Michigan’s Lapsing Economy And Its Effect of Detroit Essay Example

Michigan’s Lapsing Economy And Its Effect of Detroit Essay â€Å"Michigan’s economy is in dire straits†, (Lyons, 2006) we learn from Karen Lyons, who works for the Center of Budget and Policy Priorities. She also informs us that, â€Å"Between 2000 and 2005, Michigan’s six percent decline in employment was the lowest employment growth in the nation and its personal income growth was second lowest among the states. Proponents of the Stop Overspending (SOS) initiative — a constitutional amendment modeled after Colorado’s Taxpayer Bill of Rights (TABOR) — have sought to take advantage of residents’ concerns about Michigan’s economic troubles by promoting their proposal as a cure for the economy. They argue that Colorado has experienced strong economic growth since TABOR’s adoption in 1992 and therefore Michigan could be expected to have similar growth if it were to adopt SOS. This is a flawed and misleading argument.†Without some type of proposal that will boost Michigan†™s economy, Detroit residents will suffer not only in their school systems, but their housing, medical and employment rate will drop because many of the current residents are moving to more productive cities where they can find better jobs and live in a more prosperous and thriving environment.This study compiles recently released 1990 U.S. Census Bureau data to measure the economic and fiscal policy performance of Michigans eleven largest cities – those with populations of over 75,000. Using an index of economic performance from 1980 to 1990 – based upon poverty rates, population growth, job growth, and per capita income – we find that six of Michigans largest cities experienced economic growth in the 1980s, and five suffered economic decline.Sources from The Mackinak Center explain that, (The Mackinak Center, 1993)   â€Å"The major issue addressed in this study is why those five Michigan cities were in a state of urban decline in the 1980s. Quite clearly , the decline of the auto industry had a huge effect on the economic well-being of Michigan cities. The transition toward a service and technology-based economy also played a major role in Michigans cities that have traditionally had a large manufacturing base. But we find in this study that a factor that has been overlooked in explaining the economic performance of Michigans cities is their contrasting fiscal policies. There are surprisingly large differences between the taxing and spending policies of Michigans growth cities and Michigans declining cities.†We can easily learn by reading from these sources and identifying that Detroit has been in serious economic trouble for many years. In order to promote a better economy, it is us to policy makers to consecutively make changes in order to boost the economy for all Detroit, Michigan residents, before its too late.We also see that, â€Å"This close relationship between high taxes and spending and low economic growth is not j ust coincidence nor is it attributable to the performance of just one or two cities. In fact, every one of the five declining cities was also ranked in the top five in taxes and spending. Comparing the economic performance of the six low tax and spend Michigan cities with the performance of the five high tax and spend cities.† We see that:1. Population declined in the high tax/spend cities by an average of 6 percent, versus no net population loss in the low tax/spend cities.2. Job growth was more than twice as rapid in the low tax/spend cities: 13 percent versus 6 percent.3. Poverty grew by 58 percent in the high tax/spend cities, versus only 21 percent in the low tax/spend cities.4. Real per capita income fell by 5 percent in the high/tax spend cities, but rose by 9 per-cent in the low tax/spend cities.David L. Littman explains that, (Littman, 2007) â€Å"Michigans state motto makes this confident claim: If you seek a pleasant peninsula, look about you (Si Quaeris Peninsulam Amoenam, Circumspice). Indeed, no other state in the union boasts more beachfront property than the Wolverine State.†Detroit has much to offer, but the resources of the state must be utilized in order to boost the economy for the state, so that Detroit’s depressed economy situation will start being productive.He also shares that, â€Å"More important for much of the 20th century, Michigan was a model of prosperity, a magnet for human capital attracting and retaining a critical mass of world-renowned engineers and entrepreneurs and seemed destined to be an economic engine for the nation. But then came the 1970s and the state has been sputtering ever since. Today, a deep fog has settled over a once bright business climate.The state was always particularly vulnerable to the ups and downs of auto sales. Still, Michigan was a veritable gold mine for wealth-building and wages until the 70s, when automakers began ceding market share to competitors at a pace of just under 1 % annually. Rather than being fleet-footed, the Big Three ignored challenges, suffered severe UAW strikes and accommodated uncompetitive compensation packages through 2006. This is a well-known decline and fall.†We understand that the auto industry has played a key role in the economy of Detroit.Conditions suggest that its more than a problem with the auto industry. Most recently the state has also experienced losses of headquarters and jobs in financial and pharmaceutical sectors, e.g., Comerica Bank and Pfizer. Even lumber yards, motels and other low-profile employers are hurting.Underpinning this downturn are a few economic myths that must be dispelled. Perhaps the most pernicious myth is that Michigan is caught in a cyclical recession.Detroit’s school system will steadily continue to suffer until this situation is fully resolved.We   understand that, â€Å"There are legacy costs and not just autoworker compensation packages. Unfunded liabilities attendant to pub lic-sector employee pensions and health care stand at $35 billion in Michigan. These rapidly rising costs are stealth taxes lying in wait.When will this change? State economic prospects are difficult to predict because organized labor the public education lobby in particular now controls most tax-and-spend policy levers. Michigans education lobby pressures the governor to pass higher sales taxes to be funneled into public schools: Pre-schooling, K-12 and 15 public universities. But the notion that tax hikes will give us a more educated work force, and therefore offer a competitive salvation, is probably the easiest myth to dispel. Michigan education budgets have experienced meteoric increases over the past two decades, but quality has not risen; nor has the plethora of funding stopped the outflow of Michigans most capable graduates.†Time Coalition offers, (Time Coalition, 2007) â€Å"Here are just a few of the reasons why members of TIME believe that Michigan has a tourism product worthy of national attention:n   Michigans unique geography provides visitors more miles of freshwater shoreline than any state in the country.n   Michigan ranks among the national leaders in total number of golf courses and number of golf courses per capita.n   Michigan retains its title as the number one boating state in the country with over 901,060 boats registered to private individuals.n   With over 40 downhill ski resorts, Ski magazine has named Michigan as the Midwests Top Ski Destination!n   Michigan boasts over 5,800 miles of snowmobile trails located in State ; National Forests, and is one of only three states that offer a large system of interconnected and groomed snowmobile trails.â€Å"Regardless of the season, Michigan offers some of the best in vacation and recreational opportunities nationwide. Unfortunately, few people outside of the Great Lakes region know this great tourism product exists. The members of TIME intend to improve awareness of Mich igan tourism opportunities to help grow our states economy!†There is much that can be done to boost the economy in the state of Michigan. Detroit’s schools can prosper and grow if the tourism industry picks up pace in the state so that Detroit can be able to produce revenue for the city.†The entire state of Michigan’s school system is suffering because of   economic depression in the state of Michigan.   (Martin, 2002) â€Å"As a recession and falling enrollment slam some of Michigans wealthiest public schools, some educators and politicians say its time to take a fresh look at how the state funds education.The struggling schools say reforms that Michigan voters passed in 1994 are threatening to change the way they educate kids.East Lansing could lay off an estimated 45 teachers next year. Okemos might slash budgets for sports and maintenance. Waverly and Mason are among the other mid-Michigan K-12 districts patching budget holes they say were primaril y blown by Proposal A the measure that switched the primary source of school funding from local property taxes to the state sales tax.We also see that â€Å"Proposal A has helped rural, less affluent schools improve programs as they cash in on a system designed to strike a better funding balance between rich and poor districts. But wealthy schools say theyve been squeezed for years by relatively small funding increases. And educators are concerned because the state will have to adjust its property tax collection schedule to pay next years $200 per-pupil increase exposing potential flaws in the system.†We also learn from the Lansing Journal that When this became law, everyone said the real test would be when the economy slows, Michigan Education Association spokeswoman Margaret Trimer-Hartley said. Now were facing that test.Its emerging as a key issue in the 2002 governors race. The candidates are considering ideas to adjust the system including ways to let certain district s raise more money and make the formula more recession-proof.But Proposal A stands as one of the most effective and significant accomplishments of the 1990s in Michigan, supporters say. It provided property tax relief and still boosted K-12 education funding to record levels.By helping to level funding between rich and poor districts, its given more students statewide the opportunity to have better computer labs, newer textbooks and expanded academic programs.Nearly 70 percent of Michigan voters favored the plan in 1994. And well over half would vote for it again if it were on the ballot today, according to a recent statewide poll.Governor John Engler and others say the system works. Their message: Wealthy districts should stop complaining and manage their money better.Schools have more money than ever and, in some districts, fewer students.So the question comes back to the school districts, (Shafer, 2002) Engler spokeswomanSusan Shafer explains.(Commerica Bank, 2006) We learn from Commerica Bank that, The restructuring of the Michigan-based auto manufacturing sector continues to overwhelm pockets of strength in other parts of the regional economy, according to Dana Johnson, Chief Economist at Comerica Bank. I dont expect the local economy to start recovering until the buyouts in the auto sector are largely complete. Comerica Bank compiles the Detroit Area Business Activity Index (DABAI) monthly from eight different measures of regional activity which are seasonally adjusted, corrected for inflation, and expressed as an index, with 1996 as base year equal to 100. The Economics Department of Comerica Bank has calculated the DABAI monthly since 1957; depicting Metro-Detroits economy over seven full swings of the U.S. business cycle. Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Detroit, strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth ; Institutional Management. Comerica focuses on relationships and helping businesses and people to be successful.Detroit’s economy relies the state’s officials in building the economy for all of Detroit.WASHINGTON (CNN) (Frieden, 2006) Terry Frieden from CNN News tells us that â€Å"Murders in the United States jumped 4.8 percent last year, and overall violent crime was up 2.5 percent for the year, marking the largest annual increase in crime in the United States since 1991, according to figures released Monday by the FBI.†A bad economy can be blamed on much of the high crime rate in Detroit, Michigan. Many people resort to violence and criminal acts when a cities economy declines. We read that, â€Å"Robberies nationally increased Senior Justice Department officials struggled to make sense of the new figures, and said Attorney General Alberto Gonzales had ordered them to try to find out what may account for the increases.Richard Hertling, deputy assistant attorney general for legal policy, termed the n ew crime figures troubling, but stressed the numbers are preliminary, and do not lend themselves to easy conclusions.†;