Detroit files for bankruptcy; not the first or the last but the biggest yet

Greetings from Detroit
Public Domain Greetings from Detroit

When Detroit's bankruptcy was announced, one tweeter I follow wrote "get ready to see a lot of Detroit ruin porn on every site."

Not here. For the last few years the stories on TreeHugger have been overwhelmingly positive, from the people moving in and fixing up houses, planting urban farms, to the hugely successful Eastern Market and the growers and food manufacturers (need a perogi?) that grew up around it. Companies like Quicken Loans and Twitter are revitalizing the business core. The car companies are booming. Whole foods just opened their first store here. Manufacturing employment has grown faster than the national average, house prices are actually rising and hotel stays are up 68%.

Ambassador Bridge/Screen capture

The best is yet to come. Canada is building a huge new bridge to smooth the flow of manufactured goods across the busiest border in the nation. New locks are being built to increase capacity on the St. Lawrence Seaway. As the increasing heat and lack of water continue to make the southern and southwest states ever less inhabitable, Detroit's temperate climate and water supply will look more and more attractive. Like Buffalo, Detroit was a city with great infrastructure, great buildings, great museums, great parks, all surrounded by great farmland and Great Lakes.

A while back the economist and writer Ryan Avent suggested that all us new media types should pack up and head to Detroit.

The idea is this — if enough people of a certain productive potential move to Detroit, then Detroit will begin exercising an attractive force. In response to the growing population of people, supportive infrastructure will grow up. Employers will follow or start-up from among the migrants. Consumption options reflecting migrant taste will appear. And eventually the whole show will become self-sustaining.

In fact, this was actually happening.

Greetings from Detroit/Public Domain

So what went wrong?

Brad Plumer of the Washington Post has a list that includes the loss of manufacturing jobs, decades of bad government, white flight to the suburbs and more, that caused the population to go from 1,850,000 people in the 50s to around 700,000 today, with unemployment running at 18.6%. It's stuck with billions in pension obligations to all the civic employees that used to work in the bigger, richer city.

But what is really going on in Detroit is the same thing that is happening all over North America, what George Packer calls The Unwinding. It is the result of the destruction of unions, the globalization of manufacturing, the massive rise in economic inequality, the loss of the middle class, the Walmartization of retail. Detroit is not the first city in America to go bankrupt and it won't be the last, as cities dump obligations and debts they can no longer afford to service, because everyone is earning barely the minimum wage and shopping at the big box stores outside the city limits. Packer writes:

Over the years, America had become like Walmart. It had gotten cheap. Prices were lower and wages were lower. There were fewer union factory jobs, and more part-time jobs as store greeters.” Meanwhile, “six of the surviving Waltons would have as much money as the bottom 30 per cent of Americans”

The only way for a city to survive these days is to pay its employees those Walmart wages as well and get rid of all those pesky pension obligations; bankruptcy is just the ticket for that. Michigan just became a "right-to-work" state, which dramatically reduces union power. The Governor thinks the bankruptcy will give Detroit a clean slate:

I know many will see this as a low point in the city’s history. If so, I think it will also be the foundation of the city’s future — a statement I cannot make in confidence absent giving the city a chance for a fresh start, without burdens of debt it cannot hope to fully pay.

People's Pierogi Collective/Screen capture

Emily Badger at the Atlantic suggests that all our happy stories about artists, urban farms and pierogies …

… were inspiring, but they could never add up to something larger than the city's systemic problems that were decades in the making. That doesn't mean hopeful stories about Detroit haven't been (or still aren't) worth telling. But to the extent that we've let any of them lull us into thinking that the city could recover through the force alone of some really determined people – in the absence of employment, in the absence of functioning government, in the absence of democracy – we've been avoiding reality.

That new reality is a world where you are on your own, with no unions, no pensions, nothing but McJobs, where cities as well as people are victims of the Unwinding.

Tags: Detroit | Economics