Understanding Detroit's Decline

Detroit has fallen on hard times.  The citizens continue to migrate out of the city and a fiscal crisis looms that could further devastate the city.  What explains Detroit's decline?  Here is one hypothesis:

What made Detroit's experience so stark was the lack of regional planning and the ease with which developments were able to incorporate into new cities in order to avoid sharing their tax revenue with the city, said Margaret Dewar, a professor of urban and regional planning at the University of Michigan.

I doubt that the lack of regional planning is the problem.  Rather, the problem was the political planning of former Mayor Coleman Young to alter the composition of the electorate in order to maintain his political power.  Ed Glaeser and Andrei Shleifer have named this "The Curley Effect."  Here is part of their analysis.

Young’s racial favoritism can be seen in his tax policy and his distribution of city services. A 1982 referendum tripled the commuter tax from .5 percent to 1.5 percent, and raised the residents’ income tax rate from 2 to 3 percent. This tax, which had no impact on Young’s poorer black supporters, strengthened the incentive for the better off to leave Detroit. City governments rarely pass income taxes, presumably because of the adverse migration effects. Young eagerly sought to tax his richer constituents to fund redistribution, arguably to drive them out.

Young initiated large building projects that put his supporters on the payroll. He lobbied for federally supported public housing—an absurdity in a city with huge amounts of housing selling for less than new construction costs (Glaeser and Gyourko, 2002) — to keep his supporters, as opposed to whites, as city residents. At the same time, Young cut back on the basic services that white Detroiters valued, such as police and fire. In 1976, he cut the police force by 20 percent, which along with his other attacks on the police department, perpetrated lawlessness in Detroit. Trash collection declined by 50 percent during Young’s early years.

It appears that Mayor Coleman has a regional plan; it just did not include the promotion of economic development.

Thanks to Mark Steckbeck for the pointer.