Last week, Detroit made history by becoming the largest American city to declare bankruptcy. How can a city go from being the richest per capita in 1960 to bankrupt and broken down in half a century? Many of you probably remember how Detroit used to be. It was the home of Ford, General Motors and Chrysler, the largest automakers in the world for decades. During World War II, Detroit was retooled to produce ships, planes and arsenal critical to winning the war.
Motown produced a head-spinning number of chart-topping groups in the ’60s and ’70s: Stevie Wonder, The Temptations, Smokey Robinson & The Miracles, Diana Ross & The Supremes, the Jackson 5, Gladys Knight & the Pips, and Marvin Gaye.
But today, other numbers are used to describe Detroit. Really, the numbers are staggering and heart-wrenching when you consider the human cost.
Detroit’s population was nearly 2 million in 1950. By December 2012, it had plummeted to less than 700,000. There are 78,000 vacant buildings in the city. Sixty percent of children in Detroit are living in poverty. Half the city is functionally illiterate. A third of the city is vacant or in complete disrepair. Detroit’s unemployment rate is 18 percent. Motown’s crime rate is at a 40-year high. Residents wait an average of 58 minutes for police to respond to their calls. The national average is 11 minutes. That’s what a city looks like when civil society disappears.
Motown’s problems have been mounting for six decades and are the result of economic decline and rule by government unions. City Hall made unsustainable promises to public employees so retirement obligations now constitute half of its $18.5 billion debt. Crime, high tax rates and lousy schools have driven middle-class families to the suburbs. … In essence, self-government collapsed.
$9 billion of Detroit’s $11 billion in unsecured loans are owed to its public-sector workforce. The city currently has 9,700 city workers and 21,000 retirees drawing benefits.
The city is a tragic study of liberal policies creating a perfect storm: over-promising huge benefits to public unions, hiking tax rates to pay for the public union perks, city budgets that are dominated by payments for public union benefits leading to cuts in critical services like police and fire, which lead to higher crime rates, which impel residents to flee the city, which leads to a shrinking tax base, which leads the city to raise taxes even more on the few residents remaining. By this time you’re past the point of no return in the liberal policy death spiral.
And this leads me to my closing point: The irony of liberal largesse is that, in the end, those who liberals try to help the most usually end up receiving the most harm. For example, those public employees that were promised all those benefits? Now they are likely to get a very small fraction of those benefits, if any at all. Detroit lost its way. The music has stopped. What will we learn from it?
For Sutherland Institute, I’m Paul Mero. Thanks for listening.
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