George Will Has a Point on Detroit: Those Who Rely on Democracy in a Kleptocracy Will Be at a Serious Disadvantage

Print
Thursday, 01 August 2013 05:06

George Will had the obligatory union bashing piece, titled "Detroit's death by democracy," in the Post today. Will's story is that unions used their political power to get unaffordable contracts from the city government, thereby pushing it into bankruptcy.

For some reason he neglects to show the evidence of the union workers' bloated pay: wages that average $42,000 a year for non-uniform personnel and pensions of $18,500 a year. I suppose you might be able to get workers for less, but this probably is not most people's vision of the good life.

The main reason that Detroit died were structural factors that were determined largely outside of Detroit's city government. Certainly a high dollar policy that made U.S. cars less competitive, contributed a great deal to Detroit's decline. The growth of a parasitic financial sector that drew talented people away from productive industries like autos also played a role. And the economic collapse in 2008 that resulted from these folks' greed and incompetence was also a really important factor.

Race also played a major role, with whites fleeing in large numbers to the suburbs beginning in the 1950s. This cost the city much of its tax base and left it with sections of the city that were large depopulated but still required city services (look at Detroit on Google maps).

However Will has a point about democracy doing in Detroit. Detroit's representatives in Congress and their allies will push their case for federal aid in saving the city. But they are speaking with the wrong currency in Washington. This will be a question of the voting power of Detroit residents and the people who sympathize with them.

By contrast, when Goldman Sachs, Citigroup, and other Wall Street behemoths were facing death in 2008 they had strong advocates at the very top levels in the White House and Congress in both parties (e.g. Larry Summers and Henry Paulson). They did not need votes, they had the money to buy power. And of course they got the government to cough up the cash and guarantees that they needed to get through the crises they had created.

So Will is absolutely right in blaming Detroit's death on democracy. The city simply doesn't have the right currency to survive in the political system today.