Detroit, the Motor City, or “Motown” as it was popularly known in its heyday, was once the epitome of the “American Dream”, a “can do” city for a “can do” people. A thriving metropolis built on the back of the automotive industry, becoming the 4th largest city in the U.S.A by 1960 with the highest per capita income in the entire nation at that time.
Currently, however, a mere 50 years on, Detroit is a tragic metaphor for a dying America, while perhaps it also stands as a template for the ultimate decimation of urban industrial cities everywhere at the hands of escalating crime and violence, intense racial conflict, entrenched corruption, corporate ineptitude and most especially to the utter failure of federal and local government neo-socialist policies to do anything other than exacerbate its inexorable decline into bankruptcy and apocalyptic devastation.
The city lies in ruins, a festering sore on the landscape, with a surfeit of abandoned and burned out buildings (approx 70,000 in number, including some once magnificent and historic Art-deco constructions), derelict houses, deserted streets and rotting infrastructure. Basic services have been stripped down to the barest bones, public facilities are closed or lie empty and unutilized, and the population are actively deserting the city in droves (>60% reduction in population over the last 60 years, upwards of 1000 people leaving per week currently), leaving behind a populace composed largely of the criminal, the violent, the drug-addicted, the impoverished, the welfare dependent or the illiterate. Crime has reached such an endemic level that some areas are literally “no go” zones that are extremely hazardous to even enter, let alone to leave one’s vehicle to proceed on foot. A dwindling and underfunded police force is completely unable to cope with increasing demands with which it is confronted in the face of diminishing manpower and hopelessly constrained budgets.
Sixty percent of all children in the city live in poverty, 47% are functionally illiterate (in spite of spending more money per student for “state education” than almost any other American state), and more than 50% of over 16 year olds are unemployed. Gun crime is rampant with murder rates more than 10 times that of New York City, carjacking is rife, and many of the population live barricaded in their homes in fear and deprivation, without so much as a streetlight to give any sense of security. It is like some apocalyptic vision of a post-nuclear, depopulated metropolis lying in rubble, replacing what was once a vibrant and wealthy city, a symbol of the miracle of the Industrial Age.
As it currently stands, the city of Detroit is facing around $20 billion in debt and unfunded liabilities, equating to more than $25,000 per resident. As a consequence, Detroit has a State government appointed financial administrator currently running it rather than a city government. Just last week, this appointed administrator defaulted on unsecured loans made to Detroit. A budget has therefore now been set aside purely to run emergency services such as hospitals, the police and the fire department. They are now only weeks off declaring official bankruptcy, with the attendant subsequent bank defaults and likely loss of pension and other entitlements.
In the face of such a parlous state of affairs, it is timely to discuss some of the factors leading to the demise of this once great icon of automotive supremacy and whether it is merely a prelude for other similar cities or urban areas, whether it be Cleveland or Canton or Flint in the U.S.A, or Australian examples such as Geelong, Port Kembla, Elizabeth or Newcastle, or any other urban area in Western democracies that are dependent on their industrial activity to flourish.
When apportioning blame for this nightmare scenario that has unfolded in plain sight of a selectively blind mainstream media, certainly to the forefront was the ill-conceived push for wholesale trade liberalization and the precipitous rush to rampant globalization. This rendered “blue collar”, working class industrial activities uncompetitive virtually overnight, making it economically impossible to maintain appropriate working conditions and wages for workers while simultaneously remaining competitive with those of workers in the 3rd World. Japan initially, then Korea and latterly China and India are continuously producing far cheaper, if often more disposable or lower quality versions of the products that were previously produced by American factories. While consumers achieved apparent short term benefit from these cheaper, if somewhat less well-made and more disposable goods, it was at the expense of their fellow countrymen and eventually also to the detriment of the integrity of the fabric binding Western democracies together as a whole. Detroit can be seen as the worst prototypical example of this economic doctrine, and is the harbinger for the eventual fate of urban society generally across America, and also for those nations like Australia that are its foremost disciples.
Yet the blame hardly rests solely there since a true, free market economy is such that the profit imperative should have ensured those businesses most adversely affected should have diversified away from uncompetitive kinds of automotive manufacture into other goods manufacture (e.g. machinery and components, innovative ‘alternative’ or compact and fuel efficient motor vehicles, farm equipment, buses & trucks or other forms of mass transport, etc.), or be replaced instead by other more competitive industrial and manufacturing activities. Government policies of subsidizing these uncompetitive and ultimately non-viable industries only served to more slowly strangle the lifeblood of the industry, prolonging the agonising decline through killing it by degrees, with devastating consequences to those dependent upon it, whether directly through employment, or indirectly through its influence on the broader economy.
The heavily unionized automotive workforce continued to demand and campaigned relentlessly to receive higher wages and increasing benefits while eroding productivity and increasing costs, rather than improving these factors to justify better conditions. Unions and carmakers lobbied politicians for further subsidies to prop up an ailing industry with the sole purpose of corruptly lining their own pockets, while the management of the company continued to make poor decisions one after the other that were to be eventually counterproductive to General Motors’ overall sustainability.
The problem was not just one of economics and civic mismanagement, even though both were highly influential in their own right, but it was equally a social one. The race riots of 1967 set the stage initially for the catastrophic death spiral toward economic oblivion that was to follow by pitting black against white, providing the foundation for the subsequent escalation of senseless violence and crime that made Detroit such an unsavoury and dangerous place in which to reside.
Detroit became a city where excessively powerful and corrupt unionism was systematically replaced by socialism and ultimately mass welfare. Failure and sloth was rewarded with affirmative action, grants and subsidies and excessive benefits that discouraged true individual enterprise in favour of dependency, while promoting indecisiveness and inaction by policymakers instead of encouraging innovative planning and fostering success. There was thus no incentive for the productive members of the community to remain in the city and contribute to the rejuvenation of Detroit’s economy, especially in the face of ever-rising tide of racial hatred and crime. Once the critical mass of welfare dependents had been reached, it exceeded the legitimate capacity of these productive, working members of the society to subsidize them any longer, thereby driving a mass exodus to other parts of the nation or abroad of all but the most dependent, the criminal, the drug-addled and the detritus of society.
Detroit therefore can be seen to be the poster child for the failure of inherently corrupt crony capitalism, as opposed to true free enterprise which promotes economic growth and attracts investment, but also more particularly in the rank failure of socialist policies and welfarism to produce any positive redress for a failing economic situation. Quite the contrary, I would argue that such policies actually helped entrench the very patterns of individual and societal behaviour that not only delayed recovery but also stymied innovation and served to propagate the further descent into lawlessness, into moral and economic bankruptcy, and eventually into utter devastation and ruin. It remains to be seen if Detroit’s parlous situation is a requiem for the American Dream, or a catastrophe from which a Phoenix might arise, or perhaps merely an exemplar from which lessons can be drawn that help prevent the sad refrain from being repeated across the nation, and possibly beyond America’s shores to those nations who have unwittingly followed its example.