Are Detroit's problems the result of austerity programs in the state of Michigan?

Detroit’s problems are a large confluence of things. Not least of which is the decline in population (and thus tax base) from 2 million to 700,000.

Detroit’s problems date back decades. In many ways it has not functioned well since the fifties. It was tied too much to a manufacturing base that had very little innovation beyond the superficial; failed to diversify its industrial base to be adaptable to changes in the economy, and coupled with poor leadership for the last twenty years, it seems to me that bankruptcy was long overdue.

While I note that many of the state actions were not at all designed to help Detroit, but to carry out a Republican view of evil government, much of that was invited by Detroit’s long standing problems and inability to correct itself.

It was due mainly to corruption at every level of government with the inability to meet the demands of the National Environmental Policy Act (1970) and the Clean Air Act (1970). Coupled with the unwillingness of the people to pay for an efficient government and the inept leadership, it was a blueprint for disaster.

As with most government, they tend to expand substantially in good times but have no ability to cut back in bad times. The legasy costs in Detroit are 40% (pensions, debt service, etc.) of it’s budget. The population is shrinking, the tax base is shrinking and unemployment is one of the highest in the country. Nobody wins in this scenario but we can learn from it. This notion that when the economy turns sour, we can just spend our way to properity isn’t working. Detroit is but one example of that failure.

The economic problems in Detroit are so numerous and due to so many things that it’s hard to tell what caused what.

@Jaxk While there is some truth to that, it doesn’t mean that not spending is right. I think that spending stupidly is no path to prosperity, but it takes money to make money. The problem there is that our decisions are made largely by people who either know little about money (most politicians are lawyers, not bankers) or by those who care only about money for themselves and their cronies.
Besides, they went with a flat tax at a lower rate than before, and made it “right to work” state; I would think that a hardcore Conservative like you would have a huge erection over that.

@zenvelo Such are the dangers of being a one-trick pony, especially one that refuses to learn new tricks once the old trick gets stale. I am a bit surprised that Detroit lasted as long as it did after the Big Three crashed a few years back.

The quality of elected officials in Michigan has degraded since the auto industry abandoned it for cheap labor in the south and out of the country. The trend has been clear for years and the people left in Detroit are there because they can’t afford to leave.

I believe that the government should have been down-sizing corresponding with the population decrease. Abandoned properties should be demolished and people on the outskirts of the city should be encouraged to move closer to the city center.

The republican state government has suspended democracy in Detroit, decreased state funding for the city, and expanded policing powers to incarcerate as many people as possible. I think the Michigan law allowing the governor to appoint a “king” to run failing cities is blow for democratic government and the beginning of corporate ownership of cities and the citizens become surfs.

If anyone is to blame the depopulation, it should be the southern states that enticed industry away from Detroit with cheap labor, lax safety regulations, and low corporate taxes. The state ends up paying for the resources that corporations refuse to fund. They’ll stay in the state until they become depleted, just like Detroit, then move out of the country to deplete some foreign host.

International corporations have brought the Robber Barons back on a global scale.

@Ron_C The irony there is that, well, guess where poverty is the highest? The South. The same states that take in more federal money than they generate.

One might consider Detroit to be a precursor to what the South will be in a few years. I am not that cynical, but I see enough parallels there to see how one could see things that way.

I forget where I read it; someone suggested that we let the southern state secede from the union. That would free up money for the remaining states, allow the south to finally make their voting laws as restrictive as the want, give international corporations an area to rule, and see the social result of the “race to the bottom”.

The reason Canada is so stable is that it is a confederacy and you can’t talk a group of confederate states (provinces) into wars that have nothing to do with the country.

Talk about denial. There have been many bankruptcies in recent years and Detroit is only the most biggest and most recent. There is a common thread throughout these bankruptcies and it is Government Pensions. A government worker works for 20 years and then draws a pension for 40 years. It’s not sustainable. While Detroit’s population is shrinking, it’s pension liability is still growing. The story is the same for every municiple bankruptcy. Ignoring the problem doesn’t make it go away.

@Jaxk There is some truth to that. Not enough to place all of the blame there, but those pensions were a pretty significant problem for the Big Three as well.

Of course, those pensions are also one of the main reasons people even become government employees, especially in recent years. Without the benefit of an assured secure retirement, those jobs would become far less attractive.

@Jaxk considering the fact that GM’s CEO has a salary of over $8.5 I can’t sympathize with their complaints about pensions.

@Ron_C I think @Jaxk is complaining about the pensions for those that don’t earn enough to invest a large percentage of their income to make their own, private retirement plan. I must wonder if it would be cheaper to pay the average worker enough to actually ever be able to retire before death, but that discussion would be beyond the scope of this question. Still, you have to admit that even $20k/yr adds up when you multiply it by a few thousand recipients; the cost is non-trivial.

@Ron_C

Since most of the auto industry resides outside the city of Detroit, I’m not sure what GM’s CEO has to do with it. And since the city does not pay for GM’s pensions anyway, what is the point here.

Detroit is paying twice as many retirees as it is current employees and just to add insult to injury most of those retirees don’t live in Detroit anymore. They have moved elwhere. Maybe to those sunny southern states you hate so much. Detroit has been run by Democrats for 50 years, it’s hard not to place the blame directly on thier shoulders. Cities like Chicago and Philadephia are not far behind.

There is no good solution to this problem. The retirees will take a massive hit and that’s not good. The bond holders will as well and guess what, most of those are not the rich people but rather retirees as well. Municiple bonds are a common financial tool for income in retirement. Nobody wins here but the public sector unions are going to have to become more reasonable in thier demands. Detroit is but the latest example of what happens when unions rule the roost.

@Jaxk True, as far you go. However, without unions, employers sometimes do nasty things. If not for that, then unions never would’ve existed in the first place. I see it more as an example of what happens when you go to extremes in either direction.

Sometimes the cure is worse than the disease.

Yes, and the cure for the cure is worse than both, leading to another cure that is worse, leading… you get the idea.