On July 18, 2013, the City of Detroit filed for Chapter 9 Bankruptcy making it the largest municipal bankruptcy filing in U.S. history as measured by the amount of outstanding debt. Detroit is estimated to owe $18-$20 billion in debt over 10,000+ creditors, 100 discrete bond issuances and 50 labor bargaining units. Prior to the Detroit filing, Jefferson County, Alabama’s $4 billion filing in 2011 had been the largest municipal bankruptcy filing in the United States.
So where did things go so horribly wrong? The above video is the first in a three part series on the Detroit bankruptcy filing. Video #1 concentrates on The Economics of Failure. The video begins with an illustration of demographic trends for the following three major U.S. cities:
- Dallas – People are solidly moving into Dallas due to limited taxes; limited benefits and reduced regulation;
- Los Angeles – While the climate of Los Angeles still attracts people to the state, high state income tax and the most restrictive environment regulations in the country are driving many people out of the state of California;
- Detroit – There is a massive population exodus from Detroit with virtually no immigration due to the city drowning in debt from more than 50 years of democratic mayors running the city. The video cites cronyism, incompetence and crime as some of the major contributors.