Detroit has lost more than 60% of its population since 1950. Dozens of other large urban areas have similarly massive pension and debt obligations, with commensurately denuded services and exorbitant taxes - leading to a vicious cycle of depopulation that makes everything worse. Yet, if a Detroit bankruptcy succeeds, other cities will be tempted to follow suit. Article content Washington cannot afford a nationwide federal bailout of insolvent citiesīankruptcy, which will radically cut payments to bondholders and retirees, is the only chance to start over. This advertisement has not loaded yet, but your article continues below. Forty percent of the streetlights don’t work, two-thirds of the parks are closed and emergency police response time averages nearly an hour - if it ever comes at all. So much city revenue had to be diverted to creditors and pensioners that there was practically nothing left to run the city. The city now has about $19-billion in obligations it has no chance of meeting. The city of Detroit, however, lacking market constraints, just kept overspending - $100-million annually since 2008. The market ultimately forced the car companies into reform, restructuring, the occasional bankruptcy and eventual recovery. In time, they all found themselves being overtaken by more efficient, more adaptable, more hungry foreign producers. Unions felt entitled to the extraordinary wages, benefits and work rules they’d bargained for in the fat years. Management grew increasingly bureaucratic and inflexible. Their imagined sense of inherent superiority bred complacency. When our great industrial competitors were digging out from the rubble of the Second World War, Detroit’s automakers ruled the world. Manage Print Subscription / Tax Receipt.
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