I have little hope for Detroit. They have crashed and will be rebuilt with the same cast of characters in charge. Unlike NYC, and other cities, Detroit’s current population are not tasxpayers. So, after the crash, I see no real possibility of revenue creation. Even if outside business interests move in, they still have a crime-ridden uneducated populace.
Skipping the usual fixation on Detroit.
Is a magical unicorn going to crap gold coins in America’s cities? Their debt is growing perpetually and there aren’t enough taxpayers in the world to save them from the inevitable. Believing otherwise is just standard Keynesian thinking.
Some parallels between Detroit and NYC ( from the article):
* Detroit owes $5.7 billion for retiree health care. New York owes $88.2 billion — and has no money squirreled away. That’s $20 billion more than Detroit when adjusted for NYC’s larger population (NYC is 12 times bigger).
* Pensions? New York owed pensioners $69.9 billion more than it set aside as of last year’s annual report. Adjusted for population, that’s $28 billion more than Detroit owes.
* Bondholder debt? New York owes $77.3 billion. Detroit beats NYC there by about $34 billion — but even that should be a warning, not a comfort. People kept loaning until it was too late to maintain the illusion that Detroit could afford its retirement benefits — and now both groups will suffer.
What about budget deficits?
* Detroit can’t balance its annual budget because it must spend one-third of its revenues on health retirement benefits and debt. Well, New York’s budget has run an operating deficit six of the past seven years (with the shortfalls covered by pre-2008 surpluses).
And NYC spends one third of the budget on health and retirement benefits and debt.
* Detroit lost the auto industry. And New York, half a decade after Lehman Bros. collapsed, is still missing more than 30,000 jobs from its premier industry, finance. The sector’s ranks remain down 7.5 percent.
That’s important, because finance still provides 28.9 percent of New York’s income from wages — and we need the taxes on those wages to keep city services up so the world’s global elite don’t decamp with their cash.
* One difference -— NYC’s median household income, about $51,270 (thanks to Manhattan), is nearly twice Detroit’s.