How the NorthEast will turn Red

Detroit vs Michigan - Michigan wins

Let’s consider the series of events that have taken place in Detroit for a moment.

1) Large promises were made by the local government

2) Insufficient funds were set aside to fulfill the promises

3) The assumption was made that taxes could always be raised to meet any difference between promises and return on investment

4) Stiff regulations were passed discouraging capital investment

5) Some capital fled as plants moved, some capital died as entrepreneurs retired and closed shop, some capital that could have come in was directed elsewhere as plants were opened in lower cost lower regulation states or outsourced

6) The tax base shrunk as workers sought jobs elsewhere and residents moved outside city limits

7) The bill for promises started to become due

8) Taxes were raised and services cut

9) Tax base shrunk further as citizens fled high taxes and poor services

10) It became evident that an increasing monetary obligation cannot be forced onto a decreasing tax base.

As this was going on it became clear to the rest of Michigan that Detroit was going to claim the rest of the state needed to send them money.  In 2010 the Democrats dropped from 65 to 47 seats in the state legislature (out of a total of 110 seats).  Of these 47 seats 21 were from the 23 seats that include at least part of Wayne County (i.e. Detroit) meaning after the 2010 election Democrats represented only 26 of the 87 seats outside Wayne County.  So the Democratic party is basically the party of Detroit – which is in population free-fall.  In 2012 while Obama won Michigan by 10 points the Democrats lost in the state legislature by 7 points and gained only 5 seats.  In other words 17% of the population voted for Obama but against state Democrats.  This was also in the midst of a discussion about right-to-work laws in a heavily unionized state.  So, in blue Michigan almost a third of the people voting for Obama decided it would be best to elect a legislature that would scale back union protections and refuse to bail out Detroit.  The republican party did lose some seats (5 of 64), but against severely strong headwinds.

What does this mean for the rest of the NorthEast?  What has happened in Detroit is happening in many other Northeastern and Midwestern cities.  Look at the population of Buffalo (1950-580k, 2010-261k), Rochester(1950-332k, 2010-210k), Pittsburgh(1950-676k, 2010-305k), Philadelphia(1950-2.0M, 2010-1.5M), Boston(1950-801k, 2010-617), Milwaukee(1960-741k, 2010-595k), Chicago(1950-3.6M, 2010-2.6M), Boston(1950-801k, 2010-617k), St Louis(1950-856k, 2010-319k), Kansas City (1970-744k, 2010-459k) and Cleveland (1950-914k, 2010-397k).  The only cities (of 500k or more residents) in the the Northeast or Midwest that have a larger population in 2010 than 1950 are Columbus(+412k), Indianapolis(+402k) and New York(+284k) which have together gained about the same population(1.1M) as either Detroit(-1.1M) or Chicago(-925k) alone lost.  (2 notes below)

The promises made in Detroit are similar to promises made throughout the rest of the cities in the Northeast/Midwest.  The difference between required and actual investment is probably similar.  The return on investment will probably be similar.  The mobility of workers is just as high as it was for workers in Detroit (i.e. they can leave).  The question will be how long until the non-city residents of the rest of the Rustbelt realize they are about to be handed a bill to bail out union workers and government retirees in cities they fled due to government cost and regulation?  When voters realize that they are being billed to service the unions they ran away from in the first place there will be state level results similar to Michigan regardless of the presidential vote.

It took only one election in Michigan to swing the state legislature from 2/3D to 2/3R. Let’s prepare.

*Note – all numbers drawn from Wikipedia which lists data as being drawn from the census.

**Also keep in mind that the population of these areas is rapidly graying and that the numbers contributing to the tax base has probably decreased more than these numbers show, and will subsequently decline more rapidly than the population as retirements outpace births.

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