Detroit the Exemplar

Posted on July 24, 2013 by


I have been reading quite a bit on the travails of the City of Detroit and I find this is an opportunity for me to rant about one of my favorite topics: economic development efforts in cities, or what is also called urban renewal, better labeled “urban removal.”  These wonderful programs (note the sarcasm please) actually began in Europe in the mid- to late nineteenth century.  Cities such as Paris, Berlin and London demolished large swaths of their centers to create wide boulevards, public buildings and parks–the “city beautiful” movement.  Little was said at the time, as urban areas were not particularly aesthetically pleasing to begin with and at any rate, the urban dwellers had little voice in their fate.  Most lived in apartment dwellings.  Most could not vote.  Of course the price of rent increased as a result, but who cares when you have a really nice wide boulevard on which to stage bicycle races some hundred years later.

In the 1960’s in America, the suburban rush had begun and many large cities found that their cores were declining–how much was debatable.  The solution hit upon by Congress and seized immediately as a panacea was urban renewal.  The city submitted a plan to the Feds (HUD), it was approved with almost no objection,money flowed from DC, and the carnage began (see The Federal Bulldozer (1964) by Martin Anderson).  Blocks and blocks of houses, apartments and small businesses were demolished in the hope that in short order they would be replaced by gleaming new buildings with jobs that would revitalize the city’s economy.  

Unfortunately, some unintended (or in some case intended) consequences occurred.  First, well-functioning, low-crime, integrated neighborhoods vanished.  By “integrated” I mean not only racially but also land-use wise, both of which produced a thriving culture, even if it was not always as prosperous in terms of revenue production for the city coffers.  They were low-crime areas generally because they were relatively densely populated with “eyes on the street” to deter criminal activity and because people knew each other and tended to “look out” for each other.  Jane Jacobs in her classic Death and Life of Great American Cities (1961) showed how this all worked and kept a vital neighborhood alive and well.

In addition, when the neighborhoods were removed, the housing and rental stock decreased.  When supply decreases and demand remains the same, we all know what happens.  Prices increase, and for the very people who could least afford such increases, the poor and moderate income populations.

Moreover, though the powers believed big businesses, banks, office buildings, factories (sometimes), shopping areas, etc. would rush in to claim the vacant land and begin coughing up large tax revenues, it didn’t happen.  in many cases, the land remained vacant–no use at all.  In others, the uses were effectively subsidized by government, but when the subsidies (the free or reduced-price land, tax breaks, etc.) ran out, the uses often found they had no demand and left or closed.  Even if there were no subsidies and some use was persuaded to locate on the land the owners often discovered that few people actually wanted to come to these areas. Parking was expensive, eyes on the street had been eliminated and so crime was an issue, and many medium-valued uses that attracted people were gone and could not afford the new gleaming downtown shopping malls.  For example, a used bookstore is a medium-valued use and generally must locate in lesser priced facilities (it can’t afford a Barnes and Noble storefront or location).  But if the area is artificially inflated in land price, such uses are effectively barred.  But these kinds of uses are found to be highly valuable as supports for the big department stores or upscale specialty stores.  Together a variety of land uses make a vital neighborhood, but isolated, they all fail, especially the big stores (the little ones can sometimes relocate to lower priced areas).  The result over time:  a situation much worse than it had been before urban renewal.

So back to Detroit.  Though it was not the only reason for the city’s massive failure, urban renewal and eminent domain in the service of urban renewal contributed mightily to its demise.  Of course in the urban renewal process itself the opportunity arises for all kinds of rent-seeking by public officials–read that as corruption and the use of a legal process to help your friends at the expense of the residents.  That too, has been part of Detroit’s legacy.  What is Detroit today?  A city?  Not really.  It is a shell of a city, a kind of urban museum for those brave enough to visit what is left.  Crime is rampant, crime solving is nearly non-existent (about 8% of all crimes are actually solved now), tax revenue has plummeted, the population has declined by over 50% in fifty years, neighborhoods are dysfunctional, unfunded liabilities are overwhelming and public unions and city officials pretend the fault lies with someone else.  Some commentators have even claimed that the fault was with the dominance in Detroit of “Republican ideas.”  That is laughable and probably a deliberate lie.  Detroit hasn’t been in the hands of anyone even remotely close to a conservative ideology for at least sixty years.

Will other cities learn for Detroit?  My guess is no, until they are forced to learn the hard way.  But hopefully also urban renewal will never become a cause on a large scale again.  It was never a road to development, only a descent to annihilation.