Sunday, August 24, 2008

What Detroit can learn from Dublin

Detroit, Michigan and Dublin, Ireland: The two cities would seem to have little in common except an intimate acquaintance with hard times. But Dublin, although a basket case in the 1980s, is today enjoying an exciting economic renaissance, while Detroit continues on a downward trajectory.

A thoughtful piece by Ellen Creager in today's Detroit Free Press asks what the Motor City might learn from Dublin's stunning success.

Not everything that worked for Dublin applies in Detroit. The Irish city has a major advantage in that it skipped over the industrial/manufacturing phase, leaping from agriculture to high tech, so there was less rebuilding and environmental clean-up to do. Dublin is a capital city; Detroit is not. And Detroit, though it once had beautiful neighborhoods, lacks some of the inherent charm which makes Dublin a tourist draw. Detroit's infamously high crime rate, as well as 47-50 percent functional illiteracy rate (Dublin's is 15-20 percent), may be insurmountable hurdles to climb over.

But where Detroit -- or any other American city -- can follow in Dublin's footsteps is on tax policy. Here's a key passage:

"Key to (Dublin's) success was Ireland's decision to slash its corporate income tax rate to 12.5%," writes Creager. "By turning itself into a tax haven, Ireland stole all kinds of European headquarters of multinationals (including 500 American firms) from neighboring European Union states.

That created jobs, which created wealth, which sent Dublin on an upward spiral.

Detroit has seen some growth based on tax breaks to companies like Compuware; Quicken Loans is expected to follow.

But could Detroit compete on corporate taxes? Unlikely. The United States has a 35% top corporate federal income tax rate, plus Michigan's new business tax is 4.95%."

Just slashing corporate taxes probably won't be enough to duplicate Dublin's success in Detroit. But it might help jump-start the Motor City's sputtering engine. And Detroit, at this point, has little to lose by trying.

"The biggest lesson Dublin may teach Detroit is that when you're on the bottom looking up, you've got to be bold," writes Creager. "When cities reinvent themselves as Dublin has and Detroit is trying to do, pain is involved, and some grief, and finally a rebirth."

1 comment:

Anonymous said...

Dublin is the main city in Ireland. Detroit is a nothing norththern midwest backwater in a country with dozens of more prominent cities.