Is Detroit a Sign Of Things To Come?
The city of Detroit was built in the same way our country was built; our country was founded on the belief of life, liberty, and the pursuit of happiness. Is the collapse of Detroit a glimpse of our future? On a larger scale the events that have been adding up over the years that are putting Detroit “out of business” resemble the very same events we face on a national level today.
Government corruption funded by corrupt unions and inept government micromanagement took a thriving city and brought it to its knees. Because of wage hikes, restrictive work rules, and long-term pension commitments the Detroit automotive industry could not survive.
I understand that there are many other domino’s involved in Detroit’s downfall, but a “decent” government might have been able to hold these domino’s up and stopped the chain reaction that caused the foreclosure of an American city.
As Peter Schiff Wrote:
Things are no different in Washington. On a national level we have also promised far more than we can deliver. In addition to our acknowledged current national debt of almost $17 trillion ($53,400 per citizen), there is another $87 trillion in unfunded obligations that the Federal government has promised to pay Social Security and Medicare recipients over the next 75 years. (These figures are over and above the projected revenues those programs are scheduled to bring in.) This difference comes to another $290,000 per citizen. Anyone remotely aware of the financial well-being of the average American will know these figures are well beyond our means. But this hasn’t motivated us to reform entitlements in a way that will render them affordable.
About Detroit From The New York Post:
The most obvious candidate is the city’s vast unfunded pension programs, which have been running deficits for years. Fully 99.6% of the city’s retiree health-care liabilities are unfunded, and the program generally pays 80% to 100% of retirees’ medical costs. From 2007 to 2012, the city’s two biggest pension programs paid out $3.3 billion more in benefits than they took in through contributions or investment income. Unfunded obligations account for $9.2 billion of Detroit’s $18 billion debt: $3.5 billion comes from the pension part and $5.7 billion comes from the retiree health-care liability.
The word that gets me is “unfunded” I am no economist by any means but I do understand that you can only spend what you have, unless you can print your own money that is.
Children are taught how to budget in grade school, but our college educated public officials just don’t seem to be able to grasp this concept.
Henry Ford Built It, Our Government destroyed It
Detroit defined capitalism and private enterprise in the first half of the 20th century, and because of this was able to offer manufacturing jobs to over 200,000 people and even up to almost 2 million by the 1950’s. As the population in the United States continues to grow, the population of Detroit has actually fallen from 1.9 million in 1950 to under 700,000 as of 2012.
This is possibly due to the fact that Detroit has been referred to as the arson capital of America, and repeatedly the murder capital of America, Often Detroit is (was) listed by FBI crime statistics as the “most dangerous city in America”
Although no government can be expected to completely remove gangs, violence and drugs, it is their duty to maintain a productive society that invites business and hardworking people, not a government that is too busy working for the unions to pay attention to their actual jobs.
What Can We Expect?
In my opinion we can expect the same sort of collapse scenario to play out on a national level; as a matter of fact we are seeing it play out as we speak. Our government’s irresponsible spending, corruption and constant meddling in other countries business is completely unsustainable.
I have an idea, don’t worry about fixing Syria and fix your own country…start with Detroit.
Peter Schiff also wrote the good news is that the same forces that built Detroit could help turn it around, if only they were allowed to function. First off, Detroit needs to default on its debt. This means the bond holders and the citizenry will suffer.
But after this painful process is complete, Detroit will have a few things going for it. It will boast abundantly cheap real estate and plenty of desperate workers. If government were to relax employment regulations, cut business and sales taxes, crack down on union intimidation tactics, and eliminate the minimum wage, the employers would sense the opportunity and return.
This holds true on a national level as well. When and if our country goes through an economic collapse we will go through this same sort of suffering in the beginning, and this is one of the reasons we choose to prepare, this is why we have no faith in our current government.
At this point all we can do is pray for the best and expect the worst. Who knows when this will happen, all we can do is be prepared if it does.
If it doesn’t happen in our lifetime I think we have a responsibility to teach our children to question everything and everyone, and that our government was created by the people for the people.
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