Friday, January 28, 2005

Detroit School Implosion

In a nearly incomprehensible collapse of the Detroit School system, the Detroit Public Schools administration is projecting a loss of 40,000 students over the next three years. That's in addition to the 30,000 that have been lost since 1998. The DPS enrollment stands at 140,000 this year.

The DPS 2005 budget has nearly a $200 million shortfall (that's more than the entire budget of the Grand Rapids Public Schools). DPS predicts that it will have to close 110 schools over the next couple of years.

This is an unprecedented collapse of a school system. As we watch the death-throes of DPS, how far behind is Grand Rapids Public Schools?

Superintendent Bert Bleke said he would not rule out bankruptcy when he unveils a plan to address budget problems for GRPS in March. This is despite the fact that GRPS was successful in raising taxes to pay for $160 million in buildings in 2004 and passing a county-wide tax increase, bringing in millions more for GRPS.

What's wrong with these school systems? They are finally feeling the heat of educational competition. Detroit has been a heavy focus of charter school growth over the last decade, with acceleration in the last few years. Grand Rapids has a few schools, but it seems to have leveled off. Regardless, school districts have had to adjust their delivery, operations, and structure to counter the effect of charters.

But the drain from urban school districts seems to continue. GRPS lost another 800 students this year, on top of the loss of hundreds of students a year for the last several years.

Is enrollment a problem, or a symptom of the problem? Charter schools can't force anyone to enroll (as traditional public schools can). They open their doors and parents come running. Is the problem the existence of charter schools, as the education establishment wants you to believe, or is the problem the utter failure of public school systems? We believe it is the latter.

The education world is now a marketplace, and the public school systems must deal with that fact. We're of the opinion that they are incapable of dealing with the situation because of the entrenched bureaucracy and the absolute unwillingness to embrace any change on the part of the teachers' union.

DPS is almost dead. Is GRPS next? Will anyone mourn the death?

Thursday, January 27, 2005

State of the City Analysis

Mayor George Heartwell gave his state of the city speech for 2005 on January 15th.

First, let's go over last year's state of the city speeches. He gave three, but only two were available online.

In his first 2004 SotC speech, Heartwell concentrated on education. His fluff-filled tome focused on adult literacy, city/schools operating partnerships, and education renewal zones, to divert more money to the schools. Oh, and he ended that speech with the old cliche, that it's for the children, "...all the children."

His second speech, which we analyzed here, was a typical stump for more political power, centralization, and central planning. He wants more money spent on a wasteful mass transit system and strengthening of the Grand Valley Metro Council for more "regional planning." The one bright spot here is his stumping for tax-free renaissance zones. We wonder if he has any latent understanding of why tax-free zones work, but we're doubtful.

This year's theme? Sustainability. Whatever that means. Well, we do know what it means, but folks like the mayor won't admit what it means. Essentially more government control of economic development. But we know that is a contradiction of terms.

Heartwell starts out the speech by touching on the issue of violence in the inner city. He looks forward to a committee's recommendations to heal racism.

Next, he looks back at last year's education speech and goes over accomplishments from the last year. He congratulates himself for raising taxes twice for Grand Rapids Public Schools. He discusses the success of an adult literacy program.

Then he talks about the joint operational project between the city and GRPS. The strange part about this is that it isn't a joint operational project at all. All he can refer to is working with the schools to support more minority contractors and the sale of the West Middle School building to a developer. Huh? Last year he talked about saving money by using joint human resources, accounting, and groundskeeping departments. How have any of the above saved either the city or the schools money?

Finally, he says that a joint program with the West Michigan Environmental Action Council and GRPS has helped environmental education. But, as we pointed out previously, this program, basically to collect trash around streams, costs the city about $564 per bag of trash collected. And we thought the schools and city were hurting for money.

And then he laments the fact that the Education Renewal Zones concept hasn't progressed as much as he liked.

Then we move on to the meat of the speech. What's he going to do for us this year?

First, he goes over the usual doom and gloom predictions of how horrible the world will be if the government doesn't take a larger role in our lives. For example, he cites this example: "The United States, which presently uses 40% of all the world’s oil production and 23% of all coal production will be experiencing crisis levels in these resources."

Didn't they make those types of dire predictions in the 70s? Yeah, and we're still here.

So, we can see where this is going already.

He then blabbers on (see if you can make it through his speech without falling asleep) about sustainability and all kinds of government partnerships to make peoples lives better, in a sustainable way. He goes on to lament the state of the economy in Michigan and how social equity (another buzz-word of the extreme left) must be kept in mind.

The most fun (and laughs) comes from Heartwell's diatribe about electricity usage in Grand Rapids. He wants to reduce the City's dependence (he doesn't clarify if he means the City government, or the people in the city - he probably doesn't make that distinction in his own mind) on non-renewable resource power by 20% by 2008.

His plan to do so? Wind power. And you thought cellphone towers were ugly.

The mayor concludes with what he hopes the next generations will write about this one:

In 2005 and 2006, this diverse group of people in Grand Rapids found ways to interconnect business with the environment – maximizing commerce and nature.
This generation responded to the challenges of globalization by creating a city that led the state in productivity and returned the country to prosperity.

This generation created a city where neighbors cared for neighbors and children were safe.

This generation created schools that maximized each child’s potential and allowed us to respond to rich economic opportunities.

Truly, this generation created a city that sustained life.

Laudable goals. But government, bureaucrats, bureaucracy, high taxes, regulation, and central planning aren't the way to get us there. Anyone ever look at the history of Detroit?

Wednesday, January 26, 2005

Minimum Wage Lunacy

This week the State's Democrats proposed increasing the state minimum wage from $5.15 an hour to $7.15 an hour over two years.

We're dumbfounded. We can't understand what they are thinking. The Democrats in Michigan (with the help of the Republicans) are responsible for the over-protection of unions in this state. Those unions have created a business atmosphere where wages are so high that manufacturers are fleeing the state in droves. Artificially high wages have created unemployment.

Michigan's unemployment rate stands at 7.3%. That ties us with Alaska for the highest unemployment rate in the nation. The failed economic policies of union favoritism are coming home to roost.

But now, what do they propose? More of the same! Raising the minimum wage increases employers' costs. When employers are forced to pay more for labor, they will hire fewer people. This will further increase unemployment and decrease economic productivity.

See: Unemployment: Causes and Cures.

As an example: suppose you're a small business owner. You have four employees making $5.15 an hour. That's about $164 a day in labor cost (plus the expense of payroll taxes). If the minimum wage goes up to $7.15 an hour, that's $228 in labor cost a day. What is a small business owner to do? That's a 40% increase in labor costs. His choice is to either raise prices (probably close to that 40%, which most business owners know is suicide) or to fire one or two people. If he fires one person, his costs go down by about $57 a day, reducing the total to $171. That's a lot easier to recover in price increases. Plus, a little more productivity from those three remaining employees will probably cover the loss of one.

What just happened? The increased minimum wage accomplished two things:

1) it increased unemployment
2) it increased prices

Particularly hard-hit are black and latino minorities, which already have higher unemployment rates. So what the Democrats propose to do disproportionately harms the very people they claim to want to help most.

We are forced to conclude that Democrats' behavior is motivated by one of the following:

1) Complete ignorance of economics, or
2) A desire to further harm the economy of Michigan, or
3) A desire to look like the party of the poor people.

We believe it's probably a combination of 1 and 3. However, their economic ignorance (or ideological bankruptcy) causes the opposite of the desired effect. Is Michigan consigned to a perpetual state of economic funk?

See also: Michigan Wage Hike Threatens Already Fragile Economy.

Tuesday, January 25, 2005

City Budget Poll

We'd like to make sure everyone who reads this fills out the Grand Rapids city budget poll online. The city leaders claim that they will not raise taxes (though they did several times in 2004) to fill the budget hole. Therefore, they are asking citizens to fill out a poll to tell them which city services are the most vital.

What the city commission doesn't seem to be doing a serious job of is asking themselves what a city government should be doing, versus what they are doing.

What are the basic responsibilities of a municipal government? In our opinion, the city should limit itself to these major things:

1) Police and Fire
2) Infrastructure (roads, water, sewer)

However, our city fathers have taken it upon themselves to be social engineers, attempting to centrally control growth, poverty, education, etc. These are things that are best left to the private sector. Continuing to spend money on these things (while increasing the city's tax burden) only drives out middle class and businesses. If they truly want to make this a business- and job- friendly city, they'll concentrate on doing a few things well rather than doing everything they can poorly.

It's time to take this budget problem and turn it into an opportunity to improve services, scale back bureaucracy and regulation, and improve city life for everyone by raising the water so all boats float higher.

Take the city's poll here.