Detroit's cautionary tale
Many are warning that the United States could become the next Greece. But there's no need to look across the ocean to see a poorly governed area that's deep in debt and crumbling. Just look to Detroit.
That city was once the picture of American industrial might. Henry Ford deployed the production line there and helped create the modern middle class. During World War II, more than a third of U.S. war materiel was manufactured in the city. And during the post-war boom, cars made in Detroit embodied the American success story.
Now, the Motor City is collapsing in every conceivable way.
The unemployment rate is 18 percent. A big reason is that the city's schools have failed. Just 7 percent of eighth-graders are proficient in reading. Yet Detroit teachers are the best paid in the nation, the Mackinac Center for Public Policy says, when their pay is adjusted for purchasing power.
Meanwhile, Detroit is $327 million in the red and has no credible plan to get back on its feet. That's why Michigan's Republican Gov. Rick Snyder recently appointed an emergency manager. Kevyn Orr has 18 months to try to save the city. Even though he has broad power to sell assets and renegotiate contracts, his job will be difficult.
These days there's more work tearing homes down than building new ones. An executive at Pulte Homes has set up a nonprofit to do just that. By reversing the building process, it can remove an empty house for just $5,000, half what it would cost city government to do.
In fact, government is more a hindrance than a help. “If the government could fix the problem, they would,” urban artist Jenenne Whitfield told National Review. “Everything we know that's historically held up this city is broken. ... (O)ur government has to change. It has to go back to what it was, going all the way back to the Constitution.”
A nonprofit group called Motor City Blight Busters has taken down some 1,500 houses. There are “a lot of rules and regulations that relate to removing property,” the group's founder said. “The government (has been) interfering with our ability and others' ability” to remove blight.
There are signs that the city's government has seen the light. “Our role is to support. And sometimes, our role is just to get out of the way,” Karla Henderson, who heads up Mayor Dave Bing's efforts to remove urban blight, told National Review.
And help may be on the way following some commonsense political reforms.
In a statewide election in Michigan last year, voters soundly defeated Proposal 2, a measure that would have made union collective bargaining a right and given collective bargaining agreements the force of law.
Then in December, the Michigan Legislature passed a bill to become the nation's 24th right-to-work state. This means that workers will no longer be forced to join a union, though they remain free to do so.
It's possible that free-marketers will eventually rebuild on the ruins of Detroit. For now, though, it serves as a cautionary tale. Even a city with everything going for it can collapse under the weight of bad economic policies. The rest of us must not repeat Detroit's mistakes at the national level.
Ed Feulner is the former president of The Heritage Foundation (heritage.org).