Detroit, the once jewel of the Midwest and prideful emblem of the American dream, has descended into a city with a failing economy. There are numerous causes for Detroit’s fall from prominence; rapid development of manufacturing technology resulting in less demand for manufacturing workers and the U.S. as a whole shifting to a more service based economy are a few contributing factors. One factor, however, I believe has not received its deserved scrutiny and entire rejection: liberal policy.
Since 1962, there has not been a single Republican mayor in Detroit on top of this the city has only elected one Republican councilman in the past 47 years. Even one of their mayors was found out to be a member of the Communist Party. This gave the leaders of Detroit free reign to enact liberal policy and as we have seen in any communist country, the implementation of liberal economic policy unnecessarily strains and ,oftentimes, leads to the demise of an economy. The mayors of Detroit were not malicious in aiding to its descent from prominence; they simply didn’t understand economics and failed to recognize that their intentions no matter how good cannot change economic reality.
Taxes are most likely the most misunderstood and misrepresented topic in today’s political discourse. The core concepts behind taxes and the economy, however, are fairly simple and easily applied. In 1960, Detroit had the highest per capita income of any city in the country. Not only were there well paid manufacturing workers, the CEO’s tended to live in the city too. Tell this to any Democrat and watch his or her mouth begin to water at the idea of all the people they can rob.
Today, Detroit’s property tax rates are the highest in the nation and other rates are generally twice the national average. So let me ask you, what do you call a Detroiter who gets his taxes doubled? Anything but a Detroiter because he is definitely moving. The Democrat mayors of Detroit seemed to forget that they still had to compete with other cities and a growing foreign marketplace to keep their taxpayers and this led to a horrible cycle.
- Raise taxes to pay for campaign promises
- Scare businesses and citizens away because of high taxes
- Lose tax revenues because of this forcing them to raise taxes even further.
If the mayors of Detroit started digging the hole that Detroit is now in, the United Auto Workers (UAW) brought an excavator to help dig. One example is Packard motors. UAW striking and bullying made Packard flee Detroit in 1956. What became of their factory? Nothing, because nobody wanted to deal with the UAW. It has sat empty since Packard left and now costs Detroit more than $1 million dollars because of all the fires it has to put out at the Packard plant. The UAW didn’t stop with Packard. It went on to GM, Chrysler, and many other car manufacturers. Unions aren’t bad things, they do lots of good for the people in their Unions; sometimes though, and especially in the case of Detroit they can be drastically counter-productive.
While separate the mayors of Detroit and Unions did much harm but together they created a disastrous team. There are about 21,000 public-sector retirees and families receiving pension payments from the city of Detroit, this is more than twice the number of current employees. Unfulfilled pension obligations that Detroit owes to retirees account for about $9 Billion. How did Detroit get here? Years of Democratic politicians seeking re-election lavished high salaries and unrealistic pension promises on their employees; now, Detroit cannot fulfill its obligations and retirees are suffering because of it.
Well surely the development of new technologies, the decrease of need for manufacturing workers and stronger foreign competition contributed to the death of Detroit, right? Partly. One cannot ignore that all of these have serious economic implications for the manufacturing industry. The reality is that there are still new automotive factories being built in the United States and the question must be asked, why aren’t they being built in Detroit? Why is Mercedes in Alabama and Volkswagen in Tennessee? We all know the answer.
