
The Shrinking of Detroit - vorador
http://mapscroll.blogspot.com/2009/06/shrinking-of-detroit.html
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reduxredacted
"The problem is that economic growth in the US over the past several decades
has largely been driven by urban development (for which read: suburban
sprawl)"

Detroit is a nightmare, and I don't think there are many people who fully
understand just how bad it is out here unless you live around here.

There are basically three pockets of Detroit that you can walk around on-foot.
Take a ride on "The People Mover" (a very poorly thought out monorail) and
you'll run through areas of Downtown that are good and areas of Downtown that
look like they were used for bombing practice. Venture beyond Downtown, and
you understand why some property in Detroit is selling for $1 and why that's
highway robbery.

I used to do contract work for several companies. One of our companies was a
charter school just on the edge of the border of Detroit. You'd take Mound Rd.
to get there. Mound is a mile south of Van Dyke, which starts in the heart of
Downtown and ends in farm country. The progression was clear...the closer you
got to the edge of Detroit the more things started looking like a third world
country.

It's subtle at first: recognizable brand names start to become very sparse.
Then occupied buildings in places other than intersections vanish. The
intersections are littered with Check Cashing Liqour/General stores. Those are
replaced in kind by the same but with bars on the windows and graffiti
everywhere and eventually even those are gone replaced by what was once a
Liquor store but is now a square of abandoned cement.

My parents and my wife's parents all lived in Detroit when they were young, as
did all of their friends. They got out when crime went up. With the plummeting
price of housing, even those who were once way too poor to live outside The
City are getting out. Crime has increased in the area I live, but violent
crime is still rare. Those who can find a way out, get out.

The city's decline won't stop. The burbs have created "The City" experience
with great restaurants, great entertainment venues, great shopping and safe
living.

Most of Detroit's Mayors were of the quality of Kwame Kilpatrick (other than
Dennis Archer). The people of the city resent the folks who left, and folks
running for mayor or city counsel do best if they blame Detroit's problems on
the suburbs.

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bokonist
The rust belt cities have been the victims of two great forces, one internal,
one external.

The internal force is the incompetence of democratic city governance. Detroit
had utterly incompetent elected leaders who in the 1960's and 70's allowed
rioters to loot and burn large swaths of the city. Homicide rates rose by an
order of magnitude. If you look at homicide rates in Europe, you have to back
to the 12th century to find homicide rates as high as those in modern Detroit.
Order and security are base requirements for economically productive
societies. When the violence came, industries and productive residents fled.
This process happened in major cities across the country: St. Louis, New
Haven, Cleveland, Baltimore, etc.

Unfortunately, in a democracy the quality of government is proportionate to
the human capital of the voting population. Now that the human capital has
left, effective governance is even more unlikely. Thus the prospects for
Detroit look grim indeed. The only hope is to put the city into receievership
and grant a competent executive the authority to clean up the city (perhaps
this would be a good job for General Petraeus).

The second factor is the American seinorage empire. Since the end of Bretton
Woods in 1971 the primary export of the United States has been its own
currency. China, Japan, Korea, etc, ship cars and steel to the United States.
The U.S. ships back freighters full of dollars in return. As a result of China
and Japan buying the currency, the exchange rate is artificially low. That
makes it very hard for domestic manufacturers to compete with the Asian
producers. What should have happened is that as American industries failed, we
would have less exports which would weaken the dollar, making foreign products
more expensive, thus increasing the profits of domestic manufacturers and
stopping the cycle of decay. Instead, China and Japan continued to ship us
cheap goods, and in return bought treasuries and financial products from Wall
St. This greatly enriched the U.S. government and Wall St., but screwed over
domestic manufacturers. The result was a growth in "service jobs" which were
essentially jobs feeding off of the ever growing Washington bureaucracy. The
United States is playing the role of 16th Century Spain. It exports a currency
in return for foreign goods, while the domestic industries die.

The final blow to Detroit has been dealt by monetary incompetence on the part
of Washington. The U.S. is currently experiencing a monetary contraction.
Monetary contractions should never happen with competent economic stewardship.
The government can always simply renominate the currency and avoid the
problem. When a monetary contraction does occur, people dramatically cut
spending on durable goods. Thus again, Detroit is punished for events
completely outside of its own control.

~~~
patio11
I live in Japan so I've got an obvious bias, but growing up I don't remember
many Americans who went with Japanese cars because they were _cheaper_.

The incompetence of city government angle, though, that I can get behind.
Detroit in particular is two cities. We could call them Red Detroit and Blue
Detroit. The Red politicians hate Blue Detroit with a passion, because they
think the Blues have money and aren't sharing enough of it with Reds (and,
most particularly, Red politicians). The Blues are deathly afraid of the Reds
killing them, but try to be circumspect about putting it in so many words, so
rather than stay in the city and face a possibility of death and a certainty
of being "the colorist bastards always keeping hardworking Blues down" they
have long since left for greener pastures.

That is a metaphor, of course -- no one in Detroit is actually colored Red or
Blue.

~~~
bokonist
_I live in Japan so I've got an obvious bias, but growing up I don't remember
many Americans who went with Japanese cars because they were cheaper._

In the absence of the Japanese buying dollars, the price of Japanese cars
would keep rising until trade balanced between the United States and Japan.

~~~
barry-cotter
So the Japanese get paper and the US gets cars? sounds like a pretty good deal
to me.

~~~
bokonist
It's great in the short term. For the long term, well, see Spain.

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nostrademons
The comments point out a couple problems with the analysis, notably that it's
comparing Detroit to some of the densest urban cores in the country rather
than another sprawling suburb-city.

I'm really curious if the same thing will happen to San Jose in 50 years time.
Like Detroit, San Jose is a monoculture, with an economy based upon American
competitive advantage in one particular industry. And San Jose _already_ has a
population density lower than Detroit: 940,000 people on 178 square miles.
When the software industry gets off-shored to other companies and large
Silicon Valley dinosaurs can't compete anymore, will we see pieces about urban
decay in San Jose, with the crime, falling home values, and urban prairie that
results?

BTW, does anyone else hear Dire Straits' _Telegraph Road_ in their head
whenever they read a piece about the decline and fall of Detroit?

~~~
davidw
At least San Jose is in a pretty nice area, with a good climate, and access to
some nice places (beaches to the SE, San Francisco an hour north, hills to the
west and east). That's got to count for something.

~~~
antidaily
Detroit is surrounded by some pretty nice places as well. Ann Arbor is a great
town. And Lakes Michigan, Huron and Superior are really pretty in the summer.
I guess what I'm trying to say is that we're not talking about some landlocked
post-apocalyptic industrial wasteland.

~~~
donaldc
Having grown up in Michigan and since moved to Silicon Valley, I can say that
Detroit and San Jose are not really comparable. The weather in San Jose is
much, much nicer. It's sunny and warm most of the year. The four-month winters
in Detroit, with their freezing cold and grey skies, are never going to have
the same kind of draw.

Ann Arbor is indeed a nice town, and is a reason that people might want to
live in Ann Arbor. Living in Detroit so that one might occasionally visit Ann
Arbor an hour away makes no sense.

It's true, we're not talking about a _landlocked_ post-apocalyptic industrial
wasteland. But it pretty much is an industrial wasteland. An apocalyptic de-
industrializing wasteland, if the ever-ongoing decline of the Big Three auto
companies can be regarded as a sort of creeping apocalypse.

------
brc
I once read a plan for the revitalising of Detroit rather than the demolition.
The plan involved turning Detroit into a free trade zone, along the lines of
Hong Kong. There would be a low flat tax rate of 15% on company and personal
earnings, no import/export duties, no welfare programs or government
assistance, including being exempt from all Federal taxes, interventions and
benefits. Basically set up a border around the city and let people do whatever
they want. The idea was that within 10 years, it would again be a growing and
dynamic economy as people would be attracted to the region to escape growing
Federal intervention.

While I don't think the idea would ever fly, and I'm not sure it could work,
it's definitely an idea to make you think - perhaps the answer is less
intervention, not more.

~~~
johnnybgoode
What happens if that plan is implemented and ten years later, after Detroit
becomes prosperous, people in other cities want the same thing?

Now we see one reason the plan won't be implemented.

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donaldc
One of the things not mentioned by the article is that the city of Detroit has
an income tax on people working in the city, unlike virtually all of the
surrounding cities. This is symptomatic of a wider dynamic, in which it
actually costs more for companies and employees to work in the city of Detroit
itself than in the surrounding areas. It isn't the cause of the decline, but
it certainly doesn't help.

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ilyak
Баян: <http://egland.livejournal.com/93045.html>

