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Friday, 19 July 2013

Detroit's Decaying Majesty

The collapse of the old cities of the Industrial revolution is apparent across the Western world (first in, first out, springs to mind), and nowhere so than the Northern cities of the US - Detroit, and too a lesser extent cities like Chicago, have all suffered from the twin blights of the collapse of traditional manufacturing, and a mass influx of overwhelmingly African-American immigration, that caused 'white flight' from the centre. Most of the wealth and money abandoning the inner city areas of the centre, for suburbs across the 8 Mile Road marker, with the multi million dollar lakeside properties and gated communities.

This latter trend meant that a lot of the knowledge and skills that built the jobs in the first place were gone by the time a new renovation / reinvention was required. Sadly this left the cities to essentially collapse like Stockton in California, with crime spiralling and the funds to tackle the issues dwindling. A spiral that many thought was impossible to halt. Detroit for example, is likely to be declared bankrupt as it owes creditors $15bn (£10bn), which it can't pay.

Detroit in Decline

As an example of the sort of problems some of the USA's post industrial cities face: Between the years 2008 and 2012 in Detroit; The City population fell from 912,062 to 684,799 | Unemployment rose from 15% to 18% | Property tax collection rates fell from 76% to 68.3% | And the budget deficits have risen from $217m pa to $652m pa.

But according to a BBC report, there are signs that as even the Afro-American poor are abandoning whole neighbourhoods, a form of white 'gentrification' is going on, as what used to be called 'Yuppies' (remember them?), but are now described coyly as 'young professionals' (BBC newspeak, meaning white Americans) are moving in and establishing small scale private enterprises in areas such as Corktown. There are movers and shakers, creating venture capital companies and 'Tech' start-up incubators, organising design competitions for vacant lots, property renovators are doing up turn of the century housing to its former glories, and trying to restore some of Detroit's decaying majesty .... a situation that in some districts is sometimes called "ruin porn".

Still the private sector can only do so much, especially with so many pools of basically unemployable populations. As the city's new emergency manager wrote of Detroit's public sector, its "dysfunctional and wasteful after years of budgetary restriction, mismanagement, crippling operational practices and, in some cases, indifference or corruption"..... not a promising soil in which to throw the seed corn of a regrowth.

As others have tried to point out, expanding local councils, public sector employment and municipal contracts, does not rejuvenate a city whose time has passed. This applies as equally to the UK as the USA, and New Labour would be advised to learn the lesson.

We must have private enterprise, less regulation, and less public sector, to restore employment and thus our old industrial cities ....

Rather strangely I had written up this story about Detroit’s attempted regeneration weeks before the news today, that Detroit had declared itself bankrupt, with debts of least $15bn (£10bn). Of course in the US Chapter 9 bankruptcy is a slightly different beast than in the UK, in that essentially it stops debtors making any claims against the municipality using the ploy. In this case it was to stop creditors, including public-sector workers and their pension funds from seizing assets in preference over other creditors, and also it specifically allows the city to renegotiate any 'unsustainable pension or other benefits packages' negotiated in flush times i.e. Union Bust as the lead negotiator for a coalition of 33 unions described the move.

The city had offered 10c in the Dollar as settlement to its creditors, but the unions and pension funds had turned this down, and indeed had been due to go to court to seek an injunction against Detroit filing for Chapter 9 bankruptcy so this move by the city was to forestall any injunction. 

Of course in theory there is a downside - the city cant borrow funds from banks etc while in this state, but as in reality it had been unable to borrow money for a while, and was unlikely to have been able to borrow any in the near future, this wipe-out of debts, and 'allow it to reinvent itself without the burden of impossible obligations' i.e. Walk away scot-free is all on the positive side for the city.

However, its bad news for other US municipalities because the cost of borrowing for them is going to shoot through the roof as all US cities are classed as high risk.   

Oddly this news comes just as commercial and residential occupancy in the down-town areas are at record levels, but with the murder rate at a 40-year high (as white flight makes the city ever more Afro-American dominated), and with the number of residents declining by 250,000 between 2000 and 2010, it looks as though there will be even tougher times ahead for the 'Motor City' before it becomes the 'Renaissance City' again. 
 

2 comments:

  1. Some of the cities / towns in northern Britain, and north east France (flanders region) show the same symptoms, just not such big declines. But then they didn't rise so high.

    You see the greatest decline in those towns that were 'industrial' low skill manufacturing towns eg cars / ships / coal / cotton etc.

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