Can entrepreneurs revive Motor City? | Hacker News Reader

Can entrepreneurs revive Motor City?

economist.com

11 pointsErazal5 comments

I wonder if Dan Gilbert paid for this piece, as I suspect he did for many of the 'Webward Ave' articles that popped up when he bought a bunch of properties on that street.

As the opinion of someone who grew up in Michigan and still lives not too far away, tech can't solve the problem. Tech (and tech money) can revitalize downtown, but the problem will have to be shipped somewhere else. It's not just going to go away.

Everyone knows what happened in Detroit and Milwaukee and St Louis and other blighted cities, but do people actually stop and think about what really happened? You had a massive amount of low-skilled workers. Millions in these cities. The low-skill jobs went away, and as they did, the workers had no where else to turn. The jobs were gone. As the cities accumulated more homeless and jobless, they got more crime and more tensions. More crime and more tensions means that the owners and managers and skilled labor that was around (mostly white) left the city. This meant more low-skill jobs disappeared, the jobs that were supporting the higher-skilled workers. Grocery stores, gas stations, etc.

The buildings aren't all abandoned because no one wants to live there. Some of the buildings are abandoned because no one can afford to have their name legally associated with living there. People still live there, but they don't own the building, they just squat in it.

You can't bring in high-skill tech jobs and expect Detroit to be fixed. You can't expect to hire from the local population because there are so many who didn't go to college, didn't finish high school, and are only focused on making ends meet (because so often they can't). You can get a small bump from shipping in higher-skilled workers, as the supporting infrastructure will bring some low-skilled jobs. But it's not enough. It won't revitalize Detroit or Milwaukee or St Louis or a dozen other Rust Belt cities around the country.

It'll be very hard for private industry to fix this without pumping a lot of money into it without expectation of making that money back. And if I learned anything in my economics class in college, it's that you can't rely on the private sector to put money into public goods or things with immaterial gains. Even if tech "revitalizes" Detroit, it will look more like San Francisco, with Oakland looming just across the bay. You'll have thousands of skilled workers driving up the price of things and calling it a success, while ignoring crime waves and homelessness because it's not happening in their city. They'll just push the problem to Saginaw or Flint.

> Everyone knows what happened in Detroit and Milwaukee and > St Louis and other blighted cities, but do people actually > stop and think about what really happened?

I don't think it's limited to those areas, that's just where it's just really obvious because they were hit the hardest. There are so many areas of the country where manufacturing was a good, steady job.

On a positive note, I work for a startup that's been sitting at two different tech incubators in the past year, and it's clear to me that advancements in technology will continue to create jobs.

Many of the jobs in factories weren't low-skilled. I think our perception is skewed because we have more power in our pockets than a Cray in 1994. The knowledge worker is the new machinist. Machinists were the skilled workers who could fix machines. Knowledge workers can write software to keep business processes running, administer systems and networks to keep them running.

What is the next wave of highly skilled worker going to be? Will the rise in MOOCs redefine what a highly skilled worker is?

You're right that many of the jobs were skilled labor. But like I mentioned, when the factories closed down, skilled labor moved out of town. They had the ability to do that because they had money and their skills were not readily available in the marketplace. Unskilled labor doesn't have that advantage.

The idea is that blighted cities, no matter where they are, need to fix the unskilled labor problem before they can truly solve the downward slump.

The only thing that could restore Detroit is a restoration of American capitalism, with drastic reductions in taxes and social welfare spending, and elimination of regulations designed to protect labour. In essence, Detroit would have start again from the bottom, from the same place that countries like China are at now. Low wage, low skilled labour, gradually building the capital and skillset of the residents.

This is unlikely to happen, due to ideological resistance to free market economics, so the people will remain trapped in a state of being unemployable due to labour laws instituted by the government with the intention to protect them, and dependent on welfare programs that reward the sort of low-income lifestyle that will generate the next generation of unskilled, government dependents.

The Detroit that existed for most of the 20th Century likely can't exist again in the US unless the whole nation's economy changes. You'll never have a large population of low (formal) skilled workers making good money because their experience and a general shortage of reliable labor. The corporation has figured out for the most part how to move the know-how from the worker's brain to a corporate training manual, and unskilled labor is no longer scarce anywhere for long since relocation is a lot easier than it was 50 years ago. If Detroit is going to turn around, it is going to look like most of the other American cities. Lots of young creatives move in, followed by trendy bars & restaurants, followed by young white collar workers who want to live in the new trendy area. The white collar workers price everyone else out, and the process starts again in a new neighborhood. The white collar workers could come from startups, but the area already has plenty of them working for established businesses like the auto companies. Downtown Detroit at that point would just be a bigger Royal Oak or Ferndale with some high rises and old money sprinkled in.

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