The city government of Detroit went into bankruptcy in July. In California, the city governments of Stockton and San Bernardino entered bankruptcy proceedings in 2012. But the Detroit and California bankruptcies, like Tolstoy’s unhappy families, are not alike. They suffer from quite different ailments.
You can see the difference by comparing their populations in the 1950 and 2010 Censuses. In 1950 Detroit, then the nation’s fifth-largest city, had 1,849,568 people. In 2010 it had 713,777.
Stockton and San Bernardino weren’t much more than small towns in 1950, with 70,853 and 63,058, respectively. Their total population of 133,911 was only 7 percent the size of Detroit’s. But in 2010 their combined total was 501,631, 70 percent of the 2010 total of Detroit.
Lots of people moved out of Detroit. Lots of people moved into Stockton and San Bernardino. This is a clue to these cities’ different roads to bankruptcy.
Or put it another way. Many people who pay taxes moved out of Detroit. Many who don’t pay much in the way of taxes moved into Stockton and San Bernardino.
Why did so many people move out of Detroit? The quick answer: crime abetted by welfare. From 1965 to 1975, crime and welfare dependency roughly tripled in the United States and rose even more in Detroit.
There was a connection between the two trends. Welfare encouraged single parenthood; fatherless boys often grew up to commit violent crimes.
Most violent crimes were and are committed by (and against) blacks, whose numbers in Detroit during the great northward migration rose from 149,000 in 1940 to 660,000 in 1970.
Crime was especially common in Detroit during the 20-year reign of Mayor Coleman Young, first elected in 1973. Young was smart, charming and inclined to blame the city’s problems on fleeing whites. He stopped tough policing tactics like stop-and-frisk and concentrated on bringing in federal dollars and sponsoring big projects like the downtown Renaissance Center and General Motors’ Poletown plant.
But the Detroit Three auto companies were losing market share to foreign competitors, who prudently avoided locating plants anywhere near Detroit.
The city’s non-black population dropped from 853,000 in 1970 to 250,000 in 1990. Then white flight was followed by black flight, as the black population fell from 777,000 in 1990 to 590,000 in 2010.
Crime drove away Detroit’s taxpayers. Much residential and commercial property is literally worthless. The Detroit News found that 47 percent of property owners didn’t pay property taxes in 2011.
The city workforce isn’t huge (9,700), and its pensions are not lavish (average: $19,000). But the city lacks a tax base sufficient to pay for services for 713,777 people over 139 square miles.
Stockton and San Bernardino are different. They’re typical of mid-sized California cities that were never upscale and have been filling up with immigrants — many of them illegal, primarily from Mexico. Stockton is 40 percent Hispanic; San Bernardino, 60 percent.
Public-employee unions in these two cities succeeded in getting lavish salaries, health plans and pensions before the housing bust.
The 2007-10 foreclosure rates in the Central Valley (Stockton) and the Inland Empire (San Bernardino) were among the nation’s highest. I suspect that half the dispossessed homeowners were Hispanic.
These two cities had other problems. Stockton spent $1 billion on downtown and waterfront infrastructure that has been a bust. San Bernardino officials reportedly falsified documents on pension costs.
Economic downturns expose weaknesses and mistakes that are ignored in more prosperous times.
Detroit is in bankruptcy primarily because crime drove out the city’s tax base. The California cities are there primarily because of overbearing public employee unions.
They’re probably not the last cities to go bankrupt for these reasons.