Detroit 2.0 or 2 Detroits?
Are we creating Detroit 2.0, or are we creating 2 Detroits?
There is a renewed sense of energy and optimism in Detroit. I am seeing this as I explore Detroit's business incubators (writ large), and there is much to applaud. Detroit Venture Partners is creating attractive workspaces for businesses to rub elbows, learn from, and and support each other. It is providing early-stage funding for a handful of promising web and IT start-ups.
Detroit Venture Partners is not the only organization that is investing time, money, training, or other resources in Detroit. The Green Garage hopes to create a greener, more entrepreneurial city. The Detroit Creative Corridor Center supports businesses catering to those in the arts and other creative endeavors.
I love these efforts. I just I don't think that they're enough.
Detroit is on the verge on joining Flint, Benton Harbor, Pontiac, and Ecorse as a "failed" Michigan city that will be run by a state-appointed emergency financial manager. This politically fraught move would strip power from the city and sell or privatize city assets while further curtailing already eroded city services. The difficult straits that Detroit finds itself in suggests that, for all the high-tech, high-arts, green activity that is animating the city, we need something, well, grittier. That does not mean 1950s-era manufacturing; that day is gone. Even the successful investment by the government in General Motors and Chrysler is helping the state more than the city.
A broader, more inclusive form of capitalism is necessary--something I think of as BOP USA. The idea of BOP (bottom of the pyramid) business is gaining acceptance among companies that recognize that poor, developing world countries have considerable, and growing, aggregate wealth. And, more importantly, they represent the frontier of business where new markets are being created, new products are being developed, and innovation is everywhere. If in India or Latin America, why not Detroit?
Data on wage inequality indicates that the most unequal wage distributions are in cities with the highest levels of knowledge workers, including New York, LA, and Silicon Valley. Lower-paid workers earn more if they live where knowledge (creative class) workers' wages are higher. But the overall average wage in these locations is almost perfectly correlated with the average of the knowledge (creative) class. With a little math and a few assumptions about the relative numbers of knowledge- and lower-skill workers, we can conclude that the contribution of lower-paid workers' wages to total wages is fairly small (but didn't we know that?). More simply: wealthier wage earners pull up lower wage earners, but not by much.
So, what can we do to "save" Detroit. We can hope to create a complementary class of entrepreneurs who create less by using web services or nano tech and more by employing people who can be well-trained and work hard (even though they can't write iPhone apps). We need incubators to support these new kinds of business, and fortunately we are beginning to see them in Bizdom, Enterprsing Health, and TechTown. And we need more social venture capital and business support services for those who launch businesses in Detroit, create products and services in Detroit, and provide benefit for all of Detroit.
Otherwise, Detroit 2.0 is a dream for the fortunate few, creating too little opportunity for the city as a whole.
Please join me in this discussion. I'd love to know your thoughts. We can make a difference.