Discuss Detroit Archives - Beginning January 2007 Restarting Michigan's Economy Previous Next
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Mrjoshua
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Username: Mrjoshua

Post Number: 1289
Registered: 03-2005
Posted on Sunday, April 08, 2007 - 10:28 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Restarting Michigan's Economy
By DAVID L. LITTMANN
April 7, 2007; Page A8
The Wall Street Journal, op-ed

MIDLAND, Michigan -- Michigan's state motto makes this confident claim: "If you seek a pleasant peninsula, look about you" (Si Quaeris Peninsulam Amoenam, Circumspice). Indeed, no other state in the union boasts more beachfront property than the Wolverine State.

More important for much of the 20th century, Michigan was a model of prosperity, a magnet for human capital -- attracting and retaining a critical mass of world-renowned engineers and entrepreneurs -- and seemed destined to be an economic engine for the nation. But then came the 1970s and the state has been sputtering ever since. Today, a deep fog has settled over a once bright business climate.

The state was always particularly vulnerable to the ups and downs of auto sales. Still, Michigan was a veritable gold mine for wealth-building and wages until the '70s, when automakers began ceding market share to competitors at a pace of just under 1% annually. Rather than being fleet-footed, the "Big Three" ignored challenges, suffered severe UAW strikes and accommodated uncompetitive compensation packages through 2006. This is a well-known decline and fall.

Conditions suggest that it's more than a problem with the auto industry. Most recently the state has also experienced losses of headquarters and jobs in financial and pharmaceutical sectors, e.g., Comerica Bank and Pfizer. Even lumber yards, motels and other low-profile employers are hurting.

Underpinning this downturn are a few economic myths that must be dispelled. Perhaps the most pernicious myth is that Michigan is caught in a cyclical recession.

While chief economist of Comerica Bank, I tracked monthly index movements of the state economy over a 50-year period. What I found in the data is disconcerting: Michigan is not in a cyclical decline. Quite the contrary. Vehicle sales in the U.S. have averaged 17 million units over the past five years. Our decline has been a trend, a steady downward slide.

Net out-migration from Michigan, according to the nation's largest household moving company, has been occurring for 30 consecutive years. As of early 2007, the net out-migration of firms and population is so profound that some rental car companies in the state no longer allow one-way rentals. Their fear is they won't find anyone to return the vehicles.

Another myth: that Michigan's business climate ranks in the middle of the pack among the 50 states. This ignores the fact that Michigan's private sector is contracting compared to the expanding tax bases of every other state.

The economic fog will lift when policies are enacted that make Michigan a good place to do business for newcomers as well as for existing firms. This won't happen if the legislators in Lansing, the state capital -- who advocate heavier tax burdens on the remaining taxpayers to subsidize or attract firms handpicked by government officials -- get their way. These targeted subsidies simply redistribute scarce income. Nor is the governor, Jennifer Granholm, moving in the right direction. Her recent call to impose a 2% tax on most services is a nonstarter. But she's also calling for a new tax on the estates of wealthy residents, giving those with the means an even more urgent reason to leave. Michigan's slide will continue.

Two fundamental reforms are essential if the state is to make a comeback. Michigan was a formidable competitor prior to 1967, when the state had no personal income tax. Why not return to these days by abolishing the state's 3.9% personal income tax and replace it with nothing? Even a slow phase-out of the tax will allow the state to vie for business, new jobs and private-sector investment with fast-growing Florida, Texas and the nearly half-dozen other states that do not levy an income tax. If Florida and Texas -- two of the fastest growing states in the union -- can survive without income taxes, Michigan can too.

Second, it's time for Lansing to pass right-to-work legislation, which would allow workers to take a job without also being forced to join a union. There are 22 other states with such laws on the books and those states are often the most competitive for new Toyota, Honda and other auto-manufacturing plants that are creating thousands of new jobs. These are jobs Michigan should compete for.

Then there are "legacy costs" -- and not just autoworker compensation packages. Unfunded liabilities attendant to public-sector employee pensions and health care stand at $35 billion in Michigan. These rapidly rising costs are stealth taxes lying in wait.

When will this change? State economic prospects are difficult to predict because organized labor -- the public education lobby in particular -- now controls most tax-and-spend policy levers. Michigan's education lobby pressures the governor to pass higher sales taxes to be funneled into public schools: Pre-schooling, K-12 and 15 public universities. But the notion that tax hikes will give us a more educated work force, and therefore offer a competitive salvation, is probably the easiest myth to dispel. Michigan education budgets have experienced meteoric increases over the past two decades, but quality has not risen; nor has the plethora of funding stopped the outflow of Michigan's most capable graduates.

Voters appear now to be catching on to this ruse. In November 2006, the education lobby sponsored a ballot proposal which would have guaranteed immensely higher pension and health-care benefits to union members, past and present. It was decisively defeated.

If citizens can once again embrace the truth about competitive markets and adopt a welcoming attitude toward profit, the fog may yet break up, brightening our "pleasant peninsula."

Mr. Littmann is an economist formerly with Comerica Bank and now with Mackinac Center in Midland, Mich.
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Perfectgentleman
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Post Number: 412
Registered: 03-2006
Posted on Sunday, April 08, 2007 - 10:37 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

That pretty much sums it up for me! :-)
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Mrjoshua
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Username: Mrjoshua

Post Number: 1296
Registered: 03-2005
Posted on Saturday, April 14, 2007 - 9:39 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Both readers are right on, but the second guy really gets it. Michigan has for too long attracted and built its very own parasite class.

Death Throes in Michigan's Economy
April 14, 2007; Page A7
The Wall Street Journal, letters to the editor

There are some wild-eyed old-timers on the copper range in Michigan's Upper Peninsula who will tell you that someday the mining companies are coming back. Nostalgia for the grand old days of Calumet & Hecla can still bring on a spell of copper fever. Now David L. Littmann ("Cross Country: Restarting Michigan's Economy," April 7) sees new cause for hope, despite Michigan's steady downward slide. But his proposal for tax breaks and labor law reform is unlikely to solve the brain drain from "the pleasant peninsula" or keep its automakers from going south.

The truth is, Michigan has witnessed the exhaustion of 19th century extractive industry on its Upper Peninsula and is now witnessing the death throes of the old 20th century model of one-stop, union-shop, assembly-line manufacturing in Detroit. Neither Kirk Kerkorian nor Alan Mullally nor Jennifer Granholm can really ward off this creative destruction. Quick fixes will ultimately not prevent the undoing of industries and livelihoods there; nor will blaming the unions. Sure, you can lower taxes and "adopt a welcoming attitude toward profit," but it's also time to face some very unpleasant truths about the global economy and start a more honest conversation about what comes next in Michigan: plans to leverage old infrastructure, industries that harness the powers of the lakes and winds and offer a sustainable way forward, incentives for innovators and entrepreneurs to take fresh risks and create something other than more low-paying jobs.

There is still copper under Calumet, and there are still automobiles made in Detroit; and in their heydays both places were great. But neither is going to drive future economic development in Michigan.

Louis V. Galdieri
Brooklyn, N.Y.

(The author is currently making a documentary film about deindustrialization and the Michigan mining town of Calumet.)

Mr. Littmann is right on target but leaves out another part of the folly in Michigan's leadership. Michigan has been a growing welfare state for some years now. With no limits on social entitlements, it has become a magnet for those who make a living by living off the government. State leadership continues to promote these types of programs that in turn attract individuals who are not motivated to work or contribute positively. The populations of people I refer to are frequently in trouble with the law, have children who are neglected and abused, and get free medical care. Three Michigan state agencies were greatly over budget in 2006 as a result of this demographic: the Department of Human Services, Department of Corrections and Department of State Police. The reason -- these are the services people attracted to a welfare state burden the most. The sad truth is that Michigan chases out productive, business-minded people and promotes welfare and despair. The decreasing numbers of working taxpayers in Michigan get to pay the bills.

Brad Noren
Ironwood, Mich.
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Thejesus
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Username: Thejesus

Post Number: 922
Registered: 06-2006
Posted on Saturday, April 14, 2007 - 12:16 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

One problem that stands in the way of any progress toward implementing the changes suggested in the article, (i.e., lower taxes, right to work laws) is the "us v. them" mentality that the working classes hold in Michigan, as well as their short sightedness...(upper class has this mentality too, but it's not applicable here)

those in the lower classes would never agree to allow companies and citizens in the upper classes to benefit in the short-term, even if it means those in the lower classes will end up better off in the long-term...

I agree with most of what was said in the article...problem is, I don't see any of it ever happening...I've been up in air about whether to take the bar in Illinois when I graduate in a couple years due to downward spiral of this state....but when articles like this put things in perspective, it makes me wonder if I should screw the couple years and transfer schools now...

(Message edited by thejesus on April 14, 2007)
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Bob
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Username: Bob

Post Number: 1441
Registered: 11-2003
Posted on Saturday, April 14, 2007 - 12:21 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Boy, the second writer is dead on. Mr. Littmann speaks the truth for the most part. MI will eventually be a right to work state. The union's stronghold on things is lessening year after year. We may be the 50th state to become one, but it will happen. The future of the union goes with the future of the Big 3, if they do not give in on the upcoming talks, there will be no American car companies left to have union members work for.

It is only a matter of time before there are changes in K-12 funding, particularly having to do with teacher benefits and pensions. I would not be surprised to see health care changed to a state run pool where the teachers pay more. This is the trend nationally and will continue. There is a larger problem with the cost of health care nationally, and you are going to see more and more jobs leave our country to go to places that either have universal health care or labor is so cheap they do not have to offer it to get people to work. Just look at what Citibank is doing, sending jobs overseas to cheaper labor markets. These are not just labor jobs, they are the so-called brain-based jobs that were once thought only Americans could do. But as education levels of other countries have caught up and surpassed us, so goes the jobs. And since they are willing to work for less, there goes the jobs. Michigan is just the start, but you will see more and more of the brain-based jobs going overseas.

Back to education, you can't outsource teaching jobs, but keep in mind, that part of the reason teachers were offered such great benefits packages is because you could not get people to do the job. Not in MI right now because of our current economic situation, but states such as Florida (which Littmann mentioned) have big problems getting teachers and retaining them because of the lack of benefits and low pay. This is also why there is such high turnover in charter schools nation-wide. The same people that complain that there are too many unqualified teachers and want more scientists and mathematicians teaching in schools are the same people who want to pay teachers at the poverty level. You will not attract these "qualified" people when they can go and make 6 figures in the private sector. Also keep in mind that teacher pensions are protected by the state constitution and would require a vote of the people to change it. And even then, any teacher that is currently teaching would still get to keep the current pension system till they retire, its constitutionally protected. And savings from that will be realized many years down the road. But health care is something that should and will be changed.

Welfare needs to be changed with limits put on it. Yes, many people cannot find jobs, but even more are just milking the system because they know they can. The money that could be saved by putting a limit on benefits would go a long way, and with that taxes could be lowered.
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Livernoisyard
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Username: Livernoisyard

Post Number: 3032
Registered: 10-2004
Posted on Saturday, April 14, 2007 - 12:35 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Teachers' pay cannot be elevated uniformly because that also elevates the salaries of the incompetents among them--hardly the desired result. Attracting good, competent teachers in the US will continue to be a major problem until the educational mindsets of all the players are drastically altered. In the interim, expect the dismal results of lousy graduation rates and low academics of those who do graduate to continue as the experience of the past couple decades illustrates.

K-8 teaching is predominantly a feminine job, with some 92% of those teachers being female. In Europe, the vast majority of elementary education teachers are males who impose greater discipline upon the kids. Today's kids are largely wussified and feminized as a result of the current composition of elementary teachers and their suspect teaching methods and relative lack of discipline.
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Bob
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Username: Bob

Post Number: 1442
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Posted on Saturday, April 14, 2007 - 1:24 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

So bring back the hickory stick LY?
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Livernoisyard
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Username: Livernoisyard

Post Number: 3034
Registered: 10-2004
Posted on Saturday, April 14, 2007 - 3:26 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

My parochial school in Milwaukee didn't ever use any corporal punishment. The threat of expulsion would have been enough with dozens on their waiting lists for each grade.

Almost the entire group of 42 kids from my first grade class was intact through the eighth grade except for a few moving out of the neighborhood. Some who did move a bit out of the neighborhood made the effort to attend anyway.

Times have changed, and most definitely not for the better. Teaching was a sought after job back then--not the babysitting and going-through-the-motions types for a bunch of the current crop.

You know that is true cuz you've been there, seen that, done that.

BTW, you never turned in your Gross book report.
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Gibran
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Username: Gibran

Post Number: 193
Registered: 02-2007
Posted on Saturday, April 14, 2007 - 4:48 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Education is the key to the development of Detroit...why did most people leave Detroit (as reported on other thread) Crime and Jobs...

Crime = decline in education + no opportunities (jobs)

I believe we need to structure our inner city school districts as educational empowerment zones with "new rules"...the kids don't have the structure at home and so we should invest in after school programs with tutors, coaches and work related activities. Investment will come from external resources when they can see qualified and willing workers. I have worked with Business development people in Arkansas and they all say the same thing...the key to attracting business is an educated base. Communities need to stop pointing the finger and take some personal accountability. We should encourage a renewal in civility and think of our kids. The values that we are teaching is capitalism without work and discipline... we see it on TV and that's what we want..while it is good to have a $75,000 car but that vision is enslaving our children's idea of success. Why not teach them to grow into broader adults,,,

Now realistically, the school in Detroit with a structure of just academics is difficult. It will take vision and thinking outside of the box.

Where will we get the funding....the war in Iraq has cost 700,000,000 dollars for the Detroit region. This is based on congressional estimates... even if we take 70,000,000 or 10% and divide that by $39,000. 1794 teacher like positions and that is only at ten percent.

Think of what 1700 professional in a variety of settings would due for the economy...

The bottom line for Michigan is that in twenty years ( I had to leave because of a hiring freeze for teachers in Detroit area) we have still kept out city down with no leadership and lack of vision...

Hell what we pay our Ceo and Ball players would be a nice gift to the future of Michigan... OK so I am off my soap...Social Democrat/Repub. that I am... I still believe in having communities and government working together. Not just in election promises for a "compassionate' government....that's how you build Detroit back.


Sorry, but when you think of all the monies waisted and we still are facing the same problems we faced twenty years ago ...it king of makes you angry and sad.
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Bob
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Username: Bob

Post Number: 1443
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Posted on Saturday, April 14, 2007 - 5:10 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

One you have to admit LY, is that times change, and maybe for the better or maybe for the worse. Catholic schools have changed, there are very few with waiting lists anymore, in fact they are having to take almost everyone just to balance the books, or close the school. Another big thing that has changed is parenting. Maybe students are raising themselves, since families have two people working instead of one. One very large complaint among all teachers at ALL school, (suburban, rural, urban) is parents do not even come to conferences anymore. LY, you would be happy to hear that colleges of ed across our state are opening less slots for prospective teachers due to the fact that currently 75% of teaching graduates are leaving the state to find jobs. We are paying to educate teachers for other states. LY, you seem to blame the teachers for all the problems in schools today, but there are much larger factors than just one thing. And a lot of the things that you complain about are the minority of teachers that tend to be the ones who are tenured and have been there for 20 years. You want a problem to be fixed, its the tenure law. It was quoted in one of my classes that it cost a school district $200,000 in legal fees to remove a tenured teacher that is ruled incompetent. That includes all the paperwork to document the incompetency. Most of the teachers currently graduating from colleges of ed in MI tend to be some of the better teachers that are open to change, but they are becoming less and less due to layoffs because of the states economic problems. They are being forced to move out of state if they want to remain a teacher. I have many friends that have had to do this.

And I have been busy working on the final projects for my classes for my masters degree so I have not had time to read the book. I have it and am planning to in the next month.
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Karl
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Username: Karl

Post Number: 6769
Registered: 09-2005
Posted on Saturday, April 14, 2007 - 5:20 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

LY & Bob,

One clarification: I would agree that certain urban parochial schools are closing, most likely because changing demographics of folks don't recognize/can't afford private Catholic/Lutheran education.

That being said, many suburban parochial schools are turning kids away. The parents can afford to pay twice (taxes for public schools + private tuition) and recognize the value (as well as what's vanished from public schools while the cost to taxpayers has skyrocketed) in many private/parochial schools.

Then, of course there's the "values" issue - now that a few school districts are testing the idea of teaching about the Bible (gasp) as a historical text, along with many other texts, the parochial schools have done it all along. In addition, they push a Biblical value or 3 along the way.

Many more public schools are toast if vouchers become widespread, and marginal parochials may thrive again if they stick to their roots.
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Bob
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Post Number: 1444
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Posted on Saturday, April 14, 2007 - 5:22 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Georgia is working on creating a state-wide class that teaches the bible as a historical text.
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Livernoisyard
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Username: Livernoisyard

Post Number: 3036
Registered: 10-2004
Posted on Saturday, April 14, 2007 - 6:25 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Georgia can do what they please. I doubt that any creation class there would be mandatory anyway.

So, like sex education, let the parents choose what their kids get taught.
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Yelloweyes
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Username: Yelloweyes

Post Number: 124
Registered: 02-2007
Posted on Saturday, April 14, 2007 - 6:27 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Gibran:

You make some excellent points. Also if Detroit Schools could work out the funding they could help retain students with year-round schools. This would also help better educate students in addition to the after school programs you mentioned. Some of Detroit Students are ALOT better off in a school setting then at home.

LY: Some of the meanest most strict teachers/people I have ever met are female. Some of the wimpiest weak teachers are male. Do we need more male teachers? Yes. Your judgments are a little bit sexist.
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Livernoisyard
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Username: Livernoisyard

Post Number: 3037
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Posted on Saturday, April 14, 2007 - 6:36 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

US K-12 education is primarily female taught and doesn't stack up well against other countries, especially against those nations that have predominantly male teachers. So, is this just a coincidence or, perhaps, a major part of the the problem with US education--both private or public?

Many education reformers blame the current situation of insufficient male teachers as a primary cause.
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Ray
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Username: Ray

Post Number: 876
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Posted on Saturday, April 14, 2007 - 8:07 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

it seems pretty much hopeless.
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Gibran
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Username: Gibran

Post Number: 194
Registered: 02-2007
Posted on Saturday, April 14, 2007 - 10:54 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

It is never hopeless only a problem waiting for a solution....There are many kids in the city today that would be great teachers...send them to an academy for teachers or pay for their education with understanding they have to teach for four years in the city...In Rehabilitation Counseling there is a grant that encourages people to enter the field. They get a free Master's and then they have to work for two years in the field...

I teach at a traditionally African American University and this helps me to recruit minority students of all cultures...we need Hispanic Counselors and Native American students to in turn help their communities ...I don't see why teacher colleges in Michigan couldn't do the same ...a partnership with big business...It would be a better investment that a sign on a sports stadium...

My students of color are very motivated and we have a great time ...I draw from my life in Detroit, NMU, Wayburn/Denby and all the experiences both good and bad... So Ray it seems bad but remember ...when our immigrants left their homes and lived in ethnic ghettos they found their way out...and then reached back and gave someone else a chance....this is not impossible.
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Rhymeswithrawk
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Username: Rhymeswithrawk

Post Number: 667
Registered: 11-2005
Posted on Saturday, April 14, 2007 - 11:09 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

MIDLAND, Michigan -- Michigan's state motto makes this confident claim: "If you seek a pleasant peninsula, look about you" (Si Quaeris Peninsulam Amoenam, Circumspice). Indeed, no other state in the union boasts more beachfront property than the Wolverine State.

We're the Great Lakes State, dammit! Someone get this Midland man one of those new-fangled state quarters or something.
Sincerely,
An MSU graduate.

http://usmint.gov/images/mint_ programs/50sq_program/states/M I_winner.gif
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Terridarlin
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Username: Terridarlin

Post Number: 13
Registered: 02-2007
Posted on Sunday, April 15, 2007 - 7:55 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Livernoisyard
"K-8 teaching is predominantly a feminine job, with some 92% of those teachers being female. In Europe, the vast majority of elementary education teachers are males who impose greater discipline upon the kids. Today's kids are largely wussified and feminized as a result of the current composition of elementary teachers and their suspect teaching methods and relative lack of discipline."

That's an outrageous statement! PLEASE share your sources.

I checked a little, and found something published by "Eagle Forum The Phyliss Schlafly Report." God I hope that's not the source..She's opposed to the ERA and feminism. But then I suspect, you might be too.

I had male and female teachers all through school, some good and some bad. As far as discipline and respect, I learned that at home from Mom and Dad.
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Trainman
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Username: Trainman

Post Number: 382
Registered: 04-2006
Posted on Wednesday, April 18, 2007 - 7:15 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Privatize SMART and DDOT. This will save the taxpayers over $100 Million per year and will attract new industries because of lower taxes.

Also, the demand for public bus service will be filled by competent businesses that know how to provide a valuable service that others want without gouging the taxpayers.

We can use state funds to pay for the bus drivers by the use of worker attrition, so they will not suffer.

Putting a $50,000 per year bus driver on the street in today's job market is cruel, but our state has the money to be nice to them if we just hold off on the road expansion projects. These expansion projects will not be needed if we make competition legal in the public bus market because the buses will be full. The reason is that if they are not then someone else will start another bus company and make money.
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3rdworldcity
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Username: 3rdworldcity

Post Number: 602
Registered: 01-2005
Posted on Thursday, April 19, 2007 - 8:12 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

"No other state in he Union boasts more beach front property than the Wolverine State."

Wrong. Alaska has more shoreline than ALL of the other states COMBINED. Kodiak Island itself has more shoreline than the State of California.

Hope this isn't considered a thread jack or whatever they're called.)

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