The Rise and Fall of Detroit

It is really amazing to behold the persistence of the Left’s economic narratives. In every case where government interferes with a market to create cartels, misallocations of resources, and stifling fiscal burdens, the resulting social losses get blamed on . . . the market! And the solution is . . . more government interference! And no matter how often you disprove the narrative, it comes back, again and again.

Back in 2011, I wrote a feature for NR comparing the history of Detroit and Houston over the last century. The Left’s narrative now has it that the market favored Houston (oil) and not Detroit (cars). That totally ignores the acute oil glut of the 1980s, which sent Texas and Houston into a regional depression. The companies in Houston cried out for protection — but instead of getting government help, they were allowed to go into bankruptcy. As a result, I wrote, Houston “bounced back as if suspended from a bungee cord — even though the oil bust lasted nearly two decades.” Houston followed the conservative vision of government, which is to get the government off the people’s back and let them find their own way to prosperity. From my article: 

Detroit, conversely, is proof of concept for the liberal vision of government, which seeks to solve every problem through government, to shape economic development through government, to redress grievances through government, to attain social justice through government, and, finally, to insinuate government into every aspect of our lives. The problems Detroit faced in the latter half of the 20th century would have been enormously challenging no matter what policies it embraced. But it embraced the worst ones and so plunged recklessly down the slope of decline.

Each city has offered a nearly pure exposition of a particular philosophy of government and a vivid demonstration of the results. In the degree of collusion between business and government, in the power of labor unions, in the method of economic development, in the burden of taxation and regulation, in the tolerance for diversity — in all these ways and more, the two cities stand as diametric opposites in the choices a society can make.

The cause of Detroit’s epic fall from grandeur is not the market, but government interference in the market — from crony capitalism to labor-union laws to welfare. Don’t let E. J. Dionne’s silly myths detain you for a second. In the case of Detroit, what government policies have done amounts to a crime against humanity.

Mario Loyola — Contributing editor Mario Loyola is senior fellow and Director of the Center for Competitive Federalism at the Wisconsin Institute for Law and Liberty. He began his career in corporate ...

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