Monday, August 19, 2013

On Detroit

The bankruptcy of Detroit has sent a shock wave through the economic community and has caused much discussion about the continued provision of pensions and other "entitlements" by municipal governments. Such discussions follow the popular debate about public sector unions, but fail to take into account elementary knowledge of planning and economic efficiency. Detroit's development went against several guidelines noted primarily in Jane Jacobs' The Economy of Cities which describe how cities grow, develop, and adapt to change. Ironically, this book used Detroit as an example of how cities should develop sustainably.

1: Lack of Economic Diversity
Detroit was developed as an industrial city, and for many decades that industry and its exports were widely varied, from ship building to agricultural and industrial machinery to tools to automobiles. Jane Jacobs takes note of this and describes that a city must have diversity in its economy in order for it to adapt to change. During the second half of the 20th century, Detroit's industry began to converge on one product, automobiles. This was well and good for the brief period before automation of assembly lines and competition from foreign manufacturers. This quickly changed, as assembly lines started to automate, less manpower was required to operate factories, and legions of workers were let go. In addition, as manufacturers such as Honda and Toyota came into the American market, offering what was widely perceived to be a superior product, the demand for domestic automobiles started to decline. The fact that Detroit's main export was automobiles meant that factory workers who were laid off had few employment alternatives.

2: Sprawl
Detroit's horizontal growth (attributable in no small part to it's main export) exponentially increased the amount of money that needed to be spent to provide public services to its residents. More police and firefighters were needed to cover more land, more schools had to be built and more teachers and staff hired to operate them, more hospitals and clinics needed to be built, and more roads needed to be maintained. This not only required the city spending money to build and maintain public structures and hire people necessary to operate them, but also required private residents to pay higher taxes to maintain those services, spend more on transportation, living, and healthcare. The city is now unable to maintain this infrastructure, and vacant houses have been torn down in droves.

3: Corruption
Despite the fact that the monetary losses from the city pale in comparison to its debt, this is a major consideration. Detroit is famous for its corrupt city officials. It's mayor, Kwame Kilpatrick, has been investigated multiple times by the federal government and accused of laundering money through a variety of front companies. In addition, many current and former council members have been charged with corruption. Clearly, the city's politicians are not motivated to solve problems such as economic resiliency, poverty, and crime.

In order for a city to be sustainable, it must be economically resilient. Detroit did not plan for this (perhaps due to the fact that the interests of its politicians were elsewhere) and, predictably, failed. Cities must insure adequate economic diversity for continued survival and the well being of their residents.

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