tales of woe from the American Rustbelt

vivatifosi

A couple of interesting stories have come out in recent days on how the dire state of the Michigan economy has affected those living there. The state is essentially bankrupt.

1) the city of Flint, town managers decided to save money by changing the city's water supply. Instead of using water from the Great Lakes, as it has done historically (the supply Detroit uses), it has switched to the local Flint River. The river supply has been polluted by year's of use by the car industry, to the extent that GM itself won't use the water as it causes corrosion. People have consequently died from legionella, or suffered from lead poisoning.

http://www.independent.co.uk/news/world/americas/flint-michigan-100000-left-with-water-too-poisonous-to-drink-or-even-cook-with-a6815251.html

2) Meanwhile, over in Detroit, it's school system teeters on the edge due to the cost of debt servicing:
http://www.bloomberg.com/news/articles/2016-01-15/detroit-s-public-schools-face-day-of-reckoning-as-cash-dwindles

While it is easy to think of the state as a basket case, there are also signs of recovery...

http://www.freep.com/story/money/business/michigan/2016/01/02/5-trends-watch-state-economy/78012668/

However it is a big state, moving away from its rustbelt tag US going to take a long time.

Generali

It is a shame what is going on there. One of the things that makes the US successful is that people can move for work around the country pretty easily. The flip side of that is that places can go into a rapid decline that it's hard to get back from.

The same thing happens in the UK just more slowly with the indolent being protected from their own indecision. There is many a Northern Hell Hole that would be long dead if it wasn't for the welfare state propping it up. I've been to plenty of towns north of the Watford Gap that has had no real sign of an economy beyond selling people on the dole discounted cigarettes and booze.

It's hard to see which is better, a rapid decline or a bunch of people hanging on to a place because they are paid to do so.

mystic_trev

There are some right dumps in Michigan. I spent a few days driving around in the early 90's. I had a wedding to go to in Grand Rapids, which isn't great, neither are the rapids. The only point of interest was the Gerald Ford museum!The best part of the journey was heading up to Canada, the Niagara falls then Toronto. The drive back to Chicago was pretty torturous too. Now there's a nice place...Chicago, one of my favourite Cities.

kinger101

I'm not saying there isn't a problem with the drinking water in Flint, but the article is very poor and gets some basic facts wrong. The river water is more acidic than the water from the lakes. Some water is naturally acidic, it's not necessarily an indicator of pollution.
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The lead poisoning generally comes from lead pipes (and not the river). The problem becomes worse if the water is acidic. The water company such have adjusted the acidity of the water.

I can't see any causal link between legionella and the lead/acidity. Legionella tends to become a problem when water is stored. Perhaps it comes from water tanks in apartment buildings.

In short, the problems not the river water, rather the lack of care in adjusting the pH before it entered mains supply.

HAMISH_MCTAVISH

Generali wrote: »

It's hard to see which is better, a rapid decline or a bunch of people hanging on to a place because they are paid to do so.

Which is of course the problem with much of the UK.

Detroit is an interesting example of urban decline, it's a city that is geographically (by US standards) close to the main East coast hubs, that is every bit as (geographically) favourable as Chicago for airline or transport hubs, and that has had a surplus of 'cheap to the point of being almost free' residential and commercial property for a long time.

Yet that cheap property has done nothing to attract major businesses and employment back into the area on anything like the scale required for it to recover. (yes there are a few artist collectives and artisan projects but it's not material)

One of the pet arguments of the "crashes are good" crowd was that cheap property creates conditions that attract business and everyone ends up better off.

Places like Detroit in the US, or even much of the North in the UK, disprove that theory.

Generali

HAMISH_MCTAVISH wrote: »

One of the pet arguments of the "crashes are good" crowd was that cheap property creates conditions that attract business and everyone ends up better off.

Places like Detroit in the US, or even much of the North in the UK, disprove that theory.

My thought is what can be done to create the conditions to allow the economy to bounce back faster after an exogenous shock? How can we help towns and districts to regenerate better?

Maybe the tax code could help. Perhaps there could be a rule whereby companies within a town with GDP per capita of something like 90% of the average for the UK don't pay Corporation Tax or Employers NI for 5 years on all net new operations.

vivatifosi

kinger101 wrote: »

I'm not saying there isn't a problem with the drinking water in Flint, but the article is very poor and gets some basic facts wrong. The river water is more acidic than the water from the lakes. Some water is naturally acidic, it's not necessarily an indicator of pollution.
.
The lead poisoning generally comes from lead pipes (and not the river). The problem becomes worse if the water is acidic. The water company such have adjusted the acidity of the water.

I can't see any causal link between legionella and the lead/acidity. Legionella tends to become a problem when water is stored. Perhaps it comes from water tanks in apartment buildings.

In short, the problems not the river water, rather the lack of care in adjusting the pH before it entered mains supply.

I am in the US at the moment and the story is big news here. When you watch the Flint stories on the tv they show the water. I wouldn't drink it, it isn't even clear.

Here they are saying that Flint is just trying to save money at all costs. So the legionella and the lead poisoning aren't related, other than in the sense that they are both drawn from the same river. Both are however linked to the fact that no real effort has been made to clean up the supply to start with. It is also being reported here that the pollution is so bad that even though the supply is being switched back to the lakes, it will take a couple of years to repair the damage.

It is causing real hardship though. People are having to collect their own water, and the nature of the depopulation there means that many are elderly or infirm.

vivatifosi

Generali wrote: »

My thought is what can be done to create the conditions to allow the economy to bounce back faster after an exogenous shock? How can we help towns and districts to regenerate better?

Maybe the tax code could help. Perhaps there could be a rule whereby companies within a town with GDP per capita of something like 90% of the average for the UK don't pay Corporation Tax or Employers NI for 5 years on all net new operations.

It's a really tough one. If you look at the last article, it talks about efforts to rebalance the economy away from automotive. They are giving tax breaks to data centres for example.

I think the bigger issue is that unemployment is actually pretty low, but it is hard to get people to move there. So how do you rebuild a state where the population just moves away, leaving the elderly and infirm behind?

I see a parallel, not with the north of England, but with EU countries such as Bulgaria. There has been an exodus of the young away from such countries, leaving a small base to look after its elderly and infirm. The low birth rate among those who stay exacerbates this.

Generali

vivatifosi wrote: »

It's a really tough one. If you look at the last article, it talks about efforts to rebalance the economy away from automotive. They are giving tax breaks to data centres for example.

I think the bigger issue is that unemployment is actually pretty low, but it is hard to get people to move there. So how do you rebuild a state where the population just moves away, leaving the elderly and infirm behind?

I see a parallel, not with the north of England, but with EU countries such as Bulgaria. There has been an exodus of the young away from such countries, leaving a small base to look after its elderly and infirm. The low birth rate among those who stay exacerbates this.

Presumably if you are left with the old and the sick then the birth rate will be low by definition.

The problem that places like Bulgaria face I guess is that there is not much in the way of decent infrastructure to build an economy around. I had a great friend from Bulgaria and his family was well connected. They all either left the country to make money or stayed put to steal what they could.

It's a beautiful place in much the same way as the countryside around Central Manchester would be if we hadn't built a successful, thriving economy in the area.

michaels

vivatifosi wrote: »

It's a really tough one. If you look at the last article, it talks about efforts to rebalance the economy away from automotive. They are giving tax breaks to data centres for example.

I think the bigger issue is that unemployment is actually pretty low, but it is hard to get people to move there. So how do you rebuild a state where the population just moves away, leaving the elderly and infirm behind?

I see a parallel, not with the north of England, but with EU countries such as Bulgaria. There has been an exodus of the young away from such countries, leaving a small base to look after its elderly and infirm. The low birth rate among those who stay exacerbates this.

Interesting to think of it as a demographic problem rather than an economic one. British sea-side towns seem to be heading the same way, doctors, teachers don't want to be there, those with the gumption to do so leave to look for jobs leaving those requiring social support and those doing the low paid jobs looking after them paid for by the state. The big difference being the state resource in national not just local.

kinger101

vivatifosi wrote: »

I am in the US at the moment and the story is big news here. When you watch the Flint stories on the tv they show the water. I wouldn't drink it, it isn't even clear.

Here they are saying that Flint is just trying to save money at all costs. So the legionella and the lead poisoning aren't related, other than in the sense that they are both drawn from the same river. Both are however linked to the fact that no real effort has been made to clean up the supply to start with. It is also being reported here that the pollution is so bad that even though the supply is being switched back to the lakes, it will take a couple of years to repair the damage.

It is causing real hardship though. People are having to collect their own water, and the nature of the depopulation there means that many are elderly or infirm.

I sounds like it is going to be an expensive mistake. If the pipework has been damaged such that it will continue to leech lead for a few years, they'll have to replace all lead pipes of fit filters to individual homes.

The increase in legionella might also be partly related to pH as it would make the chlorine in the water would be less stable than under acidic conditions. Stored water tends to be problematic because the chlorine gradually escapes from this too.

But I think the main error here is probably not pollution from the river itself, but lack of adjustment to the acidity. Human error nonetheless.