We’ve all heard about Detroit, right? Michigan’s renowned American city, Detroit is known to automobile fans worldwide as “The Motor City“. The city is most notably famous for its automotive manufacturing & shows, Motown records, and Eminem.
Detroit has been at the center of the ever-growing American Automobile Industry. This has been the case since Henry Ford started the production of his Model-T in the 1900s. Thus, with the business of Ford, the city of Detroit became an inspiration to all the industries worldwide. But there is also something else, unfortunately, that made Detroit a famous name on everyone’s tongue in the year 2013.
Detroit became one of the many cities of the United States of America to file for municipal bankruptcy on July 18, 2013. At that time, Detroit was the most populous city to take this action in the history of the United States.
With this, here are the top 10 reasons due to which the city went bankrupt.
10. | Annexation – Where It All Started!
The city has seen its glory back when it was at its peak. The city saw a massive increase in its population following the end of the Industrial Revolution. Furthermore, the population explosion was beyond exponential, from 200 thousand in the 1890s to a whopping 1 million by 1900s. This was in part, the response of the growth of the American Automobile Industry for which the city came in the limelight.
There was a massive growth in terms of industry, but the city government didn’t join any land to the metropolitan part of the city. Around the 1930s, everyone started looking for real estate beyond the industry part of the city. The demand for real estate grew around the end of World War II, and there was no concrete annexation policy in action. The impact of this poor annexation policy still haunts the overall structure of the city today.
9. | The Displacement to Suburbs
The Poor Annexation Policy that the city government resorted to from the 40s to 70s led the population to move from downtown to the suburbs. The polluted, noisy industrial city’s core became the suffocating region where nobody wanted to live in. Moreover, massive industrial buildings made the city seem like a wall that restricted the people around it.
The development of the farmlands to proper city suburbs owing to the annexation policy led to the displacement of the population from downtown to the suburbs. Furthermore, as the population shifted, so did the service based offices and factories did. The suburbs became the place for malls and shops, leaving the city core only for the industries and manufacturing factories.
8. | The Lifeless City Streets
With the shift of the population from the city’s downtown to the suburbs, the streets that were mundane in the first place became even more lifeless. Furthermore, in a hurry to make the city core worth the place for the industries to exist, the city’s structure of housing became unplanned and monotonous.
Furthermore, the administration had a chance to restructure the city’s look back in the 70s to the 90s, but they couldn’t or deliberately didn’t. The city’s pedestrian look is rather mundane. The Motor City couldn’t please the tourists except for the those who were intrigued by the industrial and the musical landscape of the city.
Moreover, there is no proper planning or housing policy, which makes the street identification almost non-existent. The city is haunted by so many abandoned structures, which we will discuss now.
7. | The Industrial Structures that Haunt the City
The city of Detroit opened itself up to the industry leaders and personnel. As a result, there is a humongous amount of industry, manufacturing units and factories in place today. Even today, there is a humongous amount of land solely dedicated to industrial use. Partly, this was due to the fact that this Motor City didn’t just manufacture cars. Instead, the city supplied all the parts of manufacturing a car to other industry players and factories. Furthermore, Ford when building his factories took advantage of the city’s effort to provide better transportation – the railroads. The plan essentially trapped the city. It is crucial to understand that a city with its core left abandoned wouldn’t be able to do much. It was only time before Detroit filed for bankruptcy.
6. | The Unfortunate Increase in Crime
With no capital left, there was no money to pay for actual public service employees. Moreover, the most crucial ones are cops. There was no capital to pay cops to keep the city protected from goons, mafia or any illicit gangs. By the year 2016, the city had unfortunately amassed the record of so much violence that it witnessed itself getting placed at 4th when the murder rate in the big cities of the United States was recorded.
There was so much crime in Detroit that it had the second highest violence rate for any city in the United States. The city was just after the infamous St Louis in Baltimore.
5. | The Non-Existent Public Service
With the decline of the city’s capital fund, there was no way to maintain even the basic city services. We already know how the state of the city deteriorated with the decline in the workforce of cops. But, even services such as the firefighters and the ambulance fail to keep pace with the need.
A lot of researchers now call the city, a wasted urban infrastructure. This is rational to say when a city cannot even provide basic amenities to its citizens.
4. | The Humongous Debt
While filing for bankruptcy, Detroit revealed an astounding statistic relating to its debt. The city was in a humongous municipal debt of over 18 to 20 billion dollars. The most astonishing fact regarding the bankruptcy was the fact that it was only for general obligation, most notably, the pension fund. About $3 billion was for the pension fund, which later brought the city to court over defaulting on payments.
To capture the figure, and the dread in perspective, Jefferson County from Alabama filed bankruptcy with a 4 billion dollar debt in 2011. The city of Detroit had almost 5 times the debt.
3. | The Massive Unemployment
The city of Detroit suffers from the humongous unemployment rate in the nation and has not been able to alleviate itself from it. In July 2009, the unemployment rate in the city was amongst the highest in the nation at 28.4 percent. To compare this with other cities, Chicago only had 11.7 percent, almost a third lesser than the city.
The city’s government while fighting the situation didn’t received much favored by the employers. There was no one willing to employ people, which resulted in a massive decline in the taxpayers.
2. | The Astounding Population Decline
At its peak, when everything was seemingly good for the city, back in the 1950s, the city cherished a population of 1.8 million. This placed the city amongst the most populous cities in the United States. But due to the reasons discussed, the population gradually shifted to the suburbs and swiftly out of the city.
There was an astonishing decline in the city’s population of 62 percent, from 1.8 million to about 700K in the year 2010. This was one of the reasons why the number of taxpayers declined, and the finances of the city became haywire.
1. | The Abandonment of the Industry
Back in the peak time of World War II, the city became the center of war equipment production. This indeed drew people to the city core, both White and Black. The population was around 1.6 million, at the time. Ford’s acceptance to pay black workers handsomely for their work led to what is known today as the Great Migration. Housing (as discussed above) became a major problem for both the communities.
Increased difference led to riots, and the crime rates increased. The city’s core suffocated the residents and everyone moved to the suburbs. The increase in the capital required to satisfy the needs of workers, such as healthcare and pension pushed the automobile companies to move their operations out of Detroit. The city’s unfortunate riots and the competitive pressure due to globalization also forced the automobiles companies to take this action.
Furthermore, the companies such as General Motor and Chrysler couldn’t secure compensation or fund reliefs from the Obama Government and had to cut down operations. Numerous significant factors such as corruption in public services were also responsible for this. And the end result was the decline of one of the world’s greatest industrial cities.
Fortunately, Detroit is now catching up as a great American city would. The unemployment rate is now 5 percent, while the crime rates are also going down. On December 10, 2014, the city of Detroit officially was declared out of bankruptcy.