Detroit’s Dictator

Paralysis and deadlock are watchwords in today’s political commentary: with the national government split between two acrimonious parties, it’s little wonder that democracy today seems designed to get nothing done. Often, that opinion is dispensed pejoratively: lawmakers, we hear, are “acting like children” or “too busy backbiting” to work together and Get Something Done.

Thankfully, such paralysis often prevents politicians and technocrats from doing exactly the wrong thing.

Look to Detroit, once a shining example of American ingenuity, long a symbol of decline and urban decay. Today, it’s something a little more complex: home to a resurgent auto industry but still poverty-stricken, the site of a downtown renaissance and gentrification boom while still struggling with a shrinking population.

It’s also way over budget – and it looks like that will result in the application of Michigan’s controversial (and legally uncertain) emergency manager law, by which the city council and mayor’s office will be bypassed and a state-appointed financial manager will take power. These emergency managers are instructed to break contracts, sell assets, and fire workers.

If state and local government budgets were like household budgets, then such austerity measures would make sense: at home, I can cancel my cable package and my family is the only one that suffers. But Detroit, which is strapped for jobs, should not undermine its economic fundamentals in order to meet a one-year budgetary bottom line – it should give greater oversight to the way its current budgetary expenditures are managed.

Why is this? Consider that Detroit’s biggest problem is its shrinking population due to unemployment. When people leave the city, tax revenues drop and it becomes that much harder to balance the budget next year. But people are leaving the city because they can’t find jobs. This means that the emergency manager’s plans – to which firing a hefty percentage of government workers is central – will have the paradoxical effect of releasing a large population of unemployed workers into the city.

In a situation like that, entrepreneurship isn’t much of a solution: nobody else has money either, and the kind of entrepreneurship that springs up in economically distressed areas can’t replace higher-wage and higher-benefit positions. Essentially, whatever disease a region faces has to be treated with the right cure – the wrong one will only make things worse.

Sometimes, political deadlock isn’t the problem it seems like. When one person gets to dictate what happens to a region, it often gets a lot worse before it gets any better.

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