IN THE 1983 movie Dr. Detroit, the flamboyant lead character goes on a rampage warning of trouble to come. “I am talking about scorched earth, no survival, wholesale destruction…body-bags and fire!” he yells. That’s pretty much what has happened to Detroit over the last three decades.
Its population has shrunk by half to below 700,000. The wait for police response is five times the national average, and only 8 percent of crimes are solved. Roughly a third of the city’s 140 square miles is either unoccupied or dilapidated. About 40 percent of its tax revenue is directed to retirement or debt, and the city hasn’t been in the black since 2004. Bankruptcy should have been declared years ago. The best experts say there is no way the city can ever crawl out of its predicament using conventional means.
In the short term, Detroit could sell assets. Kevyn Orr, the city’s emergency manager, says all assets must be potentially on the table. Experts consulted by the Detroit Free Press say the collections of the Detroit Institute of Arts—works by everyone from Van Gogh to Matisse to the original Howdy Doody children’s TV doll—would fetch some $2.5 billion. But that’s only one-eighth of the city’s projected long-term debt of $20 billion. Art experts say any sales from the museum would have to be spaced out over a long period.
“There are only so many billionaires that could absorb all of that material,” art appraiser Betty Krulik told reporters.
With a federal or state bailout effectively off the table because of the bad precedent it would set for other near-bankrupt cities, it’s time for truly creative thinking.
Orr, Detroit’s emergency manager, makes clear what’s needed. “The city’s operations have become dysfunctional and wasteful after years of budgetary restrictions, mismanagement, crippling operational practices and, in some cases, indifference or corruption,” he wrote last May. “Outdated policies, work practices, procedures, and systems must be improved consistent with best practices of 21st-century government.”
Hmmm. Well, Canada lies just across the river from Detroit. It certainly has a 21st-century government, with lower unemployment, smaller debt, and even more economic freedom than the United States, according to metrics from both the Heritage Foundation and the Cato Institute. Canada might be interested in Detroit, in whole or in part.
The city of Windsor, a town of 210,000 people and the center of Canadian auto production, has already expressed interest in buying Detroit’s half of the busy underground tunnel that connects the U.S. and Canada. Mayor Eddie Francis told the Wall Street Journal he is “absolutely” sincere in trying to buy the rest of the tunnel if it comes on the market. The best estimates are that the tunnel would be worth some $100 million—up from an appraisal of $70 million when Windsor first tried to buy it in 2006.
One of the most intriguing parts of Detroit is Belle Isle, a 1.5 square-mile park with real market value that sits in the Detroit River between the two cities. Designed by Frederick Law Olmsted, one of the creators of New York’s Central Park, it was once an urban jewel but has been left decrepit by years of neglect. One proposal is to revitalize Belle Isle by having the city sell it for $1 billion to investors interested in setting up a self-governing “free enterprise zone.” While it would function as a mini-Hong Kong, some strings could be attached (no factories, for example). The idea has been endorsed by no less than former Chrysler president Hal Sperlich, who says the island could bring economic dynamism back to the area and create a “Midwest tiger.”
Other commentators point to other properties that could be sold to Canada or private investors. The city’s water department begs for new management. There are prime waterfront sites owned by the city such as the Joe Louis Arena and Hart Plaza. The Detroit Zoo sits on 125 acres of prime land. Its animals are much in demand, too; the Free Press reported that a breeding female giraffe can fetch $80,000.
The Canadian media outlet Global News went further with a poll asking “Should Canada buy Detroit?” It pointed out that Canada’s sports cred would instantly be enhanced by adding the Detroit Red Wings, Detroit Pistons, and Detroit Lions. Its music status would rise, too, as it could lay claim to local artists Stevie Wonder, Eminem, and Iggy Pop. As of press time, the winning answer was “yes”: 36 percent of respondents agreed with buying Detroit. Close behind, with 29 percent, were those who agreed it was a good idea, but “only if we’re able to get rid of the guns.”
AT THIS POINT, selling assets to Canada or even private investors is politically untenable. But wait a few months, until the crushing burden of Detroit’s debt makes it clear that radical solutions are in order. Bold ideas are often ridiculed or scorned in the beginning. In 1985, former British Prime Minister Harold Macmillan upbraided Margaret Thatcher for her program to privatize state-owned enterprises. He shouted that his successor was “selling off the family silver.” Thatcher ignored such criticism and stuck to her guns.
Detroit needs a Margaret Thatcher figure, someone who can ignore the screams of outrage that inevitably accompany the implementation of any bold program. All over the world, once-devastated cities have revitalized themselves after their industrial bases decayed: Belfast, Northern Ireland, after shipbuilding went elsewhere; Turin, Italy, after Fiat drastically downsized; Pittsburgh, Pennsylvania, after steel factories folded. Detroit can ultimately do the same if it sets no limit on who it will do business with—whether they be private investors or even Canadians.