Detroit’s Bankruptcy: A Warning to the Rest of the Nation When the city of Detroit filed for bankruptcy on July 18th, it became the largest such filing in American history. The Motor City has $18.5 billion in debts, which comes to $25,000 per resident. At the heart of Detroit’s problem is the benefits owed to current and future retirees─a number that will ultimately reach─into the tens of billions. Just to show how dysfunctional the city has become, the bankruptcy proceedings was immediately gummed up by an activist liberal judge who ruled that the filing, violates the Michigan Constitution because it would have a negative impact on pension payments. Union lawyers are also trying to void the bankruptcy filing. Since you can’t squeeze blood out of a turnip, it doesn’t matter if the law says all cities need to pay their pension or bond obligations -- there is no money. To put it bluntly: The parasite has finally outgrown the host. Few people realize how far Detroit has fallen. I could list dozens of key facts about the city’s decline. Here are a dozen of the most shocking: In 1960, Detroit had the highest per capita income in the nation. It was once our 4th largest city in America, it is now ranked 18th. The murder rate in Detroit is 11 times higher than in New York City. Police only solve 10 percent of the crimes that are committed in Detroit. It takes the police an average of 58 minutes to respond to calls. Only a third of its ambulances are in working order. Over 40 percent of the streetlights are broken. There are approximately 78,000 abandoned homes in the city. Each year 1,100 buildings are torched because of arson. There are 70 “Superfund” hazardous waste sites in Detroit. In 1950, Detroit had 296,000 manufacturing jobs. Today, there are less than 27,000. The police chief actually warned people to “Enter Detroit at your own risk.” The press has been beaming about how you can buy a whole row of house in Detroit for less than $500. There are some four-bedroom homes that list as low as $70, but they might as well be on the slope of an erupting volcano. The list price might be cheap, but the taxes are between $5,000 and $10,000, the highest in the state of Michigan. Many of the cheapest houses are worthless because thieves have stripped them of their basic infrastructure. The electrical wiring, plumbing, ductwork, windows, doors, cabinets, and sometimes even the roofs have been taken and sold. I think the most significant thing about the Detroit bankruptcy filing is how it demonstrates our inability to learn from failed socialist policies. Here we have the greatest example that liberal government planning doesn’t work, and the media and political leaders are incapable of seeing the policy that has eaten away at the city. In fact, the day after the city said it was broke, the federal government committed $25 million to build a streetcar line through the heart of Detroit. Amazingly, there have been 24 failed attempts over the past 40 years to develop a modern public transit system in Detroit. Since a one-third of Detroit’s 140 square miles is now vacant lots, the 25th attempt at mass transport would seem to stand no better chance of success. For years, Detroit’s managers tried to cosmetically hide the city’s decay by demolishing all the blighted homes and buildings. So many homes have been torn down that there are now some blocks where only one or two homes remain standing. Now that the city is flat broke, the wrecking balls will likely sit idle. Some renovations have been taking place in downtown Detroit. One led by artists, techies, and Dan Gilbert─the founder and chairman of Quicken Loans. A few million dollars of positive economic activity can’t match the $500 million shortfall that the city incurs each year. The reason why Detroit is in such sad shape has little to do with the city itself. The real problem is with the people who live there. Nearly half of the residents are functionally illiterate. Around 60 percent of Detroit children are raised in a single parent household, and less than half of the people over 16 have jobs. You can’t revive a city with a majority of its citizens having been bottle fed on the idea that the government is solely there to supply all their needs. Detroit will not be the last major city to file for bankruptcy in the coming years. There are hundreds of other municipalities that face similar financial problems. The same day Detroit was forced to default on its debts, Chicago had its credit worthiness downgraded three notices by Moody’s. I don’t see much hope for a turnaround. Unless we reach a point where we realize our moral and financial deficits are directly related to each other, the cancer that has ravished Detroit will produce the same results in many other American cities. “The wicked shall be turned into hell, and all the nations that forget God” (Psalm 9:17). --Todd Strandberg
Posted on: Mon, 29 Jul 2013 21:08:28 +0000
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