Not Dead Yet

Richard Florida makes an impassioned defense of Detroit:

The reality is that Detroit’s fiscal woes have been a long time in the making. They are the product of the city’s history finally catching up. They reflect much more than a revenue shortfall, or even incompetent and at times corrupt city politics. They are the product of a half century or more of white flight, the outmigration of industry, deindustrialization, sprawl, and the huge racial and class division between the city and the suburbs, all of which have been well-chronicled.

Detroit’s problems surely run deep. But beneath its fiscal problems, and all the hemming and hawing about them, lie the seeds of rebirth for the city and the broader metro region. Since the economic crisis, and perhaps somewhat before it, the first signs of recovery and revitalization, modest as they may be, are finally starting to surface.

As I’ve written here on Cities, Detroit’s downtown urban core is seeing more investment, economic activity and an influx of talent than it has in decades. This revitalization is concentrated and spotty and it is far from inclusive, but it is certainly something positive, generating jobs, revenue and much-needed hope and optimism that provide a foundation to build upon.

The broader metropolitan region is home to huge assets – truly great research universities, world-class research, development and design capabilities, abundant musical and creative talent, a great global airport, and, after years of neglect, a massive effort to invest in and revitalize its downtown core.

He’s right. Detroit is not dead. It’s only mostly dead and, as we all know, there’s a big difference between mostly dead and all dead.

There are several fundamental issues Mr. Florida neglects. First, he returns again and again to what Ann Arbor brings to the region:

Of course many of these assets are concentrated outside the city, in its suburbs and adjacent communities and metro areas such as Ann Arbor and Lansing.

[…]

There’s the Cranbrook educational community in Bloomfield Hills, the great for art, architecture and design. Michigan State is in East Lansing; the University of Michigan in nearby Ann Arbor.

Rather than being a defense of Detroit, Mr. Florida is making the case for growth in Ann Arbor. Under the circumstances, we would expect Ann Arbor to prosper and, indeed, that’s what’s happening:

In the last few years, Ann Arbor itself has boomed, with a high rate of startup activity and a top-tier ranking among small metros on my creativity index.

A blossoming Ann Arbor does practically nothing for Detroit. Its tax revenue only flows to the city via the state—it’s not even in the same county as Detroit. That Ann Arbor’s prosperity is, obviously, due at least in part to the billions that the state of Michigan has lavished on it over the years and will continue to pay out continues to go unrecognized. All of that money spent on higher education goes somewhere. In Michigan it clearly goes to Ann Arbor and, not unexpectedly, it has created an economic boom.

Oakland, California is almost precisely the same distance from San Jose, the seat of Silicon Valley, as Detroit is from Ann Arbor, both in distance and driving time. I don’t believe I’ve ever heard anybody make the argument that San Jose’s prosperity would be a resource for Oakland. What’s the difference?

Second, Detroit can’t pay its bills now. There is no prospective revenue stream that will change that for the foreseeable future. Detroit needs to borrow now to pay its bills and the outlook for that looks bleak. Unless bankruptcy can trim Detroit’s operating expenses and liabilities so that Detroit is able to live within its means or borrow more or both, what are Detroit’s prospects for growth? The preponderance of Detroit’s liabilities are pension and benefit obligations owed to public employees. I’m not anti-public employee. I’m just pointing out the obvious.

That will have secondary effects I haven’t seen anyone consider yet and I doubt they’re good for Detroit in the near term.

Finally, the bill coming due for Detroit could hardly have happened at a worse time. Detroit is not the only candidate for investment. There are hundreds or even thousands of communities around the United States that have every positive that Detroit has without Detroit’s massive negatives or, at least, with negatives that are less severe—less crime, less blight, less debt overhang, more skilled population. There isn’t an infinite pool of private investment and the federal government is, at least at this point, shying away from attaching itself to Detroit’s boat anchor. Why pick Detroit?