The city of Detroit filed for bankruptcy protection on July 18 – the largest municipal bankruptcy filing in U.S. history. Detroit, of course, is synonymous with the auto industry, which has been rebounding recently. So why is Detroit struggling? To find out, let’s dispel some myths about the city’s past and present.
• Myth No. 1: The auto industry is back, so Detroit should be, too.
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Detroit (the city) and Detroit (the auto industry) have been on disparate paths since the mid-20th century, when carmakers began building plants in other parts of the country. Later, they joined the rush to globalize. My 2010 Ford Fusion, for example, was made in Hermosillo, Mexico. Manufacturers started doing this to assemble cars closer to regional markets and to get away from the powerful United Auto Workers union in Michigan.
These days, only a handful of Detroit residents work in the auto industry. Once home to about a dozen car factories, the city now has only two auto plants. When car companies announce that they’re hiring, the jobs are often elsewhere. For example, when Ford said in 2011 that it would add 4,000 hourly workers, nearly half of those new jobs were in Louisville. The health of the auto industry now has little bearing on the daily lives of Detroiters, 16 percent of whom are unemployed.
• Myth No. 2: Unions destroyed the auto industry – and Detroit.
At its peak in the 1960s and 1970s, the UAW was a powerful force in labor and national politics, and it continues to be a strong advocate for its members. This is the function of a union. Or a trade association. Or a chamber of commerce. Unions, and the UAW in particular, helped create the American middle class by elevating assembly-line work into steady, well-paying employment that provided economic stability. Without unions, Detroit would not have risen to the heights it did.
The real culprit in the city’s decline has been federal policies that put corporate health ahead of community health, such as free-trade agreements that sacrifice U.S. jobs for foreign trade. President Clinton’s NAFTA treaty is particularly reviled among auto workers. Such agreements have made it easier for car companies and others to leave their communities for lower labor costs elsewhere.
Yet scapegoating corporate leaders shifts responsibility from where it belongs: on us. We’ve voted for leaders who endorse policies that require corporate brass to make decisions based on their responsibility to stockholders. Blaming corporations for maximizing profits is like blaming a dog for barking. If we want businesses to behave differently, we need to change our laws and our expectations.
• Myth No. 3: The city began declining after the 1967 riot.
Those five bloody days in July 1967, which began with a police raid on an illegal after-hours bar, resulted in 43 people killed and more than 1,100 injured. The riot has been seared into Detroiters’ collective memory. Yet it was a symptom, not the cause, of one of the city’s ills: pervasive racial tension, particularly between an aggressive and nearly all-white police force and black residents. It’s easy to forget that Detroit had rioted for the same reason in 1943.
The 1967 riot only abetted radical changes that were already underway. Detroit’s population had been in flux since the 1950s, when white flight accelerated and Southern blacks came in increasing numbers. In the 1960s, as the city’s population dropped by more than 9 percent, the black population increased by 37 percent, partially offsetting the exodus of some 385,000 whites.
The lasting effects of the riot were an exodus of small businesses and a sense among white Detroiters and suburbanites that the city could not be saved. Former Mayor Coleman Young estimated in his autobiography, “Hard Stuff,” that Detroit lost 110,000 jobs in the decade after the riot. That time included the 1973 Arab oil embargo, which hurt the auto industry. But by the time the burning began, the city had already been draining itself.
Now Detroit has 700,000 people, more than the District of Columbia, but spread over 140 square miles – bigger than Manhattan, Boston and San Francisco combined. The average police response time is about 58 minutes, and 40 percent of the streetlights are broken.
• Myth No. 4: Public pensions sank the city’s budget.
Detroit’s major financial problem is that its shrinking tax base has meant years of declining revenue. Remember, the city has lost more than 1 million residents since its population peaked in the 1950s. Those who blame pensions confuse cause and effect – like blaming a personal bankruptcy on a pesky car loan after one’s salary was cut in half. The difference, of course, is that getting rid of a car you can no longer afford isn’t the same as reneging on a promise to 21,000 retirees.
Pensions chew up so much of Detroit’s budget because policymakers didn’t prioritize meeting pension obligations when times were flush, as the Detroit Free Press pointed out before the bankruptcy filing. “Decades of mismanagement and bad practices, coupled with catastrophic market declines, have altered the pensions from a reliable way to assure retirees’ futures into a massive financial burden,” the paper noted in an editorial, adding that Detroit retirees get about $1,600 a month. Slashing those benefits now would exacerbate the city’s problems, since many retired city workers still live there.
And, although Detroit has had its share of scandals and political corruption – former Mayor Kwame Kilpatrick faces a lengthy prison sentence after his conviction this year for bribery and extortion – those didn’t cause its financial problems, either. The city’s decline was born of a half-century of corporate decisions to decentralize production, a lack of industrial and economic diversity, regional policies that encouraged exurban expansion, racial friction and globalization.
• Myth No. 5: Bankruptcy will save Detroit.
Bankruptcy might rescue the city’s budget, but it will not fix any of the underlying problems: overwhelming private disinvestment, failed institutions, joblessness, high poverty and low education rates, and increasing isolation of residents, particularly the elderly. While new investments in downtown and midtown are to be lauded, those only affect a small slice of the city. And although community gardens could form a foundation for community action – it’s a small step from neighbors working together in empty lots to working together on bigger issues – suggestions that Detroit should turn to farming on its vacant land or concentrate residents in certain neighborhoods to reduce the cost of services would do little to alter the city’s fabric.
It has taken more than a half-century for Detroit to fall this low, and the Motor City will take a long time to right itself. There are no quick fixes for its deep-rooted, systemic problems. Sharing public services with the suburbs, focusing on small neighborhood-by-neighborhood improvements instead of blockbuster redevelopment projects and improving public schools would be a good start. And all this, of course, will take patience.