Wednesday, August 26, 2015

Anarcho-Sinkhole on Detroit's East Side

When the government left these Detroit residents a road sinkhole and refused to own up to fixing that sinkhole, the residents turned it into an aquarium. While the hole remained for years, and filling with water, residents cleaned the hole of algae and stocked it with fish. This mini-pond encased in asphalt had become a home for many carp, catfish, and blue gill.

No government department has wanted to own up to the hole, of course, until it became a focus of national news. Residents claim that the Detroit Water & Sewage Department tore up the road, but that government department has pointed a finger at a utility company - DTE Energy - as having created the mess. So while the various monopolists fight over who gets to claim the whole hole, the city came out to empty the hole and relocate the fish, because, as one worker said, they suspected ulterior motives in order to draw public criticism to the city and get the hole repaired. Well, it worked.


Monday, July 20, 2015

Detroit 's Big Johnson

These are just a few of my photos from the Big Painting Exhibition in Highland Park in 2014, in an abandoned and re-purposed industrial factory.

Bicycle Bubble?

I am as big a booster as anyone when it comes to anything Detroit, especially as it involves bicycles (I have 8 of them) and commerce. And I wouldn't mind the Detroit Bikes "B-Type" bicycle for myself, perhaps someday. But I have an egg or two to throw at this article on the expansion plans for a local company, Detroit Bikes.

First, to backpedal. In 2010 I published an article, "Is Detroit a Bicyclist's Paradise?," and I wrote that article to piggyback on the New York Times piece about "biking among the ruins" in Detroit because I already knew that Detroit was going to quickly become one of the finest cycling cities on American land mass. And it is, and that's because of its sheer size and space; lack of crowded roads; friendly folks welcoming bikers; glorious architecture; and endless eye candy. I've been riding the famed Minneapolis-St. Paul bicycling trails and lanes for 20+ years, and I think Detroit was got far better bling all-around.

I spent several years publishing commentary during the unsustainable bubble years, leading up to the very predictable economic and financial market bust. The over-expansion of commerce - especially in food & beverage and discretionary consumer goods - was one of the most visible casualties, as retailers and franchisers went hog wild, only to turn around and scale back operations and expansion significantly, or otherwise, go bankrupt.

The financial markets and oncoming economic "boom" the media keeps gushing over is built on the same rickety platform that led to the 2007-2008 collapse, including the most obvious - a federal funds rate of zero-ish, making credit cheap and easy and addicting. Household debt profile statistics show that, once again, consumers debt is holding steady as compared to the pre-bust years and most falling indebtedness has been heavily linked to default rather than repayment.

Corporate executives are hired to grow business and market share, not to be good economists. That said, some things from the article are worth pointing out for a reality check. I'll start with this quote from the article:"There are 160 million American who don't ride a bike but could," Manthe says. "We want to build a bike for them." Manthe is the newly-hired Sales Director who came from Electra Bicycle Company, which built a significant footprint in the bicycle world. Brands like Electra brought forth wonderful options for the non-lycra crowd that includes folks who just want to ride a quality bike - not from Dunham's - that looks good and makes them feel good. I salute what that company has done for the bicycle consumer.

Whatever the number of potential cyclists, it's worth noting that Detroit Bikes currently has only two models, both in the $600+ price range, with accessories such as baskets costing $50 & up. That doesn't jibe with the other quote that states, "Detroit Bikes specializes in building accessible, quality bicycles for everyday cruising."

Quality, yes - Detroit Bikes offers outstanding attention to detail, hence the price point. But what does "accessible" mean here? Bikes are "accessible" everywhere, especially the sub-par bikes found in big box retail stores. In fact, they are far more "accessible" than any Detroit Bike model. Accessible, as it is used here, refers to being economically attainable for the general populace.

I can afford a Detroit Bike, but as an objective economist my thought is that Detroit Bikes are too nichey for the broader expansion for which the company may be hashing out plans. The price point is currently too high for pedestrian bicycle riders; the quality can't or won't be appreciated by large numbers of potential bicycle purchasers; and the "Detroit" label may not have the broader appeal it has here for those of us who are enamored with our special home.

I hope this company does grow organically, and not because of the distorted market signals that arise due to the manipulation and intervention in the economic system. These misleading signals are latched onto by entrepreneurs and managers who don't have the ability to foresee future market conditions. Product blitzes such as this are often a classic case of malinvestment as described by Ludwig von Mises. It's important to quote the Mises Wiki for those folks who are not aware of the terminology:
Malinvestment is a mistaken investment in wrong lines of production, which inevitably lead to wasted capital and economic losses, subsequently requiring the reallocation of resources to more productive uses. "Wrong" in this sense means incorrect or mistaken from the point of view of the real long-term needs and demands of the economy, if those needs and demands were expressed with the correct price signals in the free market. Random, isolated entrepreneurial miscalculations and mistaken investments occur in any market (resulting in standard bankruptcies and business failures) but systematic, simultaneous and widespread investment mistakes can only occur through systematically distorted price signals, and these result in depressions or recessions. Austrians believe systemic malinvestments occur because of unnecessary and counterproductive intervention in the free market, distorting price signals and misleading investors and entrepreneurs. For Austrians, prices are an essential information channel through which market participants communicate their demands and cause resources to be allocated to satisfy those demands appropriately. If the government or banks distort, confuse or mislead investors and market participants by not permitting the price mechanism to work appropriately, unsustainable malinvestment will be the inevitable result.

Wednesday, February 5, 2014

Detroit's Got Soul

Here's a nifty video that starts out with the usual stuff about Detroit's good, bad, and the ugly.

Then the filmmaker showcases the Brightmoor Youth Entrepreneurship Project, a training program that teaches youths various skills and entrepreneurial savvy. It's referred to here as "curb-side economics," and the people are known as road-side entrepreneurs. City youths in this program learn woodworking, bike repair, community gardening, and how to make t-shirts. Brightmoor's principal Bart Eddy makes the point that "we have to awaken young people to a larger dream." He also notes that while "old institutions are crumbling apart," Detroit's entrepreneurial spirit is kicking up. Detroit is a place of many small and spontaneous changes, while the bigger changes take planning and investment. Indeed, with this resurgence kicking up at a steady gallop, private investors and developers are circling the city like vultures looking for prime properties and entrepreneurial opportunity. The big changes, as Eddy notes, are coming to our town.

One gal from Detroit Soup, who is a transplant to Detroit, accurately portrays (at 7:45 of the video) Detroit's very special environment where human relationships are unique, and in fact, conversations that take place here don't seem to take place north of 8 Mile.

My city-folk friends and I call this "the village of Detroit." There is indeed a very smalltown feel here - everyone who gets out a lot knows everyone, and wherever you go in the city you run into friends and acquaintances as if you were moving about in a small town. I've made friends in the city by bumping into a total stranger and having a conversation about a commonality, or by finding out that we have a mutual friend. Time alone in a coffee shop or a bar ends up with one joining a spontaneous conversation with people who you get to know quickly, and who you end up bumping into over and over again. Everywhere I go in the city I know someone or see the friendly face of an acquaintance. And still, I have little familiarity with the folks in my own suburban neighborhood. People who love Detroit and understand its magic make friends of strangers who pay the friendliness forward, making life here seem intimately sociable. I've never experienced such a thing in my life as I have in the village of Detroit.

Lastly, I want to note the Shinola representative, Bridget Russo, who makes the comment that "Detroit has swagger." Shinola is a maker of rustic goods, beautiful bikes, and made-in-Detroit watches. In fact, they manufacture the first watches made in America in almost fifty years. The narrator notes that Shinola is "successfully marketing that indefinable Detroit feel."

Shinola store
Photo by Karen DeCoster

Shinola store
Photo by Karen DeCoster

With two friends and our trio of Shinola watches
With two friends and our trio of Shinola watches    

And that feel is unique, and those of us here know it exists even if we can't define it. And yes, while New York has lost its swagger, we are the new gritty city.