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Detroit’s decline dissected

Herb Boyd | 9/19/2013, 4:55 p.m.

To understand Detroit’s current economic downturn, it is necessary to flip the pages of the city’s history back to the 1950s, according to a recent in-depth report by the Detroit Free Press. While this has always been the proposition for many pundits delving into the city’s plummet, now with this exhaustive study that took up over four full pages in Sunday’s paper, there’s empirical evidence to underscore the assumptions.

As many have suggested, there’s no one person, incident or year to blame for the current crisis. It’s a confluence of factors, an accumulation of years of mismanagement, bad judgment and terrible economic decisions that brought about the downfall. One startling revelation from the report takes Coleman Young out of the pillory, and rather than dumping the whole flop on Detroit’s first Black mayor, the report exonerates him from the mess.

“The mayor’s sometimes fiery rhetoric may have contributed to metro Detroit’s racial divide, but he was an astute money manager who recognized, early on, the challenges the city faced and began slashing staff and spending to address them,” writes reporters Nathan Bomey and John Gallagher.

A graph on the paper’s front page further illustrates this point, showing that the city’s debt was far below the $3.3 billion mark of 1950s during Young’s 20-year tenure from 1974 to 1994.

Many Detroiters remember how Young struggled in vain to get the federal government to bail the city out during an economic dip, believing he had an inside track on relief since former Michigan Rep. Gerald Ford was in the White House. But in less vituperative language than he told New York City, Ford was not forthcoming with the funds.

In fact, the Young administration was still trying to recover from the disastrous rebellion of 1967 that left the city in ruins. Young even talked about the possibility of a city-county merger, the paper reports, and he presided over “a budget in which revenue exceeded expenditures.”

So, if Young isn’t to blame, what went wrong?

“As far back as the 1940s and 1950s,” the paper explains, “federal deindustrialization sapped strong manufacturing centers like Detroit. Federal housing and transportation policy encouraged rapid and sustained suburbanization and erected racial barriers that fueled resentment and isolation that are important parts of Detroit’s economic difficulties.”

Disinvestment and neglect from the state also hurt Detroit and other cities that watched the previous flow of money disappear elsewhere. This factor was compounded by city leaders who, the paper asserts, perpetuated “a cycle of denial and financial procrastination.”

Elected officials chose to raise taxes and borrow when revenues began to dwindle; when there was a decline in raises for employees and labor leaders agreed to contracts that promised better health care and far too generous retirement plans and pensions, it was a recipe for disaster. Fat pensions were paid out without the fund being replenished by payments from workers no longer on the payroll.

The main problem appears to be a failure on the part of the city’s leaders to plug the hole in the sinking ship. And with each succeeding mayor, despite restructuring efforts, the hole got bigger and bigger, and collapse was inevitable. It shouldn’t have come to this, the paper contends.

Union leaders signed contracts and made promises to workers that were not realistic; the pension fund was eviscerated and poorly managed with investments not earmarked for blue chip stocks; and then came the fraud and corruption that only exacerbated a bad situation.

Restructuring is again on the agenda, but it’s in the hands of Kevyn Orr, the emergency manager, who has angered just about every elected official in the city. Nothing yet of his plan has materialized to provide even a glimmer of hope that things are going to get better—and soon.

“A core of committed residents and business owners, the energy of new Detroiters and an explosion of residential and business growth in Midtown and downtown serve as a counterpoint to the drumbeat of fiscal turmoil,” the report concludes.

Well, let’s hope that drumbeat does not morph into “Taps,” and the city’s swan song.