not to fire sale their assets and to avoid foreclosure on properties. However, a majority of tools were not available for the investment or insurance institutions that held a substantial amount of subprime loans and derivatives. Swagel illustrates that the Federal Reserve’s and Treasury Department’s tools were not just underwhelming in their initial attempt at remedying the crisis, but they, also, initially underestimated the seriousness and complexity of the crisis, as did the policymakers.

      At the collapse of Bear Stearns, the Treasury Department and Federal Reserve realized that more investment firms would soon collapse if new tools and authorities were not granted. Swagel illustrates that the Fed turned to its only ace in the hole: “emergency authority…[to] lend to ‘any individual, partnership, or corporation’” if a loss is not expected (Swagel 110-1). Even with the Fed’s ability to loan a limited amount of assistance, this legal authority did not give the Fed or Treasury Department direct access to public money, however. After Bear Stearns’ negotiated bailout with the Fed, it took nearly 6 more months, October 2008, to enact the “Emergency Economic Stabilization Act that created the Troubled Asset Relief Program [(TARP)]” (Swagel 111). Beforehand, the Treasury Department understood that even attempting to approach congress without a real-time economic crisis of illiquid assets and credit market seizures, congress would “loath” the idea of providing public funds to investment banks for bailouts.

      Under the same tools of restraint and provisions that granted the Fed the option to bailout Bear Stearns, Swagel illustrates that it was the decision of the Fed not to bail out Lehman Brothers that led to an even tighter constraint on market liquidity and seizures within the credit market. With limited options from the Fed and Treasury Department, the unforeseen consequences of letting Lehman Brothers collapse exasperated the crisis further and put a constraint on debt markets, which affected normal government operations of securing debt. Two days after refusing to bailout Lehman Brothers, however, the Fed provided loan assistance to AIG, American International Group, an insurance company, because the Fed believed AIG to be more financially sound and important to the US economy. The deal between AIG and the Fed was not clean or clear, however, and the two are currently in litigation, today, from the deal struck in 2008. The same week of the AIG and Fed deal, TARP was proposed --which passed a few weeks later in October 2008-- and two more banks failed, WAMU and Wachovia (Swagel 117). With TARP, the Treasury Department would be able to provide financial support to the markets of $700 billion. Swagel illustrates that if the Fed and Treasury Department had the tools earlier and the foresight, the crisis could have been more contained, but the policymakers would not have been able to justify the $700 billion cost of TARP without such a monumental crisis.

      Swagel contends that if another financial crisis happens relatively soon, the Fed and Treasury Department will be limited in how they can intervene because of the 2010 Dodd-Frank financial reform bill and the expenditure of an already lowered interest rate by the Fed. Politicians stumped on the promise of not bailing out businesses that were “too big to fail,” so the likelihood of congress approving another direct infusion of funds, such as TARP, would be improbable, but with the Dodd-Frank act, governments may be able to seize businesses directly to control operations and direct the losses onto the bond holders and investors, which will limit the loss to the taxpayer because of new FDIC provisions. Swagel states that by studying what happened from the 2007 and 2008 collapse, a more effective response may be garnered in a future crisis.


    1. Adam S. Weinberg, a professor of sociology at Colgate University, partnered with Peter Cann, executive director of the Madison County (New York) Industrial Development Agency, on a project called “Hamlets of Madison County.” The project aimed to reinvigorate the rural hamlets of central New York, with populations of roughly 500-1,800.

      Weinburg’s real-world work led to a theory of sustainable rural economic development, which he outlines in “Sustainable Economic,” Development,” published in the Annals of the American Academy of Political and Social Sciences in 2000.

      Weinburg identifies “high road” firms as a critical component to rural economic success. High-road firms employ “the best workers and latest technology to yield products with a high value” (Harrison 1997; Thurow 1996, Kanter 1995). The work is carried out in smaller facilities, making components for larger products across geographic regions, which then supports a global network of production.

      Essentially, companies in rural areas would make small items to contribute to larger projects — such as electric conduit for engineering work. They would do so without greatly increasing their environmental or social footprint in the community, but rather hiring local and regional talent and expanding upon current industry in high-paying jobs. The leaders of these companies also have existing ties to the community, which would keep them from relocating to a different area once established.

      In attracting, or encouraging, high-road growth, there are three critical elements: Human capital (educated or highly trainable employees); physical infrastructure (communication and transportation, like high-speed data transmissions and access to airports); and adequate financing (including grants, bank financing and seed start money).

      A community also needs to have an “Entrepreneurial Social Infrastructure,” or ESI, defined by Flora, Sharp and Flora as “a bundle of factors contributing to a locality’s ability to respond to challenges in a rapidly changing context.” That might mean industry and education teaming up to identify the most important areas to focus on for job growth. It certainly means differing factions joining together for the good of the community.

      Weinburg says that local mobilization won’t happen without “social chance” — an idea expanded upon by the British sociologist Sibeon. Social chance is an event like two people meeting at the right place and right time, or a focusing event like a disaster. Social chance can be encouraged through local mobilization, or the opportunity to organize and synthesize competing ideas.

      But even with these elements in place, a community first needs incentive, which can be either monetary (jobs, better schools, improved infrastructure) or less tangible — hope, he writes, is a good incentive.

      Small communities are often resistant to change, Weinburg writes. They have seem economic growth efforts come and go, and suffered with consequences, such as effects from natural resource extraction, industrial waste and prisons. Small communities are also committed to their lifestyle and quality of life, so an influx of new employees and development is unappealing. There are also often competing and loud factions preventing different developments, out of fear of change or to promote their own projects.

      High-road development solves at least some of that, Weinburg writes — it allows a town to stay small and capitalize on what already exists, thus contributing to their own economy and the global market.

      As for Madison County, it’s a work in progress. The county has hired a consultant to assist with writing grants, but much of her time gets wrapped up in local politics. The businesses it has have grown, but only one is flirting with larger growth through contracting.

      “A start has been made,” Weinburg writes. “… Sufficient organization and resources are available to suggest that production for the global market is not out of the question. One day, it might be possible to point to this county in central New York as an example of how a rural area can restructure itself to become an active agent of globalization.”

      The fate of rural economic development is important to our policy report, as we will focus, at least in part, on the influence of economic development engines and organizations like the Small Business Association, which support entrepreneurialism and growth.

    1. This is an article from June 11, 2015 edition of the Economist about the future of cities located in the Midwest of the United States that are suffering from post-industrial economic decline. The three cities that are analyzed are Gary, Indiana, South Bend, Indiana, and Galena, Illinois. All three of these cities have historical roots consisting of economic policy centered on industrial employment. However, as U.S. manufacturers have gone out of business or outsourced production to foreign countries, cities all over the nation, but particularly in the Midwest, have seen never before rates of vacant buildings, unemployment, high school drop-out rates, and crime. For survival, industrial cities must reinvent themselves by focusing on economic diversification anchored on fundamentals: geographical location to attract tourism and new business and to fiscally focus on institutions like universities and hospitals. Additionally, dependence on a single employer for a city has proven to be too risky as an economic plan; multiple businesses and new industries must be present in an increasingly volatile, non-heavy manufacturing market.

      Galena, Illinois is an example of a post-industrial city that has reinvented itself as a National historic site that attracts more than one million visitors per year. Galena met its post-industrial decline much earlier than many other Midwestern cities; by the end of the 19th century, it had gone from a busy metropolis competing in size with Chicago, to a ghost town. However, due to some clever economic planning during the 1960’s, city planners invested in historical preservation and put Galena back on the map as a tourist destination.

      South Bend, Indiana is another example of post-industrial survival. The Studebaker headquarters were located in South Bend until the company officially went out of business in 1963; it became a “company town without a company”(Economist, 2015). Fortunately, South Bend had 2 important economical anchors that have kept the city afloat: Notre Dame University and Memorial Hospital of South Bend. Although South Bend has seen huge increases in unemployment and poverty since the 1960s, these 2 key institutions have kept the city viable. Currently, the mayor is trying to lure technology companies to South Bend with tax incentives, inexpensive power, and the geographical location of a cool climate (ideal for manufacturing technological components).

      By comparison, Gary, Indiana has not fared as well as Galena or South Bend; Gary is a smaller version of Detroit, Michigan. Gary has some 5,000 abandoned buildings (about ¼ of all buildings); this is an eyesore and attracts criminals. After a change in Indiana’s property tax rules one year ago, Gary lost more than half its annual budget; this meant the city faced shutting down half of the services it could offer. The current mayor of Gary, Ms. Freeman-Wilson pleaded with the White House for Gary to be a recipient of the “Strong Cities, Strong Communities” initiative, which gave Federal funds to the 7 most distressed cities in the nation. Presently, Gary has received $6 million in state funds for building demolition, and the mayor has applied for a $21 million federal transportation grant. Gary will focus its economic policy to invest in becoming a transportation hub, being located right on Lake Michigan and just 24 miles away from Chicago (America’s third largest city).