The case against bailing out our worst city
An industrial juggernaut in the days of Packard and Hudson, Detroit today is home to a new and uniquely 21st-century industry: the art of urban ruin. Detroit has become a mecca for photographers drawn to its blight. Grand theaters molder and collapse in increments, brick by brick. Vast interiors abandoned by humans collect debris and are repopulated by wildlife, with packs of feral dogs so large and so vicious that the U.S. Postal Service has considered ceasing delivery in some parts of Detroit. Trees take root in the most unlikely of places, sprouting from the roofs of abandoned buildings. It is a rich vein for visiting visual artists. Among the most successful of them are the duo of Yves Marchand and Romain Meffre, who were commissioned by Time magazine to document the city’s decline in a series of haunting and sometimes beautiful photographs. Their work was admired at the Cinéma du Panthéon in Paris and the Kühlhaus in Berlin, reviewed by all the right critics, and collected into a bestselling book, The Ruins of Detroit. Writing in the Guardian, Brian Dillon complained that the art of post-apocalyptic Detroit, while appealing, “seems oddly detached from analyses of the political forces that brought the city to its present sorry pass.”
On Mr. Dillon’s point, the sobering fact is that Detroit has been utterly destroyed by utterly conventional politics common to most U.S. cities but by no means limited to urban government: The politics of Detroit consist of cultivating and exploiting public dependency in order to justify massive wealth transfers from taxpayers to the political class, its dependents, and its favorites in the private sector. In Detroit, the aggrandizement of the public sector is fortified by a very nasty strain of racial resentment. Which is to say, the politics of Detroit are a lot like the politics of the Obama administration with a good head start and no Ivy League compunction about putting identity politics front and center. With apologies to Lord Keynes: In the long run, we are all Detroit.
Detroit has just gone through one of its periodic episodes of promising to save itself. Michigan’s Republican governor, Rick Snyder, has announced a “financial-stability agreement” by which a nine-member advisory board will be entrusted with seeing to it that the City of Detroit amends its wicked ways. If you have ever known a junkie, you know how this story ends: Promises are made, and sometimes even kept for a while, but sooner or later the needle goes back into the arm, because the seldom-spoken truth is that a junkie wants to be a junkie. And Detroit wants to be Detroit.
Governor Snyder’s toothless agreement is not going to save Detroit from itself, and the governor himself doesn’t even sound particularly convinced of its efficacy. Challenged by a critic about what would happen if the city should fail to live up to its obligations under the agreement, the strongest stuff Governor Snyder could muster was: “The goal is to have things work.” It always is.
Other Michigan cities have been through similar fiscal traumas, and the state has had some success in turning their fortunes around with the appointment of emergency managers, who function in much the same way that special masters function in complex corporate-bankruptcy proceedings: They can hire and fire, make budgetary decisions by decree, and behave in a generally masterful fashion until the crisis subsides — i.e., they are empowered to act like the Roman officials from whose office we get the word “dictator.”
Detroit is not getting a dictator. Instead, Detroit will get three new highly paid city executives — a chief financial officer, a chief operating officer, and a program-management director — all of whom will report to the mayor, Dave Bing, a seven-time NBA all-star and the latest in a long line of Detroit mayors plainly unequal to the task of governing the city. Detroit will get a state bailout as well, an injection of $137 million to tide the city over until the end of the fiscal year, at which point the dance will be begun again from the bow. But Detroit’s ability to borrow on its own account is more or less maxed out; it is getting that $137 million in financing only because the State of Michigan is selling the bonds in its own name, backed by its own credit. But the ability of the State of Michigan to borrow on Detroit’s behalf is not unlimited: The state’s credit rating already is subprime, and one of Governor Snyder’s top priorities is to get the state back to AAA status. That isn’t going to happen if Detroit continues to be a fiscal millstone around the state’s neck. The cost of letting Detroit fail would be high, but the cost of trying to save it may prove higher, largely because Detroit will resist being saved.
At some point, Governor Snyder and the people of Michigan will have to deal with reality: Detroit’s political leadership is a parasite that has outgrown its host. People are leaving Detroit as quickly as they can: Well more than 200,000 have left the city since 2000, and more than 1.5 million since 1960. Which is to say, Detroit’s refugees since 2000 could form a city bigger than Providence, Salt Lake City, or Des Moines. Those who have fled since the city’s peak could form a municipality bigger than any U.S. city except New York, Los Angeles, Chicago, Houston, or Philadelphia. But government spending in absolute terms long continued to rise; in per capita terms, it rises still, and the city spends far more per capita than the U.S. average. Detroit’s public sector has responded to every fiscal crisis by raising tax rates and by instituting new taxes, as often as not enabled by Republicans in Lansing. But new taxes and higher rates cannot offset the effects of the city’s rapid and steady depopulation — in fact, surveys suggest that they have hastened it — with the result that revenues declined by more than $100 million between 2007 and 2011. Income-tax revenue dropped by 18 percent, utility-tax revenue by 17 percent, property-tax revenue by 2.3 percent. Seeking a quick fix to its revenue problems, Detroit chartered several casino-gambling operations, only to see taxes from them begin to decline (by 1.5 percent last year) after a period of early growth. Detroit, once the wealthiest city in the United States by per capita income, is today the second-poorest major U.S. city.
Like many cities, Detroit has promised very generous pensions to its public-sector workers but set aside very little money to fund them, meaning that in 2011 the city had to put more than $70 million into the pension fund to keep making payments. Government is Detroit’s largest single employer, and spending on government remains very high. What Detroit is getting for all that spending is unclear: It has some of the worst schools, roads, sidewalks, and local services of any city in the country. Last year, its murder rate was up 10 percent. Very few people with options are going to stick around to endure both the highest tax rate in the state and one of the highest murder rates in the country — let alone highly skilled, highly productive workers, investors, and entrepreneurs. Detroit is driving away the people it needs to survive. Who is left?
Who is left includes a fair number of disciples of the late mayor Coleman Young, a pioneer in racist politics who, when he wasn’t impersonating Newt Gingrich (“We need to dream big dreams, propose grandiose means!”), prefiguring the Fox News investment strategy (“I don’t know nothing about no goddamned Krugerrands!”), or meeting the press in Hawaii (“Aloha, motherf***ers!”), helped create the myth of Detroit as a black-power success story. That he managed to create that myth while presiding over one of the roughest and steepest runs in Detroit’s slide into the abyss says either something impressive about his political insights or something poor about those of Detroit’s residents, but in any case Detroit is now a polity in which a paramount political concern is keeping power in black hands, even at the expense of enduring everything that has happened to Detroit already and everything that is going to happen to Detroit in the coming years. That attitude makes itself felt in the strangest places: Reacting to a good-news story that some young professionals were returning to the city, Detroit went into a racial conniption about “gentrification.” Writing in Time, progressive Darrell Dawes approvingly quoted Mayor Young’s dictum that “white people find it extremely hard to live in an environment they don’t control,” and considered the possibility that the trend would mean that “hard-fought black political power in Detroit is in jeopardy.” Citizens at a public meeting on the subject complained that a panel of “people of color” was moderated by “a beardy white guy” and spoke bitterly of “white entitlement.” But Detroit is in fact undergoing degentrification: In spite of a few trendy lofts downtown, the city is getting poorer as the black middle class and the Hispanic middle class follow the white middle class out — 185,000 blacks have left Detroit since 2000.
But Detroit’s race-poisoned politics are not going to change. When Governor Snyder considered imposing an emergency manager on Detroit, the ensuing outrage focused relatively little on economics and a great deal on race. There was talk of a “takeover” by the “white establishment.” One Detroiter demanded: “Can some black people have some courage to face the white man off?” An influential community organizer, Minister Malik Shabazz, characterized the proposal as “white-on-black crime” and “white supremacy.” His solution? “Before you can take over our city, we will burn it down.” It bears noting that this declaration was made, to cheers, at a city-council meeting.
Pace Minister Shabazz, Detroit already is burning, from the inside out. Any exterior fire would merely provide confirmation of the interior rot. The inescapable problem is that you cannot save a city that does not want to be saved. A city whose people regard economic development as a plague because it brings in young white people and Starbucks is a city that cannot be developed economically. Detroit has no money. Governor Snyder has a little, but his credit is not infinite. The real choice is between imposing an emergency manager or stepping back and letting Detroit descend into formal insolvency. Minister Shabazz and his acolytes are as likely to burn down Detroit under either scenario, so the remaining calculation is only economic, which argues against bailing out America’s worst city.