January – February 2014 Commentary

pass the torch illustration
Illustration by Dan Page

Management – A Brave New World

We’ve been here before. A new mayor takes office, new promises are made, and we all hold our collective breath that he will chart a sustainable course to recovery. The last few Detroit mayors have had their successes, but they’ve also had their share of missed opportunities and wanton political sideshows.

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Coleman Young got the People Mover built under the Carter administration, but once Ronald Reagan entered the White House, things changed for the worse. Rather than adapt to the new political reality of the 1980s, Young attacked Reagan with words like “prune face.” While Young fiddled, Detroit literally burned. And the city has yet to overcome what is now a 2.5 percent personal income tax instituted on Young’s watch.

Dennis Archer had his high points, including the federal empowerment zone and a revival of fortune — General Motors’ acquisition of the Renaissance Center, Compuware Corp.’s move from Farmington Hills to Campus Martius, the debut of two new sports stadiums, and three casinos (the result of a successful ballot initiative). But he was saddled with limited technology and too many city council members who were looking out for themselves.

We all know what happed under the Kwame Kilpatrick administration: A flash of brilliant light followed by an explosion of lies, threats, and wads of cash stashed in untold places. Despite it all, Kilpatrick advanced the city in various ways, while the Detroit Economic Growth Corp., under the leadership of president and CEO George Jackson, flourished — and still does.

When Dave Bing assumed the mayor’s office four years ago, he brought forth integrity and hope, but his managerial skills were weak (his former company, Bing Group, was closed soon after he became mayor due to a long record of mismanagement). Bing also had credibility problems as he flip-flopped on various issues, especially during the lead-up to a Chapter 9 bankruptcy filing.

Now comes Mike Duggan, who served admirably as what could best be described as COO under Wayne County Executive Ed McNamara. He also served as Wayne County prosecutor, and president and CEO of the Detroit Medical Center. 

You figure out how it ought to be done and which people should be in which jobs. It’s the kind of comprehensive approach we haven’t taken in the city in a long time.  — Detroit Mayor-Elect Mike Duggan

His business and political background should serve him well as he leads the city into the future. He will need to work closely with emergency manager Kevyn Orr, who is proving that strong managerial skills can effect positive change. And Duggan must make progress on numerous fronts, including public lighting, city services, safety, and blight removal. The one thing Detroit doesn’t have the luxury to waste is time.

Health Care – Management 101 

One object of operational success is to under-promise and over-deliver. So what happens when someone over-promises and under-delivers? The answer is Obamacare. President Obama repeatedly stated: “If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.” 

As Americans learned on Oct. 1, when the website for the Affordable Care Act sputtered to life following three years of preparation, those promises were broken. If Obamacare had been a private enterprise overseen by a board of directors, the CEO would have been shown the door. Like President Bush before him, Obama is finding that a second term can be much more difficult than the first.

So what can be done to fix the many problems? The first thing he needs to do is to level with his customers — in this case, the American people. At first, Obama attempted to blame the insurance companies for canceling thousands of health care plans. Following that, the White House tried to convey that Obama’s words were taken out of context — but that didn’t fly, either.

Obama has since apologized for the canceled plans, which was a start in the right direction. The next step is to fix the numerous bugs in the system, including a poor security wall that initially allowed anyone access to a user’s personal information. After that, it is imperative for the Obama administration to work with the insurance companies and other suppliers to fix the system and give the American people what they were promised. 

Tax Reform – The Toll Mess

Tax reform is a rallying cry for most politicians, but the proof is in the pudding. So far, there are a few ingredients on the table, but no one wants to be the cook for fear of upsetting constituencies or donors, or risking re-election prospects. That’s one reason America’s corporate tax rate is the highest in the world.

Many other countries have overhauled their tax policies to be better-aligned with modern business practices and online commerce offerings. The United States should follow their lead. As it stands, the nation’s international tax system, unlike most every other country, imposes a toll when American companies seek to bring their international earnings back into the U.S. While in recent months Sen. Max Baucus, D-Mont., and Rep. Dave Camp, R-Mich., have gathered reams of data showing how tax reform would benefit the overall economy, not much has been done.

If the House and Senate can work cooperatively to introduce tax reform, the economy will improve. The window of reform is open, as Democrats smarting from the Obamacare mess are eager to show they can lead something like tax reform to a successful conclusion. Republicans also need to repair their image following the government shutdown procedures in October, which proved to be unpopular and ineffective.

The big sticking point is that no one seems willing to tackle the numerous tax breaks, carve-outs, and kickbacks. At the same time, some citizens are worried that a vocal protest of the tax code will be greeted by an audit from the Internal Revenue Service (as we witnessed last spring). While the sequester has worked in reducing the national deficit, it’s more logical to fix the system in its entirety rather than rely on mandatory cuts.

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