November 28, 2005

Voting with Our Feet, Part 4: Leaving Cincinnati (and Other Ohio Cities)

Filed under: Economy,Taxes & Government — Tom @ 11:11 pm

Back in ancient times (actually, the mid-1960s), I learned in our school’s Ohio history class that the state had eight cities with a population of over 100,000 (Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo, and Youngstown)–more than any other state in the US.

Look at what has happened since then (in 000s):

OhioPops

Data source links are at each underlined year listed: 2003 (once at link, select a city), 2000 (once at link, select a city), 1990, 1980, 1970, 1960. Some data for Canton and Youngstown was obtained from here and here.

Every city except Columbus, whose growth was largely achieved through aggressive annexation and the explosion in Ohio government and university employment in the past 40 years, has suffered a steep population drop (Toledo’s decline didn’t start until after 1970, and the drop since then has been 20%).

Why did this happen, and, from all appearances, why is this still happening? As I mentioned in my previous post on Hamilton County, I believe that you can isolate four contributing factors:

  • Overall economy in the metro area
  • Schools
  • Crime
  • Taxes

I’m going to limit my comments from here on out to Cincinnati, but I believe much of what I say will apply to the situations in the other six declining cities.

Looking at Cincinnati, what explains a 37% drop? The overall economy in the Greater Cincinnati Metro area has grown consistently during the 43 years involved. Sure, there have been hiccups that corresponded with the late-1970s and early-1980s recession, and the two mini-recessions of 1990-1991 and 2000-2001, but in general growth has been pretty steady.

So that leaves the other three, where the city has performed miserably:

  • The schools have been and continue to be awful. Despite some recent signs of progress, they badly lag suburban and ex-urban school districts. One example (not linked, since it’s a spreadsheet): Cincinnnati city schools are third-worst in Hamilton County in overall student proficiency on the 10th Grade Proficiency test (46.1%, ahead of Mt. Healthy’s 38.8% and North College Hill’s 43.3%, and only a bit behind Winton Woods’ 49.0%). In the three other Ohio counties in the metro area, only Middletown School District (40.9%) has worse proficiency results. (For more information on proficiency test performance, go to the state’s proficiency test results web page and start poking around.)
  • Crime is horrible, and the perception is even worse. In fact, the late 1960s race riots can be seen as the realy beginning of the significant population slide. The city lost its previous reputation for safety then, and has never gained it back. The much smaller but more nationally visible 2001 riots (because the 1960s riots occurred at the same time as those in many other cities) appear to have initiated yet another accelerated exodus. How bad is it? The city has had 75 murders this year, on track to equal or surpass the all-time record of 81 set back in 1971, when the city had 40% more people than it does today. Violent crime has also infested some of the city’s formerly safe leave-the-doors unlocked neighborhoods. In one of them, an 84 year-old man was shot in his home, in his wife’s presence, by three punks last Halloween night during the closing minutes of that evening’s trick-or-treat period. The three alleged perps have been caught, but that’s small consolation to his wife, whose husband was still in intensive care on November 17, and the neighborhood, which has a new sense of vulnerability.
  • Taxes are exorbitantly high. Cincinnati’s real estate taxes as a percentage of taxable value are the highest of any major city in the state except Dayton, which is in arguably worse shape than Cincinnati. (I did the percentage calculations on data that is available in a downloadable spreadsheet at the bottom of this page.) Cincinnati’s income tax rate is 2.1%, by far the highest in the Ohio portion of the metro area (a couple of cities in Northern Kentucky may have higher rates), and is assessed based on where a person works, not where they live. With hundreds of thousands of people who work in the city but reside outside of it supplying tax dollars (without representation), you would think the city could do a better job with its schools and public safety. Nope–see the previous two items above.

How to reverse the slide? It should be doable, but from all appearances no one is even giving lip service to ideas that might work. The city has learned that trying to get tough on crime invites charges of brutality and racism, so thugs run rampant in many neighborhoods. The schools, as hard as they try, are affected by the crime culture and have to spend a lot of money that should go to education on safety. As to taxes and spending, the city hasn’t considered reducing the income tax since it went to 2.1% about 20 years ago, it refuses to try money-saving initiatives that have worked in other towns (like the privatization of many services that worked in Indianapolis). The size of the city payroll is way too high for a city of 300-plus thousand, and every administration has appeared to be captive to the municipal unions. So the prospects are not pretty.

When people “vote with their feet,” they do so even though it’s a time-consuming and costly process. Human inertia being what it is, most people want to stay where they are unless there are compelling reasons to go elsewhere. It’s clear that in the past 40 years, hordes of individuals and families have decided that Cincinnati’s poor schools, high crime, and high taxes have gone beyond the level of endurance (and similar hordes have decided not to move in for the same reasons).

If the City of Cincinnati doesn’t get a grip, and soon, it may soon have to endure the idea that it has become smaller than Toledo. Imagine a trade of the Reds or Bengals for the Mudhens (Toledo’s minor-league baseball team), straight up.
_________________________

Previous “vote with our feet” posts:
- Part 1: What Thanksgiving Is Partially About
- Part 2: It’s the Taxes, Stupid
- Part 3: Walking Away from Academic Excellence
- Part 5: Willisms Looks at State Migration Patterns
- Part 6: Losing the Very Rich

Passage of the Day: Mark Steyn on Hollywood’s Financial Funk

As usual, he nails it:

Say what you like about those Hollywood writers of the ’30s and ’40s, but they were serious lefties. Their successors are mostly poseurs loudly trumpeting their courageous ”dissent” while paralyzed into inanity. This year’s Sean Penn thriller, ”The Interpreter,” was originally about Muslim terrorists blowing up a bus in New York. So, naturally, Hollywood called rewrite. And instead the bus got blown up by African terrorists from the little-known republic of Matobo. ”We didn’t want to encumber the film in politics in any way,” said Kevin Misher, the producer.

But being so perversely ”non-political” is itself a political act. If there were a dozen movies in which Tom Cruise kicked al-Qaida butt across the Hindu Kush, it would be reasonable to say, ”Hey, we’d rather deal with Matoban terrorism for a change.” But, when every movie goes out of its way to avoid being ”encumbered,” it starts to look like a pathology. And by the time Hollywood released this summer’s ”Stealth,” some studio exec must have panicked that, what with all this Bono/Live8 debt-relief business, it might look a bit Afrophobic to have any more Matoban terrorists. So ”Stealth” was a high-tech action thriller about USAF pilots zapping about the skies in which the bad guy is the plane.

That’s right: An unmanned computer-flown plane goes rogue and starts attacking things. The money shot is — stop me if this rings a vague bell — a big downtown skyscraper with a jet heading toward it. Only there are no terrorists aboard the jet. The jet itself is the terrorist.

This is the pitiful state Hollywood’s been reduced to. Safer not to have any bad guys. Let’s make the plane the bad guy. No wonder it’s 20th century Britlit — ”Harry Potter,” ”Lord of the Rings,” ”Narnia” — keeping those Monday morning numbers up. It’s Hollywood’s yarn-spinning that’s really out of focus, and in the end even home entertainment revenue won’t save a storytelling business that no longer knows how to tell any.

Baldridge Award Winners’ Salute

Filed under: Business Moves,Economy — Tom @ 1:49 pm

USA Today wrote up the Malcolm Baldridge Award winners for excellence in business and public service operations this past week. These companies and entities deserve applause. Notice how attentive they are to measuring specific results:

DynMcDermott operates the underground salt caverns in Texas and Louisiana where the Energy Department stores 700 million barrels of oil (in the government’s Strategic Petroleum Reserve). The employee turnover rate ….. averages about 1% a year. It costs the company 20 cents a barrel to store oil at the Strategic Petroleum Reserve each year vs. $2.40 a barrel at above-ground tanks operated elsewhere in the USA and the $3-a-barrel cost in Japan.

To win a contract renewal in 2003, the company set a goal to save taxpayers $64 million by 2008 and is halfway there with three years to go.

Sunny Fresh Foods in Monticello, Minn., became the ninth repeat Baldrige winner (including large corporations that have entered different divisions). The maker of scrambled, diced and other egg products for schools, hospitals and fast-food restaurants won in 1999 in the small-business category. The company, a subsidiary of food giant Cargill, has nearly doubled its size since then and won again in the manufacturing category.

Sunny Fresh says it has never had a product recall because of food safety. It is on time with 99.8% of deliveries, and customer complaints are resolved on average in less than one day, down from 2.8 days in 1997. The company also rotates its production workers to a different station every 20 minutes, and sales per employee are up 19% since 2001.

Park Place Lexus, a 420-employee dealership with two locations near Dallas, won the small-business category. Its dealership in Grapevine, Texas, was the highest-rated Lexus dealership in the nation, satisfying 99.8% of its new car buyers. Customer complaints for promises not kept fell from 130 in 2002 to 22 in 2005. It had just one complaint from a customer who felt misled by the staff and one from a customer who felt he or she was not treated with courtesy. Those are down from 22 and 28 in those complaint categories three years ago.

Richland College in Dallas was one of two winners in the education category and the first two-year community college to win a Baldrige. Richland has more than 20,000 students, who speak 90 different languages as a first language. State funding was slashed, yet the number of students who completed the core curriculum necessary to transfer to a four-year college increased from 500 students in 2002 to 1,660 in 2005.

Jenks Public Schools, a district near Tulsa, has 9,270 students, and 42% of its 665 teachers hold master’s degrees. Dropout rates have fallen from 6.3% in 1999 to 1.2% in 2004. The teacher-pupil ratio is 1-to-16. Four current athletic coaches have been selected National Coach of the Year.

Bronson Methodist Hospital, a 343-bed hospital in Kalamazoo, Mich., won in the health care category. It has 3,182 employees and patient billings of $751 million a year. The percentage of patients older than 65 who died at the hospital declined to 3.5% in the first half of 2005 from 4.8% in 2002. Patient satisfaction improved to 97% in 2004 from 95% in 2002. The hospital has for three consecutive years been named among the 100 best companies for working mothers by Working Mother magazine and for the past two has made the list of 100 best companies to work for by Fortune magazine.

Investors Business Daily Rips Coverage of Economy

Filed under: MSM Biz/Other Bias — Tom @ 11:05 am

Choice excerpts from November 22′s read-the-whole-thing editorial “Why Can’t Media See Propserity?“:

No matter how well the economy is doing, it seems, the media manage to find something wrong. We wonder whether this is simple economic ignorance or some other agenda playing itself out.

We’ve been thinking a lot about this lately as we watch jobs, incomes and the stock market keep rising, while inflation — a real fear, given recent oil price hikes — remains tame.

And yet the media can’t seem to focus on all that’s going right with the economy right now — which is an awful lot.

….. They all commit the same sin. We think back to the classic of this genre: the 1992 award-winning series by Don Bartlett and James Steele: “America: What Went Wrong?” It was about the 1980s Reagan era, one of the most economically successful decades in American history.

The title says it all.

Why is it this way? The fact of the matter is, most newspapers are run by people who are liberal. They do not like Republican politicians. They do not like George W. Bush. They will not admit their bias. It’s that simple.

….. Reporters often argue that, yes, they might be liberal, but they are scrupulously fair when they report.

But let’s just look at the past three years, which have seen a remarkable rebound in the American economy — a rebound that has defied fears that, after the stock market’s collapse in 2000, the economy would be unable to get back on track.

We’ve seen repeated stories — and “series,” obviously intended to win big media prizes — that pooh-pooh our current prosperity.

Here’s the reality. The economy is growing faster, joblessness is lower, inflation is slower now than it has been on average for the past three decades.

….. Yes, we have a bias too. We tend to see things getting better. But then, that’s only backed up by 229 years of American economic history. How about a new series: “America: What Went Right?”

The poor economic reporting of the past year is another reason why the organizations people currently refer to as The Mainstream Media should be renamed the WORMs–Worn-Out Reactionary Media.

Bizzy’s AM Coffee Biz-Econ Links (112805)

Hispanics a Hot Target Group for Banks

I can see it, to a point:

Faced with higher interest rates and a challenging 2006, financial institutions are actively wooing the Hispanic market with specialized products and services, as well as bilingual financial education.

It may not be flowers and candy, but these targeted services — which include remittance products and mortgages based on individual taxpayer identification numbers, rather than social security numbers — can prove to be invaluable in developing relationships with the over 50 percent of Hispanics that are unbanked in the United States.

….. And for banks, worried about squeezed profit margins and dwindling mortgage refinancing businesses, the Hispanic community represents the best way to achieve organic growth.

Two things–One is a dirty little secret and the other is a question I can’t answer:

  1. The secret is that the credit-card areas of the big banks want Hispanic cardholders, because they have found that they are much more likely than non-Hispanics to pay interest and make mistakes that generate late fees and over-limit fees. Aggressive wooing of Hispanics in this area of banking is right on the edge of race-based exploitation.
  2. Regarding mortgages made based on individual taxpayer identification numbers (read: Mexican ID)–How do you price deportation risk into a loan product?

Suing Your Customers as a Business Model

The Wall Street Journal has a come-back-to-earth editorial for an entertainment industry that is still high on its Supreme Court victory shutting down Grokster. It also provides some interesting history on what the industry has tried to do in the past (bold is mine):

The industry has every right to continue this behavior; downloading the new Harry Potter movie or Black Eyed Peas CD tracks without paying for them should satisfy any definition of intellectual-property theft. The more interesting question is whether litigation is the best long-term strategy for combating digital piracy. How viable is a business model based on suing your customers, especially when the lawsuits appear to be having no deterrent effect?

It’s too bad, but history shows that the entertainment industry is much more inclined to fight new technologies than embrace them. Songwriters tried to sue the player piano out of existence a century ago. Vaudeville performers sued Guglielmo Marconi for inventing the radio. Disney and Universal sued Sony for making the Betamax VCR. And cable entrepreneurs over the years have been dragged into court by everyone from television broadcasters to the Motion Picture Association of America. If music and movie moguls had their druthers, they would have monopoly control over any device or platform capable of reproducing sound or pictures.

This is the slippery slope (really a cliff when you think about it): Any successful effort by the entertainment industry to shut down a technology will spawn imitators who will attempt to apply that result to ANY new technology in ANY industry. It will be as if buggy whip makers or horse breeders in the late 19th century could sue the nascent automobile industry. Kiss economic progress good-bye.

As much as I do not support IP theft, I remain irritated that so many recording artists refuse to make their content available digitally. That decision is the equivalent of hanging out a “Get our songs in P2P Land” sign for those who, now that viable digital alternative like iTunes and its competitors exist, simply won’t buy CDs ever again. I also have to wonder if song prices would stay at their currently reasonable 99 cents each for long if the pirated alternative no longer existed.

Environmental Protesters Needed

Memo to The Sierra Club, National Resources Defense Council, World Wildlife Federation, Greenpeace, et al: There’s been a 100-ton spill of benzene that is 50 miles wide at a chemical plant in Harbin owned by a huge oil company:

Benzene, used in gasoline, is a cancer-causing substance. It can cause anemia, other blood disorders and kidney and liver damage.

Water service in the city of Harbin had to be shut off after the spill of around 100 tons, which spanned 80 kilometers (50 miles) wide.

The plant blast, which authorities blamed on human error at a tower that processed benzene, killed five people and forced the evacuation of tens of thousands of others.

Not only that, the company and the government has resisted releasing all of the information about the spill and its dangers to the general public.

Now here’s how you get to Harbin. First, it’s in the northeastern part of China (HT Gateway Pundit) …..

….. What do you mean you don’t want to go? 3.8 million people (HT Drudge) are without water!

What? Environmental disasters don’t matter much unless they occur in the US or Western Europe?

Oh.

Note: To be fair, the WWF’s China site and Greenpeace’s International home page mention the spill. But this is what passes for tough talk:

“‘WWF is highly concerned about how the toxic spill in Heilongjiang province will impact the region’s people and ecosystem,’ said Dr Li Lifeng, Director of WWF China’s Freshwater Programme, ‘We call upon industries and those who regulate them to work together with other stakeholders to prevent this from happening again.’”

Greenpeace–”The environmental health of China is at risk from the short-term rush for economic growth. Like wise the environmental health of the planet is at risk from the rush for short-term financial gains.”

What? No calls to put executives in jail, sue the evil companies out of existence, or bring capitalism to an end that we would normally hear when a Western company commits even the most minor environmental mistake? Oops-forgot. This is Communist Nearly Free Pass China we’re talking about.

Positivity: Man Survives 28 Heart Attacks (UK)

Filed under: Positivity — Tom @ 6:08 am

Understatment: They were amazed. We were told it was very unusual to survive that number of attacks.” Uh, yeah:

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