Detroit is cueing up as the nation’s latest testimony to collective mismanagement. It is truly the poster child for what happens when you mix capitalist hubris, progressive pap, unions (public and private), and politically correct ignorance with generous dollops of corruption. The result is a city that is now on the last stages of life support, a city where the remnants of those who can are leaving, and leaving it to those who can’t or won’t. Or as the WSJ puts it, Detroit is “a sprawling city with $14 billion in debt, a depleted tax base, a legacy of government corruption—and very little time left to avert financial collapse.” Chapter 9 bankruptcy is in the offing.
Few cities have had the geographical advantage and abundant gifts of commerce that blessed post-WW2 Detroit. In 1950 its population was 1.5M, and today it has shrunk to 700K, as the productive and civilized are still taking their leave in droves. The latest we hear is that the state of Michigan will take over, and run the city with an appointed ‘financial manager’. Readers already know that Detroit has debt and unfunded liabilities hole too deep to climb out of (see ‘Hiroshima+66, Detroit+welfare’ and here).
Detroit is just the latest and most visible on the list of cities across the country going under. (See nearby interactive map for the most recent jurisdictions filing Chapter 9.) California, of course the leader in all things social and socialist, already sports a Chapter 9 club with Vallejo, Stockton, Mammoth Lakes, and San Bernardino as members. And its crown jewel, the City of the Angels, is quietly fighting insolvency. A look at the nature of LA’s fiscal countermeasures again gives lie to the leftwing denial that public service unions and their pension programs are not to blame for the nationwide scourge (here). But there will be anything but crickets if LA has to declare insolvency. I believe Sacramento will sacrifice everything except its socialist goals to keep that from happening.
Across the country teetering giant Atlanta is also fighting to avoid following in the footsteps of another big southern jurisdiction, Jackson County. It is considering the sale of major city infrastructure assets to keep the wolves from its door (here). And so this is a small sampling and an update of what it looks like on the other side of the tipping point as the feds continue to use their fiscal proctoscope to stimulate the country's jump off the real fiscal cliff. As usual, the government always starts on the wrong end of the problem.