I’ll pee in Detroit’s tin cup before I give a cent.
Perhaps it is a right to work state.
Thanks for your insightful, well-reasoned contribution.
Dallas also has a diversified economy-it has engineering, healthcare/hospitals/medical research, oil drilling technology, natural resources. Detroit was always automobiles-it never was a place that had top universities, hospitals, etc.
The Union culture made it hard to change-at the peak of Ford, GM, Chrysler, etc., many young men wold not even bother graduating from high school-you could go to work in an auto factory, earn an excellent salary, and retire with a pension. That ended in the 1980s-and it will not be seen again.
Dallas really has been a more service-oriented city rather than a big manufacturing city. Retooling an office building from a defunct insurance company to be usable by telecom office workers is going to be much less painful than trying to convert an abandoned auto manufacturing factory into anything else.
But really, the idea that there’s some big “reverse white flight” going on here is not really accurate. Yes, there is some gentrification going on, urban hipster lofts and such, but certainly nobody is rushing to put their kids in Dallas public schools.
Instead, the bigger push is ever outward–I’m in Frisco, which 20 years ago was the way-out-there town that you went to as the closest place you could buy roadside fireworks, now it’s a huge suburb approaching 150K people.
One big factor in why the Dallas area may not be suffering in the same way is that we are absorbing a lot of the people leaving places like Michigan, or California, or other places with higher taxes. However, a lot of those people seem to have a…tenuous grasp of cause and effect, saying in one breath that they came here to escape the higher taxes and in the next why we don’t have the services they’re used to back where they came from. So it’s entirely possible that Dallas hasn’t so much escaped what’s happening to Detroit so much as it’s in a different place of the curve.
As local chairperson of the “Blame Detroit crowd”, I think I can safely say that your argument has not been ignored. It has been pointed out time and again that Detroit is just one among a great many cities that has suburbs, yet not all such cities have become basket cases like Detroit. Therefore it is worth asking what factors particular to Detroit caused such a disaster. While you have acknowledged some of the factors that made people flee Detroit, such as high taxes and poor services, you don’t seem willing to wrestle with the question of why the city’s taxes are so high and its services so poor, when compared to other cities. As we’ve already pointed out, Detroit has the highest taxes in the country among big cites. And while it’s not quite so easy to quantify, I think it can reasonably be asserted that its Police, Fire, Bus lines, and so forth are also among the worst in the country, if not the worst.
You say “it does matter why Detroit collapsed”. I agree: understanding why it happened is vital to fixing Detroit and preventing such collapses elsewhere. But until you can offer an explanation for why Detroit collapsed while other big cities surrounded by suburbs didn’t collapse, you don’t have a serious argument. My explanation, as already stated is this: Detroit had the most incompetent and corrupt city government, the highest taxes, and the least friendly environment for business among all major cities. Consequently nearly everyone who could afford to do so moved away. Other cities that are also notable for high taxes, bad government, and anti-business environment have also seen people leaving in droves: just ask Cleveland, Buffalo, or Providence. Meanwhile, cities and states that focus on low taxes, good environment for business, and relatively clean government usually see their populations increase.
Most of us assume that bankruptcy law exists and that people will obey it, because after all laws have to be obeyed. Public sector unions, on the other hand, generally view themselves as above the law, including bankruptcy laws. This is already evident in how they’re responding to the bankruptcy of Detroit and other cities.
To answer BrainGlutton’s question, when a city goes bankrupt, the creditors lose, according to law. That includes bondholders and the pensioners and current union members. The judge can simply wipe out as much of their claim as he decides is necessary. However, the unions don’t want to accept bankruptcy law. They are already filing lawsuits, trying to override the law and trying to find a judge who will say that they must continue to get paid what they were owed even after the bankruptcy. If one judge rejects their lawsuit, they’ll go to a second judge and file a second lawsuit. If the second judge rejects, they’ll find a third judge. etc…
The unions will do whatever it takes to get their hands on taxpayer money, and they do not care whether they ruin Detroit and a hundred other cities in the process.
I see fingers getting pointed at the unions a lot in this thread. Perhaps it is deserving. Can someone clarify the role the public sector and auto unions played in the downfall of Detroit?
I assume it has to do with them wielding influence to get their selected politicians and decision-makers in positions to make decisions favorable to the unions, but I’d like a little more clarity on this. Was Detroit unique in this regard? Don’t other cities face the same pressures from unions?
So you think that if Detroit could get out from under its current debt it could make a go of it? I’m far less optimistic. I think even if there we somehow paid off all the debt and fully funded the pensions it would only be a matter of time before Detroit fell back to its current situation. The industrial devastation and urban blight are a continuing drain. People aren’t going to earn enough to live without substantial assistance. With no magic bailout the the impact of throwing more people into poverty by taking away their pensions and destroying the public contractors just makes things more impossible. I think it’s hopeless.
So to clarify: you will live in a suburb that wouldn’t exist if not for the city of Detroit. You will pay lower tax rates than city residents and have good schools and other quality services which they do not. But for some reason you object the the statement that “Suburbs have a big advantage.”
Decentralization is a regional issue. Detroit is already too small to deal with the issue. It isn’t the only local hellhole. Look at Ecorse or River Rouge. Suburbs absorb population and jobs from the city but get churned through as costs rise and people abandon them in turn.
I see no reason that local governments must be small and cannot be sized to fit the problems they face.
It seems to me that the other cities discussed were Pittsburgh and Dalla. That discussion included significant basic differences in their situations. I’ve seen absolutely no one disagree with that assessment. NYC has also been brought up but again there are significant differences. New York is not out in Flatland so decentralization isn’t as easy and it’s never been solely a manufacturing city. Free Trade kills Detroit but keeps New York ports busy.
Ironically I find your argument shallow. I agree that corruption is rampant. Why do you think this is so? I’ve argued that it’s due to one party rule and a reaction to the hopelessness of the situation. Taxes are high because the city has to deal with the aftereffects of heavy industrialization and not just a byproduct of patronage. Tax rates are high because the tax base has shrunk to the point where they have to wring every possible cent out of those poor fuckers left behind.
Unions don’t represent Detroit or those other cities. They represent their members. Like any other corporation it’s their job to do what they can to maximize income.
Funny. I never took you for some kind of socialist. 
This thread is too large to find where I might have objected to a statement that “suburbs have a big advantage.” That wouldn’t be logical, as the advantages are obvious. I think I might have objected to thinking that the city of Detroit had resources that I consume.
Who cares if my suburb would exist if Detroit had never existed? Detroit never would have existed if France weren’t looking to exploit the New World. Things change, as they should change. (I’m bringing the auto industry to China. Does China owe Detroit anything extra because there would be no industry to bring if it weren’t for Detroit?)
And for what it’s worth, my township historically is associated with the city of Mt. Clemens (which is contained in the township), and both of those existed much, much earlier than Detroit’s automotive successes. And it’s current population exploded much later than Detroit’s tumble into decay.
At least in part, although Detroit’s rot goes much further. The financial issues involve sizable public-sector union pension funds, which are a massive issue in several states, including Illinois and California. These funds are defined-benefit… and the officials in charge had a horrible history of overpromising and underfunding them.
The reason a great many people have very little sympathy with unions on this issue is that they knew the financial problems involved far in advance, and chose not to face that reality. They vote heavily and reliably for politicians who promise more benefits, and do not care how they are delivered, nor have they rigorously ensured that the pensions were financially stable. The market crash several years back utterly hammered many of these funds, who often did not recover with the market.*
You can decide on your own who is right. Regardless of your opinion of the cosmic justice of it, public sector unions have leveraged votes in many places to get unrealistic benefits, which have then gone on to seriously harm the budgets of municipalities and states alike. Many such benefits will be cut because there’s simply no money to pay for it. You can argue that other voters should have turned them down; you can argue that politicians shouldn’t have cravenly made bad deals; the fact remains that Detroit does not have the means to pay. If it cannot, it will not.
*For various reasons, not in all cases, etc.
We should take responsibility for our problems. We are not France. We are not China. We are, however, a part of the United States and (in your case at least) of Michigan. Perhaps you do not consume the resources of Detroit. Directly. That your suburb is merely cannibalizing municipalities that cannibalized Detroit doesn’t make decentralization any less of a problem. Quite the opposite. If there were an end in sight it would be easier to deal with.
Part of the problem is that in general, retiree benefits - both pensions and healthcare - are (or at least can easily be) a sort-of ponzi scheme, in which the system only works as long as there is enough new money flowing into the system.
Ostensibly, the cities (and corporations likewise) are required to put aside enough money to fund the pension (though not the healthcare) benefits. But as a practical matter, these benefits tend to be underfunded, and/or rigged by bogus actuarial assumptions (most notably rate-of-return on investments) which allow the people running them to pretend that they’re not as underfudned as they actually are.
The thing is, that while these debts are always looming out there, the plans can be solvent on a cash flow basis for a long time. And, as indicated earlier, it takes a lot for the public to be willing to make sacrifices, especially when there are politicians willing to tell them this is not necessary, and it’s all the more so when the problems are long term structural problems and everything seems OK now. Who cares about all this mumbo-jumbo, let the “experts” argue about that, and I’m not in favor of raising taxes or cutting services as long as things look OK.
Of course, eventually the future comes. But it comes a lot sooner if the population is falling then it does if the population is rising. Because the ratio of retirees to working population becomes higher, and the current payments become more difficult to sustain. If the population of Detroit would have been rising, then the pension and retiree healthcare issues would not be as pressing, and things would look a lot different.
In sum, as earlier, IMO the problems of Detroit are - by-and-large- not anything unique to Detroit. They are just the same problems as any city has in a democratic society, i.e. the ignorance and shortsightedness of the voting public. What triggered the crisis in Detroit was the collapse of the auto industry, which exacerbated these problems and brought them into sharper focus.
The UAW unionized all of the car companies. This destroyed all of the smaller manufacturers such as Packard, and Studebaker. The Big 3 were the only ones left. The UAW negotiated standard deals with all 3 so that there was no longer any competition for labor prices. This meant that the companies did not have any incentive to keep labor or pension costs down since their only competition would have the same expenses. The only way to compete on costs was to use cheaper materials. This led to poorly built cars. When Japanese manufacturers entered the market, it was amazing how much better their cars were made and the big 3 started losing market share quickly. The car companies tried to emulate the manufacturing processes that allowed the Japanese to build such good cars, but since work rules were negotiated by the unions it was a long and painful process. The Japanese manufacturers did not have the pensions and high salaries to pay so they were able to build better cars and sell them for less. American companies market share plummeted, two thirds of the UAW lost their jobs, and many factories closed. Many of the jobs and factories that closed were located in or near Detroit. This left a large amount of unemployed people who were only trained for jobs that no longer existed. This was the tax base of the city of Detroit and since no one had any reason to live there for work, those that could left.
The retiree issue noted above also plagued the automakers. They had a much harder time downsizing than they would otherwise have had, because this increased the ratio of retirees to active workers, and increased their costs per car.
The Japanese automakers were younger growing companies, and their retiree to active worker ratios were much more favorable (in addition to other issues).
But of course there were other issues as well. Among them was the fact that, as pubbleglum notes, the UAW would insist on parity between contracts at the Big 3 companies. (Generally, the UAW would decide on a certain one of the Big 3 as the model for a given round of negotiations, and settle that contract first, then insist that the others match it.)
That gave the UAW an inherent advantage over the automakers, since the automakers were all competing against each other while the UAW was looking at the workers at the 3 companies as one group. So the UAW was always willing to go further than the automakers, because they had a bigger picture than the individual companies. IOW, suppose ultimately it came to choice of “compromise or shut down the company”. The companies couldn’t do this and go out of business, but the UAW might think this was the preferable alternative, since they would have successfully defended the workers at the other 2 companies, who might even hire some of the laid off workers. I don’t know if it ever came to that level, but the UAW did severely wound some of the companies by engaging in strikes which shut down manufacturing for a while, and while this also hurt some of the workers to an extent, the point is still that it was worthwhile for the UAW because they kept the compensation levels high for the industry as a whole and were not just looking at the trade-off at the indiidual level.
Others have given you good answers that explain some of it. However the biggest problem with the unions in Detroit is pretty simple.
When an ordinary business finds its income growing, it hires more employees. When its income is shrinking, it gets rid of employees. This is common sense. (Of course it can also trim their hours, cut benefits, etc… The point is that when income drops significantly, the total amount of money going to employees must also drop.)
When the city of Detroit found its income dropping, it could not fire its employees, or cut their hours, or cut benefits. The unions had rammed through laws which made it impossible, or virtually impossible, to do any of those things. The result is that Detroit is now bankrupt.
[QUOTE=snowthx]
Was Detroit unique in this regard? Don’t other cities face the same pressures from unions?
[/QUOTE]
Detroit is certainly not unique. The number of municipal bankruptcies in this country has been rising sharply during the past few years. The high cost of maintaining a whole bunch of unionized employees is the main factor behind most of those bankruptcies, though not all. (Harrisburg PA went bankrupt by old-fashioned stupidity instead.)
Nonetheless, most cities have avoided bankruptcy thus far. But remember that for every city that’s actually gone belly-up, many others have narrowly avoided disaster through drastic cutbacks. Most famously, the whole state of California has had to make huge cuts to everything in order to pull itself back from the brink.
Every city and state that is controlled by public-sector unions will eventually fall into financial turmoil.
Thanks for the info. Are there any examples of a city or municipality that is in good financial health today? Both with, and without, these public sector unions?
How does one know if their city is giving away the farm?
But that still doesn’t answer romanticising cities in general or Detroit in particular. Things change. Who cares if Detroit (or any other city) fails, other than how the externalities of a failure affect things financially. Something better will come along. Societies evolve. Let Detroit evolve, too.