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Detroit: An Example of Midwestern Decline, A Reluctant Model for Pension Reform

July 19, 2013

As Detroit files for bankruptcy, the fate of its pension obligations should grab your attention, as it’ll probably set a precedent. Extraordinarily few governments (on all levels) adequately fund pensions and over-promise on benefits. Complicating that, most states constitutionally guarantee pensions (Michigan included), and how Detroit unites constitutional law with economic reality will be taken as a model.

That NYTimes blog demonstrates the liberal narrative: Detroit was felled by globalization, poor foresight, and white flight to the suburbs (which, given Detroit’s racial composite compared to 40 years ago, isn’t completely wrong). Conservatives will fault unions and government, which isn’t completely wrong, but Michigan isn’t California or Illinois. Republicans can’t say they had no voice or influence in Michigan, and they did little to transition the declining economy.

We’ll read dozens of commentators for weeks who use Detroit as a metaphor for the rust belt as they provide no enlightening criticism. Part of the difficult lies in the political unities of the Midwest. Republicans rely on fiscal and social conservatives, while Democrats rely on urban areas, unions, and government workers. Given the peculiarities of how the region developed and values of the inhabitants (as general and vague that statement is), those factions don’t push for much political experimentation, entrepreneurial spirit, or anything beyond the status quo. Democrats want more government infrastructure, spending on the poor, and protectionism, while Republicans rely on exploiting Christian values and low taxes. Comparing Ohio to Pennsylvania, I think that encapsulates why Pittsburgh reinvented itself into a vibrant metropolitan area for banking and health care while Cleveland sits like a scab, a reminder of what once was a powerhouse on the lake.

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