July 30, 2013

July 30, 2013 | Commentary on Economy, Political Thought

Detroit and the Bankruptcy of Liberalism

Detroit is a showcase for the liberal agenda — and now it is bankrupt. More than 50 years of control by big-government liberals and union bosses have left a once-great American city crippled and deteriorating.

Two weeks ago, Detroit became the largest city in American history to seek bankruptcy protection. Few were surprised, as the city’s been struggling for years.

The unemployment rate in Detroit is 16 percent, more than twice the national average. The city’s government-run schools have failed, with just 7 percent of eighth-graders proficient in reading. It takes police about an hour to respond to calls and the city has more than $18 billion in unfunded liabilities. The city’s population has dropped by a quarter in just the last decade (to fewer than 750,000), as hundreds of thousands have voted with their feet and left.

It hasn’t always been this way, of course. For decades, the city of Detroit was a manufacturing powerhouse. The assembly line was perfected there and brought with it the idea of a middle-class lifestyle based on manufacturing. Tanks and planes made in Detroit helped make the U.S. the Arsenal of Democracy. And after World War II the city boomed, producing cars that helped make the American dream achievable for millions. Motown Records produced music that defined a generation, with artists who remain household names such as Diana Ross and the Supremes, Marvin Gaye and the Jackson 5.

Many of Detroit’s problems resulted from a lack of political competition. Democrats have dominated the City Council and there’s been a Democratic mayor since 1962. One-party government quickly became bad government, featuring a stream of liberal, blue-state policies such as sweet deals for government unions. Now, though, the bill has come due for these liberal policies.

“For decades, Detroit sustained itself through the usual suspects of bad fiscal management: Unaffordable borrowing, state grant schemes, raising taxes and deferring public pension contributions rather than cutting city spending,” according to Heritage’s Alison Acosta Fraser and Rachel Greszler. “But Detroit’s tragic downward cycle has reached its end.”

There’s much Washington should learn from Detroit. The federal government has a staggering national debt of more than $17 trillion, larger than the U.S. economy. Fraser and Greszler note that future federal spending “will be driven to the breaking point” by entitlement programs.

Even as Detroit struggles, its state, Michigan, has taken a positive step. In December, it passed a right-to-work law, becoming the 24th state to do so. That will introduce competition and make the state a more attractive place for people to do business, and for employees as well.

“Workers in right-to-work states enjoy higher wage growth and, when cost of living is factored into the equation, better compensation than their counterparts in forced unionism states,” Vincent Vernuccio of the Mackinac Center said.

And by reducing the power of public sector unions, the move should help the state and local governments reduce the pension promises that eventually dragged Detroit down.

F. Scott Fitzgerald said there are no second acts in life, but Americans of all stripes — blue and red — should hope he was wrong. In order for Detroit to succeed again, however, its leaders must realize why the city has failed.

- Richard Tucker is a senior writer in the Heritage Foundation’s B. Kenneth Simon Center for Principles and Politics.

About the Author

Rich Tucker Senior Writer
B. Kenneth Simon Center for Principles and Politics

First appeared in Heritage Newspapers