Detroit and the Economics of Cities.

Cities are wonderful places.  Though I grew up on an Iowa farm and still have relatives and investments in rural areas, I would not want to live on a farm or in a small town again.

Cities are facsinating because they are filled with illusions, just like religion.  In religion, people want to hear they don’t have to die.  When they here this from someone they trust, they glop on to this notion.  They do so even though the messenger may not be trustworthy at all.

In throwing their loyalty to religions that guarantee life after death, people throw their time and money away.  There is no evidence of this life after death–they would be better off focusing on what good they could accomplish in this life.

In cities, the shaman tells residents, “You can have the advantages of living in a city, the opportunities to find work, access to entertainment and good education for your children and still live as if you were in the countryside.  We have this wonderful thing called the freeway which you can use to drive from the suburbs into the central city.”

The the shaman’s trick is to divert attention from the fact that if his sweet sounding words appeal to one person, they may appeal to most everyone.  In Detroit, as freeways filled up, they were expanded.

The city emptied out into the suburbs and there were not enough people to pay for all the infrastructure demanded by commuters.  I think a Detroit without freeways would be solvent today.

http://www.nytimes.com/2013/07/22/opinion/krugman-detroit-the-new-greece.html?_r=0

Avatar of Jon Lindgren

About Jon Lindgren

I am a former President of the Red River Freethinkers in Fargo, ND, a retired NDSU economics professor and was Mayor of Fargo for 16 years. There is more about me at Wikipedia.com.
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36 Responses to Detroit and the Economics of Cities.

  1. Wanna B Sure says:

    Jon; Could you present this topic in the form of a flow chart please?

  2. Michael Ross says:

    Detroit: Ghost of America to come

    http://www.zerohedge.com/news/2013-07-19/photo-album-main-streets-dead-city

    Rotting, Decaying And Bankrupt – If You Want To See The Future Of America Just Look At Detroit.
    http://www.zerohedge.com/news/2013-06-17/rotting-decaying-and-bankrupt-%E2%80%93-if-you-want-see-future-america-just-look-detroit

    “Now the great city was divided into three parts, and THE CITIES OF THE NATIONS COLLAPSED. And great Babylon was remembered before God, to give her the cup of the wine of the fierceness of His wrath.” (Revelation 16:19)

  3. Henry says:

    Wanna:“flow chart please?”

    Sure. Let’s try this:

    ☭ then &#9660

  4. dan says:

    Louis Miriani was the last Republican Mayor of Detroit. In 1962 until today, it has been ran by a Democratic mayor. The city didn’t empty out into the suburbs, the people simply left the state due to lack of jobs. Just this weekend alone, I saw three cars with Michigan plates on them on I29 headed north. People are leaving the state to find work. I was in Detroit back in the early 90s and the city was a dump back then. I couldn’t imagine what it looks like today. The labor unions along with the corrupt mayors of Detroit ran Detroit into the ground. Unfortunately, Detroit won’t be the last city to fall to progressivism. Chicago will probably be next.

    Lastly, out of curiosity, what do atheists believe that nothingness looks like? Do you just dissipate into darkness/light without any intelligent thought process? Does time accelerate when you dissipate or does it cease to exist? If time is relative, then does it change for those who enter into nothingness? If you look at a person through a thermal imager, you will see heat below the human skin. Once this heat/energy dissipates upon death, where does it go? If life after death does not exist, then why are there so my accounts of spirits being seen and even caught on camera? Is this the energy that becomes missing from the body upon death? Either the energy remains bonded together after death or it dissipates into nothingness. Either way, something happens to you upon death.

    • Henry says:

      Dan:“I was in Detroit back in the early 90s and the city was a dump back then. I couldn’t imagine what it looks like today.”

      Actually, nature is taking over and cleaning it up. It doesn’t take long. Soon, there will be large tracts of land with green grass, some curious depressions in the ground at a regular interval, and volunteer trees providing nice shade for the critters that are likely flourishing in the evolving (more order to less order) environment.

      • Avatar of realist realist says:

        Ordinarily I disagree with you, but in your tongue in cheek comments, you have a salient point. The fortunes of cities fluctuate over time. I do not believe that poppycock about liberals running Detroit into the ground when it was the automobile industry along with it’s Republican owners who decided to move jobs overseas and elsewhere. That said, it doesn’t matter at this point. History has lots of examples of cities declining for many reasons. It’s a natural process of changing demographics that we need to accept. If your scenario of open fields in Detroit comes true, then so be it.

    • Avatar of Jon Lindgren Jon Lindgren says:

      Dan 10:35 “…last Republican Mayor in Detroit.”

      As far as I know, Pittsburg has had several decades of Democratic Mayors. Pittsburg suffered loss of the steel industry but today is doing well. It has not allowed the urban sprawl of Detroit.

  5. Long John says:

    Detroit is an example of what happens when government over spends. Obama are you paying attention?

    • Avatar of realist realist says:

      A bit of an oversimplification, don’t you think?

    • Avatar of Jon Lindgren Jon Lindgren says:

      Long John 12:59 Yes, Detroit’s problems include spending more than it brings in. The question is why. The attached link explains the difference between Detroit and Pittsburg. Pittsburg lost its mighty steel industry. It recovered quite quickly. In Pittsburg, about half the city’s jobs are located within 10 mile of the city’s center. In Detroit, its only about a quarter of it jobs.

      A city trying to overcome the effects fo job sprawl or urban sprawl is like trying to catch a race horse with a donkey. The cost of running a city just outruns its ability to bring in tax revenue. More sprawl means more cops, firefighter, far flung fire/police stations, highways/streets, water lines, sewer lines, underground drainage because of parking lots and streest, snow removal, schools and on and on. The sprawl comes back to bit the tax revenue by reducing the amount of revenue per square mile because of density of buildings–more parking lots and streets.

      The thing is, citizens usually vote for mayors who promise more and faster streets and not to ones who pledge to make the city’s economics better.

  6. Avatar of seaofstories seaofstories says:

    Maybe the relentless partisan finger pointing might have had something to do with it.

    Compromise has clearly been in order for quite some time but none has been forthcoming.

    There’s more blame to be distributed than there are people left to take it.

  7. Michael Ross says:

    The cities may be crumbling but there is a royal baby born. Let’s get our priorities straight.

    http://www.infowars.com/as-cities-crumble-the-u-s-celebrates-british-royalty/

    • Avatar of Jon Lindgren Jon Lindgren says:

      Here is another link with a serious discussion of Detroit. But, it leaves out the big picture of the city’s problems.

      Elections in Detroit were voted into office Mayors who were not the right ones to address its problems. That is because urban sprawl leads to a certain demographic leaving the city for the burbs and another demographic staying. The demographic that stays affects the choice of who is elected by its voters. The demograhpic that leaves often commutes into the city, has investments there and tries to influene the direction of things. That group, too, wants super interstate highways carving up neighorhoods and persuading people to move out.

      The illusion continues that as newer and wider highways criss cross cities, people think things are getting better and better when they are actually getting worse and worse.

      • Wanna B Sure says:

        Jon; There are a few things you don’t take into consideration. The sprawl you refer to usually is in the suburbs. In almost all situations, those suburbs are separate cities in their own right, with their own mayors, and taxes. Most core cities are surrounded by suburbs. I’m not sure about Detroit, but just looking on the map, cities surround Detroit, with their own name and identities, infrastructure, and tax base. It’s my understanding that Winnipeg incorporated all the suburbs into Greater Winnipeg, resulting in no “suburbs”. Minneapolis on the other hand is a city surrounded by cities. The city of Minneapolis is not responsible for any of the maintenance of the infrastructure/schools/ government administration, of the surrounding “burbs”/cities. The only exception would be the freeways, which is Federal. Look at the FM area. You have 4 independent cities. West Fargo, Fargo, Moorhead, and Dilworth. Fargo really can’t expand North much more, you can’t go East, or West and you are trying to destroy Hickson/Oxbow/regions South, even into Richland County, with water retention for the sake of the flooding problem in Fargo. If you dislike the Interstates of 94 and 29, move 94 south to Wahpeton, and angle it towards Bismark, and move 29 to Jamestown North. Then we’ll see how Fargo business thrives with the inconvenience to all the feeder communities that fund Fargo’s business community. Just think how much gas would be saved by that inconvenience, so the people shop locally, instead of “hopping onto “the interstate to Fargo. I’m sure the merchants that are left wouldn’t mind. Another one of your past concerns would also be solved. With no interstate traffic, lives would be saved due to the reduced speed, and they wouldn’t have to wear helmets in the cars as you seemed to think was necessary. You could upgrade the Cole Hotel for the occasional over night shopper, and the down town would be improved.

  8. David says:

    Krugman is a hack. No other word for him. He seriously wants us to think that Detroit’s governance has not been any worse than any other city? Some sad stats about Detroit – 47% percent functional illiteracy among adults. 40% of its streetlights don’t work. 317 parks have been closed. It takes police an hour to respond to a 911 call. Property on sale for $1 remains on the market. Jon’s response is that it has to do with good roads. Lots of cities have good roads. Lots of cities have lost some of its core business. The city looks like a war zone. Homes are crumbling. Yet, because the former mayors have all been Democrats we can’t blame them. It must be the roads.

    The city is bankrupt because they spent recklessly. It didn’t just happen over night. There are no businesses willing to move to Detroit because the workforce can’t read. Taxes are too high because they cling to the notion that the rich must be soaked with taxes never thinking they would leave. The only businesses that matter are large business – to heck with small business. Regulate, tax promise great benefits to public workers. Pretty soon the only people left are public workers with no one to pay their salaries.

    • Avatar of Jon Lindgren Jon Lindgren says:

      David 7:05 “The city is bankrupt because they spent recklessly.”

      My point is, why did they spend recklessly? Because the public wanted this spending. The public wanted this spending because of the illusion they would benefit by it. The sprawl created more cost, the public wanted fire, police, streets, water and sewage. The more the sprawl, the more these services cost. Detroit’s politics is about cars. Make cars, drive cars. Cars, the space they take and their need to be subsidized by general tax revenue, work at odds with successful cities.

      • David says:

        The city is bankrupt because there are no jobs. There are no jobs because the environment in Detroit has become lawless and inhospitable to business. Greedy corporations who want to stay in business left. So did the jobs. The work force in Detroit has deteriorated as well. 47% illiteracy is not a function of too many roads but rather too much Liberalism in the schools.

  9. Avatar of realist realist says:

    Yet Krugman was right about austerity policies when many, especially non-Keynesian economists, were saying he was all wrong. Many in conservative circles have begrudgingly admitted that. So, no, he’s not a hack.

    • David says:

      Funny thing that Krugman. He’s all in favor of expanding government when the economy is down and then when the economy is roaring . . . he’s in favor of expanding government. He is a Liberal first and his economics stem from his Liberalism – not the other way around.

      I am sure that the usual suspects in “conservative” circles admit he’s right such as David Brooks. It’s not as simple as he makes it sound. Just increase spending and everything will be all right. We did that. We increased spending with TARP, the stimulus bill, Bush’s stimulus bill, but it’s never big enough according to Krugman. More importantly it’s never temporary. The spending continues and continues. I think most would agree we cannot forever continue deficit spending. Is it good that so much of the money that is taken from the private sector goes to pay interest on the debt? Will the debt ever be a problem? At some point we will lose our ability to borrow. There will be no more stimulus possible. What then?

  10. Brad says:

    This claim that Detroit’s problem is due to liberals and unions is hogwash, and it’s unfortunate that those who repeat this nonsense are so obviously Fox News disciples. Don’t think for yourself, just repeat what you hear from the right wing noise machine.

    Detroit’s problems are mostly due to the massive changes in the auto industry over the past 30-40 years. Foreign competition and outsourcing and corporate greed is what caused it. I don’t think it could have been avoided, but it is the classic boom and bust story.

    Will any of the Fox News fans blame Republicans when the western ND oil boom goes bust (and it will, eventually)? After all, western ND is hugely Republican.

    • Dan T says:

      “Foreign competition and outsourcing and corporate greed is what caused it.”

      . . . made worse by union leaders not adapting to a new reality, advocating contracts that were uncompetitive. They overplayed their hand, and their people found themselves on the wrong side of the power struggle. And what would motivate the economy to diversify in that kind of environment, where you’re told your job is protected and the wages are high?

      • Brad says:

        Diversify? To what, building mudpies? Even if there had been no unions to ensure fair compensation for workers, Detroit would still have went bust after the auto industry changed, and the only difference is that there would be smaller houses being abandoned and more people in poverty than there are now.

        • David says:

          Why is the auto industry robust in Tennessee? I think those workers the ones looking at their future are happy they aren’t in a union. They aren’t building mud pies. The auto workers don’t live in Detroit. They live in the suburbs. They’re not going to live in a lawless city with oppressive taxes. The houses being abandoned owned by autoworkers were sold long ago.

        • Dan T says:

          Perhaps it would have collapsed without the unions – or maybe people would have recognized the industry changes sooner and made plans accordingly. In the end, it probably wasn’t greedy corporations or lazy unions that brought down Detroit – it just wasn’t “lovable” enough for people to stick around and make it work.

    • David says:

      Detroit is bankrupt. It has been run by Democrats since the 1960′s. It has been a one party rule. Yet, the claim is that those running the city, Democrats are certainly not responsible. It must be corporate greed. Were corporations not paying taxes? Should they have stuck it out in a city where tax rates are oppressive? So many people cite that the decline in the automotive industry is the cause. What caused these companies to leave? What caused GM to need a government bailout? Unions rule the work force in this industry, but we can never blame unions. Only corporate greed.

      What incentive is there to stay in Detroit? There is 47% illiteracy. Who runs the schools? Certainly not conservatives. Liberals and unions run the schools. The city is a complete mess. If the city were a shining example of high literacy and economic boom you can bet every Liberal would be crowing about how great their policies are. When the opposite happens it’s some nefarious corporate greed that gets blamed. There is no explanation how this vague evil is supposedly responsible but it sounds good and lets off Liberal policies.

      Jon seems to think it was poor city planning. Too much infrastructure. Perhaps that played into it. This is a good illustration of how government is unresponsive to the market. It’s also a good explanation as to why Keynesian policies ultimately fail. Keynes thought we needed to ramp up demand. Hire people to dig holes and fill them up. Hire workers to build roads. Planned economies ultimately fail in disastrous fashion because they are unresponsive to the market. They keep building roads long after they are needed. They tax companies more and more despite the fact that they ultimately lose revenue when those companies relocate or are outsourced because they are no longer competitive. Blame voters, corporate greed, foreign car makers or general market decline, but never ever blame Liberals and unions that are running the show.

      • Avatar of Jon Lindgren Jon Lindgren says:

        David 5:17 “This is a good illustration of how government is unresponsive to the market.”

        No, it is a good illustration of being responsive to the market. The public, especially Republicans, love interstate highways in cities and everywhere else. It’s part of the illusion I discussed in the blog. Interstate highways in cities make it look like things are getting better when they are acutally getting worse. The interstate program was started by Republican President Eisenhower. When I was a Mayor, the biggest supporters of this illusion were Republicans, though some Republicans and Democrats recognized it was an illusion.

        I don’t deny there have been a string of Mayors in Detroit who were Democrats. The most famous one I visited with several times, Coleman Young. I don’t deny those Mayors and City Council members probably hired too many city employees and paid the too much. Nor, do I deny the auto labor unions probably demanded too much pay and the Republicans who managed the companies gave it too them.

        I’m just saying the politics of cities, how they are organized and the powerful appeal of infrastructure projects is the one big variable. If it is kept in balance, like it was in Pittsburg in the East and Portland in the west, other problems can be overcome.

        • David says:

          Jon,

          People voting for politicians that give them goodies is not a market function. It is fairy land dreams. If a private entity owned the roads they would not have created more roads where they were not needed or where there was no profit. Government builds roads because of the whim of politicians. Politicians have no bottom line to see whether the roads bring in more revenue. They do things to get votes. I certainly do not care whether it is a Republican centrally planned fiasco or a Democrat controlled fiasco. I will tell you that Democrats generally like to spend more and tax more. Democrats like central planning more than Republicans. Central planning is an anathema to Conservatives. Some central planning is likely better than others – I will grant you that, but it is never as efficient as a market. Markets left to there own devices without government influence correct faster because of the dire consequence of being out of business and losing one’s money. Governments can tax more or issue tax free bonds. When a government or a government influenced market goes down it tends to be more drastic because there are no profits or losses to guide.

      • Henry says:

        David:“Planned economies ultimately fail in disastrous fashion because they are unresponsive to the market. They keep building roads long after they are needed.”
        And $400 million hockey rinks at the same time they cannot keep law enforcement properly staffed or the streetlights lit. Dumb.

        http://www.weeklystandard.com/blogs/denial-detroit-city-plans-400-million-taxpayer-funded-hockey-arena_741090.html

        • Avatar of Jon Lindgren Jon Lindgren says:

          Henry 3:24 “And $400 million hockey rinks..”

          I think this is crazy too. But, I don’t attribute it to “liberals” or “central planning”. My guess is the biggest Detroit backers of this are Republican business people.

          • Henry says:

            Jon:“Republican business people.”

            Sometimes these can be the biggest “liberals” in terms of spending. There are some blowhards in this town that do not see a hockey arena they don’t like. Three public votes “no”, and we have an arena that has no accountability, yet we are on the hook for after the park district and school district bailed them out. Should have left it abandoned in bankruptcy hearings. Either a new owner could get a cheap building or it could sit full of groundwater. As a public citizen, we are not legally privy to all the details of that building we are obligated to. That is not right. Many “liberal” republicans put that deal together. They profess to be conservatives. I don’t think so.

          • Henry says:

            I have also seen another recent trend. The City of Fargo has always loved its special assessments. I would say you sometimes need them. I have noticed in the past two years, the city has created a number of districts to make improvements on streets. The projects are piddly little things, but all add up. This is trending more as the deciders and decider’s consultants have to have every portion of sidewalk and whatnot level and uncracked. The truth is we live in a harsh climate, and we will have cracked and weathered concrete with a few frost boils and soil heaving here or there.

          • Avatar of Jon Lindgren Jon Lindgren says:

            Henry 4:16 re: special assessments

            I’m with you on this. When the concept of special assessments was allowed to be used for things that are not connected directly to a piece of property, the street in from of a house, water and drainage, it became a form of conservative socialism. Every conservative saw a chance to make some money, or, have the general public pay for something he/she would benefit personally from. My view was politically unpopular, so called conservatives thought my conservative views were liberal.

          • David says:

            Jon,

            It’s not a question of Democrats or Republicans. It is a question of government being unresponsive to the market. Their market is votes – not dollars.

  11. Long John says:

    David, I agree with you; well said.

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