July 22, 2013 3:06PM

Krugman: Detroit’s Bankruptcy “Just One of Those Things”

Paul Krugman in the New York Times on the bankruptcy of my home town:

There are influential people out there who would like you to believe that Detroit’s demise is fundamentally a tale of fiscal irresponsibility and/​or greedy public employees. It isn’t. For the most part, it’s just one of those things that happens now and then in an ever‐​changing economy.

No policy implications in the decline of what was by some measures America’s most prosperous city in 1960. None at all. It was just one of those things.

It was just one of those things…

Michael Barone: “Liberal policies promised to produce something like heaven. Instead they produced something more closely resembling hell. You can get an idea of what happened to Detroit by looking at some numbers. The Census counted 1,849,568 people in Detroit in 1950, including me. It counted 713,777 in 2010.”

Just one of those crazy flings…

Stephen Henderson in the more liberal of the city’s two dailies, the Free Press: Detroiters “pay more kinds of taxes, at higher rates, than any other citizens in Michigan…. The city’s tax structure is, by sheer numbers, among its most glaring problems.” The money goes to a school system that has spent above‐​average amounts to attain a 47 percent functional illiteracy rate; where “only about a third of the ambulances are running” and “police solve less than 10 percent of the crimes that are committed.”

One of those bells that now and then rings…

Despite grotesque cuts in the level of city services, Detroit in 2011 still had around twice as many municipal employees per capita as cities with comparable populations such as Indianapolis and Columbus. Last year it was revealed that the city water and sewer department employs a “horseshoer”although it keeps no horses. According to Karl Denninger, the city’s promises to unionized employees are part of a wider pattern: “special classes of ‘untouchable’ promises that were negotiated in bad faith by one or both sides and which are then ensconced with special protections under the law.”

It was just one of those things.

Detroit is known for receiving, and misspending, vast sums in federal assistance. The previous mayor, Kwame Kilpatrick, is serving time following a multi‐​sided scandal in which shakedowns of city contractors played a central role. In 2009 five school district employees were hit with felony counts as “part of an investigation into alleged corruption and the loss of tens of millions of dollars in school funds.” The city administration, while wooing big business and the casino trade, remains indifferent at best and deeply hostile at worst toward small and informal businesses.

Nope, this bankruptcy has no wider policy implications at all, unlike the Wall Street bankruptcies that the Times columnist occasionally writes about. Cole Porter, in best Krugman mode:

If we’d thought a bit about the end of it

When we started painting the town

We’d have been aware that our love affair

Was too hot not to cool down

So good‐​bye, dear, and amen

Here’s hoping we meet now and then

It was great fun

But it was just one of those things.