Detroit is in urgent need of disaster economics. No hurricane needed. Mancur Olson paradigm needed here too: Here’s Daniel Hannan’s take:
Statism is turning America into Detroit – Ayn Rand’s Starnesville come to life
By Daniel Hannan US politics Last updated: July 21st, 2013
You thought Atlas Shrugged was fiction? Look at this description of Detroit from today’s Observer:
What isn’t dumped is stolen. Factories and homes have largely been stripped of anything of value, so thieves now target cars’ catalytic converters. Illiteracy runs at around 47%; half the adults in some areas are unemployed. In many neighbourhoods, the only sign of activity is a slow trudge to the liquor store.
Now have a look at the uncannily prophetic description of Starnesville, a Mid-Western town in Ayn Rand’s dystopian novel, Atlas Shrugged. Starnesville had been home to the great Twentieth Century Motor Company, but declined as a result of socialism:
A few houses still stood within the skeleton of what had once been an industrial town. Everything that could move, had moved away; but some human beings had remained. The empty structures were vertical rubble; they had been eaten, not by time, but by men: boards torn out at random, missing patches of roofs, holes left in gutted cellars. It looked as if blind hands had seized whatever fitted the need of the moment, with no concept of remaining in existence the next morning. The inhabited houses were scattered at random among the ruins; the smoke of their chimneys was the only movement visible in town. A shell of concrete, which had been a schoolhouse, stood on the outskirts; it looked like a skull, with the empty sockets of glassless windows, with a few strands of hair still clinging to it, in the shape of broken wires.
Beyond the town, on a distant hill, stood the factory of the Twentieth Century Motor Company. Its walls, roof lines and smokestacks looked trim, impregnable like a fortress. It would have seemed intact but for a silver water tank: the water tank was tipped sidewise.
They saw no trace of a road to the factory in the tangled miles of trees and hillsides. They drove to the door of the first house in sight that showed a feeble signal of rising smoke. The door was open. An old woman came shuffling out at the sound of the motor. She was bent and swollen, barefooted, dressed in a garment of flour sacking. She looked at the car without astonishment, without curiosity; it was the blank stare of a being who had lost the capacity to feel anything but exhaustion.
“Can you tell me the way to the factory?” asked Rearden.
The woman did not answer at once; she looked as if she would be unable to speak English. “What factory?” she asked.
Rearden pointed. “That one.”
“It’s closed.”
Now here’s the really extraordinary thing. When Ayn Rand published those words in 1957, Detroit was, on most measures, the city with the highest per capita GDP in the United States.
The real-life Starnesville, like the fictional one, decayed slowly, then collapsed quickly. I spent a couple of weeks in Detroit in 1991. The city was still functioning more or less normally, but the early signs of decomposition were visible. The man I was staying withn, a cousin of my British travelling companion, ran a bar and restaurant. He seemed to my teenage eyes to be the embodiment of the American dream: he had never been to college, but got on briskly and uncomplainingly with building a successful enterprise. Still, he was worried. He was, he told me, one of a shrinking number of taxpayers sustaining more and more dependents. Maybe now, he felt, was the time to sell up, while business was still good.
He wasn’t alone. The population of Motown has fallen from two million to 700,000, and once prosperous neighbourhoods have become derelict. Seventy six thousand homes have been abandoned; estate agents are unable to shift three-bedroom houses for a dollar.
The Observer, naturally, quotes a native complaining that ‘capitalism has failed us,’ but capitalism is the one thing the place desperately needs. Detroit has been under Leftist administrations for half a century. It has spent too much and borrowed too much, driving away business and becoming a tool of the government unions.
Of Detroit’s $11 billion debt, $9 billion is accounted for by public sector salaries and pensions. Under the mountain of accumulated obligations, the money going into, say, the emergency services is not providing services but pensions. Result? It takes the police an hour to respond to a 911 call and two thirds of ambulances can’t be driven. This is a failure, not of the private sector, but of the state. And, even now, the state is fighting to look after its clients: a court struck down the bankruptcy application on grounds that ‘will lessen the pension benefits of public employees’.
Which brings us to the scariest thing of all. Detroit could all too easily be a forerunner for the rest of the United States. As Mark Steyn puts it in the National Review:
Like Detroit, America has unfunded liabilities, to the tune of $220 trillion, according to the economist Laurence Kotlikoff. Like Detroit, it’s cosseting the government class and expanding the dependency class, to the point where its bipartisan “immigration reform” actively recruits 50–60 million low-skilled chain migrants. Like Detroit, America’s governing institutions are increasingly the corrupt enforcers of a one-party state — the IRS and Eric Holder’s amusingly misnamed Department of Justice being only the most obvious examples. Like Detroit, America is bifurcating into the class of “community organizers” and the unfortunate denizens of the communities so organized.
Oh dear. No wonder the president would rather talk about Trayvon Martin. If you want to see Obamanomics taken to its conclusion, look at Starnesville. And tremble.
http://blogs.telegraph.co.uk/news/danielhannan/100227375/obamanomics-is-turning-america-into-detroit-ayn-rands-starnesville-come-to-life/?fb
