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Government, Politics & Issues

Commentary on Detroit: Lessons from the abyss

This article first appeared in the St. Louis Beacon, July 23, 2013: The story of Detroit’s bankruptcy filing is likely to be a long-running saga. But how did it get there?

In 1950, Detroit was the nation’s 4th largest city and its industrial arsenal. The city’s stark decline may be unique but a look at its downward trajectory can provide lessons for other municipalities struggling with fiscal stress. Below are a number of factors that affected the Motor City.

Single industry dependency. Detroit was a relatively small community on a river bridging the great lakes when Ford and General Motors began to produce cars. The Big Three car manufacturers and the United Auto Workers dominated local news. Subsidiary industry grew up around the auto plants. The health of the auto industry dictated the city’s economic well-being. After World War II, the carmakers signed contracts with the UAW that were lucrative for its members and ensured labor peace. An autoworker had a ticket to the middle class.

Auto industry decline. The car companies invested little in small cars. When gas lines formed in the 1970s, car buyers turned to Japanese manufacturers for reliable, fuel-efficient vehicles. The Big Three reeled from this change in American buying habits and began to close their old city plants. The number of autoworkers in Detroit fell precipitously.

Race. Through the 1960s, the political leadership was overwhelmingly white as was the Detroit Police Department. Racial strife was not new to Detroit. Two significant disturbances occurred during World War II. A fracas broke out at the city’s island park, Belle Isle; and rioting occurred on the east side when plans were unveiled to create a housing development for black war workers. The city’s 1967 riot was the worst of those occurring in that decade. Forty-three people lay dead, blocks and blocks were devastated and President Johnson sent in federal troops. The result was further division between white and black; city and suburb. White flight increased.

Political leadership. Whites held most city offices until state Sen. Coleman Young was elected mayor in 1973. Young had encountered discrimination: He was unable to attend the state’s finest public university. He was also purged from the UAW in the 1940s, labeled a black radical. His election as mayor was greeted with joy by black Detroiters. Young’s style, however, made cooperation with suburban jurisdictions difficult, and in each of his five terms his constituency of low-income blacks grew.

Redevelopment efforts. The city’s urban renewal in the 1950s echoed that of many other cities: building massive freeways and tearing down historic black areas. The renewal led to overcrowding in black neighborhoods. In the 1980s, the city invested current and future federal funds to build two new automobile plants. The hopes for significant employment at the plants and the development of subsidiary industry did not materialize.

City finances. The immense loss of residents and jobs devastated the city treasury. Employment fell, and services were significantly reduced. Benefits were generous for city workers even if salaries were not. Pensions benefits were guaranteed: a check every month on retirement. The New York Times has noted that cost calculations may not have been accurate. This problem with pensions and their claim on city budgets is certainly not unique to Detroit.

Industrial decline has affected many Midwestern and Eastern cities, though Detroit’s fall is most severe. Smaller cities such as East St. Louis and Camden, N.J., have declined as badly. Statistics can help to illustrate the deterioration of Detroit’s 138 square miles. Its 2010 population is 713,000 — a far cry from the 1.8 million in 1950. By 1989, with the auto industry spiraling downward and Young as mayor, white flight led to a city that was then 63.07 percent black; the percentage is now 83 percent. The number of African-American residents has fallen since 1980. Many of those who remained did not have the means to move. There was no redundancy in the economy to cope with the implosion of the auto industry. Redevelopment did not address neighborhoods or diversification.

The lack of taxpayers, a population almost 50 percent below the poverty level, and 78,000 abandoned houses are not auspicious for city government. Even with a 2.4 percent earning tax and decreases in service delivery, the city could not make ends meet. It too often borrowed from Peter to pay Paul. The city may be as much as $18 billion in debt. How that can be addressed is the question.

A lesson for other cities is to encourage economic and demographic diversity and to watch debt very carefully. The good old days of mid-20th century prosperity are not going to return. Cities have to deal with fixed municipal boundaries and state governments that are often reluctant to assist.

Detroit’s destiny may not be hopeless. A younger generation has been moving into downtown and midtown along with Whole Foods, Quicken Loans, restaurants and entertainment venues. The Tigers continue to draw fans. But the post-1950 legacy may cripple any real comeback. The main lesson for others: Act before the bottom falls out.

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