Political geography bankrupted Detroit

July 19, 2013 by
Filed under: Social Economy 

Yesterday Detroit became the largest US city ever to file for bankruptcy. The fate of public services for 700,000 residents is uncertain. The statistics we’ve read are horrific: the average police response time is 53 minutes, the city has shut half its parks since 2008, 38% of revenues went to servicing debt last year and 47% of properties didn’t pay their property tax bill. But as Neil McInroy wrote, “feeling the pain is not enough.  We need also a thorough analysis of the economic and socio-political forces which cause it.”

In recent years Detroit has led the dubious club of shrinking cities providing post-industrial ruin porn. The images of decay are mesmerising: promising a futuristic glimpse of what a city looks like when capitalism and government fail together. Most accounts assume Detroit’s problems stem from severe de-industrialisation. This is entirely insufficient. The root cause of this is administrative geography: growing suburban wealth has mirrored urban decline. American political geography and property-based tax collection colludes against Detroit: local authorities rely heavily on local property taxes, which are dependent on property values. The rich have literally bought into relatively small well-funded local administrations on the outskirts (see map below). Across the US, such enclaves can protected through “exclusionary zoning”, preventing low-income residents through ordnances which require minimum housing sizes and limits on land use density.

 

Let’s recap the story but ensure our geographical lens zooms out. Detroit was once metonym for the American car industry (“Motown”). Detroit attracted economic migrants rapidly between 1900 and 1930, including many African-Americans from southern states. Like other American cities, Detroit’s suburbs grew rapidly after World War Two, and mass ownership of cars made that possible. By 1956 the last streetcar line in a 500 mile networks was ripped up and Detroit pioneered the construction of motorways which carved through dense urban neighbourhoods. Those with jobs followed the relocation of companies to the suburbs. Many poor black people were left behind. Social challenges and physical decline have a long and painful history: the Army was deployed in riots which killed 43 in 1967. 80,000 people left the city in 1968.

Poverty by race Detroit 2010

Poverty by race Detroit 2010 (Source)

But in the Metro Detroit region today – the city including its suburbs and exurbs – lives 5.2 million residents spread over 6,000 square miles. The car industry is not dead, and is recovering from its 2009 bailout and still employs 130,000. Half a million people still work in manufacturing in the state of Michigan; many of these jobs are unionised, paying wages typically 75% above the state average. Other sectors are growing around Detroit – science, technology and finance – while one of America’s top universities sits 40 miles west of Detroit. Some companies have recently chosen to consolidate their offices in the city centre, but city residents have remained poor through the decades.

Metro Detroit highlights is the inability of America’s economy, government and social infrastructure to offer social-economic mobility. In the country where people believe most frequently that personal determination can overcome disadvantage, the poor more often than not remain poor through generations. They receive poor public services because their local government is poor. Incomes have stagnated as productivity growth hasn’t been distributed to workers through wages: the minimum wage is far below historical precedent.

Regional inequality is the crucial context for Detroit’s bankruptcy. In short, as the economic geography of Metro Detroit evolved, the geographical administration of government did not evolve with it. The localised nature of the tax base meant the city became stuck in a downward spiral.

One of the negative feedback loops in racialised poverty is the education system. Arguing that education policy and racism in the housing market conspired to segregate the region’s children by race and class, the NAACP won a legal case in 1971 forcing Detroit to form plans with it 53 metropolitan school districts to integrate student. In 1974, the Supreme Court overturned this on appeal by the State and suburban districts.

The physical environment has been blighted with abandoned buildings and subject to mass arson on Halloween: depressing the property market and further depressing Detroit city government tax revenue. Declining prices (50% between 2005 and 2011) mean residents complain their property is overvalued by tax officials and refuse to pay their taxes. The city witnesses a race between blight-fighting bulldozers performing urban excision and investors who seek to land-bank them for as little as $500.

The only big effort in the US to proactively pool tax revenues locally are the seven counties around Minnesota’s Twin Cities. Even here redistribution is limited to 40% of growth in commercial and industrial tax revenue, not residential property tax. There is a precedent for cities in the US to annex nearby land and expand, but state government must consent. Phoenix has doubled in territorial size since 1970, allowing a broader tax base and for the city to profit from rising land values on its rural outskirts. Generally, its been politically impossible to force affluent suburbanites to share tax revenue and expenditure decisions through joint metropolitan government which includes poorer neighbours in the inner city.

Political administrative geography matters greatly in economic development, financial management and social integration. In the UK local authorities are experimenting with cross-borough arrangements and policy and investment based on “functional economic areas”, while new unitary authority status creates challenges and opportunities. The bankruptcy of Detroit calls into question the scales to which our psychological associations extend. Detroit remains the heart of a dynamic city-region. It seems unlikely that lawyers and administrators will be able to draw on that wider wealth in the resuscitation efforts.


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