When Atlas Shrugged at Detroit

By:  Selwyn Duke
07/25/2013
       
When Atlas Shrugged at Detroit

Detroit was once America’s most prosperous city, but now is an urban wasteland. A former Detroit business owner tells his story and explains how the city's economy was killed with bad policy. And, he warns, there are more Detroits yet to come.

Many of us have seen the striking video footage. Dilapidated homes and buildings, whole neighborhoods abandoned, large areas being reclaimed by nature and people growing vegetables where businesses once stood. It looks a bit like a post-apocalyptic world.

Some would say it’s the apocalypse of government policy.

Detroit, Michigan’s recent declaration of bankruptcy serves as a warning about the bankruptcy of bullying, bloated bureaucracy. So says businessman Don Wilkie, who tells us that “in 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000.” And in an article entitled “How Detroit Almost Killed My Business,” he presents his explanation for why.

Wilkie owned a business employing 20 people in Detroit, but in 1984 was “forced out,” as he puts it. Rampant crime was a problem, but transforming his property into Fort Knox North had enabled him to remain. The city’s notoriously poor educational system was a downside, but Wilkie’s business didn’t demand literacy of workers. And while Detroit’s taxes were burdensome, the far lower real-estate prices and proximity to suppliers of industrial parts and services helped defray them. Rather, the beam that really broke the behemoth’s back was built with “Unemployment Insurance, Workman's Compensation and Wrongful Discharge (i.e. age discrimination, sex discrimination, racial discrimination etc.) [lawsuits],” writes Wilkie. He says there’s a dearth of jobs in the city because “in Detroit, hiring someone became the worst thing an employer could do, and being fired became one of the best days in an employee's life.”

A big part of the problem is that it’s so hard to find acceptable workers, says Wilkie, that “to get one good employee, I had to hire about 8. So to get an additional 15 people, I had to hire over ten years approximately 120 people. This is when doing business in Detroit really started to get expensive.” Because even though Wilkie would be sure to fire bad employees for only documentable reasons to “avoid having to pay for unemployment,” in practice it didn’t matter; the state granted benefits in 8 out of 10 cases, and protesting the decisions was generally a go-fight-city-hall exercise in futility, with Detroit bureaucrats heavily biased against employers.

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