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Lecture 24 - Michigan and Detroit

Lecture 24 - Michigan and Detroit. Allen C. Goodman, 2014 With thanks to Charles Ballard, MSU. Michigan’s Economy: Past, Present, and Future Presented to: Eaton Rapids Rotary Club September 18, 2013. Charles L. Ballard Department of Economics Michigan State University East Lansing, MI

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Lecture 24 - Michigan and Detroit

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  1. Lecture 24 - Michigan and Detroit Allen C. Goodman, 2014 With thanks to Charles Ballard, MSU

  2. Michigan’s Economy: Past, Present, and FuturePresented to:Eaton Rapids Rotary ClubSeptember 18, 2013 Charles L. Ballard Department of Economics Michigan State University East Lansing, MI ballard@msu.edu

  3. The Worst • The recent recession is • BY FARthe worst since the Great Depression, and the recovery continues to be long and slow.

  4. Recovery has been slow BAD, but we got out of it quickly. BAD, but it’s taken a while.

  5. Fundamental structural changes in the U.S. economy  • have created big problems for the Michigan economy for a very long time.

  6. Manufacturing’s Share of the Economy Has Shrunk Dramatically

  7. Is Michigan now poor? Despite our struggles, Michigan is not a poor place.

  8. Migration to Michigan Migration from Michigan

  9. Michigan Has Big Regional Differences in Per-Capita Income (2011)

  10. 1. Oakland County $53,297 2. Leelanau County $43,978 3. Midland County $43,446 U.S. Average $41,560 4. Washtenaw County $40,821 11. Kent County $36,589 Michigan Average $36,264 14. Clinton County $35,926 16. Macomb County $35,717 19. Ingham County $34,450 20. Wayne County $34,012 27. Calhoun County $33,541 43. Genesee County $31,057 73. Kalkaska County $27,137 83. Luce County $24,492

  11. Also, although Michigan is not a poor place, our economy has not grown as fast as the national average.

  12. Trend line Ratio = 1

  13. Right to Work is unlikely to make much difference. For better or worse, the strength of labor unions has already diminished greatly.

  14. Per-Capita Personal Income, 2011: • Right-to-Work States: $38,046 • Non-RTW States: $44,515

  15. Many of the states with the highest incomes have high levels of educational attainment.

  16. Some Examples Education IncomeState Rank 2010Rank 2010Massachusetts 1 2Minnesota 10 10Michigan 34 39Mississippi 49 50

  17. How about Detroit – Source

  18. Be a little careful Revenue is a flow Debt is a stock

  19. Wilbur Thompson (1965) … tremendous amounts of fixed capital have been sunk in social and private overhead in the very large urban area – streets, sewers, schools, water mains, electric power line, stores and housing – so that even if the area’s productive facilities for export are worn out or technically obsolete, public service and utility costs are low enough to make it uneconomic to abandon so much immobile capital. No nation is so affluent that it can afford to throw away a major city. (A Preface to Urban Economics, P. 23, emphasis added). much immobile capital. No nation is so affluent that it can afford to throw away a major city. (A Preface to Urban Economics, P. 23, emphasis added).

  20. Facts In 1970 the City of Detroit had 497,748 occupied dwelling units. In 2010 it had 269,445 occupied units, a fall of 45% in 40 years. In 1970 City of Detroit had 529,012 total dwelling units. In 2010 it had 349,170 total units, a fall of 34%, again in 40 years.

  21. Every decade, Detroit lost more units than any other city, although it was not unique.

  22. Solutions – 1 ? • Increase tax base • How? • Regionalization • Detroit/Wayne County? • Wayne/Oakland/Macomb Metroplex

  23. City Council Districts, for example Solutions – 2 ? • Break it up! • It’s hard to argue that economies of scale are occurring at the current level. Viable districts will survive. Others will not.

  24. Thoughts?

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