Has there been a more spectacular downfall to an American city than Detroit? As late as 1965, Jerome Cavanagh, its then-mayor, the first of what would be to this very day an unending series of Democrat party officials leading the city, could say with some honesty, “frequently called the most cosmopolitan city of the Midwest, Detroit, today, stands at the threshold of a bright new future.”
And the Titanic was thought to be unsinkable as well, right up until she left the Southampton docks.
The riots of 1967 would be Detroit’s equivalent of the iceberg; the 1974 election of Coleman Young as the city’s mayor for the next two decades would cement its doom permanently, until ultimately, it was forced to declare bankruptcy this past July. And in addition to the city’s institutional reverse-racism, its fiscal mismanagement has been spectacular as well. As PJM’s own Richard Fernandez noted back in September, inside Detroit’s City Hall, from 1985 through 2009, “the pension trustees were draining the pension because they were so sure, so absolutely certain that the taxpayers would have to refill the pot they felt safe helping themselves to whatever they wanted… What could go wrong? To everyone’s amazement something completely unprecedented happened: City Hall went broke. ‘They didn’t reckon with the possibility,’ [Megan McArdle wrote in Bloomberg News] ‘that the city would simply run out of money, and the state would decline to step in, leaving them with no deep pockets to make up for their mismanagement.’ And so the Detroit pension is bust unless they find something they can siphon off to replenish it.”
To borrow from one of Glenn Reynolds’ recurring leitmotifs, a paraphrase of economist Herb Stein, something that can’t go on forever, won’t.
Or as National Review’s Kevin D. Williamson sums up all of the above in the new Encounter Broadside edition, What Doomed Detroit, “Detroit is a case of the parasite having outgrown the host.”
To understand how it all happened, in our latest interview, Kevin will discuss:
● Has the end come for Detroit?
● What caused Detroit to fall apart, and how quickly did the rot set in, once it did?
● How did Coleman Young’s lengthy tenure as mayor impact Detroit, and how is his legacy still impacting the city today?
● How Detroit is an extreme example of public-sector employment becoming a supplementary welfare state.
● How did a failed Soviet computer experiment predict today’s Obamacare debacle?
● Could Bill de Blasio’s administration slowly doom New York into becoming the next Detroit?
And much more. Click here to listen:[audio:http://pjmedia.com/eddriscoll/files/2013/11/20131126-pjm-ED.mp3]
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Transcript of our interview begins on the following page; for our many previous podcasts, start here and keep scrolling.
MR. DRISCOLL: This is Ed Driscoll for PJ Media.com, and we’re talking with the prolific Kevin D. Williamson of National Review. Kevin is the author of the 37th Encounter Broadside edition titled, What Doomed Detroit. It’s available from Amazon.com and your local bookstore, and Kevin, thanks for stopping by once again today.
MR. WILLIAMSON: It’s always a pleasure.
MR. DRISCOLL: Kevin, when we spoke in April, you had just published The End is Near and it’s Going to be Awesome. I’m not sure if awesome is the word I’d use, but has the end come for Detroit?
MR. WILLIAMSON: I would assume, in the sense that I’m talking about in the book, yeah. And there is some awesomeness there. I mean, it’s bad for the city, obviously, it’s bad for the people who live there. But the part of the book that Detroit is actually nicely, sort of, illustrating, is the emergence of counter-institutions, once the old, corrupt, inefficient political systems fall away, just simply for being out of money, you start to see interesting evolve, like things like the Threat Management Center in Detroit, which helps provide security to people in businesses where the police department simply can’t. You’ve got the emergence of new privately run, privately-funded bus lines, because the city busses have essentially just stopped functioning.
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And the nice thing about what’s going on in Detroit is these people aren’t asking for permission. The bus lines aren’t licensed, or they’re not registered with the city; they just started running busses. And that’s really what I’m hoping to see happen in the rest of the country, where these old, monopolistic, political institutions, things like the government schools, Social Security, Medicare, all this useless stuff that we have that’s so expensive, once they finally run out of the money, we have a chance to build something that actually works, that respects individual freedom and conscience, but more important, actually gets done the things we want to get done, that educates the children, that takes care of the poor and feeds the hungry.
MR. DRISCOLL: I think some people may see the photos of Detroit’s ruined buildings, and think this is a fairly recent phenomenon. And yet, in September, after Rush Limbaugh had promoted it, and after it was rereleased in the Kindle format, I read Zev Chafet’s book, Devil’s Night: And Other True Tales of Detroit, which was written in 1990, and yet seems like it could have written yesterday. What caused Detroit to fall apart, and how quickly did the rot set in, once it did?
MR. WILLIAMSON: Well, Detroit has two major problems. One is that it has what I suppose we have to call a ruling class — you know, a political establishment that is so entrenched, so corrupt, so greedy that it essentially looted the city and drove out all the productive people, enterprises, businesses, that sort of thing. And this came along with things like high taxes. Detroit was one of the first cities to institute a city income tax and that sort of thing, which didn’t drive people out of Michigan, necessarily, but it certainly drove them out of the city of Detroit.
And then the second thing you have in Detroit, which is, if not unique to Detroit, at least expressed in a more fully poisonous form there than most other places, which is this horrible, horrible racial politics they have there, which goes back to the transformation of the city in the early part of the twentieth century, where from 1910 to 1929 it goes from having something like 5,000 black residents to 120,000. They’re met with hostility by the local Democratic authorities, as African-Americans tended to have been all over the country, whether they were in the south or elsewhere. And these were your, sort of, old-fashioned, white, ethnic, Irish and Polish American Democratic city machines, and they just simply didn’t want blacks living in the city.
When the Second World War broke out, the Roosevelt administration was trying to build a housing development in Detroit for black workers who were going to come to the city and work in the factories there for the war effort. And it was designated — you know, it was supposed to be for blacks, because there was still segregation then. It was called the Sojourner Truth Projects. And then the Roosevelt administration, suddenly, when it starts hearing from its Democratic colleagues there in Detroit, decides it’s going to be a whites-only project and that they’re going to build a housing unit for blacks somewhere outside the city limits. This becomes a bit of a ruckus, and the Roosevelt administration reverses itself again. And so you’ve got the specter of these black families moving into new government homes in the 1940s, literally by the light of burning crosses as they were being pelted and threatened, and they have to call in troops. It turns into a full-scale race riot and it’s just — it’s ugly; Detroit gets occupied by federal troops. Detroit’s been occupied by federal groups three times in its history. It’s the only city to have that particular designation.
In the 1960s, you get another race riot in 1967, which at the time is the worst civil disturbance in the United States since the Civil War. Thousands of buildings burnt down, people burned alive, people shot in the streets by snipers, not — not government snipers; sort of private terrorist freelance snipers. And the city just burns. And Detroit in some ways never really recovered from the 1940s race riot, but it certainly never recovered from the 1960s race riot.
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Detroit’s population peaked around 1950, and it’s been in decline since then. It was the fifth biggest city in the country at one point. Now it’s smaller than Fort Worth or Charlotte.
And it was the highest income city in the country, and possibly in the world, right at the end of World War II, where the manufacturing economy was just booming and the United States was producing sixty percent of the world’s manufacturing output. And in one generation they managed to throw that all away. It’s been a spectacular case of political dysfunction.
If there are textbooks written about this 100 years from now, the study of Detroit is going to be like the study of the — oh, like the Punic Wars where the fields were salted and just a story of utter and complete devastation.
MR. DRISCOLL: Well, all of that sets the stage for Mayor Coleman Young’s legacy. Young served as Mayor of Detroit for a considerable period of time, from 1974 to 1994. How did his tenure as mayor impact the city, and how is his legacy still impacting the city of Detroit today? [The photo at top of page is of the Joe Louis fist memorial in Detroit, placed there in 1986, during Young’s disastrous reign.]
MR. WILLIAMSON: Coleman Young, gosh, the worst mayor in modern American history, maybe. Young was a practitioner of, kind of flamboyant racial politics. The opening prologue in my book is from John Milton that says “Better to reign in Hell than serve in Heaven.” Originally, it was a quote from Coleman Young, which I guess I can’t say right now, but he was a famously foul-mouthed, angry guy who was always going on about how the white folks were abandoning Detroit and taking all the money and opportunity with them, and practicing this kind of really poisonous racial politics.
And the exodus from Detroit hastened, certainly, under his administration, both because it was, so nakedly racialist, but also because, if not the mayor himself, so many of his cronies and colleagues were corrupt and you just couldn’t do business there.
And you also saw, of course, the flight of the black middle class at this point. The early story of the flight from Detroit is essentially white people leaving and black people moving in. And whites, of course, were higher income, and the blacks were lower income, although the blacks in Detroit were higher income than they typically were in the rest of the country. There really was a black middle class in Detroit, based on the manufacturing jobs and other things that were going on there.
Then you start to see a reverse of this very, very quickly. And within twenty years or so, starting really with the end of formal segregation in the 1950s and the 1960s, basically every black family that could afford to move out of the city limits of Detroit moved, with the exception of a couple of pockets of relatively affluent neighborhoods. And Detroit becomes, not so much a black city, which seems to be the impression of its politics, but specifically a poor and black city. And that is a whole different sort of political orientation.
MR. DRISCOLL: In What Doomed Detroit, you write that “Detroit is an extreme example of the fact that public-sector employment has become in effect a supplementary welfare state.” Could talk about what you meant by that?
MR. WILLIAMSON: Yeah, this is a gong that I bang a whole lot. The problem with the welfare state is not the people who are receiving the checks; the problem with the welfare state is the people who write the checks. The point of the welfare state is not to help poor people, it’s to create good, lifelong, high-income jobs for the people who administer the programs, the permanent bureaucracy in the endless welfare state.
We’ve spent — I don’t know what it is now, a couple trillion dollars on the war on poverty. The poverty rate is the same as it was in 1965. But what you have is a bunch of politically connected, in most cities and towns and states, Democrats who are paid pretty good money to administer these programs.
And so what you have is you get a big piece of the political class that gets moved out of the private economy, out of the rigors of the competitive marketplace, and installed in these comfortable jobs where they get paid pretty well and get great benefits and pensions and all the rest of that stuff, and where they can spend most of their time engaging in politics, organizing voting blocks for campaigns and things like that, which is why you see such remarkable voting turnout numbers in places that Philadelphia and Detroit and your similarly corrupt cities where you’ve got such a large public sector that spends so much time devoted to politics that they can achieve some really remarkable results. And of course it helps in the case of places like Philadelphia that poor people don’t actually get to fill out their own ballots. It’s done for them by these sort of corrupt operatives that handle that sort of thing.
And that’s really the problem of the welfare state. We always want to do what we can to help the genuinely poor and people who can’t provide for themselves and who are vulnerable in various economic and social kind of ways. I don’t think anyone really resents that too much. But the purpose of the welfare state is not to do that; it’s to create middle class jobs for political cronies.
MR. DRISCOLL: Kevin, let’s move on for a moment from the Motor City’s debacle, and look at a few other American cities in crisis. In addition to Detroit, multiple cities in California and elsewhere have declared bankruptcy. Are there any signs that once they do declare bankruptcy, that any of these cities are making meaningful reforms such as streamlining their operations, and reducing featherbedding, to minimize the chances of another fiscal calamity down the line?
MR. WILLIAMSON: Yeah, they do, to the extent that they’re forced to. I had the rare opportunity of being in San Bernardino at the city council meeting where that poor city declared bankruptcy. And I have to tell you, after having watched their city council in action, I’m surprised they made it this long without being bankrupt, the most inept and backward and self-regarding and thick-headed, beef-witted group of politicians I’ve ever seen anywhere in my life, and I’ve seen a lot of politicians.
So they have adopted some minor reforms. You get people doing things, like trying to move over to defined-contribution rather than defined-benefit pension plans, which is really the big piece of the puzzle, forcing various public sector unions to contribute at least a little or a little bit more to their own health care benefits and pensions and those sorts of things.
They won’t do it until they’re forced to do it, and that’s kind of the thesis of The End Is Near is that you don’t win any of this stuff ultimately through politics, because it’s hard to run against Santa Claus. It’s hard to run against people promising everyone free money and government jobs and all that sort of stuff, and pensions that are equal to whatever trillions of dollars they don’t have. But at some point the money does stop. And in places like San Bernardino we’re seeing that. In places like Stockton we’re seeing that.
Even in relatively well-governed places in California, like in San Jose and San Diego, you’ve got, in both of those cases, a pretty conservative Republican mayor and a pretty conservative Democratic mayor both saying at the same time, look, we have to change our pension system, we have to change the way we gather and spend money, or otherwise we’re just going to be insolvent. And so at a certain point, it transcends philosophy and party, and it also transcends what politicians are inclined to do naturally, which is important, because you really have to override those negative political instincts with the cold, uncomfortable blade of reality going in between your shoulder blades.
MR. DRISCOLL: At the end of Rudy Giuliani’s administration, I remember somebody writing, possibly in National Review, that Giuliani’s policies saved the city from becoming another Newark or Detroit, and Mayor Bloomberg largely carried on with his predecessor’s crime prevention techniques. Could the upcoming de Blasio administration begin the transformation of Manhattan into, if not Detroit, something far worse than the city that Mayor Bloomberg will bequeath to his successor in January?
MR. WILLIAMSON: Yeah, the thing about Bloomberg is, he’s a busy body and a nanny and self-regarding and sanctimonious and unbearable, and Jesus, are we going to miss him when he’s gone, because Bloomberg, for all of this faults and his weird little psychosis about bacon and salt and soft drinks and sugar and all the rest of it, and smoking, especially, basically kept what was best about the Giuliani administration.
And say what you like about Bloomberg, he’s a pretty able administrator. When he decides he’s going to keep a policy and make sure that it’s still going to be executed properly, he’s pretty good at it. So given that — and yeah, so New York, where I live, is about to get to find out what the first Sandinista administration of a major American city is going to look like. And I have my doubts about that. I don’t really want to move back to Connecticut or Texas or anything, but I may have to.
The thing about what Giuliani accomplished and what Bloomberg sustained is that those sorts of things can be lost very quickly, in matters of weeks, if not months. Keeping the knuckle down on crime in a place like New York is a 24/7 job, and you have to be committed, to say the least, to getting it done. To a certain extent, you have to ruthless. I hate to be critical of the guy, but [without] a kind of knuckle-dragging Neanderthal character like Ray Kelly around, it’s hard to really get that done. And I don’t see the de Blasio people really keeping up the pressure on that.
I saw this when I was living in Philadelphia, where they went from having a bad crime rate and a bad homicide rate to having just a shocking one, over the course of a very short period of time, you know, a year, a year and a half, something like that. And it’s a difficult thing to do. And it’s going to be harder to do because New York is, thanks to the idiots in the state government and the new idiots in the city government — and to a certain extent I’ll blame the Bloomberg administration for this too — is slowly losing its place as the world’s financial capital.
Partly this has to do with things that were done in Washington. But basically, it’s just become much less profitable and much less necessary to be a financial firm located in New York, rather than in Houston or Zurich or Connecticut or Singapore, or wherever you want to be. And without that — you know, those people pay all the taxes. They provide all the money that gets done and what needs to happen in the city of New York.
People forget that New York is actually a poor city. The median income in New York City is lower than it is in New York State, which is not in particularly good economic shape. But you’ve got a small group, ten to twenty percent of the economy — or of the people working here, who are in finance and some related businesses, that really provide the economic power for the city.
I mean, we have other industries here. There’s publishing, there’s fashion, there’s media, there’s other sorts of things, but there’s not really anything that can step in and take the place as that declines, and that’s going to be a real challenge going forward.
MR. DRISCOLL: Since I have you on the line, I have to ask you about the Obamacare rollout, and its myriad disasters, many of which you predicted in your 2010 book, the Politically Incorrect Guide to Socialism. At one point in that book, you quote from a British author named Francis Spufford, and his 2010 book Red Plenty, on the Soviet Union’s efforts in the 1950s, to yoke their economy to first generation, giant mainframe computer, with disastrous results. Are there similarities between that attempt at central computerization and the initial Obamacare debacle?
MR. WILLIAMSON: Yeah. This goes back to — well, to really Ludwig von Mises, and the whole socialist calculation debate, which not to revisit that whole thing, but Mises argued, in the early twentieth century, that central planning was essentially impossible because no bureaucracy, no committee of experts could process the information necessary to make economic calculations in a rational way, outside of the information provided through prices generated in markets. And the Austrian [economists’] ideas were never really taken all that seriously in the west, but oddly enough, they were taken fairly seriously in the Soviet Union. And of course they understood something about the limits of central planning, because they had just starved to death a whole bunch of people with their inept attempts to implement that.
But they really thought, starting in the ’60s and into the ’70s, that the emergence of what they called cybernetics, at the time, which is just to say, computer databases and things related to that, would help them solve this problem. And there is this strain of techno-utopianism that runs through Soviet Communism and most of the totalitarian movements of the twentieth century.
So they were convinced, for a while, that if they could just figure out the programming, if they could just get enough information into their, big, old-fashioned computers, which had less processing power than my telephone does, that they could have this perfectly rational, planned economy.
And the thing about Obamacare is that it suffers from the same defect, what Hayek called the fatal conceit, which is that some committee can understand things better than the millions and millions of people spending their own money in the marketplace.
But it’s been wonderful, as a guy who’s a lifelong critic of central planning, to watch this rollout, where you’ve got guys with hundreds of millions of dollars, and years to work on it, and access to all the best people; they could have had anybody they want, and they can’t even make a Web site work. And this is no surprise. I mean, I did predict that the planning aspects of this would be defective, although I didn’t think it would be something so simple as the fact that oh, we forgot to put the payment function in the Web site, or we forgot to make the Web site work with other Web sites, and the other sorts of problems they have.
So that’s been kind of brilliant and wonderful to watch. And I think, though, as a more serious matter, that this is going to cause some more Americans to be attuned to the real limitations of political planning in the economy.
When they say we’re the experts, we’ve got all the best people, and gathered all the information, and we’ll make all the best decisions, and we’ll do everything by the evidence, that all sounds really good. But then when you watch them try to do it, even if they try — and I think they’re well-intentioned. You know, I don’t think the people behind the Web site were corrupt or stupid or anything else; it just doesn’t work that way in the real world. And I think that’s going to be a really nice object lesson for a lot of people of this generation about the limits of what politics can actually do, regardless of what politics promises.
MR. DRISCOLL: And last question: while I hate to give away a book’s ending, your new book, What Doomed Detroit, ends with perhaps the single best sentence on, well, what doomed Detroit. As you write, “Detroit is a case of the parasite having outgrown the host.” Will we be saying that about additional American cities in the not too distant future, or perhaps even about Washington itself?
MR. WILLIAMSON: Well, I think so. I mean, the thing to keep in mind, in the short term, is that, thankfully, we have a body of federal law for dealing with the bankruptcy of cities. So when a city like Detroit becomes bankrupt, it’s a very complicated thing, but there’s law for dealing with that. There are courts for dealing with that, there’s a special Bankruptcy Code for cities.
Now, Detroit has something like — I don’t know, 155,000 separate creditors they have to work with in their bankruptcy. So it’s going to be a complicated thing, but there is an orderly process for this to be worked out. It’s going to be very painful for Detroit and for Michigan, and really for the country, but there is an orderly way to do that.
There is no body of law for the bankruptcy of U.S. states. So when Illinois runs out of money, and Illinois is pretty well, there; when California runs out of money — and don’t believe this business about well, we’ve got our structural deficit sorted out; they certainly don’t — and any other number of states, and including some states that are pretty well governed, because of things like Medicaid, which if it’s not reformed, is going to bankrupt a lot of states, Texas among them. There’s no law for dealing with that. There’s no precedent for dealing with it.
And no one knows what to do when you get a thing that says, well, the Constitution says California has to pay its pensions, but the Treasury says there’s no money in the bank to do it, and because we’re not really a sovereign state, we can’t print our own currency and inflate our way out of it. So what happens? And then you’ve got a crisis that no one knows what the outcome is going to be.
On a larger level, when that happens with something like the United States, and certainly countries have defaulted on their obligations before — Argentina’s done it, [and] other countries in Latin America and Europe and various places. But it’s never been a country that’s 24 percent of the world’s economic output.
You can bail out Greece, if you really want to. You can bail out Portugal. There’s no one who can bail out the United States; we’re damn near a quarter of the world’s economy. And it’s certainly unprecedented, I think, in modern history, or human history, in general, for a country like that to become truly and inexorably insolvent and to default on its obligations, both to its creditors and to its various promised beneficiaries and that kind of thing. And that’s a dangerous situation, simply because of the uncertainty that’s built into it. A company goes bankrupt, a city goes bankrupt, you know what to do. A quarter of the world’s economy goes bankrupt, it’s unprecedented; anything could happen.
MR. DRISCOLL: This is Ed Driscoll, and we’ve been talking with Kevin D. Williamson of National Review.com, and the author of What Doomed Detroit. It’s published by Encounter Books, and available from Amazon.com and your local bookstore, and Kevin, thanks once again for stopping by PJ Media.com.
MR. WILLIAMSON: Thank you. It was my pleasure.
(End of recording; for our many previous podcasts, start here and keep scrolling.)