Friday, July 19, 2013

Ebeling: On the Future of Detroit in the Face of Bankruptcy

By Dr Richard Ebeling

Detroit’s bankruptcy filing is the epitaph on decades of failed city government policies that brought a great metropolis to its knees. Over the coming weeks and months much of the media attention will be on the bankruptcy proceedings, themselves, as the courts and responsible parties determine how to reorganize the city’s debt liabilities among the claimants.

What will be far more important in terms of Detroit’s long-run future will be the public policies that become the basis for the city’s revitalization and reconstruction. In a new national and global commercial environment, Detroit must make itself attractive and competitive to draw industry and trade — and the accompanying job opportunities — back into what can no longer be considered the exclusively “motor city.”

The city’s new public policy framework should include:

1. A regime of competitively low taxes to make Detroit once again an attractive place in which to live and invest. Higher taxes in an attempt to squeeze more revenue out of the remaining tax base will only drive more people and businesses out of the city, and slow or even prevent the rebuilding of the city.

2. The city should take advantage of Michigan’s new status as a “right-to-work” state, which can assure and emphasize to prospective business investors that Detroit offers a flexible and profitable work environment. Trade unions in the city must accept the fact that a “closed shop” and an anti-employer mentality in negotiations over wages and workplace rules will not bring down an unemployment rate in Detroit that is double the national average.

3. Property rights must be safe and secure. The first priority in the reorganizing of the city’s use of available tax revenues must be to restore safety for persons and property throughout the entire jurisdiction of the city of Detroit. Police response time has to be brought down from almost one hour after a call is received to something much closer to the national average of about 11 minutes. Assaults on people, and vandalism and destruction of property in all parts of the city must not be tolerated, and must responded to with the full force of the law.

4. Municipal reform needs to include a reduction and streamlining of city regulations, licensing, and zoning rules over all business and enterprise, large and small. Not only do such networks of government controls breed corruption and favoritism, it stifles competition and makes the opening and growth of small and medium-size businesses very costly if not impossible. The first order of business for Detroit is to allow people to help themselves, and they cannot do that when city regulatory procedures, fees, and rules for starting and operating local businesses is prohibitive for its low-income residents.

Read the rest here.


  1. Anyone prepared to suggest how long before our friends on Pennsylvania Avenue involve themselves in proceedings (see GM-Chrysler bailout)?

  2. There's only one problem still standing in the way of Detroit: The people that still live/work there.

    The emergency manager and bankruptcy only occurred because they were forced on the city from Lansing. There is no interest from within the city to change anything. That's why so many people have left the city.

    But don't expect anything remarkable from Lansing, either. Lansing, and the Michigan GOP, are just as much establishment big government as Detroit and the Michigan Democrats. Snyder may be a business man, but he doesn't have a principled bone in his body. He's more than happy to be the Fed's lap dog. He's all in favor of medical insurance exchanges, and Medicaid expansion. And all of the corporate interests in the city are purely crony-ist (GM, Comerica, UAW, casinos, etc.).

    Without something completely unpredictable happening, the best that could be hoped for would be to crawl back to what Chicago has now (but more likely something like Philadelphia, or DC, or New Orleans).

  3. And all of this have about as much change of happening as wolf developing a conscience and going full vegetarian.

    I'm afraid that by now the only thing which can clean Detroit is a nuke.

  4. LANSING — An Ingham County judge says Thursday's historic Detroit bankruptcy filing violates the Michigan Constitution and state law and must be withdrawn....

    Judge Rosemary Aquilina issued a declaratory judgment that says the bankruptcy filing violated the Michigan Constitution.

    “In order to rectify his unauthorized and unconstitutional actions ... the Governor must (1) direct the Emergency Manager to immediately withdraw the Chapter 9 petition filed on July 18, and (2) not authorize any further Chapter 9 filing which threatens to diminish or impair accrued pension benefits,” she said in her order.....

    University of Michigan law professor John Pottow said the issue could travel up the court system, all the way to the Michigan Supreme Court. Or it could be answered decisively and quickly in bankruptcy court, he said.

    “There’s nothing that precludes a federal judge from adjudicating the constitutionality of the Michigan statute,” Pottow said. “The bankruptcy judge can interpret Michigan law.”

    Aquilina, who like most of the judges on the Ingham court has a Democratic background, appeared prepared for the likelihood her orders will be appealed by the state.

    “Let’s get this moving to the Court of Appeals, because that’s where you all are headed,” she said.

    She also ordered that a copy of her declaratory judgment be sent to President Barack Obama, saying he “bailed out Detroit” and may want to look into the pension issue.

  5. The problem with Detroit is that it is run by a combination Al Sharpton/Trayvon Martin mentality and a populace that seems to think it owns everything and everyone within the city limits to either boss around or loot.

    The solution is allow complete secession from the city and its school system, but which will never happen due to the above.