Detroit

Silophant
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Detroit

Postby Silophant » July 18th, 2013, 10:09 pm

We knew it was coming, I suppose.

So, despite reading through that article, I'm not really sure what municipal bankruptcy entails. I know all the debts are voided, but what else happens? Do all city services shut down? I'm hoping someone on here has some insight into this.

Also, if you read through the comment section of the article, you'll learn that Detroit's woes are directly and exclusively the result of 51 uninterrupted years of Democratic mayors. Minneapolis is on year 41. It's going to be a rough decade. :shock:
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Re: Detroit Bankrupt

Postby David Greene » July 18th, 2013, 10:32 pm

Detroit does have some serious coruption issues and long-term single-party rule can cause problems.

That said, I really, really love Detroit. There are so many beautiful old buildings there, great neighborhoods, public plazas and so forth. Yes, it has rough spots and needs a lot of work but I think the talk of shrinking the physical size of the city is probably a good idea.

web

Re: Detroit Bankrupt

Postby web » July 18th, 2013, 11:14 pm

wishing charlie stenvig back is crazy, but arne carlson was mayor 1991-99.

nordeast homer
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Re: Detroit Bankrupt

Postby nordeast homer » July 19th, 2013, 8:31 am

Carlson was gov. from 91-99. Fraser was mayor from 80-93 and Sayles Belton was mayor from 94-01. I wish Carlson would have been mayor. I would have loved to see what fiscal shape the city would have been in.

Back to Detroit. There have been a lot of rumors about the corruption in the administration, with the unions, and all the way down to the janitors. I'd love to know how much is true and how much is just passing the buck or cya. It sounds like the corruption has been going on for decades and everyone just kept thinking this would fall to the next guy in line. I feel bad for the people living there, but at some point it has to fall on the citizens for not doing something about this earlier. When you see the one major industry in your city start to decline and fall apart why do you not start putting plans in place to deal with it? Instead, let's let the rest of the country bail out your one major industry then 4 years later have to bail out your city because you declare bankruptcy. Again, along with many cities and states in this country, we don't have an income issue, we have a spending issue. Here they allowed the pensions to grow to an unsustainable size and did nothing about it. At some point simple accounting would tell you the pensions cannot continue at the level where more money goes out than comes in. I know it's unfair, but someone should have told these people a long time ago that this could happen, they need to cut the pensions back or this will be the first of many bankruptcies for Detroit. I was "fired" from a job 3 weeks before I would have gotten a pension, unfair things happen. In Detroit nothing good is going to happen without some shared pain.

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Re: Detroit Bankrupt

Postby seanrichardryan » July 19th, 2013, 8:58 am

Still one of my favorite Detroit websites. It's part UrbanMSP, part Strib comments section. Ongoing corruption threads abound in DiscussDetroit! section.

http://www.detroityes.com/
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Re: Detroit Bankrupt

Postby Gregory » July 19th, 2013, 9:32 am

We knew it was coming, I suppose.

So, despite reading through that article, I'm not really sure what municipal bankruptcy entails. I know all the debts are voided, but what else happens? Do all city services shut down? I'm hoping someone on here has some insight into this.

Also, if you read through the comment section of the article, you'll learn that Detroit's woes are directly and exclusively the result of 51 uninterrupted years of Democratic mayors. Minneapolis is on year 41. It's going to be a rough decade. :shock:
One party rule is always a disaster.

They have to void the pensions. The people who put money in to bail out the city shouldn't be the only people burdened.

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Re: Detroit Bankrupt

Postby David Greene » July 19th, 2013, 9:46 am

Again, along with many cities and states in this country, we don't have an income issue, we have a spending issue.
With Detroit it's both. Detroit has high pension obbligations, yes, but it also lost over half its population to white flight. It has a huge tax base problem which is why geographically shrinking the city makes sense. Right now they're paying a ton for providing utilities out to 1-2 houses in far-flung neighborhoods while blocks around the area sit empty. You can argue that's also a spending problem but it's really a tax base problem. Things were sustainable back when the city had a population of 1.8 million.

Detroit is also subsidizing the surrounding suburbs in the same way Minneapolis and St. Paul do here so it's a double-whammy.

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Re: Detroit Bankrupt

Postby mattaudio » July 19th, 2013, 10:29 am


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Re: Detroit Bankrupt

Postby helsinki » July 19th, 2013, 10:33 am

For truly obnoxious analysis, turn to CNBC.

In a nutshell, I would summarize the problems of Detroit as:

1. Truly poisonous race relations. See The Origins of the Urban Crisis.

2. Unsustainably dispersed settlement pattern. At 139 square miles, Detroit encapsulates the Strong Towns critique writ small: massive amounts of underutilized public infrastructure for too few people causes extremely high per capita maintenance obligations. Even Jane Jacobs in 1961 'Death and Life' noted Detroit's essentially suburban character and inability to productively mix uses. Fordism caused a failure of urban form.

3. Undiversified low-skill economy succumbed to Asian competition; dearth of universities, breakdown in social trust, perceptions (and reality) of crime failed to incubate or deterred the entrepreneurially minded who would otherwise have benefitted from low costs.

When Larry Kudlow says that unions drove Detroit to bankruptcy, he is a moron. Coleman Young was a bad mayor (see: Destruction of Poletown). Corruption and dysfunctional government are obviously bad; these obviously contributed to the crisis. But I would point the finger at a deeper cause: insufficiently inclusive political institutions (along the lines of "Why Nations Fail" by Acemoglu & Robinson), bad race relations, and bad labor relations (important to note that these last two are not synonymous).

My hunch is that these became overwhelming simply because Detroit grew way way too fast. It grew from 465,000 in 1910 to 1,568,000 in 1930 (so says Wikipedia). You can't triple your population in 20 years without overwhelming your existing institutions.

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Re: Detroit Bankrupt

Postby Viktor Vaughn » July 19th, 2013, 10:34 am

Nordeast Homer, overspending is of course a major factor, but you're over-simplifying in a way that makes this a neat little case study for GOP theology.

Detroit's ills flow from many sources. They've relied too much on one industry in a fast changing economy. Detroit has suffered disproportionately from the off-shoring of manufacturing to places where poverty-wages prevail. Detroit was hollowed out by its own "motor city" ethos which prioritized fast wide roads in the suburbs over investment in the city. Detroit has been the victim of corporate America’s efforts to lower the wages of working Americans and break the unions, by moving manufacturing plants to states hostile to workers. Detroit has been demoralized by the despicable state of race relations in this country. Policy makers have demonstrated a willingness over decades to allow this great American city to rot in generational poverty while they pontificate from the sidelines about moral hazards. Detroit is a victim of the conditions that set the stage for race riots, the physical and emotional destruction caused by the riots themselves, and the whiteflight and "washing of hands" and disinvestment that followed.

What's going on in this city is really a result of our disposable culture. Using and throwing away is fundamentally related to our consumer economy. This is true not just with stuff like cheap electronics, but whole cities as well. We're at a point where greenfield development with new infrastructure is cheaper than retrofitting already developed areas afflicted with legacy pollution, social strife, and rust. We can see this same effect in our own metro in the disinvestment seen in first ring suburbs like Brooklyn Center, Crystal, and New Hope which were only developed 60 years ago, but are already being left behind for greener pastures. We see it when Walgreens decides to abandon their store and build a bigger one across the street. We see it in the lack of quality in the exurban pop-up houses which may not even last a generation (demonstrated here when a tornado ripped roofs off houses in Hugo, so everyone could see only 1 in 10 roofing nails hit a stud). Our disposable culture says it’s ok to use and throw away a whole city.

The mistake for the rest of us would be to act like these are problems unique to Detroit. They are not. Detroit is only showing the rest of us where the road we're on leads.

Runaway pensions play a role in Detroit’s bankruptcy, but that is a symptom of Detroit’s problems more than a cause. Detroit has a revenue problem, which is a direct result of folks walking away to let that city rust.

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Re: Detroit Bankrupt

Postby talindsay » July 19th, 2013, 10:45 am

Detroit is also subsidizing the surrounding suburbs in the same way Minneapolis and St. Paul do here so it's a double-whammy.
I'll point out that it must not be the same way, because in MN the Fiscal Disparity Fund is set up in such a way that if Minneapolis were in the hole that Detroit is in, the suburbs would be paying in to Minneapolis; Minneapolis and St. Paul have only been subsidizing the suburbs for about the last decade, after a couple decades of the suburbs subsidizing the core cities. The neat thing about the Fiscal Disparity Fund here is that it would actively work to prevent this sort of problem.

More information on this unique-in-the-nation program:
http://www.house.leg.state.mn.us/hrd/pubs/fiscaldis.pdf
http://www.wmitchell.edu/lawreview/Volu ... rfield.pdf

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Re: Detroit Bankrupt

Postby David Greene » July 19th, 2013, 11:32 am

The mistake for the rest of us would be to act like these are problems unique to Detroit. They are not. Detroit is only showing the rest of us where the road we're on leads.
Brilliant post all around. I want to call out this particular bit. I've been saying the same for many years. Detroit is really no different than any typical U.S. city. It's simply 20-30 years ahead.

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Re: Detroit Bankrupt

Postby David Greene » July 19th, 2013, 11:34 am

I'll point out that it must not be the same way, because in MN the Fiscal Disparity Fund is set up in such a way that if Minneapolis were in the hole that Detroit is in, the suburbs would be paying in to Minneapolis; Minneapolis and St. Paul have only been subsidizing the suburbs for about the last decade, after a couple decades of the suburbs subsidizing the core cities. The neat thing about the Fiscal Disparity Fund here is that it would actively work to prevent this sort of problem.
Fiscal Disparities certainly softens the impact but I wasn't even thinking of direct financial aid. I was referring to all of the externalities as defined by economists. All of those costs not directly accounted for resulting from our built environment, energy use, social ills, etc. The core cities pay a lot of externalities so that the suburbs can be bedroom communities.

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Re: Detroit Bankrupt

Postby mplsjaromir » July 19th, 2013, 12:21 pm

The main problem with Detroit is that it lost half of it population in half a lifetime. In addition Detroit was one the most affluent areas in the world, as recently as the 1970s the wages in the Detroit area were higher than the average wages in MSP or Boston. Being a high wage industrial powerhouse to a hallowed out Rust Belt city is tough.

All the Chuck Marohn acolytes would love to point to Detroit and say "this is whats gonna happen!!!", in reality Detroit is a special case. It is off more than million people from its peak. Lots of retirees from the good times still collecting checks. A particularly noxious urban-suburban culture of mutual disdain. Extremely inefficient land use patterns. Misguided infrastructure spending (urban freeways and monorails!).

Granted one can point to some parallels between the Twin Cities and Detroit, but the idea our local central cities are going to collapse is laughable. Worst case scenario is that enough bond holders get burned by municipal bankruptcies the cost for borrowing will increase and projects will be more scrutinized.

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Re: Detroit Bankrupt

Postby NickP » July 19th, 2013, 12:33 pm

I just want to thank everyone for, what is so far, a very interesting and civil conversation. Props. :)

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Re: Detroit Bankrupt

Postby MNdible » July 19th, 2013, 12:38 pm

All the Chuck Marohn acolytes...
Thank goodness we don't have any of those on this board.

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Re: Detroit Bankrupt

Postby David Greene » July 19th, 2013, 12:47 pm

All the Chuck Marohn acolytes...
Thank goodness we don't have any of those on this board.
I didn't even know who he was until just now. It's not just "Chuck Marohn acolytes" who think Detroit is the canary in the coal mine.

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Re: Detroit Bankrupt

Postby mattaudio » July 19th, 2013, 1:05 pm

Even Chuck or Andrew Burleson would acknowledge that Detroit is a unique case, and the staggering population decline is unique. In this regard, every city is a unique case. We're looking for trends and concepts, but the details are what matter city by city.

Detroit is basically any American metro on steroids as far as the problems are concerned. Subsidizing a land use that draws people out of the city, but on steroids. White flight, but on steroids. Gutting a city of its character and dissolving its sense of place, on steroids. Corporate flight to the burbs, on steroids. The result has been population decline which has directly lead to a significant share of liabilities per capita.

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Re: Detroit Bankrupt

Postby Viktor Vaughn » July 19th, 2013, 1:17 pm

Mplsjaromir - There are reasons Detroit has been affected by those factors I listed above more than other cities, I was just trying to point out that those same issues are present here as well. We also struggle with disinvestment in the inner city, drastic racial disparities, offshoring of manufacturing, and a race to the bottom with other states subsidizing "job creators."

That's not to say we can see Minneapolis' future by looking at Detroit. In some ways we're turning the corner on the issues that created Detroit's situation. All the recent investment in core neighborhoods is an example of our divergence from these trends.

But it's still dangerous to look at Detroit and pretend those forces don't apply here. They do, and we need to address those issues to thrive.

(As an aside, l I find the whole Strong Towns deal strangely off-putting. Although I haven't read much of the website, it's clear I agree with a lot of what Chuck says, it's just his whole deal seems wrapped in cult-like groupthink. I can't quite put my finger on it -- maybe it's just this libertarian idea that public infrastructure should somehow pay for itself that doesn't sit right with me. Anyways, I hope I didn't start a shitstorm with my poorly thought-through reaction to S.T.)

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Re: Detroit Bankrupt

Postby FISHMANPET » July 19th, 2013, 1:58 pm

I generally agree with the basic ST approach that when a municipality spends money it should see a positive return on investment (though that doesn't necessarily have to be purely financial). To me the classic ST post is the one where he dissects the property value of a new Taco Johns. He compared it to a "run down" traditional block right next door, and the city collected far more property tax on the "blighted" store fronts than they did from the shiny new Taco John's.

Another part of the core of the ST message, I think, is that the basic infrastructure (roads, sewers) should be able to pay for themselves. You can't pay for repaving of last year's subdivision with development fees from next year's subdivision, the property tax in that area has to be enough to pay for that area.

Detroit is definetly having a problem with that last part right now, as areas are abandoned except for a couple homes, those aren't financially sustainable. And if Detroit was tearing down 2-3 story brick buildings that fronted the street and replaced them with fast food drive thoughs, then Strong Towns would say that's bad, and I'd agree with that.

But now Strong Towns is older, and Chuck just can't keep reposting that Taco John's post over and over, so he starts to drift into the vagrancies of monetary policy and that's the point where I have to get off the train. I think subdivisions to nowhere are a problem for our society, I don't think fractional reserve banking is a problem at all.


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