Detroit: The Moral of the Story (What can we learn from a rich, productive city that was ruined?)

National Review ^ | 06/09/2012 | Kevin D. Williamson

[SeekAndFind]

The Left’s answer to the deficit: raise taxes to protect spending. The Left’s answer to the weak economy: raise taxes to enable new spending. The Left’s answer to the looming sovereign-debt crisis: raise taxes to pay off old spending. For the Left, every deficit is a revenue-side problem, not a spending-side problem, and the solution to every economic problem is more spending, necessitating more taxes. The problem with that way of looking at things is called Detroit, which looks to be running out of money in about one week. Detroit is what liberalism’s end-game looks like.

And Detroit does in fact have a revenue problem, as I argued in the May 14 National Review (“Let Detroit Fail”): “Revenues declined by more than $100 million between 2007 and 2011. Income-tax revenue dropped by 18 percent, utility-tax revenue by 17 percent, property-tax revenue by 2.3 percent. Seeking a quick fix to its revenue problems, Detroit chartered several casino-gambling operations, only to see taxes from them begin to decline (by 1.5 percent last year) after a period of early growth. Detroit, once the wealthiest city in the United States by per capita income, is today the second-poorest major U.S. city.”

Detroit is evidence for the fact that the economic limitations on tax increases sometimes kick in before the political limitations do. The relationship between tax rates, tax revenue, economic incentives, growth, and investment is complex, to say the least, and deeply dependent on the historical and economic facts of particular places at particular times. We have theories of growth, but no blueprint. But Detroit was not reduced to its present wretched circumstances by historical inevitabilities or the impersonal tides of economics. It did not have to end this way, but it did, and understanding why it did is essential if we are to avoid repeating Detroit’s municipal tragedy on a national scale.

One lesson to learn from Detroit is that investing unions with coercive powers does not ensure future private-sector employment or the preservation of private-sector wages, despite liberal fairy tales to the contrary, nor do protectionist measures strengthen the long-term prospects of domestic firms competing in highly integrated global markets. We cannot legislate away comparative advantage or other facts of life. But the problem of unions’ coercing distortions in the private sector is at this point a relatively small one, given the decline of unionization outside of government. Organized labor being a fundamentally predatory enterprise, its attention has turned to the public sector, where there are fatter and more stable rents to be collected.

The second important lesson to be learned from Detroit is that there are hard limits on real tax increases, a fact that will be of more immediate significance in the national debate as our deficit and debt problems reach crisis stage. Even those of us who are relatively open to tax increases as a component of a long-term debt-reduction strategy must keep in mind that our current spending trend is putting us on an unsustainable course in which our outlays will far outpace our ability to collect taxes to pay for them, no matter where we set our theoretical tax rates. The IMF calculates that to maintain present spending trend the United States will have to nearly double (88 percent increase) all federal taxes to maintain theoretical solvency. Those tax increases are sure to have real-world effects on everything from investing to immigration. At some point, the statutory tax increases will not increase actual revenue.

Even the best tax regimes are cannibalistic: Every tax is an incentive for the taxpayer to relocate to a more friendly jurisdiction. But tax rates are not the only incentive: Google is not going to set up shop in Somalia. Healthy governments create conditions that make it worth paying the taxes — which is to say, governments are a lot like participants in any other competitive market (with some obvious and important exceptions). The benefits of being in Detroit used to be worth the costs, but in recent decades millions of people and thousands of enterprises large and small have decided that is no longer the case. It is not as though one cannot profitably manufacture automobiles in the United States — Toyota does — you just can’t do it very well in Detroit. No one with eyes in his head could honestly think that the services provided by the city of Detroit and the state of Michigan are worth the costs.

The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit? This is not angels-dancing-on-the-head-of-a-pin stuff. People do not invest in firms, industries, cities, or countries they do not trust. Corruption makes people poor.

What is true of Detroit is true of the country. Our national public sector not only is bloated and parasitic, it is less effective, less responsible, and less honest than that of many other developed countries, including New Zealand, Canada, Australia, and Germany. I am not an unreserved admirer of Transparency International’s global corruption-perceptions index, but I believe that it is in broad outline accurate. Liberals are inclined to learn the wrong lessons from the relative success of countries such as Canada or New Zealand, concluding that what we need is a bigger welfare state, government-run health care, etc. (Conservatives, for our part, tend to overemphasize the role of comparatively low taxes and light regulation in the success of countries such as Singapore and Hong Kong. Those are important, but there are other equally important factors.) In reality, there is a great diversity of health-care arrangements and social-spending levels among the countries that have more effective institutions than ours, while many countries with the sorts of institutions liberals admire (take Italy, Spain, Greece, and Portugal for starters) are in crisis, in significant part because of plain corruption. What the more successful countries tend to have in common is a public sector that is less intent on looting the fisc.

Sure, Hong Kong and Singapore have lower levels of government spending (as a share of GDP) than does the United States. So do Switzerland and Australia. At 38.9 percent of GDP, our public-sector spending is indistinguishable from that of Canada (39.7 percent). It is not obvious that we have much to show for it.

The city fathers of Detroit inherited one of the richest and most productive cities in the world, and they ruined it in a generation. The gentlemen in Washington have been entrusted with the richest and most productive nation in the history of the world, and the trendline does not look good. Those of us seeking to radically reduce the footprint of government must remind ourselves from time to time that our case is as much ethical as economic, that the ethical and the economic are indeed closely intertwined.

[BfloGuy]

The article doesn't address one of the main problems...Forced busing from K-12.

You're right. Forced busing was a factor in the decline of all the big northern cities.

[DIRTYSECRET]

Here’s the solution: Give the city to Canada. That way they can be guaranteed single-payer health care. Next, declare the nation of Haiti an American protectorate and take all the females of child-bearing age (and younger)and move them to Detroit, a French historical place. Last, turn Haiti into a penal colony for the next 50 years. They can hire any 3rd world english speaker to teach and work as prison guards. At the end of 50 years they can give the country to the rightful owners, the Dominican Republic. It’s not the first time I’ve posted on tis subject.

[Lysandru]

It’s not race, it’s the mentality that’s was fostered by liberalism and taught to the kids and families. I’ve seen this mentality in England with whites who do nothing more than suck off the government tit for a living.

Thank you for saying this. Race is not as important as what one believes. Culture is what is most important.

I once was bulldogged by liberal coworkers who blamed black illegitimacy on slavery. But then years later I read how illegitimacy was much lower--for all races-- before The Great Society.

[wardaddy]

his entire article declines to discuss the elephant in the room.

Like plenty here too....there are white democrat run cities that function

[Lurker]

I would posit that if you put Thomas Sowell, Walter Williams, and Janice Rodgers Brown in charge of Detroit that elephant would rapidly shrink.

What say you?

[Forward the Light Brigade]

Thanks for the correction—Blame Bush I and the Democrats in Congress for this dumb law.

[GOPJ]

Detroit is what liberalism’s end-game looks like.

A ready made tagline...

[hinckley buzzard]

Typical for the obsequious pussyfooters of NRO. Avoid all real issues, regurgitate the usual LSM pablum. Somewhere, Buckley is vomiting right now.

[rogue yam]

ping

[nathanbedford]

You construct an interesting hypothetical. But I'm afraid it must remain hypothetical because we cannot "put" any of these individuals in charge of Detroit and that begs the question why have not these individuals, or like-minded sterling souls, risen to be in charge of Detroit?

If we look at American cities we see a consistent pattern. If we look at towns or small cities in the Caribbean we see a similar pattern. I have not been to sub-Saharan Africa but I am led to understand the facts on the ground are the same, only more so. Perhaps I am ill informed but I do not see, Thomas Sowell, Booker T. Washington, George Washington Carver or their estimable reincarnations running these political entities -I resist the formulation, "communities."

So, if we can conclude that there is nothing in the water in Detroit, Camden, the Bronx etc. that affects the politics of those places, we are driven to ask if there is something in the DNA or the culture of African-Americans which creates Detroits? But as we are driven to this question we find ourselves trespassing on political correctness so we cast about for other explanations to dodge that question. We say there is a history of colonialism in sub-Saharan Africa and slavery in the Caribbean and in parts of the United States. We speak of discrimination, segregation, inequality etc. as reasons for Detroit.

As other posters on this thread have observed, so long as we are ourselves enslaved by political correctness we will never be able to diagnose or cure the cancer which is currently consuming the vital organs of America.

Worse, as long as we were psychically enslaved by guilt driven political correctness we will continue to mouth mindless mantras like, "our strength is our diversity" when it is probable that precisely the opposite is the case, diversity generates weakness. We must ask ourselves whether the culture that produces an Anglo-Saxon democracy comes about because the Anglo-Saxons enjoyed an advantage in guns and germs etc. or for other reasons. Do we believe that a society mixed of Anglo-Saxons, Africans, and Arabs would be more or less corrupt than a relatively concentrated Anglo-Saxon society? This takes us to a portion of the article I quoted in my first post:

The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit? This is not angels-dancing-on-the-head-of-a-pin stuff. People do not invest in firms, industries, cities, or countries they do not trust. Corruption makes people poor.

If we judge either by exercising intuition or by examining political structures across time and geography, we should almost certainly conclude that an advanced society is dependent upon the rule of law and the absence of corruption. The element the author calls "trust." Is it not possible to correlate race and the presence or absence of corruption? Could we not conclude from history that the more diverse a body politic the more likely corruption? Could we not with our sophisticated actuarial techniques rather accurately predict tipping points? Or are we paralyzed by fear that we are now trespassing on really dangerous territory pioneered by Progressives and perfected by the Nazis?

Are we afraid honestly to confront and answer the question, are some races simply more "successful" than others? If we are not willing to explore this question do we have any moral right to consciously endanger our democracy by fiddling, Margaret Sanger like, with demographics by jiggering immigration? Does it make any sense to generate a "great society" by pouring trillions of dollars into our Detroits because we are forced by political correctness to believe against the weight of experience that any given ethnic group will respond the same as Anglo-Saxons?

Consider the plight of Japanese Americans emerging from concentration camps at the end of World War II. We have an example of one race succeeding within our culture despite the most ruthless kind of government discrimination. Instead of being invested with federal money they were in effect thrown into federal concentration camps yet the Japanese emerged from their ordeals to succeed at the highest level of American culture. I submit there is a distinguishable difference among races.

No, I have no empirical evidence which leads me to believe that a leader of the Athenian virtue will rise to the top of Detroit or elsewhere in our troubled cities. My subjective reaction tells me that the culture of Detroit simply will not tolerate Thomas Sowell running the place. I have plenty of empirical evidence which tells me that the nostrums of the Great Society do not work but perversely aggravate the pathologies. When social scientists attempt to accumulate objective evidence such as we might read in The Bell Curve the findings are disparaged. I have subjective evidence that there is a difference among races and those differences account for much of the pathology of Detroit.

I despair that I have to tiptoe around the subject even to address it.

[lentulusgracchus]

The Derbyshire episode was proof The National Review is either too PC or too chicken sh!t to discuss race openly.

Which shows that any article by NR or its staff will always have the fault of being too delicate to address the real problem. And now, worse, they've staked themselves out in that posture by dismissing Derbyshire, so nobody will ever take them seriously again on these subjects.

At the end of the day, corrupt people have no leadership with which to rally others; their only inducement is plunder shares. That is why governments run by such people are ineffectual: they lack honest leadership.

[lentulusgracchus]

My subjective reaction tells me that the culture of Detroit simply will not tolerate Thomas Sowell running the place.

Ping to my last. How many times have we seen it demonstrated, that tribal leaders become pirate chiefs, plunderers and raiders of The Other, whose proud boast in self-justification is that, to quote Anthony Quinn's line from Lawrence of Arabia, "I am a river to my people!!" <gunfire, ululation, and general applause>

Remember, it was a law of Rome, back when Rome lived at least partly by high-seas piracy in competition with Antium (Anzio), that adversus alienum semper ius esto, that the court must always find for the rights of the citizen of Rome, against the claims of an alien.

[nathanbedford]

When a meretricious leader pretends to be a "river to his people" he is consciously exploiting tribalism. We see this tribalism and the Travon Martin affair. The Jesse Jacksons of this world have made a good living out of being a river to their people.

There is something ominous beyond the mere corruption within the tribe going on in the Detroits of America. If the African-American tribe in Detroit descends into tribalism, there is no resort for those who are not members of the tribe except to form their own tribe (or to flee, hence "white flight"). We see this explicitly in the prisons. As tribe and tribalism begets tribes, we turn America into Iraq.

The entire system, the Anglo-Saxon system, which is based on comity crashes. There are high intellectuals and low Bolsheviks in our society who yearn for the crash. Judging by his biography, his associations, his appointments, and his affiliations with the New Party, ACORN, Saul Alinsky, and Bill Ayers, Barack Obama belongs to this group.

Tribalism undermines the nation state and, of course, the nationstate, especially the American state, is the principal obstacle to the success of worldwide socialism.

Good post.

[dragonblustar]

I grew up in the Detroit area. From what I experience, some of the whites had resentment towards blacks because of the riots and what it did to Detroit. Its a simple thing to do, but if you are to really look at the root cause, it’s really liberalism to blame. ( and it’s liberalism that prevented that city from every healing.) I didn’t realize this until I went to England.

When I went over to the UK, I didn’t think there would be any problem.... That was until I went to Brighton Beach and walked along the boardwalk and a bunch of rowdy kids ( at least a hundred ) took to the streets. I was never more scared in all my life. I lived in England for a while and what I saw among the people who were totally dependent of the government was the same attitude that I saw in Detroit, with some cultural differences but basically it was the same.

Liberals use race as a divisive issue. They use it on the Blacks to keep them feeling like a victim of the Whites and use it against the whites to make them feel ashamed at the way blacks are living today.... Liberals are the biggest racists around because they’re the ones who don’t hold blacks accountable for their actions, as if they’re too stupid or something. And they’ve made race such a hot issue that nobody wants to really talk about it and fix the problems in the black community. Look at how Bill Cosby was vilified.

[lentulusgracchus]

When a meretricious leader pretends to be a "river to his people" he is consciously exploiting tribalism.

That scene from Lawrence was interesting, in that Lawrence bent an English scruple when he replied, or rather when he folded his tent rather than persevere with his observation that the Hawitat, and by extension all Arabs, were brigands and skulkers. He was engaged, however, not in uplift, but in persuading the Hawitat to attack Aqaba.

<OT>The new Ridley Scott sci-fi epic, Prometheus, makes a very pronounced homage to David Lean's Lawrence. In one scene, an artificial person is watching Peter O'Toole's portrayal and combing his own hair to resemble O'Toole's Lawrence haircut and imitating his speech. Now I can spend some time, when I see the film again (Scott is a bear on people who like actually to hear and understand his dialogue), wondering if that scene was also an example of inescutcheon, of a play within a play.</OT>

The entire system, the Anglo-Saxon system, which is based on comity crashes.

My understanding is that the early common law, the body of Saxon laws, was intended to strengthen the king's realm by delegitimizing and suppressing clan and tribal factionalism and vendetta. In a way, it was a program to suppress particularisms, as the high-dollar set like to say, in favor of fealty to the king, in return for which the king promised justice. So of course society's Frankfurt-school destroyer-wannabes desire the destruction of public peace, so they can substitute, at some juncture, their own -- on the pretext that the former incumbent has failed.

The short form is that the Communists encourage tribalism and raiding behavior and vendetta in the short term .... only. Later on, the dirigisme.

Thanks for the kind words.

[equaviator]

Detroit neighborhoods are a jungle and wherever those people go from there they’ll take it with them.

[FreedomPoster]

I was thinking similar thoughts while reading this piece. Nice to have it confirmed that it was not just me.

Our county exec just spent $100k on the beginnings of a soapbox derby track (say what!?). This expenditure was not approved by the county commission. The total price tag would ultimately be north of $1 million. He is black.

We have had huge corruption in recent years in the county school system involving sweetheart construction contracts. Fortunately, this has been weeded out and there has been jail time involved. It was made more difficult by cries of RACISM! when the all-black group was initially being accused, and the replacement school superintendent was clearly selected primarily for the melanin content of her skin rather than for any proven ability to turn around a large system with some daunting issues.

In short, we are seeing locally examples of this same failure in government and tendencies towards corruption by black political leaders that caused Detroit’s downfall.

On a positive note, about a year ago I went down to watch a county commission meeting where a large tax increase was passed by a 1-vote margin. There were some *really pissed off* middle class blacks there after the vote who had been woken up as to the real nature of their political leadership. So amongst the dark clouds there is some hope.

[FreedomPoster]

I was thinking similar thoughts while reading this piece. Nice to have it confirmed that it was not just me.

Our county exec just spent $100k on the beginnings of a soapbox derby track (say what!?). This expenditure was not approved by the county commission. The total price tag would ultimately be north of $1 million. He is black.

We have had huge corruption in recent years in the county school system involving sweetheart construction contracts. Fortunately, this has been weeded out and there has been jail time involved. It was made more difficult by cries of RACISM! when the all-black group was initially being accused, and the replacement school superintendent was clearly selected primarily for the melanin content of her skin rather than for any proven ability to turn around a large system with some daunting issues.

In short, we are seeing locally examples of this same failure in government and tendencies towards corruption by black political leaders that caused Detroit’s downfall.

On a positive note, about a year ago I went down to watch a county commission meeting where a large tax increase was passed by a 1-vote margin. There were some *really pissed off* middle class blacks there after the vote who had been woken up as to the real nature of their political leadership. So amongst the dark clouds there is some hope.

[Zman516]

"Nathan Bedford's first Maxim of American politics: all politics in America is not local but ultimately racial.

This entire article declines to discuss the elephant in the room"

Here's a guy unafraid to tell it like it is.

http://stuffblackpeopledontlike.blogspot.com/

[11Bush]

Thank you both for reasoned, articulate, and logical postings. They are refreshing and rare.