The Daily Caller

The Daily Caller
              In this July 17, 2013, aerial photo is the city of Detroit. On Thursday, July 18, 2013, Detroit became the largest city in U.S. history to file for bankruptcy when State-appointed emergency manager Kevyn Orr asked a federal judge for municipal bankruptcy protection. (AP Photo/Paul Sancya)

The real lesson of Detroit: change or die

Photo of S. T. Karnick
S. T. Karnick
Director of Research, The Heartland Institute

One thing that has become evident about Detroit’s recent bankruptcy filing is that the city’s problems, though dire, are by no means unique and are in fact just a more extreme case of the situation that faces many other big U.S. cities and even a few state governments. The promises politicians made to voting blocs to gain and keep power have proven impossible to keep. In Detroit’s catastrophe is a lesson about the very nature of government, which we would be foolish to continue to ignore. The evidence is clear that the nation as a whole is on the same path as Detroit, and history suggests that there will soon be a wrenching reckoning on the national level.

In his current column, Charles Krauthammer aptly refers to economist Herb Stein’s famous dictum: “If something cannot go on forever, it will stop.” Krauthammer is right to apply Stein’s truism to Detroit. For several decades, under Democratic mayors and with Democrats controlling the municipal government, Detroit spent money it not only did not have but also could not possibly obtain. The money went to politicians, their cronies — the government employee unions that conspired to elect those politicians who would in turn make lavish pension promises to union workers — and pet projects intended to put some new paint on the crumbling city’s facade without doing anything at all to ameliorate the pervasive rot behind it. Meanwhile, the city’s schools deteriorated into ruins, police and fire services were cut back drastically, abandoned houses were left standing as lairs for squatters and criminals, and normal, working, taxpaying people left the city en masse. And the cycle continued.

That is how government works. Because it has a monopoly on lawful coercion, government forcibly takes money, time, and other resources from some people and gives them to others, who will keep that government in power in order to continue obtaining those benefits. Such rapacious behavior cannot be sustained over any great period of time because of competition: people will move elsewhere if they can.

Thus the population of Detroit fell from two million to 700,000 — though they’re still counting down — in a surprisingly short period of years. Even the mighty Soviet Union could not be sustained, because of competition from a West that had finally (albeit just temporarily) thrown off some of the shackles of its own collectivism, under visionary leaders such as Ronald Reagan, Margaret Thatcher, and Helmut Kohl. Eventually, some smart people devoted to liberty and personal responsibility will inevitably step forward to provide competition against corrupt governments.

Competition between geographic areas continually undermines the viability of corrupt, monopolistic jurisdictions. That is what we see in Detroit: everyone who could leave, did.

For all of its potential flaws, the world of commerce and other voluntary associations differs in kind from government, being driven by direct competition and a strict need to serve customers, and an inability to rely on coercion. A business or industry may rise to great power, but unless it gives its customers more value than it asks in return, such a business or industry will inevitably decline due to competition from other providers. Consider, for an apt example, the rapid decline of the Detroit automakers in the wake of their market triumph in the years after World War II.

Two paragraphs in Krauthammer’s column admirably illustrate this difference between government and commerce:

“When our great industrial competitors were digging out from the rubble of World War II, Detroit’s automakers ruled the world. Their imagined sense of inherent superiority bred complacency. Management grew increasingly bureaucratic and inflexible. Unions felt entitled to the extraordinary wages, benefits, and work rules they’d bargained for in the fat years. In time, they all found themselves being overtaken by more efficient, more adaptable, more hungry foreign producers.