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Detroit’s long structural decline

By Brian Doucet
October 30, 2013

One hundred years ago, Detroit was the Silicon Valley of its day. Entrepreneurs flocked to the city because it was at the cutting edge of industrial innovation. Henry Ford perfected the assembly line, unleashing a whole new mode of production. Mass migration followed and made Detroit one of the fastest growing cities in the world. In the post-war years, Detroiters enjoyed some of America’s best public schools and had the nation’s highest rates of home ownership. Their city was the flagship of America’s industrial power. By 1960, the population reached almost two million.

So what happened to the one-time fourth largest city in the US, now bankrupt and home to under 700,000 people? Many accounts blame the recent economic and foreclosure crises and political mismanagement. It is very easy (and popular) to blame local Detroit politicians for what has happened to their city. But these accounts miss two important factors which the City of Detroit is little able to influence: wider structural trends of deindustrialisation and globalisation and extreme regional fragmentation which encourages sprawl and ensures that the wealth which does exist in Greater Detroit remains in the suburbs, rather than in the city.

Deindustrialisation has hit the Motor City harder than any other place on earth. It has been a long process; in his book The Origins of the Urban Crisis, historian Thomas Sugrue pointed out that tens of thousands of well-paying jobs were leaving the city as far back as the 1950s. One of the best accounts of the city’s fortunes is George Galster’s book Driving Detroit. In it, he states that between 1950 and 2005, the city lost 29% of its homes, 52% of its people, 55% of its jobs and 60% of its tax revenue. Since 2005, these numbers have all increased considerably. Most of this has simply been transferred to the suburbs. Given these dramatic statistics, how is a city supposed to function?

To illustrate the dramatic decline that has befallen Detroit, think of a city you know well. Then imagine that within a few decades, 65% of the population of that city has left. Of those who remain, close to half cannot read (which, since you are reading this, probably means you have left too) and 36% live below the poverty line. Within sixty years, the main economic activity has lost over 90% of its jobs. What would that mean for shops and amenities, public transport, municipal services, quality of live in neighbourhoods, crime and other key factors which are important to cities? If you can picture this in your favourite city, you get a pretty good indication of what happened to the ‘Paris of the Midwest.’ You can also imagine the virtually impossible task of trying to run such a city without incurring huge debts and debilitating cuts to services.

Many people in the rest of America and in Europe look at the Motor City and say ‘that can’t happen to us.’ They point to Detroit’s long history of troubled race relations, which stands out even among American cities. And compared to their European counterparts, American cities rely far more on their own tax bases, without pooling or redistributing resources. This means that a sharp loss of jobs or people can have far more catastrophic consequences for the provision of services and the fiscal health of a city than in other countries. This is exacerbated by the extreme fragmentation of American metropolitan regions, which are comprised of dozens, or even hundreds of separate municipalities who fund their own schools, libraries and police departments. While Detroit is bankrupt, there is a lot of wealth in Greater Detroit; the suburb of Bloomfield Hills is among the wealthiest communities in America. But virtually none of this wealth is shared with the City of Detroit. The suburbs keep growing; they rely on growth and sprawl to fund their services. Yet the entire region has remained stagnant for over four decades, with a total population of around 4.2 million. Growth on the urban fringes of a region which is not growing results in abandonment in its core; between 1970 and 2000, 160,000 homes were abandoned in the City of Detroit. This is not a uniquely Detroit issue: in America, each jurisdiction is forced to fend for itself and the result is city pitted against suburb and as sprawl continues unchecked we increasingly see older, inner-suburbs pitted against newer ones.

While European cities and regions have different governance models which pool resources, plan at a regional level and ensure that at least some wealth is redistributed, this does not exempt them from feeling the effects of wider structural trends in the economy. Deindustialisation has hit many European, particularly British cities, hard. In Europe, the stronger role of the state in providing welfare and redistributing wealth from rich to poor regions mean that the overall impact of these structural economic changes have been less extreme than in American cities. But even in many European countries, the state is withdrawing from these functions leaving people and cities to fend for themselves more and more. In countries such as the UK and the Netherlands, policies now focus more on strengthening core regions such as London and Amsterdam, rather than aiming to redistribute wealth across the country. In this regard, the differences between Europe and America are decreasing.

Detroit’s key lesson should not be focused on political mismanagement, its combative labour relations or even regional fragmentation. These factors have made Detroit’s situation direr, but they are not the root cause of its bankruptcy. Detroit offers the world a cautionary tale as to what happens when a place loses its economic reason for existing and what happens when the economic activity which created so much wealth disappears within a few decades. Detroit was built on the mass production of cars. That mass production now requires far fewer workers and is no longer geographically concentrated in Detroit. These structural changes, far more than anything else, lie at the root of the city’s current predicament.

While most visible today in old industrial cities such as Liverpool or Newcastle, Detroit’s lessons have resonance with all cities. Think of how important the financial services industry is to today’s wealthiest cities. New York, London, and Frankfurt are all global leaders of the post-industrial era in the same way that Detroit, Manchester and Germany’s Ruhr valley were in the industrial era. What would happen to these cities if globalisation caused the centre of the financial industry to shift towards China or the Gulf States? Stating that could never happen is similar to a 1960s Detroiter proclaiming that cars would never be made Japan, Korea or the American South.

Any place that puts all of its economic eggs in one basket runs the risk of losing its wealth if the forces which brought about that prosperity change and they are unable to adapt to meet that change. That holds true as much for today’s economy as it did in the industrial era. Detroit excelled at one thing – making cars – much the way Silicon Valley today leads the world in developing computer technology. Any real, long-term solutions to Detroit’s woes will require two key factors. First, a structural readjustment of the city’s economic base which provides good jobs to large numbers of people. The creative businesses which people such as Richard Florida have been celebrating in Downtown and Midtown Detroit are a small start; but they have very little impact on the bulk of the city which hasn’t seen the arrival of the ‘creative class.’ Real solutions will need to address these areas, too. Second, some sort of regional planning and coordination to redistribute wealth across the region. This will also need to curb the sprawl at the region’s edges which are responsible for the abandonment at its core. This is unlikely to happen anytime soon as many suburbanites are reluctant to ‘bail out,’ as they see it, the city they fled years ago.

While Detroit offers us an extreme example of deindustrialisation and regional fragmentation, it is by no means unique. The paths that Detroit takes over the coming years will influence other cities around the world as they struggle with these issues themselves. Finally, for those who say that such a decline could never happen to us, Detroit’s lesson should not be to look at how poor and bankrupt it now is: it should be to look at how cutting-edge, innovative and prosperous it was only a short time ago.

Figure 1. The Packard Plant represents Detroit’s structural economic changes. It, and hundreds of other factories like it lie vacant as the forces of globalisation and deindustrialisation hit Detroit harder than any other city on earth.


Figure 2. Much of Detroit looks like this; one third of the city is vacant. Any real solutions for Detroit’s problems will need to find ways of using this space, too. Dubois and Wilkins on the east side.


Figure 3. Sprawl at the edges of Greater Detroit, a region which has not grown in over forty years. Growth at the fringes of the region leads to abandonment of its core.