This week we have witnessed the largest bankruptcy of a city in U.S. history. Of course I'm talking about Detroit. Yes, cities in America have filed for bankruptcy in the past but not cities of this size.
The city owes an astounding $20 billion, and it has become clear that it can't pay that back. According to Walter Russell Mead, “Detroit has been spending on average $100 million more than it has taken in for each of the past five years. The city’s $11 billion in unsecured debt includes $6 billion in health and other retirement benefits and $3 billion in retiree pensions for its 20,000 city pensioners, who are slated to receive less than 10 percent of what they were promised.” Detroit has lost a quarter of a million residents in the last decade and well over a million since the 1950s. The jobless rate is now twice the national average, above 18%.
News of this bankruptcy must come as a shock (or maybe not) to Barack Obama, who used Detroit as a distinct difference between himself and Mitt Romney in the last election. Does this ring a bell: ‘We refused to let Detroit go bankrupt.’ That was Barack Obama in October of 2012. Obama has made a habit of making promises he can't keep or using baseless political hyperbole to win over the voters.
The bankruptcy of what was once the heart of the American middle class is truly sad, and I feel for those retired workers who rely on these pensions, which have now come into question. But hopefully we can learn from this. The question we should all be asking ourselves is this: How did Detroit get to this point? The fact is that this is the result of liberal policies, big government and union control. Yes, companies left Detroit but they left for a reason: They left because the cost of doing business in that city became uncompetitive. Why? Because unions drove up the cost of labor, among other things. If you want to see the final chapter in the book of liberal utopia, look no further than Detroit.