Sorting through my thoughts about Detroit's bankruptcy (or whatever it turns out to be)
Different ideas about how companies can be organized and run are floating around. What resonates with me are institutions that support communities: "communities" of employees, of local citizens, of people interacting with the natural environment. Too often, though, companies barely acknowledge the importance of these communities while they bend over backwards to better meet the needs (make that wants) of investors.
Many people reflexively respond that the main (or only) purpose of a company is to make money, and that companies must be organized to serve the needs of the "community" of investors. (They don't). Of course, investors may have no connection to a company at all -- they don't work there, don't live in the towns where their investments are put to work, they may not even like the products the company makes. Yet to business traditionalists -- but not to me -- investors' desire for making money trumps everything else.
I would like to think that when it comes to a real community -- I'm thinking of Detroit -- that we wouldn't even need to question whose rights should be considered ahead of all others: the rights of those who call the community home. Other discussions about social issues can take on a moralistic dimension: deficits somehow correlate with lack of character (though empirical evidence indicates it is appropriate to stimulate a stalled economy); poor people don't deserve to eat; ill-supported (and often mean spirited) advice like that.
But when it comes to a city -- a place where people live, raise kids, and shape our future -- moralizing or scolding make even less sense. Police, firemen, and other pensioners contributed to the city for years -- some for decades. State law says their pensions cannot be reduced. Those not owed pensions are owed essential services, including timely responses by police and fire fighters, working schools, and working street lights. They did not cause Detroit's decline, but they have suffered greatly from a transformed auto industry and corporations' decisions to decamp to the 'burbs, taking with them their tax dollars.
With change, comes the opportunity to reflect upon new ways of doing business. Shifts in population growth and in spending have made companies aware of new markets in the developing world, if not yet in as dramatic a way at the bottom of the economic pyramid. Similarly, in the next several decades, large-scale transfers of corporate ownership provide an opening for a dramatic shift towards inclusive corporations.
And now Detroit is facing bankruptcy. This grim circumstance creates an opening, too. What kind of city does Detroit deserve to be? Most essentially, for Detroit to "work," people must work. And there is work to be done. With more than a quarter of Detroit's 140 square miles abandoned, projects to raze and re-purpose these properties are being undertaken. Detroit Blight Authority is taking a lead, appealing for federal funds. This is a perfect opportunity for the government to release funds, contingent upon the training and hiring of Detroit's idle workforce. What's more, Detroit can follow the lead of other downtrodden communities, including the South Bronx, to create a green, energy-saving, and even energy-creating city.
Detroit's schools are the next (if not the first) obvious place to make changes. Detroit Public School's newly appointed emergency manager can help foster an environment that couples academic rigor with real-life relevance. If you've followed this blog, you know how high I am on the Network for Teaching Entrepreneurship">, a model that creates life-changing educational experiences for low-income students.
Even with ObamaCare, negotiating the healthcare maze will be daunting. Programs like Rebecca Onie's Health Leads demonstrate how non-traditional health care workers can help cut through red tape to ease the problems faced by the ill, poor, and elderly. Where Health Leads relies on college students to fill "prescriptions" for food, clothing, housing, etc., Onie suggests that local community members themselves can staff similar positions. Such staffing (jobs!) can avoid expensive emergency room visits and head off long term health problems. Suitably structured and financed (possibly with social impact bonds), hospitals can serve more patients, more effectively, and save money.
As Governor Snyder has been saying, Detroit's problems did not just occur; they've been unfolding over decades, caused in large part by a dis-investment in the city. Now at the point of crisis, we can begin to point Detroit in a new direction. Detroit's resurrection will take time, as did its decline. It will take investment, but investment in, and of, the community. Not investment aimed at making investors wealthy ahead of the needs of the city.
The city that helped more than any other in winning World War II; the city that created a modern society through the automobile industry and industrial efficiency -- this city needs our compassion and support. This does not mean our charity: for by re-making a working, well-educated, healthier Detroit, we set the country on a stronger course.
What jumps out to me:
Unemployment Rates, adjusted to U.S. Concepts
- Since 2007, every country but Germany has a worse unemployment rate. This is a global--not a national--problem. The group of European countries, whether we consider the EU-27 or only those that have adopted the Euro as their currency, have seen unemployment increases each year since 2008. Those groups are not explicitly represented in the BLS data.
- Since 2009, just after Lehman Brothers hit the fan, through the second quarter of this year, four of these ten countries the BLS cites for comparison have seen their unemployment rise. The United States is not one of them.
- From 2011 to the second quarter of this year, only one country has seen its unemployment rate drop by 0.5% or more. That country is the United States.
Unemployment, seasonally adjusted, March 2011-August 2012.
- We--all countries--are in this mess together. Too big to fail might describe banks. Too interconnected to stand alone describes national economies.
- No leader has the ability to magically restore the economy of his nation.
- All things considered, the United States is faring fairly well.
- How can we challenge the economic beliefs that are holding back our economy?
- How can we include the poor as a source of resourcefulness, innovation, and business opportunity?
- How can we better identify and support local (social) entrepreneurs?
- What urban centers are taking the lead in creating sustainable, inclusive communities?
- What innovative approaches to education are working and can prepare students for meaningful careers?
- How does social wellness use existing resources to create more inclusive health for us all?
- What does inclusive leadership look like?
The Atlantic just ran a nice article in which it reported an interesting survey it had conducted. In the survey, respondents (only Americans) were shown two nations' wealth distributions--one like Sweden's (but even more equitable); and one like the United States's--and asked to choose which country they'd rather live in. Respondents preferred the country with the Swedish distribution.