Bankrupt Cities

Reason Writers Around Town: Shikha Dalmia on Saving Detroit By Handing It Over To Houston

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The big issue before Detroit right now is whether its mayor and city council can agree on a plan to balance its books and avoid a takeover by a state-appointed emergency financial manager. An audit by Ernst & Young found that the city is on track to run out of cash even for its daily operations by April—and this is after Mayor Bing maxed out the city's credit cards.

But Detroiters are worried about the wrong thing when it comes to a state manager, notes Reason Foundation Senior Analyst Shikha Dalmia in her latest column at The Daily. That's because even though a recent state law gives the manager sweeping powers to put Detroit's fiscal house in order, s/he can't cure Detroit's dysfunctional political system that has produced this fiscal mess in the first place. She notes:

He or she cannot root out entrenched political corruption; cut taxes (the highest in the state); eliminate red tape; loosen the chokehold of the public unions that could once again saddle the city with unsustainable legacy costs; fight crime or improve schools. These are classic Third World problems that have produced classic Third World results: an unlivable and economically depressed city.

To address that, Detroit ought to consider an idea that New York University's brilliant economist Paul Romer is recommending to fix governance in Third World countries: charter out governance of portions of the city to other governments that have a more successful track record in managing their cities. She explains:

Bing has been talking about downsizing Detroit by withdrawing services from thinly inhabited areas. If his plan moves forward, vast tracts of the city could become completely uninhabited. Rather than turning them into farmland, as some propose, it might be better to turn them over to, say, Houston, whose government has successfully revived its city, especially since Detroit has the assets to thrive — a great freeway system, a sparkling riverfront, a world-class port and lovely housing stock.

Read the whole thing here

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  1. Reason Writers Around Town: Shikha Dalmia on Saving Detroit By Handing It Over To Houston

    We don’t want them. They can all go die in a hole, the Unionized and welfareized bastards.

  2. Turn the whole place over to the Omni Consumer Products corporation.

    1. I love it when crappy movies come true.

      http://www.youtube.com/watch?v…..re=related

  3. Saving Detroit By Handing It Over To Houston

    Why the fuck should Houston be punished for Detroit’s sins…?

  4. Outsourcing: is there anything it can’t do better?

  5. Turning it over it another already-existing entity is stupid. Detroit should downsize and the newly-unincorporated areas can organize as their inhabitants see fit.

  6. If Detroit abandons the thinly populated parts of the city, they will not become uninhabited. They will be inhabited by somebody, but without any services whatsoever. Either that woulddegenerate into some sort of Mad Max anarchy or a gangster enclave.

    1. But it would still be better than Detroit and tax-free.

    2. Detroit already is like Mad Max. Our own little slice of Africa right here in the US of A.

    3. Why wouldn’t it turn into a farming community, populated by land-starved Brooklyn hipster transplants?

      1. Because farming entails work?

  7. “These are classic Third World problems that have produced classic Third World results: an unlivable and economically depressed city.”

    Really? The outsourcing of the industry that defined the city, along with the loss of half its population and tax base had nothing to do with it.

    Clearly, everything is the fault of unions and their socialist government enablers.

    1. Clearly, everything is the fault of unions and their socialist government enablers.

      Finally! Mick, you are starting to understand. Come into the light, Mick. There’s hope for you yet!

    2. Nobody outsourced GM, Chrysler, or Ford. We just stopped buying their shoddy products.

    3. Um… yeah? I mean, if the city wasn’t able to scale back and re-prioritize spending and services to account for the diminished needs and diminished means of its diminished populace, that’s probably largely due to corruption in service to the government worker industry.

      If it was able to scale down, then the loss of population and taxes doesn’t seem relevant unless they changed in such a way as to make it much poorer per capita. Even then, it probably didn’t re-prioritize correctly (basic law and order, sanitation, and access to competitive education seem like the most essential needs).

    4. Really? The outsourcing of the industry that defined the city, along with the loss of half its population and tax base had nothing to do with it.

      You think Detroit was entitled to perpetual economic industrial prosperity? That there wouldn’t be consequences to electing a corrupt black nationalist and keeping him in power for 20 years? That the working-class population would simply sit by and take it while an entire group of “GIMMEDATS” and their enablers wrecked the foundation that allowed those industries to thrive in Detroit in the first place?

      Detroit’s woes, while in some cases due to circumstances beyond its control, are mostly self-inflicted. Denver, for example, has gone through so many boom and bust cycles that you can define them by industry and era–yet it remains a stable city that has remained relevant even as the suburbs outpaced it in growth. That’s because it constantly reinvented itself and has adapted its economies to those industries which are relevant on both a local and national level.

    5. You’re a troll trying to reinforce our point, right?

      Think about what could incentivize the flight of the tax base, or what could make outsourcing (with its various aspects of quality, need for new capital, and other issues) financially appealing.

      The outsourcing and the tax base flight aren’t the acts of swirly-moustached villains trying to do something dastardly, they were the rational reaction to the state of regulation, taxation, and labor costs.

  8. Oh, and I forgot this.

    The assests that Detroit has that fortel a resurgence; “Detroit has the assets to thrive ? a great freeway system, a sparkling riverfront, a world-class port and lovely housing stock.” must all have been created and lovingly maintained by the unseen hand of the market, with no assist from public entities or built up by decades of living wages.

    No problem. Let Mad Max rule! What could go wrong?

    1. Tax money built the river?

      1. Magrathean labor ain’t cheap, and gov’ts are the majority of their client base these days.

      2. And the houses. We all know how wonderful public housing is.

    2. Yes because without the loving hand of government to guide us we would all turn back into gamboling savages.

      “Government guide us. Government teach us. Government protect us. In your light we thrive. In your mercy we are sheltered. In your wisdom we are humbled. We live only to serve you. Our lives are yours.”

    3. Yeah, and now you’re seeing the end result of all that public spending. You built up these assets in an area that they could not sustain themselves and could only exist with further subsidies.

  9. You’d still have state government to contend with. Since MI isn’t right-to-work and a general hellhole of licensing, it’s still an uphill battle.

  10. The proposal seems to be to outsource a city charter to a faraway manager precisely because the process would be subject only to market competition, not democratic or electoral manipulation. But Detroit is in the spot it’s in precisely because it takes a colossal level of incompetence before businesses will undertake the cost of moving. Until then, the fixed business costs of location, goodwill, labor base, supplier contracts and certainty outweigh the benefits of moving.

    Seems like a better solution would be to balkanize Detroit, allowing portions of the city to be completely free of city regulations and taxes. That way instead of outsourcing from a basket-case city to a different city, we could outsource people’s decisions to those people individually.

    1. The best solution would be to place a wall around Detroit and turn it into a penal colony. Then sabotage a plane carrying a politician’s daughter so that it lands there and someone has to be sent in to rescue her.

      1. Escape from Detroit? Because Die Hard 4, Lethal Weapon 4 and Indiana Jones 4 all worked out so well.

        1. Technically Escape from Detroit would only be the 3rd movie and Indiana Jones 3, Die Hard with a Vengance and Lethal Weapon 3 were all pretty good.

          I’m all for it.

          1. Yeah, but Escape From LA was an abomination.

            1. The “Temple of Doom” was no picnic either.

              1. I would propose ballistic missle testing. You could set up batteries on the outskirts of town and watch the fireworks.

      2. You wouldn’t even have to do that–in another 10-15 years or so, some Russian mafia billionaire will probably buy out the whole city and turn it into his personal 19th century-style country estate. Thanks to so much of the city going back to wilderness, he’ll even have his own hunting grounds.

        And in 50 years, some earnest SWPL will write a novel about his staff called “The Help.”

  11. There’s always homesteading of the thinly populated parts of the city. You would still need the calvary nearby though as well as legal gun ownership.

  12. Installing a different captain doesn’t do any good after the ship has already hit the iceberg.

    1. But we could finally get the deck chairs arranged with some sort of feng shui before we all drown?

  13. NYC has 40,000 homeless people. Detroit has empty homes that they can’t afford to demolish. Why doesn’t NYC pay Detroit to house its homeless?

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