(Editor's note: This is adapted from an article that originally appeared on Industrialpolicy.org.)
As Detroit and the rest of Michigan look forward to 2010 and beyond, it might be wise to look back at what economics lessons the experience of the past half-century may provide to guide our future choices.
In 1965, then-Mayor of Detriot James Cavanagh provided narration for a piece of film boosterism titled "Detroit: A City on the Move." Among other things, the mayor confidently announced that Detroit's future was bright "as a direct result of considered planning" and "planning with a purpose." Further, it declared that "Detroit is rebuilding to a master plan of beauty and public service," and that "a new concept of urban efficiency" was being developed.
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Alas, it was not to be. Today, Detroit has roughly half the population it had only 40 years ago. In 2008, the U.S. Census Bureau reported that Detroit was America's poorest city, with 33.6 percent of its 2004 population living below the federal poverty line.
The depth of the city's decline and fall is so glaring that even international news organizations "parachute in" reporters to cover it as they might a natural disaster, except with a focus on economic or social oddities. For example, the BBC last month reported that charitable farming was taking root in Detroit to help fight poverty. That is, the city is experiencing a "rural sprawl" of sorts, employing land to grow crops where vibrant urban communities and commerce once flourished.
Those bright-eyed city planners in 1965 could hardly have forseen the economic and social trends that would rock the city's foundations, and in this we may find a first lesson to guide us now: No matter how talented government planners may be, they simply do not have the ability to divine the future needs and wants of millions of people with any great accuracy. Beyond making reasonable provisions to ensure adequate future infrastructure for core urban functions — sewer, water, roads, etc. — attempts to micromanage the course of local or regional economies will only waste scarce resources.
Even if these particular urban planners could have predicted the future, their best efforts would have been overwhelmed by a local government that imposes crushing tax burdens on families and job providers; hyper-regulates the simplest of market processes; provides basic services in the shoddiest manner possible; and allows corruption and cronyism to fester unchecked.
Referring to her own administration's central planning activities in 2006, Gov. Jennifer Granholm might have felt the presence of James Cavanagh when she said, "In five years you will be blown away." Four of those years have passed, and the result of an unprecedented expansion of the state's centralized activities has been an acceleration in the "Detroitification" of Michigan. That's another lesson we should take to heart going forward.