I’ve been to Detroit and I won’t be hurrying back. I’ve never been surrounded by such appalling poverty in a Western country – rows and rows of public housing, every window broken, every door barred. I was advised to take a cab everywhere and to avoid the sidewalk at all costs. The gas station near my motel was a notorious hangout for crack dealers. The only way to get any food was to order it in, and the pizza guy refused to enter the motel itself. I had to come out to the freeway and nervously exchange money for food in the middle of the road. The strangest sight I ever saw was an abandoned toilet bowl in the middle of the highway. A metaphor for something.
What went wrong in Detroit, which has filed for bankruptcy? This piece by Kevin D Williamson pretty much nails it. The figures he gives are astonishing: in 1960 it had the highest per capita income in the US. Today it is the poorest city by far. Crime is rampant and services are poor; corruption is ubiquitous. Anyone with any money has left. The city’s population has fallen by two thirds. It’s a ghost town with a few poor souls still trapped there.
The reasons partly lie with bad policy. The unions helped to price local car workers out of the global market. It meant that those in the union lived well, but when the economy sank and the business was unable to compete, they lost their good salaries and their health insurance. Nowadays, car makers prefer to set up in states like Alabama where costs are much lower. Of course, union power was accentuated in Detroit by having a stagnant economy that refused to diversify. While other cities found new service sector jobs to replace the old ones, the business and political leaders of Detroit stuck to an outdated industrial model that simply did not suit the contemporary world. It didn’t help that regulation was too high and the city too kind to its public employees. Of the $11 billion that it owes in unsecured debt, $9 billion is down to pensions and health insurance plans.
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