We are on the verge of a very important election.  Irrespective of the outcome on Issue 2, the debate over collective bargaining, unions, and how government functions is not going to go away.

In the wake of movements like “Occupy Wall Street,” it is apparent that there are those that think that if we go back to the old, “Blue State,” statist approach, all will be fine.  The middle class will not be squeezed.  For them, if there is to be any squeezing, it will end up being those “rich fat cats” that occupy the corporate boardroom.  They will pay more in taxes and the status quo can continue unimpeded.

For those that believe this, a recent story from the Economist should make him or her reconsider.

The piece outlines how Detroit, long seen as a rusting hulk that recalled the Midwest’s past industrial glory days, could be on the verge of a renaissance.  However, this renaissance is not due to heavy embracing of a “Blue State” model of pro-government, pro-union, pro-tax, and pro-regulation policies.  Rather, it is driven by some of the kind same people being demonized by “Occupy Wall Street.”

From 2000 to 2010 Detroit lost an astounding 25 percent of its population as the automotive industry ran into a myriad of challenges.  This led to tragic results,

“There are now about 60,000 empty houses in Detroit, says its mayor, Dave Bing. Vacant properties are magnets for crime, and once one house in a block has been vandalised, and often set alight, the problem tends to spread. As property prices in the city collapse, so too does the rate-base that is used to collect the taxes that go to pay for schools; so the schools decline too…”

Unsurprisingly, this massive loss in population has led to declines in property values.  Ordinarily, this is very bad news.  Yet in Detroit’s case, it seems that what usually is bad may also be a new foundation for growth.

The reason is that the cheaper prices for office, retail, and residential space are beginning to draw entrepreneurial-minded people in to the city’s downtown core from which many had been fleeing for decades.  As the Economist states,

“The most remarkable of these is Dan Gilbert. A 49-year-old native of Detroit whose motto is “We can do well by doing good”, Mr Gilbert is reshaping Detroit’s centre. Last year he moved his main business, Quicken Loans, the largest internet mortgage company in America, from the quiet suburbs into a building on Campus Martius park, the heart of downtown. His 1,700 staff there were joined, earlier this month, by another 2,000 people whom he moved into a second building nearby.”

Of course, while these kinds of moves can help revitalize areas that had long since decayed, it is not enough to simply rearrange chairs.  That’s why Detroit’s “TechTown” is another ray of light for the troubled city and one that is slowly, but thus far surely growing the economic pie.

“David Egner, who runs Detroit’s New Economy Initiative (founded three years ago with a $100m budget by a group of ten non-profit organisations) has high hopes for TechTown, a business accelerator his organisation helped set up on the corridor to take advantage of Wayne State University, the Detroit Medical Centre and the Henry Ford Hospital…

It has 250 businesses on its books, and a waiting list of 40 would-be start-ups; it is considering a number of additional buildings for expansion”

Even education in Detroit is being helped out by private foundations, churches, and other philanthropic efforts,

“Half of Detroit’s children now escape the poorly run and poorly funded public schools, because of an explosion in the number of independent charter schools, religious foundations and rules that let pupils attend schools in neighboring suburbs.“ 

There is a long ways to go before Detroit can really say it has emerged from the dark cloud of the past few decades.  However, Walter Russell Mead, who blogged about this story, has it 100 percent right when he states,

“This is very good news, and it is refreshing to see that people are still searching for solutions in a city that many had left for dead. It is interesting to note, however, that in one of the bluest of blue-model cities, the government is responsible for so few of these changes.”

Dan Gilbert is a big time business professional and multiple private foundations have played the key roles in establishing “TechCity” and getting charter schools off the ground.  This is not a government focused, Keynesian effort at pump priming.  It is a bottom up reimagining by people and groups willing to put skin in the game in order to make a difference.
If a paragon of the “Blue State” model like Detroit can undergo this type of transformation, other rust belt states and cities should take notice.

Ohio is slowly attempting to do this and we’ll see on November 8 how close, or how far, it is from being realized.  It would be striking if in ten years from now Detroit has become a beacon of light while Ohio persists in stagnation.