For the true Detroit experience, stay the weekend at the Motorcity Hotel and Casino.
It's just a few blocks outside of what is considered 'downtown' Detroit. It's not an overly fancy or even large hotel but it has the weirdest vibe to it, it's as if you're in this dystopian movie about the future where there's a 1:1000 difference between the haves, and the have nots.
Inside the hotel there's food, booze, gambling, and bright lights. As you leave the hotel you see security forces (hotel security as well as a fairly large presence by the Detroit PD). But once you're outside, that's it.
Barren wastelands. Empty city blocks, fields of grass and weathered concrete, and the ruins of entire neighborhoods. Exactly what you see when you Google 'Detroit slums'.
In the daytime you'll see people walking around like zombies, carrying grocery bags, walking between stores (despite what you read on the internet, there are grocery stores in Detroit). You'll see them talking to each other on the corner, sitting under trees, or hunched over on a curb.
They have nothing. They do nothing. There is nothing for any of these people to do. There's nowhere for them to work. There's nothing even for them to have. Everything is gone or destroyed.
At night time you won't see anything. Almost all of the streetlights in the city have been turned off, because Detroit can't pay the bill! The city is pitch black at night. You can drive around with the highbeams on. You can't see the roads, you have to make sure you don't run over anyone who's in the street, it's incredibly unsafe but it's just so dark it's unbelievable.
And then in the midst of the darkness you see the multi-colored lights of the hotel, and you know you're back to your version of Detroit. The police let you back in, you park your vehicle in the guarded garage, and you walk back to your room to eat $4 bags of M&M's and $5 bottles of water.
And once you think about how fucked up that is, you almost lose your appetite.
Thats a great analysis of a visit to Motorcity Hotel and casino. I live 40 minutes from there, but refuse to go because the people that gamble there are there to try and pay their bills. Its not like Vegas where someone loses a hundred bucks and smiles about it. Its much more intense, but in a not fun/sorta dangerous type way.
There was a story not too long ago where an older guy won 5,000 and on their way home someone followed him, ran him off the road, killed him and took the 5,000. Doesn't beat the pizza delivery guy murders here in Flint, but it paints the correct picture.
> Barren wastelands. Empty city blocks, fields of grass and weathered concrete, and the ruins of entire neighborhoods. Exactly what you see when you Google 'Detroit slums'.
Just had a look on Google Maps satellite and street view in an area near the Motorcity Casino and - wow. There's a lot of nothing there.
Where did the grassy vacant lots come from? Did someone (the city?) bulldoze abandoned buildings? All of the grass is neatly trimmed. Is that the city too? Or does the casino keep their immediate neighbourhood looking neat?
People say how bad the city is, and yet there's a brand new Whole Foods. There's a lot of new construction happening. Rolling down Woodward, you'll see new restaurants and new stores.
There's no weird vibe in Motor City Casino - maybe it's just you. It's very nice in there and everybody is having a good time. The dealers are all very nice. The vibe there was much better than Atlantic City - now that's a sad place.
How the heck is Motor City the 'true Detroit experience'? The 'true Detroit experience' is staying with friends that are Detroit natives. 1515 Broadway, Green Dot Stables, Centaur, Circa - plenty of gems.
My friends ride their bike up and down Woodward and John R many nights. I rode with them multiple times after DEMF. There are street lights for miles.
Detroit has a lot of run-down areas, but it's not 'dystopian'. My first visit there I walked down the Cass Corridor - that's bad, but not as bad as areas I've been in cities like Atlanta or the Bronx or even Brooklyn.
And, the electronic music scene is very much still vibrant. The people of Detroit have such a love for the music.
Detroit is the perfect entrepreneurs city. Tremendous opportunities along with tremendous risks. I've waited my entire life to see progress in Detroit's long downward slide. Sadly now that it is here few can see it.
Might be why Chinese investors are buying houses by the block full. Or why twenty year olds have leveraged themselves into owning downtown skyscrapers. No where in the world do those opportunities exist.
>> At night time you won't see anything. Almost all of the streetlights in the city have been turned off, because Detroit can't pay the bill!
Just to be clear, the city may be able to pay the electricity bill, but not the bill to repair the light or the copper wire which has been stolen by scrappers.
Lighting is just one of those things you probably take for granted. When you don't have it, and your kids need to walk between abandoned homes with no street lights in the darkness to get to their bus stop, it becomes an essential public safety requirement.
Freep.com covered how the lack of public lighting really puts kids in danger in a good piece last year.
yea, i'm sorry, the comments on articles re: detroit end up reading like the side-boob gazette (read huffpo) sensationalist blog articles. i work downtown, have lived downtown, and definitely grew up in metro-detroit. i've also lived in good 'ol sunnyvale, ca, and spent a fair amount of time in beloved sf (more homeless people than i have ever seen.) no doubt detroit isn't fairing well on tourism lists, but fer fuck's-sake, can we end the zombie ruin porn shit?
a lot of people and a lot of history have been here a long time. rebuilding a city takes time.
How much time? Detroit began its decline in the late 1960's, and the current financial crisis started in earnest in ~2004 when they lost a bunch of Federal funding[1]. The Tigers abandoned Tiger stadium (which was demolished in 2009, and the land remains undeveloped) and the Lions abandoned the Pontiac Silverdome in 2000 for the Comerica Park / Ford Field as part of the push to "revitalize" downtown Detroit. The Casinos were brought in because it would bring people downtown, and to generate tourism. To this day there are multi-level abandoned buildings just down the street from the Comerica Park / Ford Field complex[2][3]. Sorry, "it takes time" is a hollow answer in my book. If people really were working to turn the city around, that might hold some weight, but there are a lot of people looking to mooch off of it on the way down, while the suburbanites migrate further and further from Detroit-proper.
[1] The population fell below 1 million in the 2004 US Census. For comparison, the population of Detroit was around 2 million at its height.
[2] http://goo.gl/maps/oMzfZ
[3] http://goo.gl/maps/n7MIm
Rebuilding a city, on this scale, takes a LOT of time. Maybe our lifetimes, or two. It took a lifetime to grow Detroit from a small city to a big one. But this time, the game may be much more complicated.
Although my evidence is only anecdotal, I can see with my own eyes when I'm in and around Detroit (I live about an hour west) that people are working incredibly hard to turn the city around. But the statistics may not show this at first glance, and it could take many years for all of this hard work to even register on the national radar.
If we're here looking for simple answers, the only simple answer would be to let Detroit continue declining, and forget about it and deal with the blowback, whatever it may be, for however long it may last. Every other answer is hard.
i guess i take issue with these hollow ruin porn, zombie tourist trips, and your commentary is equally hollow:
> If people really were working to turn the city around...
people are working to turn the city around. people are migrating to the city to fix it and making progress -- but, i guess you may have missed that looking up stats on wikipedia and census.gov and google maps. the people of detroit are aware of the history of detroit.
But why rebuild it? What's the value proposition of Detroit? Why should capital -- both monetary and human -- flow to Detroit when there's already plenty of excess capacity available in other well-established American cities? And please don't say low COL, because that's a function of Detroit not attracting aforementioned capital.
To name a few from the top of my head:
1. Strategic location along the straits and along an international border.
2. Most (almost all) of the needed infrastructure is already in place.
3. Many reputable universities in the area, including two Big 10 schools.
4. An educated workforce (well, those who have stayed in-state).
5. Top-notch medical and robotics industry and innovators in the area.
6. Scenic travel destinations directly to the north (and west on Lake MI).
7. Situated smack-dab in the middle of the industrial shipping corridor between Chicago and Toronto
8. Excellent international shipping facilities and international port of entries (DTW, etc.)
That is a valid question. Why rebuild Detroit when there are other cities who are in much better shape financially and structurally. There are abandoned towns all over the mid-west and west coast. They were abandoned when the gold ran out, when the trains bypassed them, when the interstate was built. Detroit, AFAICT, is a manufacturing town in an era where manufacturing is no longer being done. At least not by humans. Robots don't care where they are situated (in the city or in the desert) and don't pay taxes.
I beg to differ. I think it is an asinine question (hence my "then just nuke it" quip below.) What's the alternative for the people that live here / have lived here a long time. They have history here, livelihood, businesses, family, roots... The people that live here will rebuild it, and they/we are. Armchair social engineering isn't really required or desired.
Yea I gotta agree. I've only ventured downtown Detroit once to go to the MDOT HQ. It's a bit awkward that it's surrounded by barbed wire, and the neighborhood around it doesn't look great at all.
I've also been around Baltimore, not the worst parts, but still, it isn't that much different.
I don't know where this Detroit people == zombies thing comes from. That can describe how a lot of people in the ghetto look.
>>Barren wastelands. Empty city blocks, fields of grass and weathered concrete, and the ruins of entire neighborhoods. Exactly what you see when you Google 'Detroit slums'.
Or if you have ever visited Tenpenny Tower in Fallout 3:
Not to trivialize bluedino's message, but I also thought of Fallout 3, more-so Fallout: New Vegas. The description is indeed somewhat reminiscent of the game.
In order to be in the top 1% of income your household needs to have earnings of around $380,000 a year. Unless your definition of "haves" excludes households like that, there is an upper limit of $380 a year for "have nots" in order for your statement to be true. There aren't very many, if any, US households with income of less than $380 a year.
Of course, on HN I wouldn't be surprised to hear that $380k/year is working poor.
Net worth is probably not a great metric. There are a lot of well-paid people in the US who live expensive, flashy lifestyles that cost them just a little more than they earn every year, and consequently have a negative or near zero net-worth. I don't think most people would consider them have-nots.
Considering that you are "worth" what you "have", net worth is the only metric. GGP's coment is spot on, there is a 1:1000 difference between billionaires and millionaires, and another 1:1000 difference between millionaires and people worth 100k. Guess what? In the United States, less than 65% of people have a net worth under that [1]. So by this logic, the majority of the United States's have-nots are between a 1:1000 and a 1:1,000,000 difference compared to haves.
I'd imagine most graduates of top medical schools have a negative net worth when they receive their degrees, and probably retain that upside-down status for several years. That doesn't make them "have nots".
You're ignoring the relevant math. Even if the income differential is 20:1 (380/19), what's the difference in wealth? The savings differential is bigger because life necessities don't increase linearly with income. The person making $380k can save $100k/year and still live comfortably. The person making $19k can't save at all. Moreover, you're ignoring the magic of compound interest. After 10 years, the net worth of the person making $380k is going to be much more than 20x as much as tue net worth of the person making $19k.
Holy shit, really? This is your argument? Talk about not getting it.
The average income in the US in 2013 is $52k.
The "haves" are not the arbitrary top 1% which starts at $380k, no, the "haves" are the people with millions or BILLIONS of dollars. It's not about yearly income, it's about net worth.
The difference between someone making $52k a year and someone with BILLIONS of dollars to their name is far more than 1:1000. Assuming just $1 billion to $52k the difference is about 19,230:1.
And that's assuming the people with $52k income "have" $52k. But they don't really, they're probably in debt.
This is silly though. There are fewer than 500 Billionaires in the US. Why is that your line for the "haves"? Really you can create whatever ratio you want by drawing the "haves" line in completely arbitrary ways.
It's not arbitrary, though. It's called wealth disparity and it's a real thing. Yes there's fewer than 500 billionaires, does that make it more acceptable or less that they have billions of dollars and the average income is $52k?
You don't seem to have any grasp of why this is a problem, let alone how to begin to deal with it.
I was just saying that your 19,230:1 ratio was arbitrary. You could just as easily have made it 192,300:1 by choosing 10x billionaires (of which there appear to be 41) instead of just billionaires. Or you could have made it 1,923:1 by choosing 100x millionaires (dunno how many of those there are I'm gonna guess 10k or so).
On the other side of the line that 52k $ is arbitrary. Why is "average income in the US" the relevant #? I bet the average income in Detroit is lower. Or what about average african american income which is surely lower than that? I bet there are people in Detroit who earn essentially no money? Surely that number is relevant when talking about a wealth disparity ratio.
I was just saying that there are much much much better measures of wealth disparity than the #s you came up with.
The zombies thing is a bit disturbing, not because I take it at face value but rather that you would actually say that.
Those are people. They may live a life very different from yours, but I feel pretty confident that they care about the things they have, the people they know, where they live, and so on. Your narrative sounds terribly dehumanizing and dismissive. Nor do I understand how that the geographical location of a casino represents...anything at all, much less a 'true' Detroit.
As others have said, the Detroit dystopia thing has played out. As a Torontonian I love taking a drive down to Detroit and catching a game. The city truly feels like it is on a slow rise from the depths, having quite firmly hit rock bottom.
Does it have bad area? Absolutely. But then so does every urban American city.
I hate these in depth "Here are the 50 reasons that Detroit is bankrupt ..." that try to parse every speck of dust on the city payroll. Here's why Detroit is bankrupt: because anyone smart enough to get out left a long time ago. The schools are terrible, the crime is terrible, the racism is terrible, the infrastructure is terrible. Why would anyone willingly stay? It's like a sticking around Carthage after the ground has been salted. You can argue a thousand different reasons about why it's the way it is, but it doesn't change the facts on the ground. Smart people leave and don't pay taxes to keep the corrupt apparatus afloat.
I grew up in inner city Detroit, many years ago. It was terrible even then, and once I got out I never went back. I learned practically nothing in school and had to dodge violence everyday. I feel sorry for those that were never able to get away from there. (Class of '69 at Highland Park High School)
One thing that bothers me about this is that they have the concept of "retiree costs" but track those at the time they became due, when instead they should be blaming earlier administrations who promised higher benefits at the time but didn't put money aside to cover these future costs.
Retiree benefits are essentially "loans" and should be (but aren't) included in all the debt graphs.
> instead they should be blaming earlier administrations
That's one of the main differences between public finances and private finances - administrators who over-promise in private space get audited and corrected, administrators who over-promise in public space get financed and elected.
That's true but for "Too big to fail" business. This century has begun with this new type of pseudo-public economy where the taxpayers support the financial loses of this kind of business.
Also I don't understand why the state or the union help this city. Having a city with so much citicies living in misery is a failure of the entire country. Detroit is in this situation because the laus of the country let it be.
Yes. Both cities and corporations are guilty of this, especially on the Health Care side. I recall attending a recruiting presentation of a Detroit automaker who bragged about how they were purposefully not funding their Health Care liabilities because they thought the cash was better spent elsewhere and the government would eventually pick up the tab.
Michigan's constitution requires that pension costs be funded at the time they are incurred. I'm not sure where they breakdown was exactly -- whether Detroit officials lied to state overseers or there were no state overseers to begin with, but there was a breakdown somewhere.
The statute of limitations has probably run, but I wouldn't be surprised if the pension trustees acted contrary to law. Grossly negligent if nothing else.
Pension accounting is tricky because you have to put a number on your fund's ROI, and that number has gigantic implications for the solvency of the fund. Some committees are more optimistic than others, but they're not necessarily wrong.
A good example is California's public retiree system. If CALPERS didn't estimate an 8% ROI the fund would be underwater. I don't know anyone who actually thinks you'll be able to get 8% over the next 20 years from pension-quality investments. On the other hand, I'm not ready to say the people in charge are doing anything illegal.
It's not really tricky. The problem is humans aren't capable of predicting economic (nor longevity) conditions 30 years into the future (or even 5 years). There's a reason why you don't see pension like annuities being offered by insurance companies, because it's stupidly expensive to promise someone something like that.
Defined benefit pensions are ripe for corruption. Politicians get to buy votes with taxpayer money that doesn't need to be accounted for while they're in office. So you promise a bunch of unions some benefits, the union leader wins, the politician gets elected, in a few years he moves onto the state senate or wherever, rinse repeat. This is all great and easy to cover up when you have a growing tax base (i.e. large young population), but it starts to fall apart when the balance tilts the other way.
There's a pretty easy way to fix this, and that is to ban governments from making pensions. They should pay their employees in cash only, the employee can then purchase an annuity if they like for the amount of pension they have earned. Of course, they won't be able to, because it's not affordable for anyone unless the government is hiding the costs of pensions in the ridiculously high investment return assumptions.
The only silver lining is that there is a pot of dumb money sloshing around chasing higher and higher returns, so in my field it makes it a little easier to make money (heads I win, tails you [taxpayers] lose).
Nope, not contrary to law -- it turns out the Generally Accepted Accounting Principles for pension accounting are just total bullshit.
The GAAP says to assume a totally unrealistic rate of return; then when it's not met, to depreciate those losses over decades. Neither makes any sense at all.
If there's any gross negligence going on, it's shared by the entire profession and the Governmental Accounting Standards Board.
And there very well may be. Except it's probably beyond 'gross negligence', in the sense that the ridiculous standards served some financial firms and their pocketbooks very well. Not so different than other crazy shit banks and financial firms got away with in the last decade, and nobody's held responsible because, after all, everyone was doing it, so it was 'best practices'!
Some accountants have been sounding the alarm about this for years, and been ignored by 'the establishment' until fairly recently, when issues like Detroit made it impossible to ignore.
Well at the time those programs were created the tax base was capable of supporting them. Then when the tax base decreased in size significantly the city did not, in turn, change those programs to acknowledge the fact that the money simply would not be there. They were put in place on the assumption that the tax base would increase as it does in a lot of major cities.
My point? I think they should be included because the government failed to take them into account, or ignored the looming problem.
"One dramatic example of the cost of racism born by Detroit is this: Detroit has an income tax on those who work within the city limits. The two-tier tax is lower for those who work in the city but live in the suburbs. In enacting the tax, the state legislature required employers based in the city to collect the tax via payroll deduction as they do with federal and other taxes. Suburban based employers are not required by the law to collect the tax. Most of them donβt. The revenue lost to Detroit per year is estimated to be as much as $142 million."
I think ideology may be clouding your understanding. Unlike the Detroit Free Press, Alternet has a strong political point of view and the article you linked is simply trying to use the failure of Detroit to score political points for their agenda - not a good place to find out what is really going on.
The example you bring up, Detroit city income taxes, was explained in the Free Press article. Originally put in place by the Detroit city government they were then increased in an initative approved by Detroit voters. So, at least in this example, if anyone set Detroit up to fail it was the elected government and voters of Detroit. The article also notes the higher resident versus non-resident rates are typical for city income taxes in Michigan.
Or you can just stick with an ideological analysis and always get the answer you like ;)
Detroit was the 10th-largest city in the US in the 2000 census with a population of ~900k, but was the 18th-largest in 2010 with a population of ~700k. It was the 4th largest in the 30s and 40s and reached its peak population of approximately 2MM in the 1950s. Since then it has been losing approximately 200k residents (think: taxpayers) per decade like clockwork.
So any story about Detroit has to explain that. There are systemic things at work and there have been for over 60 years, although I agree "set up to fail" has a rather conspiratorial tone to it.
If intent is unknowable then you can't say Detroit was "set up" as that would require divining supposedly unknowable intent. Judging only outcomes means the failure of Detroit is as likely to be the result incidental vs intentional action.
I think he's using the phrase in the sense of 'destined to fail,' which doesn't necessarily imply a belief in an unshakeable destiny, it's just a comment that failure was inevitable/predictable with those policies. Of course, hindsight is always 20/20.
Wow, geeks objecting to belief in cause and effect.
My apologies.
I was laboring under the impression that it doesn't take great insight to see how defunding and defrauding and disempowering Detroit created the circumstances which led to them declaring bankruptcy.
Forgive me for not singling out individuals to blame, though there is plenty to share. Nor playing along when trolls use imagined conspiracy theories to dismiss objective reality.
You could write bestselling management books with empty platitudes like that: "The (number)(abstract noun) of Disempowered (People/Managers/Teams)" Bam! Bestseller.
I don't think I disagree with you, but the term set up to fail suggests to me that someone who set up the city did so with the intention that it fail.
One danger is the categorization of Detroit as an exception, that it couldn't happen elsewhere. I am not saying it will, but I try to avoid that label unless there is strong evidence to prove (rather than an explanation after the fact) a situation is unique.
You're right about "set up to fail" being a loaded phrase. I didn't anticipate how it'd be interpreted.
I have a Jared Diamond view of this. In Guns, Germs, and Steel he talks about the deforestation of Easter Island. What was the person thinking as they cut down the last tree?
How could all these smart people do such stupid things? Over decades. Was it structures? The processes? Larger societal forces (white flight, depopulation, drugs, jobs disappearing)? Is there a fundamental flaw in the human psyche? All the above?
>Detroitβs leaders engaged in a billion-dollar borrowing binge, created new taxes and failed to cut expenses when they needed to. Simultaneously, they gifted workers and retirees with generous bonuses. And under pressure from unions and, sometimes, arbitrators, they failed to cut health care benefits β saddling the city with staggering costs that today threaten the safety and quality of life of people who live here.
That is eerily, if not disturbingly, parallel to our national problems. Though, hopefully, we have a bit more time to fix the national problems.
Yes, but. The Federal government has many monetary tools available to it that Detroit doesn't. It's not clear to me that making the analogy between the way the Federal government and a non-soverign entity like Detroit work does anything but confuse the issues.
I think the analogy is useful, because the financial problem has some of same roots. That the federal government has more solutions available to it doesn't excuse following the same path. It's useful to to look at Detroit to try and avoid the problem, it's not useful to look at Detroit for solutions once it hits critical mass.
No, it is not useful. As someone with an economics degree I can tell you with authority that comparing the finances of a city to the finances of a nation is absolutely and utterly asinine.
You see similar memes on the Internet, made by conservatives, comparing the national economy to a household budget. It's just laughable.
You have a strong political opinion, and an inflated sense of authority. That smells like youth, so I forgive you for it. I promise when you're older you'll look back and be embarrassed at claiming to be entitled to make authoritative economic claims.
Regardless, there are certainly economists with more than an undergraduate degree in economics who have held out Detroit as a warning for the US debt problem. Do you have more authority than Rachel Greszler who has a masters in Economics from Georgetown? I know, you'll disregard her because she works for an conservative group. Just be honest and acknowledge that this is about a political difference, not an authoritative truth.
>>Do you have more authority than Rachel Greszler who has a masters in Economics from Georgetown?
No, but Paul Krugman does. He's a Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University and a Centenary Professor at the London School of Economics. Oh, he also won the Nobel Prize in Economics back in 2008. Suffice it to say, he has more than a simple Master's degree from Georgetown. Here's what he has to say on the subject.
In light of your high-horse comment, I found this part especially funny.
"Perhaps most obviously, the economic βexpertsβ on whom much of Congress relies have been repeatedly, utterly wrong about the short-run effects of budget deficits. People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now!"
One, that's an appeal to authority. And two, if you think Krugman is the least bit unbiased in his column, you're mistaken. For someone as smart as Krugman, he's a master at manipulating facts to suit his political beliefs.
It's kind of funny how both economists you have cited so far can have their ideologies traced to some economically ultra-conservative think-tank. These are people who believe strongly in small government (in other words, are strongly political) and write countless articles that are anti-government spending so that they can "starve the beast."
>>Interesting article. I read it, and then saw the footnote.
I have to disagree. It was meandering and had little to offer in terms of evidence, facts or actual policy prescriptions and was instead filled with anecdotes that somehow ended up supporting policy positions already supported by the Manhattan Institute. The author jumps from charter schools to federally funded highways in a span of a sentence right at the end. Not a lot of evidence is offered that local regulation is somehow strangling entrepreneurship nor is his idea of denying federally supported bonds to over regulated entities ever elucidated in any fashion. (Maybe because sticking local communities with higher taxes is rather counterproductive in the first place). So basically he spends most of piece talking about the 'entrepreneur' as a mythical entity that deserves to be supported by a verifiable buffet of policies that aren't really explained. So the Think of the Children!! argument rehashed.
The article reads exactly like a lot of cookie cutter political writing these days that say absolutely nothing about anything of concrete importance but are just couched to ideological compatriots that enjoy light reading from authors who will appeal to their political vanity while safely holding all the 'bad' ideas at arms length by appealing to the most simplistic possible explanations of problems; while you the reader are serenaded for easily understanding what your political 'enemies' cannot.
>You have a strong political opinion, and an inflated sense of authority."
But he's correct. It's one of the most ridiculous arguments perpetuated. Comparing a city (or a household) with an entity with the capacity to print the currency in which its debts are denominated is nonsensical. Solvency and bankruptcy are a not an issue for the United States. The constraint is inflation.
The whole country can't stop spending at once. The sooner people realize that public deficits create private financial assets, and hence are necessary during recessions, the better we'll all be.
As far as your article, anyone who considers "unfunded obligations" to be debt is not worth listening to.
You are arguing that the US has seatbelts and can survive a car crash, while Detroit gets ejected through the windshield. I'm saying, stop recklessly speeding down the highway like Detroit, because we're better off avoiding the car crash.
The goal is to avoid a debt crisis entirely. Detroit and the US are both spending themselves into a debt crisis. That different solutions apply once the crisis is reached is true, but the analogy holds when you are looking at the cause and hopefully avoiding the crisis.
>"Detroit and the US are both spending themselves into a debt crisis."
Do you have any data that the US is on its way to a debt crisis?
It sounds to me you're just repeatedly and wrongly assuming that we're somewhere near a point where paying our bills is an issue. Like Detroit. Except Detroit is bankrupt, and the US is growing.
There is no similarity between "debt issues" of Detroit and the US. None.
The fact that we are here today to debate raising Americaβs debt limit is a sign of leadership failure. It is a sign that the U.S. Government canβt pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Governmentβs reckless fiscal policies. β¦ Increasing Americaβs debt weakens us domestically and internationally. Leadership means that βthe buck stops here.β Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
Many of the points distinguishing a household from the federal government also apply to the task of evaluating how much the later is like a municipality.
It's apples and oranges. When your debts are denominated in something you issue, your problems are inflation and unemployment; when it's not something you issue, your problem is solvency.
The US problem is worse than Detroit's, because Detroit can escape via bankruptcy and the US can't. Fixing the debt by printing money and the resulting inflation and unemployment would be far more disruptive to the US than the bankruptcy process will be to Detroit.
> The US problem is worse than Detroit's, because Detroit can escape via bankruptcy and the US can't.
"Bankruptcy" is just the sovereign conditionally permitting a debtor to repudiate (some or all of) its existing debt, and is only relevant because, in the absence of bankruptcy, the sovereign would instead be enforcing the existing debts.
As a sovereign state, the US doesn't need bankruptcy; if it chooses to repudiate its debt, it just does so, it doesn't need to ask a higher sovereign for permission or terms (it might choose to negotiate with other creditors to maintain good relations, but that's something any debtor can do short of bankruptcy.)
I agree with you in general, and completely disagree with the guy you're replying to, who doesn't know what he's talking about.
However, it's worth pointing out that the idea of national-level bankruptcy isn't _entirely_ meaningless. The other thing the bankruptcy process does is provide an orderly means of distributing what funds are available amongst creditors, directed by a theoretically neutral third party.
There is sometimes discussion of creating an inter-national (ie, between nations) bankruptcy process, to make defaulting on national debt a more orderly (and, at least in rhetoric, a more fair and just) process.
They haven't gone anywhere for a variety of reasons, and even in proposal it would have to be a pretty different process from ordinary bankruptcy, because indeed sovereign entities are so different in their relationship to debt and financial equity than non-sovereign entities as you note.
(And possibly because the idea of the _liquidation_ of a nation state has rather terrifying implications for democracy, but I don't think that actually puts much pause in the those who run things.)
(And, then, as you mention, there's the fact that the US's debt is in it's own currency; AND most of our creditor's debts are in _our_ currency too. Which puts the U.S. in a unique class of it's own, even among sovereigns. And generally, means nobody anywhere actually wants the U.S. to 'pay its debt'.)
A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war. Things would have to be very, very bad for things to go that far. More likely you'd see dollar devaluation and heavy inflation, but even that would be a global political problem.
> A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war.
Default has rarely been considered an act of war except when the default was on debts incurred as part of a peace settlement, and its not like anyone is in a position to take much substantive action because they "consider" a US act to be an act of war.
> Things would have to be very, very bad for things to go that far.
Well, its not going to happen in practice in any case, because the US debt is dollar denominated, and if it was necessary, it could be monetized (not that it would have to be: creditors would probably prefer to allow the US to restructure debt rather than encouraging monetizing it, since many other debts are dollar denominated, and for most creditors it would be better for the US debt to be devalued through restructuring than for all USD-denominated debts to be devalued by monetization.) Sovereign default is mostly an issue with countries whose debts are denominated in something other than their own national fiat currency.
Tell that to Japan. They have a debt to gdp ratio well north of 200% and they still are fighting deflation. BTW, their interest rate is 0. Those bond vigilantes are tough.
The US needs to run larger deficits until we are at full employment. A simple way to do that is to eliminate the payroll tax both on employer and employee side. This will stimulate demand, and demand is the name of the game in this era of high productivity.
>"because Detroit can escape via bankruptcy and the US can't"
What does "escape" mean in this context? Bankruptcy means that bondholders and other investors get stiffed. That's a rather one-sided view of the outcome, and will itself have economic consequences beyond The City of Detroit.
There is no "escape". Bankruptcy, while necessary, picks the wrong winners.
Why does money printing cause more unemployment? I don't see the link?
EDIT: I guess a good debt destroying hyperinflation would root out all the FIRE jobs and cause unemployment there. A high inflation would funnel more wages into debt payoff so think I can see the link.
It seems to me that the proximate cause of Detroit's problem is this massive flight of high-value (in the economic sense) population. I don't see even an echo of that happening in the US; certainly not at the level that it could be considered a problem.
That may not currently be a problem, and as I'm not a psychic, it may never be a problem, but it's certainly more likely to happen from over-taxing the top 10-20%, and/or overtaxing businesses. History has examples of a nation trying to fix its financial woes through taxing the rich, and generally, the rich simply leave.
Currently, Americans are renouncing their citizenship at record levels due to FATCA[1] and emigration from the US is at elevated levels since it spiked in 2009[2].
The problem with Detroit is unsustainable debt. Depopulation is just one of many contributing factors. The depopulation has been slow, very long term, and predictable. The debt could have been avoided by scaling back spending as the the population decreased. Or an effective Detroit government might have even taken steps to improve the city so people didn't leave or even moved in.
I agree that there are cautionary lessons to be learned from the Detroit fiasco; but to my mind they're less about the particulars of, say, the Kilpatrick debt issue boondoggle, and more about the problem of incentives for elected officials. If you're looking at an average career in public service, you're going to be making decisions that have a time horizon of decades, but your electoral prospects are determined by the short term pain your constituents face, and so kicking the can down the road is entirely a sensible decision. But these sensible decisions compound, and that ends up causing enormous knock-on effects.
> instead of term limits, make it you have to win each election with 5% more of the electorate?
But that would be an exponential increase, an increase without bound that would sweep past 100% as if it was standing still.
If a candidate won a substantial majority in one election, that rule might decrease his chances to be re-elected because the stakes would be raised in the following contest. So being popular would count as a handicap.
> He would have to be head-and-shoulder above the competition, yes, but he could run.
More to the point, he would have to be 5% more popular each time he ran. That's not likely. And eventually he would have to win more than 100% of the vote.
You are correct; over the short term. The federal govenment can print money, Detroit cannot. But when you print money you de-value it, so if the Federal govenment uses the monetary tools you mention, without reverses their effects when the economy improves (politically unpopular)you are likely to end up with the same result at the federal level.
So if bernanke rained money from his helicopter but everyone sold their neighbour a massage that night then the money is not devalued because it was absorbed?
I'm not an economist, but my understanding is that the quantitative easing that Bernanke has been using over the last few years is more or less equivalent to raining money from his helicopter, only into financial markets. Runaway inflation has not resulted because there are sufficient downward pressures on prices to counterbalance the easing.
Runaway inflation has not occurred because something like $3TT in wealth evaporated from the balance sheets of (mostly) the shadow banking system during 2007/2008. That's massively deflationary. The printing of money has filled that void.
This makes my head spin. Is there an ELI5 explanation of this somewhere? How can 3 trillion dollars suddenly evaporate, and how can newly printed money fill this void as if nothing had happened?
Imagine that lots and lots of people own shares in the mineral rights to various oil fields. Oil is at a really high price, all those rights are being traded for tons of money, and they're assets collectively valued at billions of dollars.
All of the sudden, the value of oil plummets to a fraction of its former price. So cheap, in fact, that it costs more to get the oil out of the ground than you can sell it for. So all these mineral rights aren't worth anything anymore, there's no more income coming in from selling the oil, the fancy drilling and exploration equipment is being auctioned off for pennies on the dollar, and all the people depending on that money go broke. Then their employees, accountants, lawyers, dentists, real estate agents, grocery stores, furniture stores, and everyone else that depended on that cash flowing go broke. And, of course, a lot of people bought those oil rights or that expensive equipment on borrowed money that they can't pay back. So now the banks go under, and hurt anyone depending on those banks. That's a brief synopsis of how billions of dollars vanished in the blink of an eye in the Texas oil boom collapse (and then the Savings and Loan collapse) in the 80s.
The real estate thing is more or less the same thing, but with mortgage backed securities. Once it turned out that people couldn't pay back all those ridiculous mortgages they'd been getting, suddenly the right to collect those mortgage payments was worth a fraction of what it had been. And all the high-flying companies that were getting rich off of owning, trading, and packaging those securities suddenly were left holding little pieces of paper that went from being worth billions to being worth a tiny fraction of that. Because it turned out that those mortgages were worth way less than everyone had thought they were worth, all that money effectively just vanished.
I'm not very good at ELI5, but briefly: all debt is a liability on one balance sheet, and is therefore an asset on someone else's balance sheet. That's an accounting identity.
If you go belly-up and can't pay your debt, then the financial asset disappears from the other balance sheet as well. Poof.
Picture owning $100,000 in bonds of a company that goes bankrupt. One day you have a net worth of $100,000, the next day it's gone.
Not really. QE is a swap. Bonds (or other financial assets) for cash. If I take a bond from you and give you cash, are you going to interpret it as a windfall and go on a spending spree?
Adding demand and thereby liquidity to a market creates a windfall that wouldn't have been there otherwise. Whether it's because you were sitting on a bond that was impossible to sell and now you have money because you sold it, or because you would have gotten $1000 for it and now you got $1200, that's a windfall.
Whether that money goes into buying groceries or buying other securities, I assume most of it will continue to circulate in the economy. If it doesn't, then it's pretty much a failure as a quantitative easing.
Central banks sit on bonds because they buy them as part of their open market operations, and they are legally required to make a market for treasuries so the government is funded.
The Fed does not own a helicopter. Congress does, but they're keeping it grounded.
Your example is ridiculous and contrived, but if there is enough massage capability because everyone has the free time to do so and everyone decided that's what they wanted to spend on, then yes.
So your position is, if Bernanke made it rain 100 trillion dollars and 250 million people charged each other $(100 trillion/250 million) for the massage, then money is not devalued?
Yes the example is contrived but it illustrates you are wrong.
The Fed cannot introduce 100 trillion into the economy without taking 100 trillion in assets out; if congress were to introduce 100 trillion into the economy, of course there would be inflation.
Also, people aren't going to buy 100 trillion in massages, that is fucking ridiculous, if you start from a ridiculous set of circumstances, you're going to arrive at a ridiculous ending point -- it's not instructive of anything.
Congress doesn't print money. The Fed does. Congress can spend money that it doesn't have by getting the treasury to sell bonds.
Foreign CBs are not mopping up all those bonds which is why the Fed is buying them up with QE.
What is the problem with a toy model in extreme to illustrate the absurdity of your position?
First off, the Fed is a creature of Congress. Congress issues spending orders, the Treasury creates bonds and sells them to the primary dealers (who are contractually obligated to buy them), and the Fed will make liquidity available to those primary dealers if necessary. The practice of issuing bonds equal to the difference between taxes and spending is a self-imposed constraint, and is really a hold-over from the convertible currency era.
>What is the problem with a toy model in extreme to illustrate the absurdity of your position?
It's not illustrative of anything, other than a contrived absurd example.
If there was capacity to absorb 100 trillion in massages (equally absurd), then prices would remain stable.
Think of it like this: we hit a recession, orders drop and companies lay off workers and produce less output. From one day to the next the capacity for a certain level of output remains the same, but on the second day less is produced.
Actually it does not, or at least does not when institutions like the Federal Reserve Bank are operating as they were designed to.
The purpose of the Federal Reserve is to set inflation in a way that is optimal for the economy. That does not mean providing the government with cheap loans. In fact, one reason the Fed is independent from the government is so that it cannot be used for this purpose.
At the end of the day, people are able to borrow only because people are willing to lend to them. There is no magical trick the federal government can use to get around this constraint.
That said, I don't believe that the analogy is useful, but for different reasons: the federal government has completely different responsibilities from the city government. Each issue should be judged on its merits not by some crude analogy.
From the article: "Other cities also have profound problems today β Chicago, Providence, R.I., Baltimore. But only Detroit is in bankruptcy court."
Meant to write "... in bankruptcy court, so far." or something similar.
It's mathematically impossible for Chicago and Baltimore and a couple others not to join Detroit in the near future in bankruptcy court. I donno about the finances of Providence RI.
I'm only aware of one tech company in Detroit which is a place that makes what amounts to a small Xylinx FPGA dev board on a DIP-64 PCB so it just plugs into a circuit board or breadboard. I own one and haven't used it much but so far its a good product. But its the only tech company I'm aware of based in Detroit. There may be others who spend even less on advertising, donno. Cool as that place may be, I don't think it makes up for the collapse of auto industry employment and lack of mobility. Most of the unemployed people in Detroit originally came from the South because there were no jobs in the South, but there were jobs in Detroit. The "real problem" is there's no where better to go than Detroit for those people. If they had jobs in Minneapolis, there wouldn't be a problem with unemployment in Detroit, but there are no jobs, anywhere, for anyone not in tech, so, they sit, expensively, in Detroit.
There's also Compuware and Quicken Loans, as well as a lot of startups through Compuware Ventures, Detroit Venture Partners, Bizdom, and other investors.
"It's mathematically impossible for Chicago and Baltimore and a couple others not to join Detroit in the near future in bankruptcy court."
I don't know about Baltimore, but Chicago's fiscal problems are fixable without bankruptcy court. It will be messy and politically difficult, but I don't think anyone currently sees it as a foregone conclusion.
I suppose they could go back south where the cost of living is significantly cheaper. I live in a house one block away from beachfront on an island and probably pay about what a one bedroom studio in Detroit costs. There is also a growing manufacturing base around here as well that employs a lot of the sort of people that would have worked in Detroit (welders, for example). Also, you don't have to live in Detroit ;)
If the place is a completely unsafe wasteland occupied primarily by the indigent, I don't really understand why a one-bedroom studio would be particularly expensive. In fact, I would expect substantial vacancies and many affordable options for people willing to risk living there.
It is absolutely the case. City income taxes and property taxes do add up though. Any property you purchase you have to check to see what the lien is against the property. Anything for a dollar (http://www.theblaze.com/stories/2013/07/30/despite-astonishi...) usually has a large tax lien that must be paid if you purchase the house.
If you're not afraid of the locals (have a CCW permit and a shotgun), it's not the most ideal of locations.
Somehow, I don't see increases on municipal taxes (Which, all in all, make up a small part of our overall tax burdens) to the main cause of the exodus... Compared to the lack of employment - from, say, the demise of the Detroit auto industry.
It doesn't matter if your municipal tax bill is 0, if you don't have a job.
Well the 1967 riots didn't help much either, nor did the downward spiral in race relations in Detroit. It drove much of populace out who could move. Taxes weren't the old reason, just compounded on top of consistently corrupt administrations. https://en.wikipedia.org/wiki/1967_Detroit_riot
Looking at the actual figures, I don't think the 240K who moved out in the 00s, left because they just noticed the '67 riots. The population loss in the 70s was very small.
I don't have it the information at hand, but I believe many people moved to the towns just outside of detroit to escape the taxes. IIRC those towns/cities are doing fine.
In which case, I'd cite the ability, and the desire of the American middle class to raise their children in a gated suburbia to be a far more likely factor.
Think of it as a typical parent - would you want your kid to go to school in Detroit? (The same school that Balanced Budget politics is more then willing to defund.)
I think it is way too early to call a trend. And to the degree cities are growing just barely faster than suburbs (.2%) for the last couple years, that can largely be explained by the housing bubble and recession. While there is some data showing young people moving to cities, there isn't much showing families returning to cities.
According to his analysis of the 51 metropolitan areas with more than 1 million people, the primary cities in those metros grew an average of 1.1 percent, compared with 0.9 percent growth in the suburban areas of those metros between July 2010 and July 2011.*
This is true of many metro areas. The overall decline in Dallas (Texas) schools began with the boom economy in the 70's and 80's and the flight of the middle class to suburbia, the Park cities and exurbia. It was sped up due to school integration and ever ongoing mass migration of poor and wealthy from out of state/county.
I thought Texas has high property taxes (no state income tax, so that's how government is funded), but $6700 per $100k valuation is steep. Plus a 2.4% local income tax, plus a tax on utilities, plus a tax on gambling. Just crazy.
The tax rate on property is closer to 1.8% and not 6.7%. So you would have to have a home over $300k to pay $6700 in property taxes. Also I am not aware of a income tax, at least not in Dallas. The sales tax is a bit high though at approximately 8%.
Are you talking about the property tax rates in Texas or Detroit? Detroit's property tax, at least according to the article, is 6.7%. That's what the GP was referencing.
Property taxes in Texas can vary by quite a bit depending on where you're located, since so many special districts are overlaid, and have taxing authority. One of the properties I'm looking at has City of Austin, Williamson County, Austin Community College, Williamson County FM/RM (roads??), Round Rock ISD, and Upper Brushy Creek water collection.
I agree this is the main take-away from the piece. The tax base has just collapsed. Surely there was some mismanagement, but even without that they would still be in trouble.
This begets the downward circle the article refers to, i.e., that because of lower property tax revenue, they have to raise other taxes which in turn cause further decline, etc.
Just another case of corporate socialism. The big three were just following the profit when they left Detroit a hollowed husk of an auto industry. Now the people they left to clean up the mess, they did the real harm by making sure normal people could afford to live.
Finally someone gets it right. There's already a bunch of comments in here comparing the federal government's "debt" to city, state, corporate, or individual debt. It's ridiculous and incredibly damaging to try to draw parallels between entities that have to account for their borrowing and a central bank that can extend infinite credit without collateral, debt or repayment any time it feels like it.
Putting scare quotes around sovereign "debt" doesn't change that fact that bondholders are actually expecting to get paid. Though there's no force of law behind that expectation, if the government defaults no-one will lend to it any more without hefty sweeteners. Similar deal if we debase the currency with inflation.
Scare quotes are what you use when the thing you are discussing is not the word you're using. They are completely appropriate there.
The guy who replied to you is correct, as everyone who paid attention in Econ 101 is aware: there is no reason for the US Federal Government to default, ever. It dictates the literal amount of its monetary units that exist on earth (another thing carefully defined and explained in Econ 101) by extending credit. It extends this credit with no collateral, no limits and no need for leverage. They create money when they want to for any reason, and they don't when they don't want to for any reason. They can, tomorrow, instruct the Fed to create $17T (roughly the national "debt") and credit it to whoever they want. The key difference between a central bank and all other entities: when it extends credit, it does not create a matching liability in the government's accounting. The central bank, or rather something with the power of a central bank, is the only entity in a society that can do this. That's what the "sole power to dictate the supply of money" means.
Any logic developed while thinking about debt carried by people, companies, cities or states, all of whom must add liabilities to their accounting books when they take on debt, does not apply to the entity that controls the central bank for the monetary units in question. Anytime anyone expresses concern about the national "debt" as if it wasn't something Congress could wave away with a pen in 15 minutes, they're being ignorant at best and disingenuous at worst.
It is absolutely critical that you read up on and understand this. It puts the lie to a lot of the national dialogue about austerity, belt-tightening, and service cuts.
'Anytime anyone expresses concern about the national "debt" as if it wasn't something Congress could wave away with a pen in 15 minutes, they're being ignorant at best and disingenuous at worst.'
Whether Congress have the power to do this is not the issue. The issue is whether they can do it without serious negative consequences. I'm curious to know why Argentina had to institute currency controls if waving a pen is such a trifling matter.
> I'm curious to know why Argentina had to institute currency controls if waving a pen is such a trifling matter.
Because Argentina's debt is largely foreign-currency denominated, not local-currency denominated, meaning that Argentina, lacking the ability to print, for instance, (non-counterfeit) US dollars, can't just monetize its debt. (And, because it can't just monetize its debt, its not in as good a position to negotiate restructuring of its debt as it would be if it could monetize it.)
there is 0% chance that the US will be forced to default on the debt.
We could choose to do so, just as a person trapped in a warehouse full of food could choose to starve, but we could never be forced to. This is not a theory or conjecture, it is cold, hard fact.
>"That might be relevant if someone on the thread had claimed such a thing."
It's extremely relevant to the argument at hand.
In case you didn't read the article, it's about Detroit going bankrupt, to which other commentators have drawn an analogy to the country that makes no sense. That's what we're talking about here.
But I'm glad you feel good pride in finding something tangential to the real topic so you can say, "Nuh-uh! You're wrong!". Yes, we can decide tomorrow to cease paying interest on our public debt, which would put us into default. Brownie points for you.
No, the analogy being drawn between Detroit and the USA is that they both have shit-loads of debt.
Of course the feds would inflate debt away with QE rather than defaulting. The real tangent is to claim that this makes such a world of difference that we don't need to worry about the federal debt.
BTW: Although your statement that "the federal government cannot default" was literally false, my response to it was overly pedantic.
>"Asserting something confidently does not make it so."
You're pointing to the debt ceiling as an argument? It's political posturing. You know, to scare the plebes. Apparently it works.
The article is referring to a "default" because of some artificial cap placed on spending, which proposed spending would surpass. It's a technical default, by choice, not from inability to pay.
You can argue until you're blue in the face about the risk of default. It's wrong-headed.
Sorry, but what unmentioned corruption are you talking about?
This is high up in the article:
> Adding the last straw β Kilpatrickβs gamble: Heβs best known around the globe for a sex and perjury scandal that sent him to jail and massive corruption that threatens to send him to prison next month for more than 20 years. The corruption cases further eroded Detroitβs image and distracted the city from its fiscal storm. But perhaps the greatest damage Kilpatrick did to the cityβs long-term stability was with Wall Streetβs help when he borrowed $1.44 billion in a flashy high-finance deal to restructure pension fund debt. That deal, which could cost $2.8 billion over the next 22 years, now represents nearly one-fifth of the cityβs debt.
And then there's a whole section headlined: "Kilpatrickβs award-winning deal turns into a financial disaster"
Kilpatrick is quite famous for his sex and corruption. But are you arguing that those had more of an effect on Detroit's long term viability than a pension deal that blew up the city's obligation to swap holders from $770 million to $1.95 billion in four years? You could argue that only a corrupt bastard would make such a deal, but that deal was talked about at the time...and, the Freep notes, even its own editorial board approved of it. It was a politically expedient and irresponsible gambit, but let's face it, the corrupt don't have a monopoly on irresponsibility.
and Emmanual/Daley, Bloomberg, and Villaraigosa don't? Every big city suffers from quite a bit of corruption, from backroom deals to strong-arm unions. This doesn't explain Detroit.
Bloomberg doesn't. As a mayor he's fairly incorruptible, at least in terms of money. He pays for his own elections, and basically does whatever he feels like. With a net worth of 27 billion it's unlikely that anyone could offer him a monetary bribe worth looking at.
> Bloomberg doesn't. As a mayor he's fairly incorruptible, at least in terms of money. He pays for his own elections, and basically does whatever he feels like.
That's not an argument that he doesn't give deals to his friends and do other corrupt things, its an argument that to the extent he does it, its because its out of desire for the, e.g., helping a friend, and not desire for kickbacks from helping someone with money to gain. Both are corrupt. Even, if you accept the "rich = uninterested in money" argument, which I will address next...
> With a net worth of 27 billion it's unlikely that anyone could offer him a monetary bribe worth looking at.
Alternatively, getting to a net worth of $27 billion is the external evidence of a consistent, dedicated, long-term behavior pattern of not missing an opportunity to milk every last drop of financial return out of any opportunity.
To your first point, I guess I don't understand your definition of corruption. I think your example is exercising a legitimate power as a mayor, to the benefit of a friend rather than to the benefit of some other deserving party, and no benefit to himself other than a warm fuzzy feeling. That is poor governance, but it is not corruption.
To your second point, virtually all of Michael Bloomberg's wealth comes from 'Bloomberg' the company. 'Bloomberg' the company has one business -- terminals on traders' desks. Everything else they do is a loss-leader to advertise the terminals. For the past 20 years every bond trader in New York and London has paid BBG around $3000 a month and will continue to, until some young whipper snapper from HN disrupts the industry and dislodges them from traders. Reuters came close, and is currently mounting a new challenge, but I wouldn't hold my breath.
Except he's not dictator and favor debt is just as real as money debt. The members of the NYC council have their own interests, corruptions, etc that he need to work with.
There's this idea that a mega-rich politician will be incorruptable. I'm not sure that's ever been true. The system is bigger than just one guy making decisions and even the head of an organization needs to keep a lot of people happy.
Well, the thing is trading favors with the city council is politics, not corruption. You might not like what he did to have the city council extend term limits so he could run a third time, but it was above board, and no different politicking to get the law passed to begin with.
And I have no doubt that New York City's government has corruption, but comment I was responding to specifically referred to mayors.
I get that the head of an organization needs to keep a lot of people happy and the executive may need to needle and cajole, but as I said, that isn't corruption that's politics.
Detroit isn't circling the drain because of Kilpatrick, as corrupt as he was; the problem is fundamentally the cumulative effect of decades of reasonable if ultimately irresponsible decision making. I liked the freep article a lot; I was surprised by how little approbation Young came in for, all taken with all.
There's a fairly serious principle-agent problem in elected government; I'm not sure how you get around things like e.g. Detroit's pension fund throwing the 13th check around, or US Representatives trying to force the US Treasury into default, given that the incentives for more long-term thinking just aren't there.
Detroit has been losing 200k residents per decade since 1950. It's probably more useful to see Kwame Kilpatrick's administration as a symptom of Detroit's deterioration rather than its cause.
While Kilpatrick did commit crimes to say the whole downfall is due to him is joke. The article does cover his financial deals that now look to be costing Detroit a lot. At the time thought the paper was supporting those deals.
Look into the concept of failed states. Usually as applied to 3rd world countries, but most of it applies to Detroit just as well.
Seems to be an open question if the cause and effect is failed states result in corrupt administration, or corrupt administration results in failed states. Probably a lovely intense feedback loop. But it takes more than just one crook.
http://en.wikipedia.org/wiki/Compuware
It's not enough to employ anyone in Detroit who might want a tech job but it is a decent sized tech company based in the city. Quicken Loans is also bringing a bunch of people down and buying up a lot of the empty office buildings. Down town appears to have turned around somewhat but since I'm one of the people who lives in the suburbs I canβt speak to weather thereβs any kind of meaningful trickledown effect to help the rest of the city.
Their location downtown is the exact reason why I haven't yet applied with them. I live in the suburbs where downtown Detroit is a 1hr drive (on a normal day) each way. Something in the north/east suburbs is a much more reasonable 30 minutes.
I'm not willing to move into or closer to the city just for the couple more jobs there, as living in the city proper is not so great, and just another place in the suburbs would be a lateral move.
I strongly suspect that many who live in the Detroit suburbs feel the same way.
I would have shared this post with others, but the first graph is serioualy racist-looking. Regardless of how accurate it is, there is no reason to show faces with the names that show skin color going with a significant rise in debt.
a similar debate existed with New Orleans after the flooding. do we bother to rebuild was the question - one of the more interesting ideas was instead of spending x billion on (indfficient) government reconstruction give each citizen x billion / population. if enough people decide to stay and rebuild fine, if they all leave and buy flats in NYC it's also fine.
It's interesting - but certainly not the first thing I would suggest if I was a congressman
Council members at the time β Maryann Mahaffey, Barbara-Rose Collins, Sharon McPhail and JoAnn Watson β blocked the original pension certificates deal for months. They warned it was too risky because of the stock marketβs volatility and accused Kilpatrick of political gamesmanship.
The Free Press editorial page in February 2005 also applied pressure, calling the reluctant council members βheads-in-the-sandβ politicians who βhave become a threat to the stability of the community.β The editorial described the transaction as a βsound dealβ that was βakin to refinancing a mortgage.β
Haha nice head-fake in the intro. You had me going.
No matter the municipality, the "smart" money will always be in favor of the most outlandish deal the market could possibly bear. After all, it's the general public's money at risk. In 2005, you could refinance your mortgage at a drive-through window. I doubt they would have used that language in 2009.
Refi once, you might be fine. Refi twice, you might be fine. Keep going, and you'll lose your house.
Ten years ago, a report like this would have been greeted with something like "Detroit is in decline? In other shocking news, it's raining in Seattle." The vast majority of people don't care about long, ongoing stories that they know the basic story of until there's some notable event that makes it news right now, which in this case is the bankruptcy.
I would expect they've been reporting on the various aspects of the problem all along -- that's what local papers generally do year in and year out. It's just no one cared about consuming in one big report like this until it became a notable event.
Odd that Pittsburgh, another Midwestern industrial town of about the same size as Detroit, has faced very similar difficulties, but is now doing pretty well for itself, so much so that some now consider it America's most livable city. Why the huge difference in outcome?
I live in Hamilton, ON - basically Pittsburgh of Canada. Well, Pittsburgh with a time-machine back to that confused period when Steel City was on the pivotal moment where it could decay into Detroit or become what it is today.
Local activists and even the CBC point to Pittsburgh as basically Hamilton's to-do list, and former mayor Tom Murphy in particular.
Basically, his approach was this: cut spending brutally, raise taxes (especially parking tax, which improves revenue, cuts traffic, and gets more people into bikes and buses), call in favors from philanthropists, bulldoze the steel mills into profitable waterfront land.
Too late for Detroit to make those changes, though.
But I am still left wondering why Pittsburghers not only made different choices than did Detroiters, but made ones that were so vastly superior as to lead to their city's becoming the best town in America even as Detroit transformed itself a post-apocalyptic wasteland whose denizens hunt raccoons for their flesh.
In other words, one cannot really explain why the Western Roman Empire fell if he cannot account also for how the Eastern Roman Empire managed to last another thousand years.
Your first statement is an attempt to demonstrate moral superiority and therefore merits no response. Your second statement is misleading, in that it sweeps under the rug how Detroit's descent into poverty mirrored its changing demographics.
You could, of course, attempt to disprove Daniel_Newby's contention that demographics is at the bottom of this. All that you need to do is provide a single counterexample by pointing out an instance--just one will suffice for our purposes--of a city that became richer or that economically speaking at least held its own even as the percentage of blacks comprising its population grew. This seems like a simple enough task.
I think that that city is too busy trying to keep the white suburbs from seceding, a move that would deprive Atlanta of its tax base, to have time to talk to the likes of me.
You really believe that? Congratulations, you have identified the greatest market development opportunity ever. Simply recruit a million Africans who are being kept down by racists like me, teach them to be engineers, and retire a billionaire on the recruiting commissions.
Detroit used to be prosperous because blue collar Caucasians and Africans are damn valuable in a world without robots. Now they are cognitively obsolete.
P.S. Bill Gates decided that the problem was that not everybody in our world of shameful inequalities could get a world-class university prep education. He paid out of his own pocket to make the pilot project happen. The result was ... almost no improvement.
Pittsburgh started with a bad reputation (soot covered steel city) and which cleared up when the steel industry there floundered. On the other hand Detroit arguably had a good reputation because of its industry; there were no upsides to the auto industry floundering.
I shall have to add "Having a good reputation is really a handicap" to the list of such eternal verities as "Poor people are happier than the rich because their lives are simpler" and "It isn't easy being beautiful."
It's just a few blocks outside of what is considered 'downtown' Detroit. It's not an overly fancy or even large hotel but it has the weirdest vibe to it, it's as if you're in this dystopian movie about the future where there's a 1:1000 difference between the haves, and the have nots.
Inside the hotel there's food, booze, gambling, and bright lights. As you leave the hotel you see security forces (hotel security as well as a fairly large presence by the Detroit PD). But once you're outside, that's it.
Barren wastelands. Empty city blocks, fields of grass and weathered concrete, and the ruins of entire neighborhoods. Exactly what you see when you Google 'Detroit slums'.
In the daytime you'll see people walking around like zombies, carrying grocery bags, walking between stores (despite what you read on the internet, there are grocery stores in Detroit). You'll see them talking to each other on the corner, sitting under trees, or hunched over on a curb.
They have nothing. They do nothing. There is nothing for any of these people to do. There's nowhere for them to work. There's nothing even for them to have. Everything is gone or destroyed.
At night time you won't see anything. Almost all of the streetlights in the city have been turned off, because Detroit can't pay the bill! The city is pitch black at night. You can drive around with the highbeams on. You can't see the roads, you have to make sure you don't run over anyone who's in the street, it's incredibly unsafe but it's just so dark it's unbelievable.
And then in the midst of the darkness you see the multi-colored lights of the hotel, and you know you're back to your version of Detroit. The police let you back in, you park your vehicle in the guarded garage, and you walk back to your room to eat $4 bags of M&M's and $5 bottles of water.
And once you think about how fucked up that is, you almost lose your appetite.