The Real Lesson of Detroit: Change or Die

Sam Karnick Heartland Institute
Published July 30, 2013

One thing that has become evident about Detroit’s recent bankruptcy filing is  that the city’s problems, though dire, are by no means unique and are in fact  just a more extreme case of the situation that faces many other big U.S. cities and even a few state governments. The promises politicians made to voting blocs  to gain and keep power have proven impossible to keep. In Detroit’s catastrophe is a lesson about the very nature of government, which we would be foolish to  continue to ignore. The evidence is clear that the nation as a whole is on the  same path as Detroit, and history suggests that there will soon be a wrenching reckoning on the national level.

In his current column, Charles Krauthammer aptly refers to economist Herb Stein’s famous dictum: “If something cannot go on forever, it will stop.” Krauthammer is right to apply Stein’s truism to Detroit. For several decades, under Democratic mayors and with Democrats controlling the  municipal government, Detroit spent money it not only did not have but also could not possibly obtain. The money went to politicians, their cronies — the  government employee unions that conspired to elect those politicians who would in turn make lavish pension promises to union workers — and pet projects  intended to put some new paint on the crumbling city’s facade without doing anything at all to ameliorate the pervasive rot behind it. Meanwhile, the city’s schools deteriorated into ruins, police and fire services were cut back  drastically, abandoned houses were left standing as lairs for squatters and  criminals, and normal, working, taxpaying people left the city en masse. And the cycle continued.

That is how government works. Because it has a monopoly on lawful coercion, government forcibly takes money, time, and other resources from some people and gives them to others, who will keep that government in power in order to continue obtaining those benefits. Such rapacious behavior cannot be sustained over any great period of time because of competition: people will move elsewhere if they can.

Thus the population of Detroit fell from two million to 700,000 — though they’re still counting down — in a surprisingly short period of years. Even the mighty Soviet Union could not be sustained, because of competition from a West  that had finally (albeit just temporarily) thrown off some of the shackles of  its own collectivism, under visionary leaders such as Ronald Reagan, Margaret Thatcher, and Helmut Kohl. Eventually, some smart people devoted to liberty and  personal responsibility will inevitably step forward to provide competition against corrupt governments.

Competition between geographic areas continually undermines the viability of corrupt, monopolistic jurisdictions. That is what we see in Detroit: everyone who could leave, did.

For all of its potential flaws, the world of commerce and other voluntary associations differs in kind from government, being driven by direct competition and a strict need to serve customers, and an inability to rely on coercion. A business or industry may rise to great power, but unless it  gives its customers more value than it asks in return, such a business or  industry will inevitably decline due to competition from other providers. Consider, for an apt example, the rapid decline of the Detroit automakers in the wake of their market triumph in the years after World War II.

Two paragraphs in Krauthammer’s column admirably illustrate this difference  between government and commerce:

“When our great industrial competitors were digging out from the rubble of World War II, Detroit’s automakers ruled the world. Their imagined sense of inherent superiority bred complacency. Management grew increasingly bureaucratic and inflexible. Unions felt entitled to the extraordinary  wages, benefits, and work rules they’d bargained for in the fat years. In  time, they all found themselves being overtaken by more efficient, more adaptable, more hungry foreign producers.

“The market ultimately forced the car companies into reform, restructuring, the occasional bankruptcy, and eventual recovery. The city of Detroit, however, lacking market constraints, just kept overspending — $100 million  annually since 2008. The city now has about $19 billion in obligations it  has no chance of meeting. So much city revenue had to be diverted to  creditors and pensioners that there was practically nothing left to run the  city. Forty percent of the streetlights don’t work, two-thirds of the parks  are closed, and emergency police response time averages nearly an hour — if it  ever comes at all.”

This is the direction the United States as a whole is rapidly heading, in the wake of nine decades of nearly unabated government growth. Once the richest  nation in the world, the United States is in economic and cultural decline due  to the complacency that all monopoly endeavors ultimately fall prey to. The  nation needs reform, meaning a full rethinking or indeed dismantling of the national welfare state, in order to get the streetlights working again and do  the things government is intended for: to protect people’s lives, liberty, and property against potential predation by others.

The lesson is clear. When government becomes the predator, as it did in  Detroit and has to a great extent at the national level in the United States, it  must change or die.

[Originally Published by The Daily Caller]