Ok, kids and kidettes, time for a quick quiz. What is the answer to turning Toledo around once and for all?
That’s right, it’s the economy, stupid. What we need is economic development, lasting sources of income for T-froggers and revenue for public institutions. Economic development creates wealth for the community and stable distribution of that wealth.
Wealth creation and distribution within the community. Turning raw materials into useful products adds the most value, thus creating the most wealth. Doing so within community boundaries helps boomerang that wealth across job sectors. Distribution of useful products adds value, although not as much as product creation.
Here’s the quiz. Lots of folks in City Politics are touting routes toward the development that will help Toledo’s rebirth. Which of the following represent real economic development?
- Expansion of the Chrysler assembly plant. Yep, this is the real deal. Assembling parts into a completed product creates real wealth. Paying workers good union wages with bennies means they will have disposable income and the health and time to spend it. The expansion will create more than one thousand new jobs for local folks, who will then tend to spend their newfound earnings in local stores, restaurants, and entertainment venues, spreading the wealth throughout the community. The expansion will also restart wealth creation in support industries like tool and die and machine shops, which can hire more folks with similar ripple effects. Public coffers will fill with taxes generated by all this economic activity.
- The recently announced expansion of retail outlets in the Toledo area. This is certainly good news for the T-Town economy, but not as good as the return of manufacturing. New retail stores will hire folks, although usually at a pay scale approaching minimum wage and often without benefits. These employees will have less to spend than their union counterparts and will tend to work longer hours, giving them less time to spend it. Some of the stores will be franchised chains, which means some of the economic ripple effects like banking and legal services will leave the area. Retail distributes rather than creates goods, which adds value but not at the same rate of return. This will help public coffers, though less than manufacturing will.
- The new casino. Here’s where we start to go down hill. Hundreds of new jobs in entertainment help lower the unemployment rate, and the casino offers decent pay and bennies, although many of the new jobs are part-time. Some of the profits will leave the area since the ownership group is out of town. The profits have already helped public coffers, and the casino management has donated thousands of additional dollars to worthy causes.
The deeper problem is whether the new entertainment choice will expand the amount of entertainment dollars spent in Toledo or simply move them from other venues. In other words, will folks stop spending elsewhere to concentrate their spending at the casino? This would simply move economic activity rather than create it. Moreover, many of the folks gambling their money away are spending money they might otherwise spend on more economically productive activities. All in all the jury is still out, but we fear this isn’t true economic development.
- New storefront churches. We threw this in as a gimme. Churches don’t pay taxes, and putting them in formerly revenue-producing venues creates a double whammy. They don’t create products of value, spiritual enlightenment aside. They don’t create jobs, other than for the nominal spiritual leader. The most we can say is they might slow the deterioration of otherwise vacant properties and, if located in certain neighborhoods, might lend a light of community spirit. Other than that, we’d be better off keeping the existing churches and filling storefronts with, um, stores.
- New charter schools. This one keeps popping up, touted by wags in elected office and others as economic development. We think it should be as easy to see through as the church thing above. Schools don’t pay taxes either, and unless they are manufacturing new students, don’t produce jobs but instead take them from traditional public and parochial schools. In fact, many of the charter schools have a higher student to teacher ratio, especially the new online schools, which means they actually destroy good-paying union jobs with benefits. Test scores at most charters show their educational product is actually worse than their traditional counterparts. A new trend is that some start up charter schools don’t bother to renovate their spaces following mandated building codes. Two new charters have had to suspend classes recently because their classrooms were deemed unfit for human habitation. Not only does this endanger their students, it also means they don’t use licensed contractors to complete the work, adding another layer of killing good-paying union jobs.
That’s the quiz. How’d ya do? With a bit of common sense and a modicum of understanding of economic principles the answers shoulda been simple. How about you folks in the economic development and policy making spheres? Did you get all five correct?
No, huh? We figgered as much.