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A public policy blog from AEI
Photo galleries and slideshows showing Detroit’s decay are always great Internet click-bait. (Maybe second only to shots of the soulless Pyongyang.) The pictures look like stills from one of those “Life After People” speculative documentaries. Unfortunately, lots of people still live in the Motor City’s urban ruins, some 700,000 of them, down from a peak of 2 million in the 1950s.
They live in a city with not much to show for its nearly $19 billion in debt, other than the biggest US municipal bankruptcy filing in the country’s history. As Reuters reports, a) the city’s murder rate is at its highest in nearly 40 years, b) only a third of Detroit’s ambulances were in service in the first quarter of 2013, and c) an estimated 5,000 buildings a year intentionally are set on fire.
Yes, Detroit has been atrociously managed, as Edward Glaeser documents in Triumph of the City. Faced with the decline of US auto industry, Mayor Coleman Young, who led the city from 1974 through 1993, decided the city’s salvation was to be found in building things rather than “trying to attract smart, wealthy, entrepreneurial people.” In the 1970s, for instance, Detroit built an expensive new hockey arena for the Detroit Red Wings and then rented it to the team at bargain rates. In the 1980s, it built the People Mover monorail, what Glaeser calls the “single most absurd public transit project in the country.” The $350 million Renaissance Center created millions of square feet of new office space, a complex eventually sold to GM for $100 million.
But fundamentally, Detroit’s demise as an industrial city stems from a failure to adapt — as seen in its preference to invest in things rather than people — as automation allowed automakers to make more cars with fewer workers and globalization brought cutthroat international competition. The story of Detroit is the story of the transformation of global manufacturing, including the auto industry, in a gale of creative destruction. As Enrico Moretti of the University of California, Berkeley and the author of the New Geography of Jobs, said in a recent EconTalk podcast:
Detroit’s local politicians, the unions, and the car executives–they became complacent. And they had their share of responsibility. But the biggest failure of all was the fact that, at the time when it had one of the biggest, most prosperous ecosystems in the world, it failed to reinvent itself and leverage that consistent into something new.
When the demand for workers in the auto industry started collapsing, Detroit failed to find something new. The technological frontier keeps evolving, and there’s no technology that stays on the frontier forever. The secret for a community is to reinvent itself into new things. And I think this might be the most important difference between Detroit and Silicon Valley. Silicon Valley keeps reinventing itself. It used to be mostly hardware and silicon in the 1970s and 1980s. Then it became mostly software. And then it became mostly Internet. And now it’s branching out into new things like nanotech and biotech. Nobody knows whether those technologies will succeed and will create jobs, but this is an ecosystem that keeps following what the frontier of technology is. In contrast, Detroit failed to, and now it’s probably too late, because the ecosystem is not there any more. And so there is little left to be leveraged.
Good luck returning Detroit to what it once was through government-created innovation hubs. “I haven’t found one example of an innovation hub in the US that has been created by deliberate policy that says, ‘We’re going to create an innovation hub here,'” Moretti says. Instead of a top-down effort, better to create the organic conditions that will draw those smart, wealthy, entrepreneurial folks Glaeser writes about — especially immigrants — to Detroit. Maybe turning Detroit into a sort of Hong Kongesque tax haven — one with decent schools and safe streets — to encourage startups and a more diverse economic base than relying on one manufacturing sector. At best it will be a long slog with no guarantee of success, but the odds will be a lot better with policies that invest in people rather than things.
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