Detroit

The Answer to Detroit's Problems: Rich Guys Calling Each Other to Discuss Their 'Neat' Ideas

J.P. Morgan "rolls up its sleeves" and gets to work in saving Detroit.

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"When the head of the world's largest bank called the local billionaire bent on Detroit's revival, good things happened," reads the lede to a story in the Detroit Free Press by Business Writer John Gallagher. The "billionaire bent on Detroit's revival" is Dan Gilbert, the co-founder of Quicken Loans, and the "head of the world's largest bank" is Jamie Dimon, the CEO of J.P. Morgan Chase, who just announced that his bank is making a $100 million "investment" in the Motor City.

Jamie Dimon, CEO of J.P. Morgan Chase. |||

"Obviously, Detroit was having issues," Dimon told Gallagher in an "exclusive" interview. "I got together some of our senior people and said, 'What can we do that's really neat, that could be really creative?'"

If only super rich guys would pick up the damn phone more often to talk about their neat ideas, maybe Detroit wouldn't be an urban disaster area currently embroiled in the largest municipal bankruptcy in American history.

Gallagher explains to his readers that J.P. Morgan decided to spend $100 million in Detroit as a public relations move and to "revitalize one of its major markets." He doesn't mention that in forking over all that money the bank is actually fulfilling its obligations under its $13 billion settlement with the U.S. Department of Justice related to its role in securitizing toxic mortgages. As part of the deal, some of the money goes towards combating urban blight, and other distressed cities have also been vying for a piece.

A typical scene in Detroit. |||

With the announcement of its gift, the bank released a pamphlet touting its "commitment" to the area that's filled with some of the worst clichés of urban redevelopment. J.P. Morgan will be "strengthening workforce readiness," "tackling blight," and "rolling up [its] sleeves." What could go wrong?

The J.P. Morgan money will undoubtedly do some good, though I'm particularly skeptical of the $12.5 million allocated to job training programs, based on the track record of such initiatives. And the $5.5 million that the bank will contribute to the light rail project on Woodward Avenue would be better spent on improving Detroit's unreliable albeit less glamorous public bus system, which is what residents actually use to get around.

Speaking of "seeding future economic growth" on Woodward Avenue, Nick Gillespie and I looked at the rationale behind that light rail boondogle back in 2010. In his recent Reason TV series, "Anarchy in Detroit" (which he elaborated on with an article in our print mag), Zach Weissmueller looked at how bottom up initiatives, like mower gangs and experiments in alternative living, are actually Detroit's best hope at a comeback.

Click below to watch the first video in the series.

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  1. OT: But if you can stomach it, Nick Gillespie will be on HuffPO LIVE! to talk Koch Brothers.

    1. Most of us can’t stomach it. That’s why we come here.

    2. And I’m sure he will be met with completely rational and fact-based arguments about why the Koch Brothers are poopyheads.

    3. weird, must be the day of the kochtopus, just heard a segment on npr.

  2. The answer to Detroit is to wall it off and force it onto Canada.

    1. If we level it, flood it, and freeze it, Canada might like that idea.

      1. Canada can do their own dirty work 😉

        1. OK, how about this? We lease Detroit to Michael Bay for two years. When the lease expires, we keep the money and then give the smoldering hole to Canada.

          1. It would be like that scene from Scary Movie 4, where they’re showing footage of the alien attacks in a bunch of cities, and the girl says “Here’s Detroit” showing a burning city with sounds of war in the background, and then she says “Here’s Detroit after the attacks” and it’s exactly the same just with the alien machines present.

          2. MS, am I right that you’re somewhere in the greater SoCal area?

            Would you have any interest in socializing with a motley crew of libertarianish misanthropes?

            Calidissident, check your email. Playa expects me to produce socializing results, and I can’t do that without full commentariat cooperation.

            1. Yeah, I’m in Ventura county. I could be persuaded, but Sugarfree has some interesting thoughts on Reason get-togethers that give me pause. If the location is not announced on the site, I’m happy to go. Send me an email.

              1. The NSA knows all of our emails too so I’d suggest we all communicate using carrier pigeon.

  3. Lottery winners have a great record of spending their money wisely. I foresee a future in which Detroit has squandered 99.9 million dollars on “downtown revitalization” or some other vanity project that shovels money at cronies while remaining desperately broke.

    1. I see you have an excellent grasp of how the system functions. I see that they have the train thing going. Ooh.. maybe they can build a convention center? That always works!

      1. and a River Walk… and bicycle lanes!

    2. Poverty is a cultural problem not a monetary one. Detroit is an impoverished city. It has an impoverished culture and an impoverished government. Just NBA stars who start out in the ghetto, make a hundred million dollars and wind up back where they started, no amount of money is going to change Detroit.

      The way to “fix Detroit” is not the give it money. It is to change its laws and governing culture. Do that and it will be a great city again.

      1. The way to “fix Detroit” is not the give it money. It is to change its laws and governing culture. Do that and it will be a great large mediocre city again.

        1. Detroit was once the greatest industrial city in the history of civilization. That is a great city in my mind. What makes a “great city” is more than just its fucking hipster culture.

          1. Those days, they ain’t a comin’ back, dude. If Detroit can find itself again as simply a regular place that regular people can live it will be a monumental accomplishment.

            1. I don’t know why they wouldn’t come back. All it takes is opening the city up to commerce and trade and freedom. Hong Kong is a desolate rock that was nothing but a shanty town full of starving refugees in 1945. It was a lot worse off and had a lot less going for it than Detroit.

              Freedom and the rule of law give people the opportunity to do miraculous things.

            2. Actually, parts of Detroit are now ‘regular places where regular people live’. In the downtown and New Center area the occupancy rate in medium and upscale lofts/apartments is close to 100%, and there are thousands of them. And new restaurants and boutique-y stores are opening up right and left. The inhabitants are working for web firms, new manufacturing (do a search for ‘Shinola’, for example) and such.

              I should also mention that it’s safe. There’s less crime (real crime, that is) in the area from Wayne State down to the river than there is in Ann Arbor.

              However, I predict that the Light Rail boondoggle will kill this (real) renaissance by making it impossible to get in and out of downtown for three or four years, while it’s being built. And it’s being built on Woodward, the main artery into and out of downtown.

              1. We were downtown for Autorama and the Supercross race earlier this year. (ate at National Coney for one visit, American Coney for the other!)

                Downtown’s definitely looking better, but it’s still an utter shithole when compared to Pittsburg and Cleveland.

                PITTSBURG AND CLEVELAND, FOR FUCK’S SAKE!

                Gonna take more than a few artisanal watch makers and Dan Gilbert (“Go Cleveland gambling!”) to sustain anything.

                My car hasn’t been stolen YET, despite rather frequent bidness trips. Gotta know where to park…and travel in groups if possible. During the day…

                I wish the old girl luck, but it is still mostly a mega,, festering, putrid shithole. Mostly.

                1. Get in touch next time you’re in town–we could experiment with Detroit beer, or vodka…
                  PS I can tell you where to park, and where you can safely travel in groups. Or by yourself..

              2. Just one example, from today’s Crains:

                http://www.crainsdetroit.com/a…..oit-flavor

  4. The J.P. Morgan money will undoubtedly do some good,

    It will do no good. It surprises me that Reason would think such a stupid thing. Economic aid never does any good, except the various cronies who get checks. The only thing that revives and economy is freedom and the rule of law. We have about a 60 year sample of international aid programs that shows this.

    1. Yeah but this time it’ll work, because we’ll attach strings to the money so they can only spend it on the things we think they need to get back on their feet.

      Completely airtight.

    2. Even Bono acknowledges that.

      1. We have spent fifty years now spending money to “solve poverty” and have nothing to show for it. You would think people would get wise at some point.

        I have to give Bono credit. Lots of people are smart enough never to believe in aid. But very few people believe in aid and then are smart enough and honest enough to realize it fails.

        1. But very few people believe in aid and then are smart enough and honest enough to realize it fails.

          This. Every time I see some celebrity like Alec Baldwin spouting the same lefty talking points they learned 50 years ago in college I wonder to myself how it is possible to keep one’s eyes closed shut for so many years.

    3. This sort of shit only breeds more corruption. I honestly think they could do more good by taking $100,000,000 and just setting it on fire.

      1. Or throwing a giant party with it. At least a few people would have a good time.

    4. You do realize that this is private money being used to do private stuff. That’s supposedly what libertarians think is a valuable alternative to ‘Foreign Aid’.
      Yeah, I know, loan companies and banks aren’t really ‘private’. But they’re a hell of a lot more private than HUD…

      1. I am most skeptical about money moving into businesses in Detroit staying in the businesses and not being siphoned off by the city. I imagine that this skepticism is not mine alone.

      2. It doesn’t matter that it is “private money”. It is effectively charity. Giving money away doesn’t solve the problem. It doesn’t matter if the money is private or government. It is still welfare and won’t do any good.

        You can “invest” in all of the businesses you like. But unless you change the laws and the tax structure to make those businesses viable, it won’t do any good. If this were anything but welfare, they wouldn’t be telling the world how charitable they are being. They would be making loans and doing business like they do everywhere else.

        1. Politicians always prater on about bringing jobs into the city but have they ever thought about relaxing their regulatory and tax laws to allow current businesses to grow and expand?

          1. Where is the opportunity for graft in corruption doing that?

    5. They’ll be able to rehire their farrier!

  5. Any “how to rebuild” Detroit discussion that doesn’t involve Les Gold is worthless.

  6. Give me Detroit and absolute power over it, and the problems there will soon come to an end. I also need a cadre of former Viet Cong troops. No reason.

    1. Can I be Sergeant Major of the Petorian Guard? I make sure they look smart and do daily drills in the palace court yard.

      1. It’s not about me, John. It’s about my people.

      2. I can’t decide if Detroit’s national anthem will be “Panic in Detroit” or “Detroit, Rock City.”

        1. The former.

          1. Look, get your own blasted city to rule.

      3. PO-LEESE DAT MOOSTACHE!

  7. J.P. Morgan will be “strengthening workforce readiness,” “tackling blight,” and “rolling up [its] sleeves.” What could go wrong?

    It certainly reads like those catch-phrases one reads in the workbooks they pass around at those “Employee Engagement” workshops.

  8. “the CEO of J.P. Morgan Chase…just announced that his bank is making a $100 million “investment” in the Motor City”

    ORLY?

    “2013…a year when [JP Morgan] agreed to $20 billion in legal payouts, most notably in the form of a $13 billion settlement with the Justice Department over its mortgage lending practices and roughly $1 billion in fines for its “London Whale” trading scandal. The bank also experienced its first quarterly loss in nearly a decade.”

    In context, $100m could be easily considered gratuitous ‘goodwill’ payments to people who might look more favorably on the bank they are regulating as long as they are throwing millions of dollars condition-free at their municipal-crony friends.

    I mean, if people are bilking your bank for *billions*, does it not make sense to throw a few hundred million into ‘pre-payment’ schemes such that the future estimated legal-ripoffs are ameliorated somewhat?

    Because as we all know, when Government huffs and puffs and demands huge ‘settlement’ payments… its not about politicians burnishing their credentials!? No, its ‘protection from market excesses

  9. Chicago’s heading towards that direction. When it does reach that point, I hope by then I have a multi-national conglomerate that buys everything in the city.

    It would basically be Robo-Cop but with more nudity.

    1. I wonder if maybe the example of Detroit might wake Chicago up. Even Mayor Tiny Dancer admitted the other day the city is in decline. I know that sounds far fetched. But if the pensioners in Detroit really do lose out, I am thinking the ones in Chicago might tell their union bosses to be more reasonable.

      1. That’s what Rahm is banking on. He’s an idiot though. If he would have cut the city’s waste and cronyism and tried to actually reform the city services as oppose to give his friend’s special privileges, he could have had the city’s support when it was time to fight the unions.

      2. I wonder if maybe the example of Detroit might wake Chicago up.

        It won’t. My hipster cousin with the Pious has a home in the city. He’s into Rahmbo cause, “He don’t take any shit.” Huh? Thinks it’s all good…

        Nope – they gonna go down, hard, just like alllllll the other big cities will.

        “President to New York: Drop Dead!” Same to Detroit, Sacramento, Chicago….it’s all coming home to roost. Ima enjoy it.

        1. Me too. The only way to fix them and let them hit rock bottom. They are like drug addicts addicted to stolen money rather than drugs. They will only get better when there is just no more money to steal and to waste.

        2. That’s why I am trying to get out of there. I’ve been there my whole life and would love to stay but every year it seems as though the city is getting much more shittier.

          1. I don’t know Detroit. Is there any sort of “productive class” left that keeps the place afloat, like in NYC?

          2. New York, at least under Gulliani and Bloomburg was smart enough to realize if you have an effective police department and keep the city safe, you can at least keep the rich residents no matter how badly you fuck things up. It looks like Chicago isn’t even that smart and is about where New York was under Dinkins.

            1. The violence in the city used to be contained on the West Side and parts of the Southside. Now it’s so bad that a couple summers ago we had a shooting downtown at the Taste of Chicago. Granted this was done by thugs from the low income areas but now they are bold enough to come into the affluent neighborhoods and cause trouble.

              1. Is Cabrini Green still around? That place was scary as FUCK when I was working out there in the late 80’s.

                1. It’s gone now. What made it so scary was Candyman.

    2. Chicago’s heading towards that direction.

      Chicago isn’t heading in that direction, it’s been following in lock-step. But nobody gives a shit about anything south of 63rd Street east of Pulaski. Most people north of Hyde Park think Avenue O is somewhere in Indiana.

      1. I should say that Rahm and Barack DO care about the southeast third of the city during election campaigns. But God forbid they let the area improve slightly because working-class people might move in and ruin their reelection chances.

      2. I lived in the Fernwood Park area (103rd and Halsted) and while it’s mostly a black middle class neighborhood, it’s slowly turning into a place where crime is becoming the norm. My stepdad tried to organize everyone to ward off the crime but it seems as though no one really cares. The alderman certainly could give two shits.

        1. The alderman loved the black working class when they followed voting orders. Now that some of the working class are questioning the effectiveness of the political leadership, the alderman is happy to scare them away.

  10. There’s nothing wrong with Detroit that a few tanker trucks of gasoline and a book of matches can’t fix.

    1. +1 Devil’s Night

  11. I wonder how many dilapidated properties could be bought and bulldozed for $100 million in the current Detroit Wilderness Preserve.

    If nothing else, put the damn train station and some of the abandoned factories out of their misery. The goofiest Libeskind-style architectural eyesore would be preferable to what’s there now. There’s nothing more pathetic than a “historic structure” that has no commercial development possibilities whatsoever. Even the most fanatical historic preservationists are smart enough to understand that it takes money to sustain these buildings. If no one will step up to the plate, it’s time to say goodbye.

    1. The goofiest Libeskind-style architectural eyesore would be preferable to what’s there now.

      At least Detroit’s magnificent ruins look great from afar. Libeskind’s buildings look horrible at any distance.

  12. I aaw this article on Crain’s Detroit Business via a post on DetroitYes forums http://www.detroityes.com/mb/s…..to-Detroit
    http://www.crainsdetroit.com/a…..troit-deal

    1. Remember when Crain’s was a business-focused publication instead of a crony-capitalist publication?

  13. In context, $100m could be easily considered gratuitous ‘goodwill’ payments to people who might look more favorably on the bank they are regulating as long as they are throwing millions of dollars condition-free at their municipal-crony friends.

    This was pretty much my first thought.

    See, also: Papal Indulgences

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