Freedom.What a novel idea. To be more precise, the idea being proposed for Detroit and other distraught urban centers by Senator Rand Paul is “free enterprise”. Instead of government bailouts, Sen. Paul suggest we let the private sector and the good people of Detroit do the bailing. Here are just a few links to articles on Rand Paul’s plan to pull Detroit out of the bowels of hell: here, here, here, and here.
In a nut shell, what Rand Paul is suggesting is to take an idea that Jack Kemp back in the 80’s, economic freedom zones, and apply it to parts of Detroit and other cities where there exist very high unemployment. Specifically, those zones in a city that have unemployment rates of 1.5 times the national average (12%) would become Economic Freedom Zones (EFZ). In these zones, Paul suggest a flat tax of 5% for businesses and individuals. He is also suggesting that in these zones that capital gains taxes be reduced. There’s more to his plan; but these are the key elements.
It’s a simple idea. Investors would be attracted to these Economic Freedom Zones to take advantage of a 5% tax rate for their business rather than the standard 35%. Once investments are announced, real estate developers will buy up cheap property in Detroit to build suburbs inside the now devastated city. And, people would want to buy these homes to be close to their work and enjoy the low 5% income tax rate. In this way, Detroit and other suffering cities would recover and it wouldn’t require the federal government to spend taxpayer monies. Detroit would bail itself out.
Sen. Paul plans to introduce his bill in the Senate on Monday. My guess is it will never see the light of day. Harry Reid will see to that. Even on the one in a million chance that Harry allows a vote on the Economic Freedom zones and it passed, you can be sure that President Obama would veto it. You can read some of the response from Left land here and here. Mostly it the same old demagoguery about tax cuts for the rich, voodoo economic, or their favorite: trickle down economics. One liberal Nimrod had this to say:
Paul, like many in his party, wants to take us back to the time of robber barons, where the rich could do what they wanted, without fear of reprisal, in exchange for the promise that they might, at some point, step in clean up their messes…
We know why they are really against Rand Paul’s plan, don’t we? They are deathly afraid that Economic Freedom Zones would actually work and millions of inner-city dwellers might begin to question why they’ve been voting for Democrats all these decades. They can’t have that. Much better for them to have another Obama stimulus plan where the only thing stimulated are the bank accounts of big time Democratic Party campaign contributors and bundlers.
Well, that’s what I’m thinking. What are your thoughts?
Asylum Watch 
The plan is to have the taxpayers bailout the city, keep federal bucks flowing in and maintain a level of corruption that will keep Detroit in the democrats’ hip pocket. Rewind all the media attention to this story and rarely if ever will we find the number one cause for this debacle namely corruption with the politicians and their partners in crime, the unions, in tandem with the federal government keeping the dependency mills churning at full speed; the same government with the answers to fix what it turned a blind eye to for 50 years. The “generous pensions”, salaries, etc came out of the blue. Government strangulation of the car companies played no part either. Blame the Tea Party and that old bugaboo, George Bush, yeah that’s the ticket.
It’s always someone elses fault, isn’t it? I like the idea of Economic Freedom Zones, but I doubt that Detroit is the place to try it. If tried in a deeply conservative state like Oklahoma or Utah, then the rest of the country could see what free enterprise could really do.
You are correct. The plan will never see the light of day. If the Democratic party loses the black vote they will be in deep trouble.
It’s probably a moot point anyway. I fear Detroit is too far gone to save.
Plough it under and start over then?
Rand Paul is a clever fellow. His bill doesn’t have to see the light of day. It’s a subtle thing, but he’s setting it up so that blame actually starts falling where it belongs: on the corrupt Dems that run Detroit, the other soon-to-be bankrupt Democrat controlled cities and states, and the Dems at the Federal level that support the local Dems and benefit by that corruption. It may take time, and you have to fight your way through a lot of mainstream media bullshit, but there is a subtle genius in being able to say, “We provided an answer that gave people more freedom and power to help themselves, yet the Democrats who ran the place into the ground wanted to do more of the same thing that ran it into the ground. It didn’t work. Now… Would you like to try a different approach?” Call it the “Obamacare” gambit.
Dear friend, I do not know how you manage to stay so optimitic. God bless you!
Taking the road less travelled, I guess. That, or lots of medication. Not sure which is working. Truly, though, I’m very encouraged by the collapse of Obamacare and the way people are responding to big government being so inept. I really think that the veil is being lifted for a lot of people. In a country split roughly 50-50, it doesn’t take the veil being lifted from too many people to give conservatives an edge. Prior to now, we haven’t had a huge failure of big government that people actually felt… It’s all been theoretical, and was able to be trumped by rhetoric. Now it’s glaringly obvious and is actually affecting people in ways that hurt (the way the debt won’t affect people until the dollar collapses… THEN they’ll understand the theory we’ve been telling them about for years when bread is $15 a loaf). It is an awesome sight to see how inept, dishonest, and corrupt big government is. I think it should give us hope that people are going to start wondering what else we’ve been right about.
Pat- What you are proposing relies on a sane, fair and balanced media to report the truth to a sophisticated objective and fed up populace. The entitlement class will not and possibly cannot rise to that level. And just as the media trumpets that republicans offer no alternate plans to Oblamacare so will they accuse them of being devoid of solutions to rescue the cities that are plowed under by years of democrat corruption. Here in NJ we have our shining city on the hill, Newark, a place where each succeeding administration is more corrupt than the last, where not unlike BO a mayor is not elected because of the contact of his character but by the color of his skin.
There are places that are just basket cases and media that is simply dishonest (as well as dishonest politicians). All I want is some number greater than 50% of the population to start waking up. The die hard leftists are never going to see the light. It’s the large population of fence sitters who I think are going to start understanding that big government solutions do not work. As I said above, that’s what gives me optimism resulting from the disaster that Obamacare is… A lot of people are waking up to ineptitude, stupidity, and corruption of big government. And, this time, the media and the Dems can spin all they want, but people are either being affected negatively themselves, or know someone who has been negatively affected, and we’re just seeing the tip of the iceberg. Wait’ll companies start raising employee contributions to more expensive plans, or kick employees onto the individual market. Wait’ll we start hearing about people losing doctors, or not having insurance when they thought they’d enrolled on the website. What will lodge in people’s minds is that they can’t trust government. (And perhaps that they can’t trust the mainstream media, which tried to peddle the lies the politicians were telling instead of finding the truth behind the lies.)
Interesting that it takes a Kentucky Senator to even propose a plan to save Detroit (Michigan Senators, are you listening?). Regardless of its prospects for passage, I’d like to see it more in-depth.
I wonder if even a 5% tax rate would entice long-term substantive investment. The infrastructure is still a disaster in any proposed zone. I would think to draw serious corporate investment would require more of a long-term tax rate agreement akin to a tax abatement in which businesses can rely upon it staying in place for a multitude of years before they commit their resources.
Any potential company still has to deal with substandard city services, police and fire protection, crumbling roads, etc. A skilled worker pool and future taxes on profits are only a piece of the puzzle.
I’m sure businesses use critical thinking just as we would and wonder if the bureaucracy would eventually hijack the plan and corrupt it just as every other facet of Detroit has been.
It is a good conversation starter however. Not making you want to move back is it Jim? 🙂 🙂 🙂
Like I said to Peter, an Economic Freedom Zone would be best ried in a deeply conservative county and state. It’s not going to happen; but it’s fun to see a politician actually talking about it.
Rand Paul might be unaware that for decades Detroit has designated tax free “Renaissance” zones, where businesses AND residents are exempt from city, county, AND state property and income taxes, for up to 15 years. That’s a lot of incentive. For decades. If that hasn’t worked for Detroit, why should Paul’s proposal succeed?
I don’t think Paul actually expects his proposal to be taken seriously. It’s PR theatre playing to his base. He knows most of his followers probably don’t know anything about Detroit, and they’ll reflexively support any “solution” that involves cutting taxes, regardless of whether it will have any effect.
Let’s step back a moment to consider this: why should the Federal government PAY companies to relocate to Detroit? How does that align with free market conservative principles?
How do you think his followers would react if he instead suggested that the Federal government just give money to businesses to relocate to Detroit? They would hate it. But give them money and call it a tax cut and they love the idea.
Detroit’s problems are possibly intractable, and Paul’s proposal isn’t serious, it’s just PR he plays to the uninformed members of his base.
“Let’s step back a moment to consider this: why should the Federal government PAY companies to relocate to Detroit? How does that align with free market conservative principles?”
If you really believe that the earnings of a company or individual belong entirely to the federal government and any part of those earnings the government allows the company or individual to keep is a gift from the government, then I nor anyone else can help you, SH.
You are right about why the Democrats will not let this see the light of day; if they do it will prove once and for all that free market solutions are better than government intrusion and they cannot have that!
It’s a nice thought though, isn’t it?