The Shrinking of Detroit
mapscroll.blogspot.com
mapscroll.blogspot.com
Detroit is a nightmare, and I don't think there are many people who fully understand just how bad it is out here unless you live around here.
There are basically three pockets of Detroit that you can walk around on-foot. Take a ride on "The People Mover" (a very poorly thought out monorail) and you'll run through areas of Downtown that are good and areas of Downtown that look like they were used for bombing practice. Venture beyond Downtown, and you understand why some property in Detroit is selling for $1 and why that's highway robbery.
I used to do contract work for several companies. One of our companies was a charter school just on the edge of the border of Detroit. You'd take Mound Rd. to get there. Mound is a mile south of Van Dyke, which starts in the heart of Downtown and ends in farm country. The progression was clear...the closer you got to the edge of Detroit the more things started looking like a third world country.
It's subtle at first: recognizable brand names start to become very sparse. Then occupied buildings in places other than intersections vanish. The intersections are littered with Check Cashing Liqour/General stores. Those are replaced in kind by the same but with bars on the windows and graffiti everywhere and eventually even those are gone replaced by what was once a Liquor store but is now a square of abandoned cement.
My parents and my wife's parents all lived in Detroit when they were young, as did all of their friends. They got out when crime went up. With the plummeting price of housing, even those who were once way too poor to live outside The City are getting out. Crime has increased in the area I live, but violent crime is still rare. Those who can find a way out, get out.
The city's decline won't stop. The burbs have created "The City" experience with great restaurants, great entertainment venues, great shopping and safe living.
Most of Detroit's Mayors were of the quality of Kwame Kilpatrick (other than Dennis Archer). The people of the city resent the folks who left, and folks running for mayor or city counsel do best if they blame Detroit's problems on the suburbs.
I'm really curious if the same thing will happen to San Jose in 50 years time. Like Detroit, San Jose is a monoculture, with an economy based upon American competitive advantage in one particular industry. And San Jose already has a population density lower than Detroit: 940,000 people on 178 square miles. When the software industry gets off-shored to other companies and large Silicon Valley dinosaurs can't compete anymore, will we see pieces about urban decay in San Jose, with the crime, falling home values, and urban prairie that results?
BTW, does anyone else hear Dire Straits' Telegraph Road in their head whenever they read a piece about the decline and fall of Detroit?
Man, this could be worse than Tim Draper performing his version of Smooth alongside Carlos Santana, with the words changed to be about entrepreneurship...
Perhaps other regions with a diversified economic base can never be as spectacularly wealthy, but they should be more insulated from industry collapse.
I think it's more that diversified, healthy economies take time to grow, and you'll never get the sort of fast growth rates that Detroit or San Jose have had in a diversified economy. Boston and NYC have both been around for close to 400 years; they've had industries rise and fall, which gives them a broad base to fall back upon when the latest industry du jour dies. Boston had a problem much like Detroit in the 1930s-50s when the textile & tanning industries moved south, but it also had grown strengths in education and finance (dating back to the 1600s) that served as the backbone for the tech & biotech revolutions of the 1970s an 1990s.
An interesting comparison might be with Salem, MA, which at the time of the revolution was the 6th largest city in America. Salem's growth was much more concentrated in shipping that neighboring Boston. So when technological development replaced sailing ships with steamships, which needed a deeper harbor than Salem could provide, the city declined until it was a mere suburb of Boston.
I think the strength of New York and Boston are due to a couple factors 1) crime never passed a certain tipping point at which most of the productive citizens left and 2) they both are traditional homes of industries that have done well the past thirty years ( finance and education). See my previous comment for the reasons why finance has outperformed manufacturing, - http://news.ycombinator.com/item?id=657765
Detroit is failing not just because its economy was driven by the automotive industry -- it was also dependent on a small number of employers (basically the Big Three automakers) who failed to compete with more agile, innovative foreign competitors.
There are certainly bigger players in the SV/Bay area whose disappearance would be felt painfully (Google, Apple, Oracle, etc.), but the business culture in the area also seems fairly able to turn collapses (SGI, AltaVista, Netscape, Sun) into opportunities, or at least mitigate the damage done.
Ann Arbor is indeed a nice town, and is a reason that people might want to live in Ann Arbor. Living in Detroit so that one might occasionally visit Ann Arbor an hour away makes no sense.
It's true, we're not talking about a landlocked post-apocalyptic industrial wasteland. But it pretty much is an industrial wasteland. An apocalyptic de-industrializing wasteland, if the ever-ongoing decline of the Big Three auto companies can be regarded as a sort of creeping apocalypse.
While I don't think the idea would ever fly, and I'm not sure it could work, it's definitely an idea to make you think - perhaps the answer is less intervention, not more.
Now we see one reason the plan won't be implemented.
The internal force is the incompetence of democratic city governance. Detroit had utterly incompetent elected leaders who in the 1960's and 70's allowed rioters to loot and burn large swaths of the city. Homicide rates rose by an order of magnitude. If you look at homicide rates in Europe, you have to back to the 12th century to find homicide rates as high as those in modern Detroit. Order and security are base requirements for economically productive societies. When the violence came, industries and productive residents fled. This process happened in major cities across the country: St. Louis, New Haven, Cleveland, Baltimore, etc.
Unfortunately, in a democracy the quality of government is proportionate to the human capital of the voting population. Now that the human capital has left, effective governance is even more unlikely. Thus the prospects for Detroit look grim indeed. The only hope is to put the city into receievership and grant a competent executive the authority to clean up the city (perhaps this would be a good job for General Petraeus).
The second factor is the American seinorage empire. Since the end of Bretton Woods in 1971 the primary export of the United States has been its own currency. China, Japan, Korea, etc, ship cars and steel to the United States. The U.S. ships back freighters full of dollars in return. As a result of China and Japan buying the currency, the exchange rate is artificially low. That makes it very hard for domestic manufacturers to compete with the Asian producers. What should have happened is that as American industries failed, we would have less exports which would weaken the dollar, making foreign products more expensive, thus increasing the profits of domestic manufacturers and stopping the cycle of decay. Instead, China and Japan continued to ship us cheap goods, and in return bought treasuries and financial products from Wall St. This greatly enriched the U.S. government and Wall St., but screwed over domestic manufacturers. The result was a growth in "service jobs" which were essentially jobs feeding off of the ever growing Washington bureaucracy. The United States is playing the role of 16th Century Spain. It exports a currency in return for foreign goods, while the domestic industries die.
The final blow to Detroit has been dealt by monetary incompetence on the part of Washington. The U.S. is currently experiencing a monetary contraction. Monetary contractions should never happen with competent economic stewardship. The government can always simply renominate the currency and avoid the problem. When a monetary contraction does occur, people dramatically cut spending on durable goods. Thus again, Detroit is punished for events completely outside of its own control.
The incompetence of city government angle, though, that I can get behind. Detroit in particular is two cities. We could call them Red Detroit and Blue Detroit. The Red politicians hate Blue Detroit with a passion, because they think the Blues have money and aren't sharing enough of it with Reds (and, most particularly, Red politicians). The Blues are deathly afraid of the Reds killing them, but try to be circumspect about putting it in so many words, so rather than stay in the city and face a possibility of death and a certainty of being "the colorist bastards always keeping hardworking Blues down" they have long since left for greener pastures.
That is a metaphor, of course -- no one in Detroit is actually colored Red or Blue.
In the absence of the Japanese buying dollars, the price of Japanese cars would keep rising until trade balanced between the United States and Japan.