The city of Detroit was one of the major casualties of the 2008 financial crisis, finally filing for bankruptcy in July 2013. Seth Schindler looks at how the city’s bankruptcy has acted as a catalyst for change. He writes that Detroit has moved from a ‘growth machine politics’ characterised by a push for economic growth at the expense of urban services, to a policy of ‘degrowth’ which rejects fiscal austerity in favor of economic diversification and creative land use

Schindler, Seth

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blogs.lse.ac.ukhttp://blogs.lse.ac.uk/usappblog/2015/02/05/other-cities-in-crisis-can-learn-from-detroits-bankruptcy-fostered-degrowth-machine-politics/Other cities in crisis can learn from Detroit’s bankruptcy-fostered Degrowth Machine Politics.The city of Detroit was one of the major casualties of the 2008 financial crisis, finally filing forbankruptcy in July 2013. Seth Schindler looks at how the city’s bankruptcy has acted as acatalyst for change. He writes that Detroit has moved from a ‘growth machine politics’characterised by a push for economic growth at the expense of urban services, to a policy of‘degrowth’ which rejects fiscal austerity in favor of economic diversification and creative land use.Speculative lending practices and the securitization of sub-prime mortgages were largely toblame for the 2008 financial crisis. The crisis was particularly severe in cities where the lack ofliquidity in the financial system made it difficult for municipal governments to respond to the wave of foreclosuresand resultant shrinking tax bases. With the worst of the crisis seemingly behind us it is time to reflect on its long-term impact on American cities. Perhaps the most extreme example of a city in crisis is Detroit. The city’sbeleaguered finances proved to be no match for the global economic meltdown and in 2013 Detroit filed forbankruptcy. This part of the story is well known, but much less attention has been paid to the vision of Detroit’sfuture development around which a consensus among local elites coalesced in the year-and-a-half sincebankruptcy was declared. While this plan retains some elements of out-of-the-box urban development programs,it dispenses with a growth-based strategy geared toward rejuvenating the city’s manufacturing base. Instead, itrecognizes the likelihood of further economic decline and its emphasis is on improving the quality of life of Detroitresidents, economic diversification and environmental sustainability.In order to understand the willingness of policy makers in Detroit to relinquish the dream of returning to a goldenera of Fordist manufacturing it is necessary to put the 2008 crisis in context. Like many American cities, Detroit isa casualty of the prolonged economic crisis that began in the 1970s. Auto manufacturers relocated productionfacilities to southern states and then overseas in an attempt to outflank organized labour and to counter a fallingrate of return. The collapse of Detroit’s manufacturing base left the city’s finances in tatters, and policy makersresponded by embracing market-oriented solutions that were in fashion in the 1980s. There was a broad shift inthe United States during the 1980s, in which the primary function of municipal government went from managingday-to-day service delivery to fostering economic growth. To this end “growth coalitions” emerged in many cities.These coalitions practiced “growth machine politics” whose objective was to augment land value and attractinward investment. Public bodies assumed risk for large-scale urban development projects while private firmsreaped the financial rewards. This led to a perception among investors that municipal bonds were safeinvestments that offered lucrative returns, so when Detroit’s municipal government sought to make up for itsshrinking tax base by issuing bonds there was no shortage of willing investors. By 2012 Detroit’s deficit stood at$326 million while its tax base and population continued to shrink.The textbook response to crisis in many cities has been to intensify neoliberal policies. Thus, when growthcoalitions failed to attract investment or augment land value, the response has oftentimes been to offer even morefavourable terms to investors while cutting back on services. This has led many scholars and activists to despairthat while neoliberalism is the cause of the current crisis it is also perversely embraced as its solution. Manymunicipalities have indeed imposed fiscal austerity since the onset of the financial crisis as a means of attractinginvestment. Some of these cities may have fundamentally sound finances, and policy makers may view fiscalausterity as a short-term detour aimed at calming skittish investors. According to this reasoning the pain causedby austerity will be offset in the near future once the growth coalition is able to resume a cycle of development andgrowth. In the case of Detroit this optimism would have most certainly be misplaced because even the mostaggressive version of fiscal austerity would not have reversed the city’s decades-long decline. This begs anobvious question: Why should a city endure the pain of austerity if further decline is inevitable from the outset?Community garden in Detroit Credit: Jessica “The Hun” Reeder  (Flickr, CC-BY-2.0)Detroit’s elites decided that although austerity was in the best interest of extra-local creditors it promised to makelife even more difficult for residents, and they decided to repudiate the city’s debt and take the historic step ofdeclaring bankruptcy. By freeing the city of its debt burden bankruptcy has allowed Detroit’s future to be re-envisioned. A coalition among Detroit elites coalesced around this emergent vision, which is based on creativeland-use, environmental sustainability and economic diversification. It is articulated in a 345-page documententitled Detroit Future City (DFC). It reads like a master plan and focuses on five “planning elements”: economicgrowth, land use, city systems, neighbourhoods, and land and buildings assets. Unlike entrepreneurial urbanpolicies whose time horizons are measured in quarters and election cycles, DFC aims to rejuvenate Detroit’seconomy in the course of the next five decades. The first step is to make the city liveable in order to stem the tideof out-migration, and to this end the plan calls for investments in neighbourhoods. Residents in neighbourhoodscharacterized by high levels of abandonment are encouraged to relocate to neighbourhoods with high populationdensities. Fordist manufacturing is rejected in favour of economic diversity, the single-family detached home isrejected in favour of densely populated diverse neighbourhoods, and in a major shift for the Motor City the planenvisions an efficient public transportation network. Perhaps the most noteworthy aspect of the DFC is “the re-imagination and reuse of vacant land for productive uses or, where there is excess vacant land, returning it to anecologically and environmentally sustainable state.” The emphasis on sustainable land use is a significantdeparture from growth machine politics aimed at augmenting land value.It is too early to tell whether the vision articulated in the DFC will be realized or if it will indeed guide policy for thenext fifty years. Nevertheless, it is important to note that bankruptcy gave Detroit the opportunity to chart a newpath. I refer to this as degrowth machine politics because it takes the further shrinking of Detroit’s economy forgranted, and rather than placate creditors policy makers are focused on improving the quality of life for cityresidents. The concept “degrowth” is not new but it has historically been used primarily by activists and scholarsbecause politicians do not win elections by campaigning for shrinking the economy. This is changing since theonset of the financial crisis because there are many places in which degrowth simply seems to be a reality thatcannot be reversed by fiscal austerity. For example, elements of degrowth are beginning to enter mainstreampolicy discourse in southern Europe. Voters in Greece recently rejected fiscal austerity, and although this mayjeopardize lines of credit from austerity-obsessed creditors in Brussels and Berlin it empowers Greek policymakers to focus on quality of life issues. Similarly, many cities in China are struggling to cope with sluggisheconomic growth that Xi Jinping has called the “new normal.” If the heady days of sustained 10% growth areindeed over and urban planners are unable to attract foreign investors or loans from state-owned banks, then theymay be forced to respond to demands for quality-of-life improvements from their citizenry in more creative ways.Detroit may provide lessons for degrowth coalitions elsewhere. First and foremost, Detroit demonstrates that theintensification of fiscal austerity is not the only response available to policy makers faced with an economic crisis.In spite of declaring bankruptcy Detroit was not punished by creditors. On the contrary, the repudiation of debttransformed Detroit into an attractive destination for investors. For example, Goldman Sachs launched aninitiative to invest $20 million in Detroit’s small businesses. Quite simply, an institution that is unburdened by debtseems like a better investment than one that cannot hope to repay its debt without the support of a guarantor (inthis case the State of Michigan). Second, the reason why Detroit is able to attract investment is because itsdegrowth machine politics has clearly articulated an innovative plan for the city’s future. The rejection of austerityfor austerity’s sake must be accompanied by a clear set of policies aimed at managing decline in a way thatmakes cities more liveable. Thus, rather than an end in and of itself, the repudiation of debt must be seen as ameans that can allow cities to envision alternative, sustainable and equitable futures.This article is based on the paper ‘Detroit after bankruptcy: A case of degrowth machine politics ’, in Urban Studies.Please read our comments policy before commenting .Note:  This article gives the views of the author, and not the position of USApp– American Politics and Policy, norof the London School of Economics.Shortened URL for this post: http://bit.ly/1xpfpal_________________________________About the author Seth Schindler – University of SheffieldSeth Schindler is an urban geographer interested in rapidly growing metropolises in developingcountries. He is particularly interested in theorizing urban transformation in these cities, whichoftentimes cannot be explained by mainstream urban theory that was developed largely inEurope and North America.CC BY-NC-ND 3.0 2014 LSE USAPP

Other cities in crisis can learn from Detroit’s bankruptcy-fostered Degrowth Machine Politics.

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