Wednesday, October 06, 2010

[Detroit] Selling Detroit - Style Over Substance

Selling Detroit - Style Over Substance: It's been a awhile since I busted on the city of my birth, but a recent article in the WSJ irritated my pet peeve. At first glance it seems like one of those optimistic takes on a supposed turnaround in Detroit, a city which has been poised for a turnaround for the entire half-century of my life. But credit the WSJ for not completely falling for the happy camper story.

Centering on the massive influx of filmmaking projects in Detroit (and all of Michigan) since the implementation of a 42% tax rebate on any instate expenses incurred by production companies, the usual sunny but shallow comments abound:
So far, the entertainment industry has produced 7,000 production jobs, though many of those are part-time and without benefits.
[S]ays Mikey Eckstein, whom producers hired to help relocate actors-a job that includes everything from finding a math tutor and trumpet instructor for Mr. Imperioli's children to finding an apartment that can accommodate large dogs. "I paid off my mortgage before they even started shooting."
Well, that's one mortgage paid.

Let's think about this, though. If that 42% tax credit is actually a net financial positive for the state wouldn't it make more sense to broaden it? Why not extend it to, oh I don't know, say, the auto parts industry? How about tech? Offer the same credit to any electronics company that will relocate from Taiwan. Or any sneaker-maker who will relocate from Vietnam. See where I'm going with this? If a lower effective tax rate really spurs growth, why not do it for all businesses?

In all honesty, the business tax climate in Michigan is not the worst in the country. It is simply below average and probably a mild disincentive to bringing in new business. In Detroit, one of the few cities in Michigan with the hutzpah to carry an income tax, the climate is very bad. But whether State or City, as demonstrated by the film industry, reducing the tax burden brings development. So again, why not take it to the next level?

There are two reasons why broad and drastic business tax incentives won't be implemented. First, the cynical reason: it shrinks the control politicians have over which industries get started and which don't. This is not to suggest they are sitting around, twirling their mustaches and plotting to keep central control over the peasant economy. It's just human nature in general and the nature of those who get into politics particularly. No matter what your agenda, you cannot implement it without power so protect your power above all else. (Read your Machiavelli.)

The second reason it won't happen is the specific form of the justification they have manufactured to explain their power protection in polite society. To wit: They seem to believe Detroit's problem is primarily one of public relations:
"Without being too romantic and starry-eyed, this is a dream weaver industry and if storytellers can't bring hope to a region, no one can," says Scott Putman, executive producer/unit production manager on "Hostel: Part III."
Unlike jaded denizens of Los Angeles and New York, Detroiters are enjoying celebrity sightings. Last month, Ashton Kutcher and wife Demi Moore, in town to shoot her new movie "LOL," attended a Tigers game. Around the same time, Ms. Moore and actor Gerard Butler, who was in town shooting "Machine Gun Preacher," were spotted at a local bowling alley. Hugh Jackman stopped by the polar bear exhibit at the Detroit Zoo. "That all helps reshape our image and show people we're turning the corner," says Carrie Jones, director of the Michigan Film Office.
"We're done being sad," he says. "We're trying to build a new industry."
This is the sort of thing that presses my button. Whether it's the Ren Cen or new sports stadiums or movie lots, every generation has its own magic pill to save the city by changing its image. We learn nothing. We just ride the loop-de-loop of futility into oblivion.

So what am I, some sort of tea-party type who thinks a tax cut will solve everything? No, a tax cut for businesses will not solve everything. But it's part of creating an environment which allows all sorts for businesses to thrive, not just the glamorous high profile ones that can get politicians re-elected. Included in that environment are public safety, education, and infrastructure -- in all those areas, Detroit is an epic failure. What doesn't help? Celebrity sightings, movie locales, PR campaigns, and other agents of a "change in perception." Put more simply: You're not fooling anyone putting lipstick on a pig.

As to what long term affect these movie shoots will have:
"Hollywood follows the money," says Mr. Belding, the location manager. "If Ohio had a 50% rebate, we'd all head 100 miles south and find Paris there."
In other words, this change in perception amounts to paying people to be our friends.

The bit of good news is that for the first time in recent memory there is a Mayor who seems to have a realistic outlook. I don't know if it's enough -- in fact, I doubt it is -- but I hope Dave Bing can pull something off in the realm of intelligent downsizing that is always discussed.

For a less polemic look at Detroit I highly recommend David Byrne's recent journal post. He spent a fair amount of time biking around the city on a recent visit and seems to have been fascinated by it from an aesthetic point of view - which I heartily endorse. Despite occasional points of naivete, his observations are acute, passionate, and quite well expressed.