How to Prevent another Detroit
by L. D. Alford
Through the 1960s Detroit, Michigan was the gem of the northern United States. By 1970 it was the example of urban failure. Today Detroit Michigan is half its peak population of 2 million people. It has 33,500 empty houses and 91,000 vacant residential lots. It is like a city bombed out in war but never rebuilt. And why rebuild it? There isn’t any big business in Detroit anymore. Its businesses especially manufacturing businesses fled before the people did. The big question is why did the manufacturing jobs leave Detroit? Other cities faced similar declines in manufacturing and business, but in comparison, for 58 years Detroit has been in a slow death spiral that many think will only be solved by bulldozing the city and starting again. I have some news for you, the city of Detroit could solve its problems in less than a decade. They are the authors of their own decline. Why isn’t Detroit like Tokyo or Seoul, Korea? In spite of global decline in automobile manufacturing, both these cities have grown and their manufacturing has grown. Their auto industry has grown.
The problem with Detroit is it implemented a government caused failure. Manufacturing left Detroit to find lower cost places to build automobiles. They left because the cost of doing business was high. Unions forced costs up, but even the union pay scales might not have led to Detroit’s decline, after all, other cities with union manufacturing have been in decline, but not the decline Detroit has seen. The difference is that city and state taxes as well as regulations and city codes in Detroit are higher than other states and cities. When the business left, the city didn’t reduce taxes, they increased them to keep up their benefits and infrastructure. As more businesses fled the high taxes and regulations of the state and city, the tax base crumbled and the infrastructure crumbled. Businesses didn’t leave because the infrastructure, parks, etc. became worse and were reduced. Businesses left because the costs of doing business would not support profits—they could simply make more money in another location.
Here is a parable for this age. Businesses will always seek environments were they can make the greatest profit. They will tolerate a less profitable environment for a while, but when given a choice, they will always choose the place where their costs are the lowest. Which brings us to the question at hand. How do you create an environment that is positive for business? Foreign countries don’t have parks and recreational facilities. They don’t have greenspaces and urban paradise. They don’t spend $10K per student to partially educate them. They don’t have a thriving downtown. What foreign countries have is cheap labor, lower costs, and most of the time lower taxes. A state and city in the United States can reduce labor and tax costs. They typically don’t. They typically moan and groan about infrastructure, greenspace, and a vibrant downtown while the established businesses they have walk away, and with the businesses go the city and state’s tax basis.
So, Wichita, Kansas is the manufacturing capital for aircraft. It has been since almost the dawn of aviation. Just like Detroit was the capital of automobile manufacture. Aircraft manufacturing has been in decline since 1978, and Wichita has seen some decrease in manufacturing. Instead of cutting taxes and reducing the burden on the established manufacturing they have, Wichita has been on a jihad to increase city spending and infrastructure. This kind of policy will kill the city of Wichita. If this keeps up, Wichita will become like Detroit—a dead city with a carpet bombed infrastructure and little aircraft manufacturing. So how can they stop the decline?
Wichita must cut all corporate taxes and begin to lobby the state government to get rid of Kansas corporate taxes. They should get rid of all city property taxes for businesses. They must get rid of their income tax—that reduces the cost of labor. They can keep some degree of sales tax, but not on items manufactured within Wichita. The sales tax should be transparent to the manufacturers.
The city of Wichita must reduce their regulations that govern manufacturing businesses and building. Regulations should not be any greater than the state or federal requirements. The city should lobby to reduce any regulations in the state that negatively affect manufacturing and building in the city.
The city of Wichita must cut spending. This means everywhere. It doesn’t aid business when the city school system spends over $12K to not educate a child. The city should discover innovative means to make its current infrastructure more useful and should sell off infrastructure it can’t maintain. The city must cut spending to match its revenue. The growth of business will increase the growth of the cities tax inflows. The reduction in spending will reduce the costs of labor. In every case, the city wins by cutting spending.
If the city of Wichita doesn’t take these steps, Time magazine, in the future, will be making a article about the once great Wichita, Kansas, the past capital of aviation manufacturing—the dead city on the great plains.
The author is a retired Air Force test pilot and a Ph.D. in Aerospace Engineering who has worked in and with aircraft developers and manufacturers for over 30 years. His other aviation, technical, and fiction writing can be referenced at www.ldalford.com.
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