Wednesday, September 18, 2013


Detroit's highest class neighborhood
The story of Detroit’s decline has been told and retold so many times now that you’d be forgiven for assuming there’s nothing more to say. But the Detroit Free Press has put together a new, comprehensive financial history of the city from 1950 to the present, gleaned from tens of thousands of pages of archival data on the city’s finances. It provides a much clearer picture of the city’s collapse than anything we’d seen before.

It appears that the city took all of the hallmarks of blue governance to extremes. For years, it tried to address its revenue shortfall by raising taxes, which drove residents out of the city and shrunk the tax base in the process.

Detroit lost 61 percent of its residents between 1950 and 2010, and the total value of its property fell from a peak of $45 billion to $9.6 billion in 2012. Meanwhile, even as the city’s revenue base was imploding, public employee benefits remained generous and in some cases even expanded.

The Free Press notes that there were a few periods of hope during thee postwar period when the city’s finances were relatively strong, but each time the city squandered these opportunities and used its good standing to borrow more rather than address the core problems that got it in the mess in the first place. . . . The city has paid a heavy price.

Today, Detroit has more pensioners than employees, and a debt that is more than twice what it had in 1960. It spends considerably more on police and fire retirees than active workers. And despite the fact that the city has the highest income and property taxes in Michigan—by a wide margin—the state’s inflation-adjusted revenue is lower than it was in 1960.


Duckys here said...

"But perhaps the greatest damage Kilpatrick did to the city’s long-term stability was with Wall Street’s help when he borrowed $1.44 billion in a flashy high-finance deal to restructure pension fund debt."
The same Wall Street that is behind the forced black out the other day in a move to privatize Detroit's electrical grid?
Shades of Enron.

Kilpatrick seems to have been Wall Street's guy and he was their tool for doing major damage in a short time.

Now it's theirs at 20¢ on the dollar.
Such a parcel of rogues.

sue hanes said...

Joe - It's sad and pathetic to see a city go bankrupt like Detroit is.
What will it take to get it back on its feet again?

Joe said...

sh: It will take the relaxation of restrictions to business,lower taxes, fewer government "services," an attractive business environment and lots of dedication. It can be done, but not if politicians seek self service rather than what will promote stability and growth.

Glenn E. Chatfield said...

No one forced him to borrow from Wall Street. That's the problem with libs. If someone borrows money, it is the fault of the lender that the borrower defaults or has more financial troubles.

Xavier Onassis said...

Joe - "It will take the relaxation of restrictions to business,lower taxes, fewer government "services,"

Oh sure! Forget all those "pesky restrictions and regulations".

Let anyone who wants to go into business selling whatever fraudulent snake oil they can concoct to do whatever they want without any sort of government oversight or restriction.

Because greedy idiots looking to make a buck are the salt of the Earth and the Evil Gummint is always trying to hold them back from getting rich under the silly pretext of protecting the consumer.

G.E.C. - Riigghhtt. "Wall Street" is just a benevolent collection of wise financiers patiently waiting for people to beg them for money and prove that they have a Sound Business Plan.

You, are an idiot.

"Wall Street" is the most super aggressive collection of Capitalistic sharks ever assembled always on the hunt for gullible idiots that they can chew up and spit out for their own profit and pleasure.

Glenn E. Chatfield said...

No, YOU are the idiot. Put the blame where it belongs, on the people who do the borrowing. NO ONE has to borrow, no one puts a gun to their heads.

Liberals always take the responsibility away from the guilty person to blame someone else.