Detroit Goes Bankrupt

Detroit_city_render_01.jpgd40e5b47-413c-4898-9ea2-84f02d121b87Large-300x300The City of Detroit, Michigan, made history yesterday by filing the largest municipal bankruptcy in American history. After decades of economic decline, the $18 billion in debt that the city carried was simply unsupportable. Mayor David Bing has vowed that services will continue and workers will get paid, and that is all to the good. However, the big picture is much different. An era has ended with a whimper.

Journalists love short-hand terms for bigger ideas. They say “White House” when they mean the administration of the day. And when they wanted to talk about the American car industry, they simply talked about “Detroit.” No city in America is so closely identified with an industry as Detroit was with car making. (Silicon Valley isn’t a city). A happy accident of geography and natural resources made the Great Lakes region ideal for building metal-bashing industries, and auto manufacturing created the American middle class.

However, the American dominance of the industry in the 1950s and 1960s was somewhat artificial. America’s rivals had bombed themselves back to the Iron Age, and there was little competition until the VW Bug and the Toyota Corolla turned up in the 1960s. Then, the leaner, more aggressive imports starting taking market share from the Big 4 (American Motors was still independent) American companies. To compete, the American firms built new factories away from Detroit where the unions were weaker and the local governments happier to provide tax breaks. Meanwhile, those who had the money moved to the suburbs, hollowing out Detroit, which was not a unique situation.

As the population declined from 2 million in the 1950s to 713,000 today, jobs were fewer and tax revenues lower. A death spiral began. Today, there are over 70,000 abandoned properties in the Motor City. On any given night, 40% of the streetlights don’t work,contributing to a violent crime rate that is the highest of any major US city. In 2011, just 53% of property owners paid their property taxes. At the beginning of the year, only a third of Detroit;s ambulances were in service.

Republican Governor Rick Snyder could have arranged a bail out, but Detroit is a Democratic city and a union town. Help wasn’t going to come from the state. And politics aside, one has to wonder if there was any hope that a bail out would work. Detroit’s population levels and economy suggest that it would more likely have delay the inevitable. The city, as previously structured, doesn’t work.

Cities are mankind’s depositories of civilization, and the decline of any city is a sad affair. Countless towns in America’s west grew up during boom times based on gold, silver or some other resource, and they faded to dust when the mines played out. Detroit is too big and too well-situated geographically to become a ghost town, but it will be a shadow of its former self.

If there is any grounds for optimism about Detroit’s future, one only has to look at Rome, Italy. The “Glory that was Rome” is gone, but it’s still full of people with exceptional taste in clothing, great places to eat, and new artists working in the same place as the greats of the past. And Detroit has one advantage over Rome; Silvio Berlusconi isn’t involved.