Detroit, once one of the nation’s most vibrant cities, faces imminent bankruptcy. That’s the headline from the report last month of emergency fiscal manager Kevyn Orr, issued 45 days after he was appointed this spring by Michigan governor Rick Snyder to take over the city’s government.
“The path Detroit has followed for more than 40 years is unsustainable,” Orr said. “And only a complete restructuring of the city’s finances and operations will allow Detroit to regain its footing and return to a path of prosperity.” The police department, his report says, “is in disarray.”
In my childhood, Detroit was proud of being the fifth-largest American city, the center of the auto industry, and the home of Hudson’s, the nation’s second-largest department store. Detroit’s inventors, entrepreneurs, and financiers made it the second-fastest-growing city from 1900 to 1930, behind only Los Angeles, which started off much smaller. Newcomers poured in from eastern and southern Europe, from the farmlands of the Midwest and Ontario, from the hills of Appalachia and the Black Belt of Alabama to work in the factories.
Detroit was the prime example of what I have called “Big Unit America,” in which the heads of large organizations — big business, big labor, big government — made the big decisions and hundreds of thousands of people below them, small cogs in a very large machine, carried them out.
For a time, Big Unit America seemed to work splendidly. The Big Three automakers, with some cooperation from the United Auto Workers and at the behest of big government, made Detroit “the arsenal of democracy.” Arthur Herman tells the story in his most recent book, Freedom’s Forge.
The big units’ prestige lasted for a generation after World War II. General Motors’ president was Time’s man of the year in 1955. John Kenneth Galbraith’s 1967 book, The New Industrial State, argued that big automakers could manipulate demand through advertising and should share more of their inevitable profits with union members and the government.
That was just about the time the big units started to sputter. Detroit’s leaders didn’t notice. White flight to the suburbs accelerated after the 1967 riot, and in 1973 Detroit elected its first black mayor, Coleman Young — smart, charming, politically shrewd.
But his 20 years in office were disastrous for the city. He ended what he considered police brutality, and crime rates soared. There were hundreds of arsons every year on Devil’s Night, October 30. Young relied on big units for economic growth. Big government paid for projects such as the People Mover, which moved few people. The city condemned one of its few viable neighborhoods to make way for a General Motors plant. Unions developed a stranglehold on city finances.
Numbers tell the story. In 1950, there were 1,849,568 people in Detroit. In 2010, there were 713,777. White flight was followed by black flight; there were fewer black residents in 2010 than there were 20 years before. General Motors and Chrysler were forced into bankruptcy in 2009, and Hudson’s downtown store was demolished in 1998.
Now Detroit has ineffective public services and overwhelming public obligations. Bankruptcy looms. The “big unit” model doesn’t work anymore.