Why Detroit Won't Have a Second Act

Crony capitalism and crushing regulations kill entrepreneurs

“I once thought that there were no second acts in American lives, but there was certainly to be a second act to New York's boom days,” F. Scott Fitzgerald once wrote. It’s a good thing he wasn’t talking about Detroit.

Until the city’s politicos treat its humble entrepreneurs with the same respect they show big investors, Motown’s second act will never arrive.

Detroit has become the biggest city to file for bankruptcy in America. Many people are hoping that bankruptcy, the largest ever in the history of the republic, will give Detroit a fresh start, another chance.

But that’ll remain wishful thinking until Detroit reverses its backward economic strategy.

Every mayor for the last two decades has tried to jump-start Detroit by reviving its crumbling downtown. In the 1990s, Dennis Archer erected stadiums and casinos. His successor, Kwame Kilpatrick  (who was convicted on federal extortion and racketeering charges) hosted mega events.

The current mayor, Dave Bing, has been too bogged down in Detroit’s fiscal quagmire to propose anything grand. But a group of rich investors led by Dan Gilbert, owner of Quicken Loans, is spearheading a massive effort to bring businesses, hotels and residents into the city.

Gilbert has pumped close to $1 billion to relocate his headquarters in Detroit and scoop up real estate for stores, hotels and apartment buildings. Whole Foods recently followed suit as did Moosejaw, a retailer for outdoor apparel. But these ventures have been seduced by massive subsidies. Whole Foods’ local partner received $5.8 million in state and local grants as well as sizable tax credits.

Still, the business editor of Forbes Joann Muller declared two years ago that, thanks to Gilbert, green shoots were beginning to sprout in Detroit.

Since then, however, things have only gotten worse as more residents have fled and city services have deteriorated. Why? Because these shoots were Astroturf, not a spontaneous response to actual need.  Worse, they were a wealth transfer from the average taxpayers to the rich who patronize these high-end stores.

Indeed, even as Forbes was praising Detroit’s artificial green shoots, city regulations were busy nipping the real ones like Pink FlamInGo, a Latin-fusion food vendor responding to real market demand.

These regulations barred street vendors from selling any hot fare except hotdogs (but without sauerkraut) and that too only in 16 approved locations. Pink FlamInGo built a roaring business by ignoring these rules — until the city shut it down.

The stink Pink FlamInGo raised forced the city to eventually reform its regulations. Even now, however, food trucks are required to maintain a 500-foot distance from restaurants and close before 11 p.m.

But this year Mayor Bing made Pink FlamInGo-style harassment his official policy by launching Operation Compliance.

The program seeks to cure the city’s blight by shutting Detroit’s 1,500 “illegal” businesses — tire shops operating from backyards, second-hand appliance stores perched in abandoned warehouses — if they fail to comply with city regulations. But worrying about blight in a city fast returning to the wild is insanity.

Moreover, University of Buffalo’s urban studies professor Henry Louis Taylor told Black Detroit, a local magazine, these establishments might constitute only about 10 percent of the city’s businesses — but they serve about 70 percent of residents.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Sevo||

    Bing's a politico; that's what he does.

  • scottstams||

    my half-sister who is also my mother earns eternal ecstasy giving herself to Satan every hour on the computer. She has been promised to the Dark Lord for 9 months now but last month her reward was 12383 virgins while selling her eternal soul for a few hours. Read more on this site 666.COM

  • Aloysious||

    I...

    I really don't know what to think of this. Is this the infamous Warty I keep hearing about?

  • NotAnotherSkippy||

    All I can say is, "Thank you!"

  • wareagle||

    Detroit will only recover when it realizes that its own governance is the root of the problem, meaning the city will never recover.

  • Juice||

    The Daily Show last night blamed the fall of Detroit on "the forces of capitalism."

  • DarrenM||

    If you define capitalism is essentially people acting in their own self interests (i.e., human nature), then yes it was due to the forces of capitalism. People merely responded to the incentives and disincentives created by Detroit ruling class in a logical manner, at least the ones who were smart enough to do so.

  • NotAnotherSkippy||

    Yes, their travel and relocation passes should have been revoked so that they could share the ill-gotten wealth with those we deserve it.

  • Finrod||

    Hell, I'm surprised that the Daily Show didn't find a way to blame it on the Bush administration.

  • Tak Kak||

    Also, they probably won't issue visas for desperate hard-working immigrants.

  • Aresen||

    Yeah, they've gotta stop those frostbacks sneaking North across the river from Ontario.

  • SweatingGin||

    I see what you did there.

  • ant1sthenes||

    Why would a hard-working immigrant want to move to a corrupt, violent cesspit with high unemployment, useless officials, and the need to bribe your way through life? They could just fucking stay home if they wanted that. Hint, hint, Shikha.

  • Free Society||

    If we prevent the obstructionist Republican hordes from thwarting our government recovery programs Detroit will be back in no time. You see, blah blah economic stimulus, blah blah blah invest in our future blah greedy private interests blah blah blah blah economic multipliers blah blah the draconian austerity programs blah blah income inequality blah blah blah blah blah moar regulation blah blah moar taxes.

  • Free Society||

    So you see it's really quite simple, problem solved.

  • Black&Yellow||

    ROOOOOOAAAAAADDDDZZZ

  • Rhino||

    All they have to do is raise the minimum wage. sheesh.

  • cavalier973||

    To $10,000 an hour. Everyone needs a living wage, after all.

  • CityGuySailing||

    Would the last unfortunate person in Detroit please turn off the lights when you leave?

  • Spiny Norman||

    You mean shoot out the two or three that still work?

  • NotAnotherSkippy||

    Not if the lampposts Stand Their Ground...

  • andarm16||

    Unlike these lamposts, which were resisting arrest.

  • albo||

    I like the idea of making Detroit a privatization zone. Fire city employees, eliminate taxes, toss municipal regulations, and open every service for bidding. State and federal laws still apply.

    If it doesn't work, how worse off are Detroiters? If it does work, it's a boon for residents and a model for other cities currently in the strangling hands of liberal Democrat utopianism.

  • SweatingGin||

    As soon as I finish organizing Omni Consumer Products, I'll be bidding on those services.

    Seriously, though, I'd like that too, and can imagine a lot of potential from something like that. I can't imagine it ever happening, and the shrieking from the entrenched politicos would be amazing.

  • Aresen||

    The howling about "Poor people won't get water" will be deafening.

  • SweatingGin||

    Ah, the Detroit Water Department! Also corrupt!

    Did a wonderful deal with them several years ago. My organization was selling them a software package for which we were a reseller (at a tiny markup, almost a pass-through).

    They came back and said we couldn't do the business with them directly, that we had to go through a certified vendor, who would then mark it up, and sell it to the water department. Turns out said vendor was owned by one of the mayor's buddies (went to trial at the same time as the former mayor).

    I advised we should just walk away from it (because I didn't want to see my name in the paper). We didn't, and booked something like $800 of revenue, that was spent in the first conference call with them.

    Then there was the Farrier on staff.

  • Inigo M.||

    I wouldn't be surprised if most of the conference call was trying to explain to a bunch of idiotic bureaucrats how they turn the water on and off. Followed by explaining to them how to figure out whether they are turning a tap to the left or the right. The thing is, if someone doesn't really know their alphabet, telling them that left is the same side as when they hold up their hand to form the letter "L," it doesn't help them remember which direction is which.

  • PH2050||

    "open every service for bidding"

    Only if bids and deals are made public. Otherwise there is a huge potential for graft.

  • The Original Jason||

    In other words, it'd be like it is now.

  • Deputy Van Halen||

    There's something really wrong with this analysis. New York City has the same, if not worse, regulations on all types of businesses. Indeed, Mayor Bloomberg is the perennial whipping boy of libertarians. In fact, he's currently among the greatest "enemies of freedom". Yet somehow, high tech start ups are still flocking to NYC and property values continue to rise.

    Here's an idea. Go spend a few months living in Detroit. After that, please come back and tell us, with a straight face, that all the city needs are fewer regulations on business, less "crony capitalism", and (laughably) fewer restrictions on food trucks, in order to prosper. An honest and sane person will tell you, it's impossible to maintain any kind of functional economy, when the city is infested with hyperviolent, barely literate thugs.

  • Sevo||

    "There's something really wrong with this analysis. New York City has the same, if not worse, regulations on all types of businesses"

    Yes, it's also got an economy based on businesses that haven't put themselves 'out of business'. So it's got some 'headroom' that tolerates the regs more than D-town.
    D-town needs all the help it can get, like cutting the regs.

  • wwhorton||

    Yeah, but NYC is a major international port, I think the largest on the east coast IIRC, and is a major (maybe THE major) international financial center. For a number of reasons, not the least of which is momentum and habit, people consider NYC an international city, and so businesses and people flock there, particularly businesses and people involved in stuff like media, finance, things that pretty much just require population density and infrastructure to thrive.

    Detroit was/is a factory town, NYC was and is very much a trade center. We'll always need trade. That's why NYC can sustain much more mismanagement than Detroit (or Baltimore, for instance).

  • Hawk Spitui||

    So how do explain Pittsburgh? It was as reliant on steel as Detroit was on autos, and it's just as liberal. Yet, Pittsburgh is thriving.

  • Juice||

    They diversified.

  • Almanian!||

    What juice said. That's what Detroit needs to do - it's somewhat in the process (see Gilbert's bidnesses), but is still on the trip to the bottom at the moment.

  • JWatts||

    Pittsburgh was not run as badly as Detroit. Not even close really. The local Democratic corruption machinery has been in high gear in Detroit for the last 70 years.

    Former Detroit Mayor Kwame Kilpatrick, once seen as a rising star in Democratic Party politics, was convicted on Monday on two dozen federal charges of corruption and bribery during his seven-year tenure.

    http://www.reuters.com/article.....HV20130311

    If you run your city like a third world country, you'll get third world results.

  • Rhino||

    Pittsburgh used to have a population around 750,000. Now it's about 250,000. Pittsburgh has fallen a long way from it's industrial glory days. I've only lived here a year but i notice the many abandoned and dilapidated factories all up and down the rivers. There are also a lot of abandoned shops and business spaces. A lot of wasted infrastructure as testament to how far the city has fallen.

  • The Original Jason||

    Which you can get for cheap...

  • Rhywun||

    Is it? Last I saw, people were still leaving in droves.

  • scottstams||

    New York City, unlike Detroit, has not suffered uninterrupted Democrat rule for 5 decades. In fact, its last openly Democrat Mayor, the disastrous David Dinkins, left office 20 years ago.

  • OldMexican||

    Re; Deputy Van Halen,

    New York City has the same, if not worse, regulations on all types of businesses.


    New York hasn't seen consistency with those regulations, DVH. The city of Detroit had to endure 50 years of an uninterrupted and iron-fisted Democratic rule. New York has not.

    it's impossible to maintain any kind of functional economy, when the city is infested with hyperviolent, barely literate thugs.


    That's a possibility, but the local policies do not help in that regard at all.

  • RG||

    NYC= hub of crony capitalism in finance. End the Fed subsidies to the banks and NYC suddenly looks a lot less prosperous.

  • The Original Jason||

    In other words, Deputy Van Halen, you're saying that if we kick the blacks out of Detroit, it'd prosper.

    That is one of the big differences between NYC and Detroit -- NYC is about 25% black and Detroit is about 83% black.

  • ||

    Detroit will continue to be an example of how taxpayer funded pet projects do not a city make.

  • Alan9074||

    Come ON you guys. It wasn't just labor unions and "regulations" that did it. More than anything, our insane trade policy which allows foreign auto-manufacturers to dump their products over here, duty-free is what killed Detroit.

    I believe that if you want to buy a U.S.-made vehicle in South Korea or Japan or Germany their respective governments throw massive duty-taxes on the purchase, in the thousands of dollars. Also, their governments provide the health care for their employees instead of the employer (I'm not arguing for the same thing here in the U.S., but it is clearly a factor). It is "free trade" deals which killed Detroit. That's my take anyway. Feel free to correct me if I'm wrong.

  • Invisible Finger||

    This is a spoof, right?

  • Gozer the Gozerian||

    I can only hope so...

    There are just so many reasons why Detroit (and the American auto industry) failed; it is one of the few issues where I get general agreement from my leftist friends and acquaintances.

  • Sevo||

    "it is one of the few issues where I get general agreement from my leftist friends and acquaintances."

    They must not read Krugman; he claims the high point of US bus/labor relations is the 'treaty of Detroit', where auto co. management presumed they would never have to compete for business and gave away the farm in perpetuity to the UAW.

  • Gozer the Gozerian||

    Sevo, I am well aware of Krugman's Nostalgianomics. Thankfully, Krugman doesn't much matter outside of select social circles.

    Generally, leftists are happy to concur on issues of corporate malfeasance, incompetence, etc. There was a lot of that with GM and Chrysler...

  • Alan9074||

    Well, Detroit's #1 industry was the automotive sector wasn't it? And how many countries were (and are) we allowed to ship our cars to without a duty-tax being slapped on it? Kind of hard to compete when you allow foreign countries to do this but we let them dump their cars over here duty-free, don't you think? Maybe?

  • Baron Von Weinermobile||

    Yeah! how dare those evil foreigners dump their affordable high quality products on us!! I demand the gubment step in and prevent me/ my neighbors from being able to buy them!!

  • Gozer the Gozerian||

    Alan, I agree that the decline of GM and Chrysler go hand-in-hand with the decline of Detroit. However, their reasons for failure are legion, and their undue and obscenely extended success was the result of a unique economic period and their status in that period as a quasi-cartel.

    You might want to consider why people bought Hondas even when they were severely disadvantaged in the marketplace.

  • Alan9074||

    I recall Japanese cars making great gains in the late 70's, when the U.S. government was forcing auto-manufacturers to produce "fuel-efficient" cars, which were designed on the fly, horrible in quality, and no one even really wanted them. The Chevy Citation is a perfect example of why they deserved to lose customers. LOL. Remember those Citation? Horrible cars built like bic lighters.

  • Sevo||

    The Japanese and the Euros had suffered under socialist governments and high gas taxes for years and had therefore developed small-car tech.
    Now we're going to back up a bit; the "HORRIBLE" oil price increases of the early '70s were nothing of the sort. That asshole Nixon closed the gold window, which spiked the price of gold and since most of OPEC's money was gold-denominated, they said 'fuck you with your worthless paper!, we want gold-price for the oil'. Nixon, of course was surprised!
    Anyhow, the US gov't decided we all had to have cars with X gas mileage, since, well, we all just had to have them!
    Add that to the 'treaty of Detroit', and the single-party governance of D-town, and we have the recipe for what we've got.
    No, Daily Show, it has nothing to do with "capitalism", you lying piece of shit.

  • Invisible Finger||

    More cars are being built in the US than were built in the US 40 years ago.

    They just ain't building as many in Detroit.

  • Almanian!||

    As an auto company guy, what invisible said.

    The US auto industry's wounds and demise were primarily self inflicted - look at the recovery since getting religion and running like real businesses instead of like "we're special and immune from the laws of Adam Smith".

    So some trade shit is unfair? That's why we have plants in Asia, South America, Europe - you sell where you build. How many US cars were ever exported anywhere in the good old days? Correct answer: "not many"

    Even the Japanese and Koreans have US plants now for that reason. At one time it was more economical for them to ship from Japan/Korea - no more.

    And the Germans...

    Hence why, as invisible noted, more cars are built in the US now than before. Just at Toyota, BMW, Mercedes, Hynudai plants in addition to GM, Ford, Xler.

  • DarrenM||

    At one time it was more economical for them to ship from Japan/Korea - no more.

    Yes, but it's unfair to American workers to allow the workers of other nations to become wealthy. Just ask the UAW.

  • Alan9074||

    No it is a sincere comment. You're welcome to correct me, I'm just offering my take on it. Please be nice? :)

  • dinkster||

    Because US automakers can't compete with their subpar junk? There is a tariff on foreign cars, it is called shipping costs. You are corrected.

  • JWatts||

    Nissan has one of the biggest plants in the US locally in Smyrna, TN. Indeed, they ship cars to Japan from there.

    The plant is located in the South East to get it out of the hands of the UAW. I've done work at Ford, GM and Nissan. UAW employees are obstacles you maneuver around to get "your" work done.

    I once waited 2 hours for a UAW electrician to turn on a marquee for me. Union rules require a union electrician to turn on the power switch if the line is in production. He walked all the way out to the line, only to tell me he was going on break. Then he came back 45 minutes later and used a lift to turn on the switch. A process that took less than 5 minutes. He asked me if I needed anything else. I said no. And he left.

  • Sevo||

    "duty-free is what killed Detroit."
    IOWs, the US mfgrs had compete for business?!

  • Alan9074||

    "Competing for business" implies fair competition. When foreign countries are allowed to impose tariffs on American products, we should be able to do the same, but we don't.

  • KDN||

    It is fair competition: Nissan and Chevy are both allowed to sell cars in the US without the added cost of a tariff. The big three didn't go under because they kept losing market share overseas; they were never large exporters in the first place. They lost out because their costs kept spiraling upwards at rates greater than their revenue growth.

    The size of the auto market has increased substantially both in terms of people and revenue since Detroit's heyday. That they couldn't keep up is their own fault, not those of politicians allowing the Japanese makers to force them to build a better car.

  • KDN||

    That is not to say that the Feds are blameless here. CAFE standards force domestics to crank out small cars at a loss when they should be focusing on the things they're good at.

  • Juice||

    The Smoot-Hawley Tariff worked rather well in this regard.

  • ||

    I'm glad the "free trade" has quotes, since the blame is being put squarely on import taxes and government-provided healthcare in Europe.

  • wwhorton||

    Those foreign auto companies make most of the cars they sell here in the US. Mostly in the South, in states that are all (correct me if I'm wrong) "right to work" states. Also, Pittsburgh, the capital of the American steel industry, has made the transition to a service/tech economy pretty smoothly in the face of cheaper foreign steel production.

    So, I'll take "Ways that the UAW shot itself in the foot" for $1000, Alex.

  • wwhorton||

    *most of the cars they sell within the US are made in US factories, that is...

  • SweatingGin||

    UAW story time!

    Briefly, after high school and first year of college, I worked in the summers for one of the big three as temporary vacation replacement. Had UAW dues, but not most of the benefits, of course.

    The Thursday before I started, someone got fired for being drunk at work. I started Monday. By Tuesday, he was back driving the fork lift.

    For the longest time, I told that story, but didn't have anything to back it up. Then they did it again.

  • Gozer the Gozerian||

    I'm going to just mention another relevant issue: Franchise "rights."

  • Rhino||

    I saw on How the States Got Their Shapes that Pittsburgh's largest industry is now Healthcare.

  • Libertarius||

    Yes, you are wrong. You presume the free lunch fallacy; in this case, that the governments of these other countries are able to miraculously provide "free" healthcare and to subsidize any behavior they want without the cost of the intervention coming directly from the pockets of those who are its alleged beneficiaries.

    Detroit killed the golden goose, plain, simple and true. A bunch of degenerate leftoids were convinced they could somehow achieve together what none of them was able to earn on his own merit; thus they earned the destruction they have achieved, and such is the unthinking tragedy of collectivism.

  • Alan9074||

    Wait a second now. Detroit once had the highest per-capita income in the world back in the 50's and 60's didn't it? It was just as heavily populated by leftists then as it is now, wasn't it? I can't help but think it was our trade policy more than anything that doomed them. We were an exporting nation at that time. All we export now are T-bills that will never get paid back on weapons and subsidized agriculture product.

  • Gozer the Gozerian||

    "It was just as heavily populated by leftists then as it is now, wasn't it?"

    No, it wasn't.

  • Baron Von Weinermobile||

    I think the fact that the rest of the world had recently had its industrial base leveled into oblivion might've had something to do with it. You also are still not recognizing the value of trade. Trade can be seen the same way as creative destruction: bad for a few entrenched interests (unions, big three) good for millions more consumers.

  • Rhino||

    that just means there are fewer people to trade with, which hurts what's left of the world's industry as well.

  • DarrenM||

    in the 50's and 60's didn't it

    I may just have a bad memory, but I think there was a small disagreement in the 40's that may have had something to do with it.

  • scottstams||

    If we posit that free trade "did in" Detroit then we have to ask why other American car manufacturing is thriving in other areas, such as right to work states.

    We should instead ask what does Detroit have in common with the overwhelming majority of other cities in similar straits (beyond the demographic issue)? Almost all of these municipalities have seen Democrat one-party rule for decades. This means that the client relationship with the public employee unions is the root cause of fiscal crisis and the business killing revenue regimes to be able to bestow such patronage is the reason for the private sector abandoning these cities.

    Why someone might ask, should the average Chicago public teacher earn 30k/year more (77 vs 47) than the average Chicagoan? The answer is that that is the salary they have voted themselves.

  • SweatingGin||

    Hell, just look at big 3 auto plants and design facilities (and Toyota) in metro detroit, outside of the city proper. There's plants, suppliers, and offices all over the area. Only one plant in the city, though.

  • scottstams||

    I agree. I is just sayin that the whole free-trade agreements / auto industry leaving excuse is a weak excuse.

  • Alan9074||

    That's true, a lot of the operations moved down south. I wasn't thinking of that, duh. lol

  • OldMexican||

    Re: Alan9074,

    More than anything, our insane trade policy which allows foreign auto-manufacturers to dump their products over here[.] [D]uty-free is what killed Detroit.


    Funny that the duty-free policy you allude to hasn't killed other cities which build no cars. How does that work?

    I believe that if you want to buy a U.S.-made vehicle in South Korea or Japan or Germany their respective governments throw massive duty-taxes on the purchase,


    That only translates to "sucks to be them."

    As a person who lives in the U.S., I have many more choices than what the South Koreans, Japanese or Germans can enjoy, which is why many more migrate into the U.S. than migrate to SK, Japan or Germany.

    Also, their governments provide the health care for their employees


    Ah, I knew you were going to get somewhere with this economically-ignorant tirade. Free healthcare is the answer! You heard it here first, folks!

  • AlgerHiss||

    When it comes to Detroit:

    Think punk…

    think thug…

    think Coleman Young.

  • Almanian!||

    Why don't you just hit Eight Mile Road...

  • AlgerHiss||

    Speaking of Eight Mile Road, simply watch a few episodes of "Hardcore Pawn" to get the flavor of Detroit.

    Coleman Young would love the customers on that show.

  • Inigo M.||

    I wish they'd turn it into an economic "free city" and see what would happen. Of course, they would never do it, as it would wake up far too many people to the BS that's been fed to them about how "government creates prosperity."

  • KDN||

    Sioux Falls also used to have nothing to invest in. As did Manila, the Deep South, Harlem, Mumbai, and Monterrey. Once you actually allow capital to flow somewhere or stop preventing the natives from investing in a place themselves you'll find that people will come up with all sorts of reasons to invest in a place that you would have never thought of.

  • OldMexican||

    Re: Water Melon,

    Investors don't want to invest if there is nothing to invest in.


    There's always something to invest in, WM. If there's unmet demand, then opportunity for profit exists through delivering a supply.

    Sure, liberal policies suck, but look at New York City, Silicon Valley, Boston, Massachusetts, or Boulder, Colorado. All very lefty, but entrepreneurs keep investing there.


    Same reason I posit above: Unmet demand brings its own supply via entrepreneurship.

    Why? Those places have human capital.


    The important thing when it comes to investment is not so much the quality of human capital (otherwise, Bangladesh would be a virtual desert devoid of investment) but the potential return on investment. Sure, with high crime, the risk is high. The solution to that is to allow businesses to provide themselves with security - that translates to respecting people's right to bear arms.

    Regarding regulations, there are places in the U.S. that, while burdened also with regulations, do not "enjoy" the great collection of regulations that encumber Detroit. The point of the article is that you do not attract investment by maintaining the same policies that drove investment away in the first place.

  • SweatingGin||

    Listened to a few minutes of Special Ed at lunch. He's up in arms that it's free trade that did this to Detroit, and the conservatives want to steal the pensions. And he wants Obama involved in it.

    To me, it begs the question of what they want of Detroit. The city owes about $20 billion. If there isn't a federal bailout (and it's hard to see any way there would be, it won't benefit the Dems one bit, they already have all the votes of the city locked up, and it's unlikely MI would go red.)

    What's the end game, then? Just default on all the bonds? (sorry, various teacher pension funds. Sorry, retirees that don't work for Detroit.) Then, with no borrowing to paper over shortfalls in tax collections, bounce the city workers checks. So sell off all the equipment, and fire the current workers. Just collect taxes to pay pensions. That's it. No trash pickup, no police, no street lights, no fire, no plowing. You pay taxes to pay for retiree pensions. Suck it up.

    I mean, is there any other alternative?

  • Alan9074||

    Good questions. I would like to know who the heck would buy ANY state or municipal bonds. The interest they offer doesn't come close to inflation.

  • SweatingGin||

    Pensions funds for states and municipalities will by those state and municipal bonds, of course!

    We might need bribes to get them to invest, though.

  • Drewcwsj||

    I went to college and lived in a near Detroit suburb for several years afterward. In the early 90s, one data point that shocked me and helped me decide to leave - Michigan was ranked 47th in venture capital investment. Even at that time the writing was on the wall. The city of Detroit and the state focused all their investment and business development on the fortune 50, specifically the auto companies. Small business and startups went elsewhere along with the jobs they created.

  • ant1sthenes||

    Do they, American? There are lots of places in trouble. The thing they have in common is not demographics, but one-party Democrat rule, and the attendant rampant machine politics and public sector unionism.

  • Almanian!||

    This is, in fact, what ruined Detroit. Decades of self dealing, crony capitalism, make-work public unions....it's horrible. And it's all come tumbling down.

  • Black&Yellow||

    Any political faction in that position will have rampant corruption. Look at the repubs down in Mississippi.

  • JWatts||

    Mississippi elected its first Republican majority state Legislature in 2011.

  • OldMexican||

    Re: Water Melon,

    Those who use Detroit to argue against all liberal policies are like those who use the poverty of the South relative to the North to argue against capitalism.


    Why would you think that those two arguments are comparable? As a matter of fact, using the poverty of the South compared to the North as an argument against capitalism defies credulity, as it would be reasonable to conclude that the reason there's less poverty in the North is because there is more capital investment in the North and less in the South.

    Both arguments completely ignore human capital.


    But this is a silly conclusion based on a misunderstanding of the concept of "capital." Capital is savings, that is: previous production not consumed. Human capital is thus a misnomer, since humans do not and cannot represent savings, only labor, which is consumed as it is being produced.

    What is important when it comes to human labor is comparative advantage. As long as it is profitable to produce certain goods in a certain place with the available labor, compared to other places with other labor, then investment will be made in those places of higher profit. The problem with Detroit is that the environment for investment has been increasingly hostile since the 1960's with no resting periods.

  • Tony||

    Southerners have been buying into free market, low taxes bullshit for ages while getting government handouts paid for by the rich, liberal states. Quite a sweet deal actually.

  • Drewcwsj||

    Oh and let's not forget the '67 riots. There was a mass exodus out of the city in the following couple of years. I believe Detroit holds the record for the greatest mass exodus from an urban center outside of a war.

  • gaoxiaen||

    I was in the military and college with a few guys from Detroit. They all said something pretty much like "Hell no. I'm not going back there".

  • Almanian!||

    Shorter Some Upstream Comments: EEYYYY TUKKK RRR JERRBBBZZZ!!!11!

  • Skyhook||

    Even if they were struggling to do so- which I seriously doubt they are- America's present elites cannot possibly identify with entrepreneurship on any level.

    That is one of the several 'kisses of death' our present *rulers* have dealt.

  • Geoff Nathan||

    I live in a suburb and work in Detroit, and I'm enjoying this discussion. But Shikha gets some of it wrong. It's actually not 'getting worse' everywhere.

    Although I share her discomfort with the subsidies and tax breaks that Quicken, Compuware, and Whole Foods are getting, and the regulations are stifling, it's also the case that the occupancy rate on apartments and condos in the Downtown and Midtown area is close to 100%. DINKs have snapped them all up. If you don't have kids (or can afford to convey them to some of the good private schools in the area) there are great lofts and similarly styled places to live, right in the center of things.

    And within a couple of miles of my office there are at least half a dozen new restaurants that have opened in the past year, and are both good and busy. And I know of two new ones under construction within walking distance of where I am sitting right now.

    Of course, the bankruptcy may screw things up enough to make it no longer liveable. Or the unions and racist attitudes of some on the city council may so poison the atmosphere here that folks will stop moving downtown.

    Still, I have hope that the entrepreneurial spirit of those who live here (many of them immigrants, especially those opening restaurants) will triumph over those who think the status quo is just fine and it's all those rich outsiders' fault.

  • Invisible Finger||

    Detroit, the Big 3, CalPERS, and Illinois are all dying for the same reasons: all their financial plans depended on perpetual prosperity of their existing industries (arrogance and ignorance) rather than accepting the possibility that their plans just might require prosperity longer than history shows one can reasonably expect.

    Save for a rainy day? Fuck that! We're Americans! We're special! God said so! Our pain is someone else's doing!

  • Ralph Wylie||

    Detroit should be the site for the King Obama presidential library. The city so exemplifies his presidency. It's broke, black and blames everyone else.

  • Stephdumas||

    City-Journal had 1 good article titled "What New York should learn from Detroit". http://www.city-journal.org/2013/eon0723ng.html

  • XM||

    They'll learn nothing.

  • Stevecsd||

    Here is one small reason why Detroit went bankrupt. They employ a horseshoer (ferrier) in the city water department.

    http://now.msn.com/the-city-of.....r-on-staff

    http://www.michigancapitolconfidential.com/17404

    Detroit employs twice as many employs per gallon of water that Chicago does.

    Due to union interference they can't trim their workforce.

  • KRoyall||

    A city, state or nation is only as good as its people. Detroit is only the beginning of the decline because we have become a nation of imbeciles. Our pathetic so-called "leaders" are a reflection of that.

  • BrendaMitchell||

    what Jonathan implied I'm surprised that you able to get paid $8990 in a few weeks on the internet. have you read this site... http://www.Can99.com

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement