A Short-Hand Solution to Finding Comparables

One of my most instructive memories and insights into local government came on my third day in my first job. We had some minor flooding issues (water sitting on roads with some homes most or less fortified against a medieval army but dry inside and accessible), and the Administrator swung by my desk coming out of a response meeting. He took a big swig of coffee and said, "Well, since you're new both here and to the field, let me be the first to ask you a question you'll hear about a million times before you're where I am - what are the comparables doing about clean-up?" True to his word, between being directly asked what our comparables do and thinking it to myself, I'm probably approaching 100,000 times. To be sure, it's an entirely reasonable question, but the methods used to answer who your comparables can range anywhere from well-reasoned to entire guess work.

As we all know, everyone looks to comparable organizations for any number of things. Both private and public sector organizations look to those they consider either competitors or fundamentally similar for benchmarks and ideas. However, due both to a lack of traditional market competition and freedom of information, public sector organizations are inclined to go so far as to borrow language directly from one another for policies and volunteer extraordinarily large amounts of management and operating information. Therefore, because the materials are so readily available, the quest for comparables becomes so second nature for public administrators that it enters into most major decisions.

Again, that's not the problem - the issue is how to differentiate between useful and extraneous (or, in the most extreme circumstances, harmful) information. And that's where the problem becomes critical. In some cases, the exercise is unnecessary. For example, when discussing flood response, comparability was more of an intellectual exercise because, we were all going to respond in a similar manner regardless of what we had in common. However, when we get to a subject like collective bargaining, comparability is a key issue in determining what's affordable for something like a COLA. Based on my experiences and watching how others have gone about determining comparables, any one of the following reasoning measures can be used to determine who to go with for comparison:

1.  "Whoever We Have Always Used": A classic response is that the comparables are whoever you have always looked to. These other communities may or may not be truly comparable, but without additional information, it's impossible to tell.
2. Proximity: I've seen a lot of communities look around their neighborhoods to find comparables. In some respects, that's not a bad response - after all, it's likely that some essential factors are similar. However, we cannot say that Arlington, VA is comparable to Washington DC simply because of their proximity.
3. One or More Key Similarities: This is a particularly tempting method to follow. If there is a key similarity between two communities, it may be simple to say that they are comparable (for example, two communities may both have major universities). However, while some factors are likely the same, nobody would argue that Iowa City, IA and Ann Arbor, MI are fundamentally similar because they both have Big 10 Schools.
4. Assessed Valuation: Another common piece of reasoning is that assessed valuations is a good shorthand way to determine comparables. I agree with this to an extent - assessed valuation is a decent indicator when the distribution of residential, commercial and industrial valuations are considered but not the total figure it and of itself. A town with a ton of residential valuation might look comparable to a city with lots of industrial valuation otherwise.
5. Community Relationships: This normally occurs where two communities have a particularly close relationship (either the communities or their leaders do) and end up becoming de facto comparables because they immediately consult each other first when they need external information. I wrote my grad school capstone on a related topic and have noticed that my particular friendships with others in the field have lead to the policies of the communities they work for influencing my employer's policies (because I borrow from them) and vice versa. This is not problematic in and of itself, but if the two communities are dramatically different, this wouldn't be advisable.
6. Vanity: Many times, communities will identify the communities they wish to aspire to or be compared to as comparables. The reasoning is simple: if these communities are "better," then we can become "better" by following their example. However, this is the biggest trap of all - odds are that these "better" communities came to be under different circumstances and borrowing heavily from them without understanding your underlying differences is a recipe for trouble.

So, how then can we go about determining comparables? When forced to determine an "objective" way of doing this for a collective bargaining agreement a few years ago, I spent a few hours and mapped out an index which compiles a variety of unrelated information and attempts to find the best match. The formula is below (warning - some math follows):

X = ∑ y
y = 1- ((Z-A)/B)

For those not up-to-date with mathematical summation, the formula above basically says that X is the sum of all y variables. Each y variable is expressed as the Z variable minus A dividedby B then subtracted from one. It all sounds complicated, but it practice, it's relatively simple. Before we proceed though, some explanation on why y is used instead of a set figure. This is because, depending on your purposes, any number of variables may be used. I've used between three and seven at a time, so I leave the number open.

Let's see how this formula works out in practice. Let's say that I manage a town of 50,000 people with $1,000,000 in assessed valuation. I'm looking for the most generalized comparables possible. Here's the few that I have immediately identified:

• Town A: 65,000 population, $900,000 in assessed valuation.
• Town B: 80,000 population, $1,100,000 in assessed valuation.
• Town C: 55,000 population, $800,000 in assessed valuation.
• Town D: 35,000 population, $950,000 in assessed valuation.

Clearly, each of these is not a perfect match, but the question is how do we determine the best match. Here is what I propose in a step-by-step format:

1. Separate each variable to keep the data consistent - i.e. put all population figures in one sheet.
2. Subtract each figure in that particular variable set by your community's number (explanation will follow at the end).
3. Convert any negative numbers to positive numbers.
4. Divide each figure by the largest number to get a percentage.
5. Subtract that percentage from 1.
6. Repeat these steps with each variable identified as an indicator of comparability and finally add each town's figures for a final index sum.

What we are trying to accomplish here is a shorthand way of showing general comparability. As that is the case, traditional means of summarizing data (such as averages) are irrelevant because they do not make comparisons of one number to the set. Therefore, what we are trying to do is measure variation. In each case, subtracting your town's figure establishes it as 0 and the basis of comparison. Essentially, what happens then is the most disparate community is treated as the range and each community's figure is plotted along that range. That plotting is the foundation of the index. Below is how the math works for the example I've given.

Initial Data (raw data):

	Pop	EAV
Your Town	50000	1000000
A	65000	900000
B	80000	1100000
C	55000	800000
D	35000	950000

First Treatment (Your town's data subtracted from all figures and all figures converted to positive numbers):

	Pop	EAV
Your Town	0	0
A	15000	100000
B	30000	100000
C	5000	200000
D	15000	50000

Second Treatment (divide each figure by the most disparate - for example, all population figures are divided by 30000):

	Pop	EAV
Your town	0	0
A	0.5	0.5
B	1	0.5
C	0.1666666667	1
D	0.5	0.25

Final Treatment (subtract each figure from 1 and add all figures):

	Pop	EAV	Final Score
Your Town	1	1	2
A	0.5	0.5	1
B	0	0.5	0.5
C	0.8333333333	0	0.8333333333
D	0.5	0.75	1.25

As you can see, Town D is considered the most generally comparable based on these factors, though it may also be worth while looking at Town A. 

You may be asking if I've used up to seven variables before then what should you be looking to. Here's a list of potential items to use for comparability:

• Population
• Assessed Valuation
• General Fund Amount
• Property or Sales Tax as a Relative Portion of the General Fund
• Home-rule status (this is an exception to the rule - since a community is either home-rule or it isn't, I generally just use 1 and 0 for scores)
• Ratios of Assessed Valuation (residential vs. commercial vs. industrial, etc.)
• Number of emergency calls (for police and fire)
• Lane miles (for engineering or public works)
• Miscellaneous emergency date (number of vehicle accidents, ALS/BLS figures, etc.)

Before jumping into this model fully, just two things to be aware of: (i) be sure you are comparing apples to apples and (ii) recognize how the choice of communities used will impact your figures. In regards to the comparison, a common problem is that there is some variation in what does and does not get measured (for example, if you are looking at requests for service, be sure that all comparison communities use similar systems for tracking). Finally, realize that including a number of disparate communities will skew your numbers somewhat. However, because we are looking at relativity, most areas should work out fine.

In short, I hope this is a useful tool for you going forward. Keep in mind that multiple different communities may be ideal comparables depending on what you're looking at, and you should always think through these issues each time you go out to review a major issue. What are your thoughts and what are you looking at comparables for?

The Photos Collected by the Dead Malls Enthusiasts Will Make You Think

courtesy of Dan Wampler Photography.

I know I've been on a brief hiatus (working on a very large entry), but when I ran across this article on Neatorama about the Dead Malls Enthusiasts, I knew I wanted to share it. Essentially, the Enthusiasts are a group of people who like to collect photos of America's various "dead malls," or those shopping centers that are all or mostly abandoned, leaving nothing but shuttered doors and the faded impressions left by old store signs. The photos range from comical to eerie and remind me very distinctly of the kind of images you would see during the Dust Bowl, except in the form of structures instead of people.

What the photos also represent to me though is two kinds of tragedy - the loss of a large group's livelihood as well as the failure of both a business' and a community's work. In many cases, when a business fails, it can simply disappear, and while the loss is painful, another will take its place. A mall, however, is not simply a business - it's a giant piece of real estate. Unlike storefronts or office space which can be refilled, a mall will simply sit and become blighted in little time save the introduction of a grant redevelopment project. The community that gambled on it is also a loser in the failure as a result.

The photos are definitely worth a look - only if just out of curiosity. Take a moment and reflect on some of those issues that only abandoned buildings can really show and how we might address them before we get to that point.

A Sad Truth About Local Elections: Low Voter Turnout Isn't Going Anywhere Without A Lot of Work

Courtesy of the LA Daily News.

This coming Tuesday is Wisconsin's spring election day, which typically covers local offices and issues, and 2014 is already looking to be another lackluster year for voter turnout. True to the election form, mayoral candidate signs began sprouting up around town like spring flowers about two weeks at major intersections and in seemingly random front yards. They were quickly followed by signs for aldermen and county supervisor signs, rarer breeds which cluster near the mayoral flora like a complimentary species. The local news station focused on some races in Milwaukee County (our nearest metro area) over the last few days, and the local papers gave some obligatory mentions about specific races and dutifully printed the names of the candidates in each race. Tomorrow, there will be at least one editorial on why local elections matter. Tuesday - Election Day - our local field reporter will be at some suburban polling place stating that the polls are open and that there are no lines. After playing some of the winners' speeches on Wednesday morning, a few local media folks will likely elude to disappointing voter turnout (typically, always much less than the most recent presidential election) and lament this fact. By Thursday, it will be life as normal again.

I don't need to tell anyone that reads this blog that local elections do matter, and local government is probably the most influential on the everyday quality of life for residents. Knowing that, the issue of low voter turnout in local elections is all the more devastating. But, we must as ourselves, why is the average voter so disinclined to participate? The underlying issue to me is a combination of four things which are individually somewhat well-documented and discussed but not necessarily connected: (i) the simple daily bombardment of information we each experience, (ii) a lack of engagement with political institutions, (iii) the complicated calendar of elections and (iv) a general apathy arising out of a combination of factors potentially all related to the first three items listed.

It would take a novel-length piece to adequately do justice to each of the items noted above (indeed, each has essentially had a number of books, journal articles and studies). The question though is what can we do to help turn around low voter turnout in our local elections. Some thoughts from various sources for your consideration are below:

1. FairVote, a non-partisan organization focused on structural barriers to voting, offers the following proposals for increasing turnout.
2. A bit more unorthodox treatment of the issue from The Week's Keith Wagstaff.
3. Some rapid fire thoughts from political consultant Anthony Morse.

Personally, I think Morse's point on civic education is a particularly important one - how many people out there don't vote either because they don't know the issues or feel that their vote doesn't matter? That's where we, as public administrators, can make a dramatic difference. Everyday local issues are not necessarily sexy, but they are important and the easier we can make that information to find and understand, the better the level of participation we will receive.

What does everyone else think out there about the empty polls you'll see? 

7 Days, 7 Topics: A Round-Up of Topics from this Past Week

Florence's new brand.

To say it was a busy week would be something of an understatement. The Crimean and general Ukrainian situation escalated. The hunt for an airplane lost in a Bermuda Triangle-style continued in the south Indian Ocean. Duke lost to Mercer. Not exactly light stuff for anybody, unless you're a Mercer fan. Anyway, this whole volley of events prompted a number of articles and opinions worth bringing forward and discussing in the context of public administration. Below are seven articles from this past worth passing around and discussing:

1. Sunday: Too Soon for Answers in Harlem (by Nicole Gelinas for City Journal): An overview of things that could have caused this month's explosion in Harlem, which killed eight people, injured several more and leveled a few buildings. Gelinas points out that it may not have been Con Edison's (the transmission utility) fault due to any number of other problems. Fair enough, but her argument is then expanded to say that the failure of a gas main cannot be compared to the general infrastructure problem facing America as Con Ed is a private utility with underground infrastructure. That argument misses the fact that private regulated utilities function almost identically to public utilities (indeed, under an enterprise fund, it's not as if funding can legally be diverted from water mains to teacher salaries as Gelinas mentions) and the 127-year-old cast iron main located near the explosion is far beyond its service life. America has a real infrastructure problem regardless of who is tasked with maintaining any given piece of infrastructure and casting doubts on it does no one any favors.

2. Monday: Determining the Markup on Municipal Bonds (by the New York Times' Carl Richards): A brief overview of a side of the market we (at least I) rarely think about - those folks who are buying municipal bonds and the power of brokers in those sales. If you've got a few in your portfolio, it may also save you future problems with markups.

3. Tuesday: Walmart Goes Urban and Smaller in Washington DC (by Edward McMahon for Urban Land Magazine): Walmart's finally found its way into major cities - in this case, Washington DC - and its taking on the look of the landscape by compressing its space and adopting urban facades. It's an interesting change of heart for the retail giant, but really, it also proves the adage "Necessity is the mother of invention." Strong demand for lower cost merchandise coupled with high population density probably softened Walmart's strategy in approaching the question of its urban locations with favorable results for those communities. Sadly, I don't expect to see this in the suburbs.

4. Wednesday: How the Crimean Conflict Could Impact Your Finances (by Richard Barrington for Forbes): Russia's invasion and subsequent annexation of Crimea is the kind of event which foreign policy experts could write a new War & Peace about, but aside from some general basic humanitarian concerns, there is little other immediate impact at the local level - unless you think about how global trade issues trickle down. Barrington illustrates the possible impacts of this whole situation on your wallet simply and efficiently. Of course, tax revenue is yet another step removed from the level Barrington is at, but the correlation between general economic conditions (and, in particular, individual consumer sentiment on the economy) and tax revenue is clear and obvious. If this situation simmers at its current level or escalates, we may begin seeing the consequences anywhere from three months to a year down the road in tax receipts.

5. Thursday: The Great Debate: City Manager vs. Assistant City Manager (by Julie Underwood, writing on the ELGL Website): A nice overview for emerging professionals on the merits of both seeking the City Manager role and the benefits of being a career Assistant or Department Head. This was not something they openly discussed in my grad school (though subject specialist adjunct professors would sometimes touch upon it), but the longer I've been a professional, the more I recognize the merit of staying an Assistant. Grad students and recent new professionals should definitely give this food for thought a read.

6. Friday: What is CNN Going To Do If We Never Find This Plane? (by Esquire's Ben Collins): An absolute great look at how the media's need for ratings (and sales by extension) promotes sensationalized news without substance. What's that got to do with us in public administration? Well, first and foremost, it creates problems with our relationship with the media. Investigative or sensational coverage is nothing new, but as it grows, it'll make those reporters we were once comfortable with become our enemies and that defeats the whole purpose of media relations. Second, it creates problems with the public. While the traditional media is not the mainstay it once was, it still holds more sway than most of our public information efforts, and negative coverage hurts both the public's generalized view of government and their specific view of our individual organizations. This is something we should be concerned about and asking ourselves what are we going to do in light of the fact that the media may give us prolonged negative attention that we are not necessarily prepared to manage.

7. Saturday: Florence's New Logo: Crowdsourced Design That's Bad for Design (by Steven Heller for The Atlantic Cities): City branding has been hot recently - it seems like everybody is jumping into it. In this case, Florence opted for a riskier albeit cheaper route to creating a brand: crowdsourcing it. Heller argues that the ultimate logo Florence chose is unsatisfactory and partially because the crowdsourcing option cheapens the whole process. I'm not in love with the logo myself, and I agree that crowdsourcing feels like a weak alternative to the careful study and thought being placed on the community, its unique attributes and its dynamics that a designer can bring.

Thoughts? Any other good stories I missed? Share them below.

It's Been More Than Just a Long December: Being Prepared in the Face of Increasing Uncertainty

"A long December and there's reason to believe 
Maybe this year will be better than the last." - Counting Crows, "A Long December"

If you're living anywhere north of the 30th parallel, you most likely know exactly what I'm talking about - it's been far more than a long December for all of us. This winter beat the stuffing out of everybody with the exceptions of Boston and Alaska (lucky!), and it is still barely holding on in my neck of the woods (only flurries today though). The Peach City essentially came to an icy halt altogether at least once. St. Louis residents and businesses alike were in an uproar over the city's snow plow plan, which traditionally left side streets untouched.  Dangerously low cold and wind chills impacted most everybody in the Midwest and Northeast, shutting down schools as far south as Austin. The Great Lakes had near record ice cover. Only Florida managed to escape it, being the only US state to not have measurable snowfall. In short, if you managed to stay above freezing all winter and see less than a dusting, you are one of the very fortunate and few.

An unusually cold and snowy winter is perhaps nothing to worry about in particular. After all, the prior two winters to this one were more or less mild in most parts of the nation, and, once the snow melts off, public attention will go elsewhere. However, this is seems to be part of a wider set of unusual events that are pushing the limits of public services. For example, consider these events:

• Extreme Drought in the Southwest and Midwest in 2012 and 2013: A situation which not only increased wild fire potential in the West but stressed water reserves and agriculture.
• The 2012 Derecho in Chicagoland and the 2013 One in the Baltimore-Washington Metro Area: Major, powerful and fast-moving storms that knocked out power in for thousands in both Metro Areas - for days in many cases. Both stretched the capabilities of emergency responders and public works/utility crews.
• Sandy: The largest weather event of 2012, which effectively shut down the nation's largest metro area and impacted up to 24 states.
• The On-Going Troubles with Lake Mead: Las Vegas' water supply is drying up - quickly - and that has negative implications for most everything in that area.
• The Fall 2013 "Unusual" Winter Events in the Upper Midwest: Blizzards, tornadoes and all manner of hell hit the Dakotas and Nebraska just as the federal shutdown struck, compounding response problems.

Now, some may want to turn this into a debate about whether or not these events are related and the nature and origin of climate change. My argument to you is that for those of us on the local level, that's simply a moot point.  Severe events are occurring, and we, as public administrators, have an increasingly important but daunting task: responding and always being prepared for an above-average event in a time of lean spending and high uncertainty.

Short of an oracle or a time machine, we can't predict the future. However, as always, we can and must continue pursuing avenues which decrease our immediate exposure. Below are some thoughts on ways in which we can begin tackling tomorrow today:

1. Mutual Aid Agreements: I believe these have been common in most emergency responder agencies for years, if not outright mandatory. However, how will you provide public works and utility services or performance emergency building inspections? Thinking broadly about mutual-aid now may pay dividends later.
2. Resource Sharing and Bulk Purchasing: Some mutual-aid agreements intrinsically cover these issues but think broadly about issues like bulk commodity purchases (such as rock salt). If you run out, how will you secure commodities or find extra vehicles? Can a supply or group be pooled and shared? Some forethought and planning here may save costs and time in the not-so-distant future.
3. Regularly Analyze Your Needs and Assess Your Risks: Odds are you have already taken on some kind of survey of your needs and emergency risks at some point as part of an emergency management planning process. But is someone reviewing these plans annually and adjusting or updating them as necessary? A five-year-old plan will not serve you as well as a one-year-old one and could bog you down as you make adjustments.
4. Develop The Relationships Necessary To Manage An Area: Relationships matter, especially when you need your neighbor or one of your vendors. Get out and meet your neighbors, fellow local governments and specialized vendors now so that you aren't searching for them in your time of need.
5. Build Your Communications Network and Resources Now: Every minor crisis is a test of how well you communicate with your residents and businesses. If you didn't perform so well on your last one, take the time to think through the problems and design improvements today. While a minor emergency can be weathered today, an uninformed and confused public could be a huge hazard tomorrow.
6. Learn: The aftermath of Sandy produced a flurry of studies and white papers on a variety of emergency management topics. Some of them are quite good (I blogged about one on social media last year) and worth a read. Remember: Planning now helps promote preparedness later.
7. Encourage Preparedness: I joined several other area PIOs earlier this month in recognizing National Severe Weather Preparedness Week and promoting preparedness resources. Ready.gov has a ton of resources you can share with your residents for all types of events. However, you should always remind residents wherever possible about simple things like how to shut off their water valve at their meter in case of more minor emergencies and the need for having canned food and bottled water on hand.

Remember, it's been more than just a long December and this year may be no better than the last. Think ahead now and promote initiatives to prepare to minimize impacts in the future.

The Sound and the Fury Over the Millennials

“I suppose that people, using themselves and each other so much by words, are at least consistent in attributing wisdom to a still tongue...”- William Faulkner, The Sound and the Fury

Over the last year, the media seems to have been collectively obsessed with the plight of young workers.  When I say, "collectively obsessed," I mean mostly gawking and pontificating about the merits of hard work.  Here's one particularly horrifying story about student loan debt. I had remembered reading that story a few months ago, but to find it again, when I searched, I had to use Fark.com, which is mostly a commentary website, to find it (and they didn't have good things to say).  The internet is simply littered with other examples.

However, for this past May (coincidentally around graduation), it came to a fever pitch.  Joel Stein (who I normally respect) wrote an article in Time the now in-famous, "Me Me Me Generation" article.  In it, he details in the very beginning about the incidence rate of narcissistic personality disorder among Millennials being three times higher than in adults age 65 or older.  This begins the long number of exhibits Stein pulls out to illustrate his ultimate point: Millennials are self-adsorbed, narcissistic and, perhaps most offensively to prior generations, entitled.  Granted, there is some discussion about how "we'll save everyone," but frankly, it's a systematic assault on the entire generation.

There have been some attempts among my cohorts (yes, I am a Millennial) to defend our generation.  The Nation posted one such response, which was just dripping with sarcasm.  A more measured one from PolicyMic can be found here, though it focuses on more of a defense of the things Stein points out.  Then, one of the publications I read somewhat regularly, Public Management, ran a commentary by Garin Giacomarro, an Economic Development Coordinator from Texas and fellow Millennial, on how to work with Millennials.  As the Whispers once sang, "And the Beat Goes On..."

I'm not here today to launch a polemic attack on Stein or the number of Baby Boomers and Gen Xers who believe what he has to say.  I'm here to suggest that this is all one great sound and fury over nothing.  Socrates famously said:

"Our youth now love luxury. They have bad manners, contempt for authority; they show disrespect for their elders and love chatter in place of exercise; they no longer rise when elders enter the room; they contradict their parents, chatter before company; gobble up their food and tyrannize their teachers."

 To which Joel Stein responded:

"I am about to do what old people have done throughout history: call those younger than me lazy, entitled, selfish and shallow. But I have studies! I have statistics! I have quotes from respected academics! Unlike my parents, my grandparents and my great-grandparents, I have proof."

To which I now posit a great Homer Simpson quote:

"Aw, you can come up with statistics to prove anything, Kent. Forty percent of all people know that."

Yes, ladies and gentlemen, I am going to say it: you were once Millennials.  You once had no idea what you were going to do after college or what a reasonable starting salary was.  You once longed for flexibility in the work schedule to do what you wanted to do.  You once slept in until 11 a.m. on the weekends (I no longer do, but I remember back in the day).  Your "good, old days" are actually your, "bad, young days."  You can claim that you understand that productivity was the point of work and not pursuing your passions, but hindsight is always 20/20.

Now, to my fellow Millennials, I am going to say that the older generations are right.  The point of work is to be productive (you can pursue your passions on the side).  Yes, sleeping in until 11 a.m. is a bad thing (but can be done once in awhile like all things in moderation).  Yes, job hopping is bad, but if you feel that your job isn't secure, by all means, I'd encourage you to look for another.  Yes, do show up to work on time.  However, don't let anyone get you down by telling you you're too young.

So, I now ask everyone in this conversation - what are we fighting about?  This is artificial divide is all nothing but sound and fury over age old divisions, all of which repeats itself over and over.  And the beat goes on.

Detroit: Cautionary Tale

I doubt anybody missed the news this week about Detroit.  Or the subsequent protests from city employees and pensioners. Or how a Michigan state judge has since blocked the city's attempt to file for bankruptcy.  And, just for good measure, everybody and their mom's dog's opinion on why Detroit got into this mess in the first place.

In short, it was a bad week for Detroit and just about everybody there.

As Jared Bernstein said, "It’s obviously been a long way down for Detroit."  There's an understatement.  Detroit, in recent years, has been more of the proverbial snowball, rolling down a hill and rapidly collecting and compounding problems, than falling straight done to a hard landing.  The warning signs were there, and Detroit responded, but it was too little too late.

Detroit was a perfect storm of bad things.  With a largely homogenous industrial base, a rough reputation and housing stock that is particularly susceptible to price swings, it comes as no surprise that Detroit's tax base shrunk with gusto when the economy first started to shake.  Without that foundation, Detroit faced massive revenue shortfalls and with already substantial debt and pension costs. The whole house of cards came down pretty quickly as Detroit had few safeguards in place.  And here we are. 

Of course, that's only the local view.  Others can point to globalization, which hurt Detroit's major economic players.  As that occurred, the housing bubble compounded the problem.  Perhaps it's all a matter of perception about exactly whose fault it is.

However, I think this is a clearly cautionary tale to the rest of us and our communities.  Some clear lessons which we should take to heart:

1. Diversify: Detroit flew high when American autos corporations were kings.  When they fell, Detroit fell even harder.  Further damage came from the fact that Detroit wasn't just housing the auto corps but all their supply chains.  Once upon a time, keeping all the supply chains close was a smart philosophy for everybody, but those days are gone.
2. Manage Your Reputation: Detroit has long had a rough image.  Even native Detroit metro inhabitants admit this.  Of course, this has a subtle but still powerful impact on where businesses and individuals want to locate.  Detroit or Chicago? Detroit or Houston? These are generally not hard decisions.  Businesses can be incentivized, but individuals not as easily.  Keeping ahead of our reputations is an important part of keeping a vibrant community.
3. Plan Ahead: I'm not sure to what extent Detroit officials knew how bad this situation could become.  Nate Silver argues in his new book The Signal and the Noise that economists themselves had significant difficulty predicting the 2008 recession.  However, it's obvious to us now that we have to at least consider the worse case scenario and plan accordingly and install safeguards.
4. Obligations and Liabilities Need Proper Consideration by All Parties: Many are quick to blame pensions for Detroit's problems.  Pensions are one of many institutional factors that contributed to the situation.  To some extent, Detroit may have been able to control its pension liabilities - I'm not exactly an expert on pension law in Michigan.  However, in many states, it's up to the State Legislature to define pension benefits, which accordingly drive pension costs and contributions.  Communities must be vigilant in educating their elected representatives about pensions, how they function and their costs.
5. Federal Policy Matters: It's commonly said that local government has the most impact on the lives of residents.  That's true, but what's not as commonly understood is how federal law ultimately impacts local government.  In the case of Detroit, globalization is obviously a key factor in the problems which lead to the bankruptcy as major economic players struggled.  We often watch our State legislatures - we should be constantly watching Capital Hill as well and predicting its impact on us.

 So what say you, readers? What else can we learn from Detroit?