the bankruptcy of Detroit

The problems that have led Detroit to bankruptcy are multiple, including industrial decline, poor management and excess borrowing, but the chief cause of the city’s woes is its shrinking population. As Tom Geoghegan, writing in BBC News Magazine, recently noted, “losing 1.2 million people since the 1950s would send any city into crisis. As the jobs and the inhabitants went elsewhere, the city was left with plummeting tax receipts, rising crime and derelict streets.”  Geoghegan concludes that the city must accept that fact that it is not likely to regain its lost population, and realize that “smaller can be better”.

Toronto architect Jack Diamond (born 1932) suggests a different approach. Detroit is surrounded by vibrant suburban communities. Why not expand the boundaries of the city, to include the prosperous suburbs?

The metropolitan area of Detroit consists of a large number of independently incorporated cities. None contributes taxes to the city of Detroit, essentially the downtown of the metropolis. Many of the cities of the metropolis have affluent populations and sound economic bases. Each funds its own municipal services and infrastructure. Bloomfield Hills and Grosse Pointe are two such examples. It is the economic (and hence social and racial), Balkanisation of the metropolitan area, along with the lack of economic diversification, that is the cause of Detroit’s bankruptcy. It is clear that if the metropolitan area had a common tax base, the outcome would be a profoundly different one, in both fiscal and probably governance terms.

AJ Diamond, “Detroit’s problem is Balkanisation“, letter to the editor, Financial Times, 3 August 2013.

There are many examples of amalgamation of municipalities into a single government, most famously the consolidation in 1898 of five boroughs (The Bronx, Brooklyn, Manhattan, Queens, and Staten Island) into the City of New York. Amalgamation has typically occurred without the consent of – even with fierce opposition from – voters of the affected municipalities. I know of no example, however, of a merger with a bankrupt city forced on its prosperous suburbs. Consolidation of Detroit’s metropolitan area is certainly a legal possibility, but is it politically possible? Significant aid from the state or federal government is not expected, and suburban voters will not welcome a call for them to bail out a bankrupt inner city.

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