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Motor City Meltdown
The Detroit Free Press has performed a thorough financial autopsy on the Motor City. The piece is chock-full of charts, graphs and shocking details about the fall of the area once known as the Arsenal of Democracy.
“Detroit got into a trap of doing a lot of borrowing for cash flow purposes and then trying to figure out how to push costs (out) as much as possible,” said Bettie Buss, a former city budget staffer who spent years analyzing city finances for the nonpartisan Citizens Research Council of Michigan. “That was the whole culture — how do we get what we want and not pay for it until tomorrow and tomorrow and tomorrow?”
Walter Russell Mead has long warned left-leaning cities about the coming collapse of their “Blue Social Model”:
The city has paid a heavy price. Today, Detroit has more pensioners than employees, and a debt that is more than twice what it had in 1960. It spends considerably more on police and fire retirees than active workers. And despite the fact that the city has the highest income and property taxes in Michigan—by a wide margin—the state’s inflation-adjusted revenue is lower than it was in 1960.
Though I’ve lived in Arizona most my life, my family has deep roots in Michigan. One of the reasons my parents fled the state was the lack of jobs — and that was back in the 70s. Sadly, the economy has gotten far worse, especially in and around Detroit.
After decades away, I drove the length of Michigan a few years back, south to north and back again. Though I loved the deep blue lakes and green trees (just the right height!), the stagnation and decay of certain areas were impossible to miss.
Let’s hope that Michigan’s leaders are willing to confront the problems and set the groundwork for a Rust Belt renaissance.
Published in General
I doubt anything people are willing to try will work. The solutions lie beyond the realm what is acceptable to the democrats.
I sincerely hope that they can turn it around. If they can, they could be the model for California, and Illinois.
Sadly – my Golden State experience is that the more you give out today, and pay for … never… the more people will line up to take what you’re offering. And the more people will vote for a government that confiscates and pays off voters. I don’t see an end to the cycle here. Possibly the only way out is to completely write off a generation (and a half?) of voters.
There is some hope – it’s called “rock bottom”.When there are more takers than producers, eventually the Ponzi scheme breaks down. Unfortunately, there’s more to hand out to broken states, and I suspect we will be seeing a Federal Bailout effort underway all too soon.
The article lost all credibility the moment it said, “Don’t blame Coleman Young, he was a fiscal conservative!”
His spending habits can not be removed from his racial politics. He kept the latter just below the boiling point but certainly above scalding.
You can’t build through division. When Judge Stephen Roth tried to force suburban school districts inside Wayne County to bus their children into the failing Detroit City Schools, it prompted whites to move even further away from the city. Young’s attitude was, basically, don’t let the door hit you on the way out.
Eight Mile Road, the city’s northern border, should be renamed Coleman Young Boulevard, as no one divided the city more from suburbs and divide an entire region on race and class politics.
This was an excellent article.
It’s a shame that the press doesn’t take the same interest in the current finances of the United States.
My only question is which city will be next. San Bernadino? Harrisburg? Stockton?
It’s a shame that the press doesn’t take the same interest in the current finances of the United States. ·8 minutes ago
Beat me to it. What about a warning to left-leaning countries about the coming collapse of their “Blue Social Model”? The mind boggles as to what the United States or Europe will look like once they get the full Detroit treatment.
I keep waiting for an Elon Musk-type entrepreneur who, instead of focusing on bleeding-edge transportation a la Tesla, SpaceX and Hyperloop, dreams of radically altering a municipality on life support. How about one of those Walt Disney-like blueprints for a city of the future? Declare Detroit dead and send all those unemployed college grads to build a new Tomorrowland. I won’t pay a nickel for a bailout but I’d invest dollars in a great plan with young energy behind it.
All I know is there is going to be quite a few more. I also know I don’t want a penny of my tax money to go to any of them as a bailout.
That which gets rewarded gets repeated. Incentives matter.
The answer is pretty simple. Raise taxes on the rest of the state to pay for Detroit’s debts. The income generating tax base left Detroit so they just need to expand the tax zone to include them. Be honest, we all know that is exactly what is going to happen. The only question outstanding is if the taxing is going to be done at the state level or the federal level. I suspect it will be done at both so the overall tax increase will be in smaller bite size amounts thus allowing for blame shifting plus it will have the added benefit of allowing both bureaucracies the ability to feed from the trough.
I think Stockton already filed for bankruptcy over a year ago? San Berdoo if memory serves did too.
It’s a shame that the press doesn’t take the same interest in the current finances of the United States. ·8 minutes ago
Beat me to it. What about a warning to left-leaning countries about the coming collapse of their “Blue Social Model”? The mind boggles as to what the United States or Europe will look like once they get the full Detroit treatment. ·2 hours ago
I guess countries can’t technically go bankrupt so the analogy isn’t perfect, but you know what I mean. The whole country or continent can still look like Detroit once the consequences of the Blue Social Model become manifest.