Detroit: Big Problem/Simple Solution

detroit1Detroit is broke — or maybe not, depending on what the courts say.  Either way, when you owe north of 15 billion dollars and your tax base is shrinking faster than the Donner party, legal opinions are not that relevant.  Like it or not — you’re broke.  This isn’t the first time a big city has gone under, but the interesting thing about Detroit is nobody seems all that concerned about it.  Damage Control is priority #2 right now, with Blame Allocation taking the top spot.  All over the country (and the world) journalists are acting like the high school kids they really are and airing their study hall “ain’t it awful” gossip across the media, sliced and spiced with equal parts of juvenile smirk, and “it could happen here.”  They’re kicking each other out of the way to get at the root cause of this Motor City Madness in 750 words or less and spinning it into everything from racial demographics to Henry Ford was a capitalist.  Strangely enough, though, nobody’s bothered to under-think the problem and come up with a viable solution to Detroit’s dilemma – until now.

Everybody knows that urban centres (remember when we use to call them “cities?”) are incubators for thousands of professional politicos who make their bones (sometimes literally) in civic committees and city council meetings.  These on-the-job trainees sometimes go on to bigger and better things, but normally they “Peter Principle” out and either get indicted or eventually just retire.  By way of documentation, of all the mayors, in all the cities, in the entire history of America, only Cleveland and Coolidge ever went on to become president.  Just sayin’.  Unfortunately, the demands for sound judgement put on these less than mediocre managers are usually more than they can bear.  What ends up happening is they try and do too much with too little and find themselves behind the fiscal eight ball a day late and more than a dollar short (to mix my clichés.)  To be fair, the folks who run our cities are given tons of responsibilities, not very much authority and never enough cash, so, for the most part, even the ones who are working flat out haven’t got an even chance.

I don’t know much about Mayor Bing, but Detroit is typical of this phenomenon.  However, there’s more, and it’s got nothing todetroit do with him or his predeceasers.  In the late 40s and early 50s, American cities crashed headlong into cultural change.  The result was massive internal injuries which were not treated at the time.  Basically, the middleclass automobile moved families out of the urban into the sub-urban.  Without the middle class to support them, shops, theatres, restaurants etc. closed, the tax base disappeared and whole urban neighbourhoods began to deteriorate.  Meanwhile, the new suburbanites needed more and bigger roads to get them back into the cities to work every day.  These expressways, built in the 50s and 60s, ignored natural neighbourhood boundaries (look at any map) and cut most cities to pieces.  Under the overpasses, the neighbourhoods deteriorated even further.  By the mid 70s, the middle class had vanished from the big cities, taking their tax dollars with them, and urban America was on Life Support.

The civic politicos, underachievers that they are, decided the solution to the problem was to throw money at it.  They did this — beyond anybody’s wildest expectations.  However, they made two fundamental mistakes.  One, they didn’t use any of the money they were pouring into the neighbourhoods to try and repatriate the middle class.  Thus, the problem remained, teetering on disaster, but now dependent on regular infusions of cash.  And two, the money wasn’t theirs; they’d borrowed it against a future tax base that didn’t exist.

The vicious circle of urban flight combined with financial sleight of hand worthy of Charles Ponzi, and the rest is Detroit history.

So now that we know where the swamp came from, maybe it’s time to kill a few alligators.

Don’t be over awed by the magnitude of Detroit’s debauch.  Like all things economic, the solution to this, and every other city’s financial problem, is quite simple.  Quit spending so damn much money!  Nobody — I repeat nobody — from the homeless guy on Eight Mile to Elena Ford — has ever borrowed themselves out of debt.  Here’s a tip: spend the money you have, not the money you wish you had.  What a novel idea, right?  However, sure as Michael Moore makes movies, unless Detroit and a few other places start taking this radical approach they’re going to go broke again in less than a generation — “financial creativity” be damned.

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