As Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan ponders how best to make Detroit’s debt manageable and restore urgently needed city services, it is appropriate to look ahead to see what the future might hold for the city and its people.
But predicting the future depends on how well we understand the past. Recent media coverage of Detroit's struggle has been long on titillating drama, like whether the city's art collection will be sold to pay its creditors, and short on reporting how Detroit's history brought it to this point.
Having lived and worked in Detroit for a decade, I've studied its history and I know that Detroit's story is a complicated, if familiar one that needs telling before we jump into forecasting the future. Important elements of the past will still be with the city as it moves forward.
In this column, therefore, I will lift up some of the reasons Michigan's largest city has come to bankruptcy. In my next column I will share some thoughts on what we might expect in the decades ahead.
Henry Ford's 1914 offer of a "five-dollar day" spurred the second half of the Great Migration of blacks to northern and western cities, fleeing Jim Crow tyranny in the south. Yet as thousands arrived in Detroit, few jobs were actually available. Prejudice in the workplace relegated African Americans to the most menial and dangerous jobs. Discrimination in housing crowded them into sections of the city with the most dilapidated housing, where whites no longer cared to live. With no jobs, and having used their modest life savings to get here, most families found their options limited. Once here, they were locked in.
Immigrants from Europe further swelled the pool of available labor, allowing manufacturers to pit workers against one another, driving wages to the bottom. Families doubled up on housing, but still couldn't make ends meet. And then the Great Depression made living in Detroit even more nightmarish.
With the New Deal came support for union organizing. Conditions began to improve as wages increased through union contracts with the auto industry. The war effort of the 1940s led to prosperity for Detroit manufacturers. Outstanding performance by African American fighting units led to the integration of the armed forces, while the G.I. Bill provided advancement through higher education.
With the 1950s came the Civil Rights movement, which eventually induced Congress to enact civil and voting rights legislation. Post-war prosperity saw increasing numbers of blacks moving up to middle class living standards. Detroit and its black population prospered in these years.
These advancements were short-lived, however. Amid much ballyhooing about America’s great economic engine, Detroit’s auto industry, always looking for the cheapest labor and fed up with the power of the unions, began decentralizing. They moved installations to the south, then overseas. Other corporations followed suit, and soon the wages of workers nationwide stagnated, sending them down a half-century plunge into poverty. The black community was now divided into those privileged to higher economic status, and those who were still impoverished.
Following the assassination of civil rights leader Dr. Martin Luther King, Jr., frustration gripped poor urban blacks. Their frustration found an outlet in rioting in major U.S. cities. Simultaneously, militant African Americans began to talk boldly about forcibly obtaining rights, justice and dignity, invoking the phrase “Black Power.” Throughout the 1970s and 1980s whites fled major urban areas while conservatives instituted America’s massive incarceration system. This effort focused on removing from society young blacks and Latinos using crack cocaine provided, in part, by U.S. dollars supporting drug cartels.
Just as 500,000 blacks came into Detroit in the early 20th century, so half a million whites now fled to the suburbs. With them went Detroit's tax base. Detroit became a repository for the poor, the uneducated and the unskilled. As the city struggled to make ends meet it borrowed heavily and chose to provide city services rather than appropriate money as the city’s share of city workers’ pensions.
For nearly a decade after the civil rights legislation, anti-poverty programs created by liberals proved how useful the taxing power of government could be in fighting poverty and moving people toward the middle class. But as conservatives returned to power, these programs were systematically dismantled. Detroit’s remaining residents were now more than ever mired in poverty, and city revenues continued to fall.
Detroit has been running on empty for nearly half a century. It is a harbinger of what is also happening in other American cities, and to the U.S. government. Just as whites fled the inner city, depriving Detroit of its tax base, big business is running to other countries to escape its U.S. tax responsibility.
Locally or nationally, the alternatives are few: raise taxes on a dwindling number of citizens, or borrow huge amounts of money. Raising taxes won’t bring in enough revenue. The banks will use the latter course as an opportunity to make more money – for a while.
But these are dangerous choices: they eventually lead to bankruptcy. And when that happens, all the people who worked for the government – local or national – will have their pensions, salaries and benefits robbed to pay the wealthy corporations and bankers. And that continues the reverse redistribution of wealth we have experienced in this country for the past half century.