Detroit's bankruptcy filing is designed to solve the city's short-term financial crisis and give city leaders a bit of fiscal breathing room. But the city's long-term prospects still look bleak.
Over the past 60 years, the city has lost more than half of its residents. As its tax base declined, the city struggled to pay for basic city services. As service quality declined, the city became an even less appealing place to live and so more people left.
Really turning Detroit around will require some outside-the-box thinking. And there's been some. Here are six big ideas to revitalize America's most troubled city.
1. Eliminate all the taxes
And all the regulations: Jack Kemp, the former congressman and housing secretary, 1996 Republican vice-presidential nominee and 1988 presidential candidate, had an idea for America's inner cities. He wanted to make them "enterprise zones," where federal taxes and regulations were greatly relaxed, to spur outsiders to come and do business. That's been tried to varying degrees, including a federal program creating "empowerment zones," but why not go all the way? Eliminate all taxes for year-round residents of Detroit, with the federal government paying the cost of the abolition of state and local taxes. Get rid of zoning, parking requirements, occupational licensing and other cumbersome regulations while you're at it. See how many businesses come.
2. Make it into a tax shelter
Delaware's strategy of structuring its corporate tax code to favor corporate headquarters has brought billions of dollars of investment into the state. It's possible to do that with catastrophic insurance reserves, as a former insurance commissioner once proposed for the District. They're currently taxed as income in the United States, so tens of billions of dollars are sitting in bank accounts in Bermuda and the Cayman Islands. If the federal government allowed Detroit to host that money at a much-reduced rate, it could create a small but significant financial industry to manage it.
3. Create a Detroit Visa
What Detroit needs, more than anything else, is to replace the million people it lost over the past six decades. The easiest way to do that would be to import them. Most Americans don't want to live in Detroit. But as Matt Yglesias has noted, there are about 165 million foreigners would like to become Americans. Presumably some of them would be willing to live in Detroit if that's what it took to get a green card.
The proposal would work like this: Immigrants would get a visa that would be good for five years, during which they'd be required to maintain residence within the city limits. After that, immigrants would get normal green cards and could live where they liked. But hopefully, as they put down roots and Detroit as a whole prospered, many would choose to stay.
It might seem like these new Detroiters would have trouble finding work, but population growth tends to create job opportunities. Immigrants tend to be highly entrepreneurial; some of them would not only create jobs for other immigrants, but for some native-born Americans too.
4. Go vegan
The People for the Ethical Treatment of Animals have a proposal, too. They say they'll give the city $100,000 to make all meals in government buildings -- mostly schools, hospitals and jails -- meat free. As if that weren't enough, they'll also plaster trash and fire trucks with vegan-boosting advertisements, supporting a strapped public transit system. PETA President Ingrid Newkirk notes that vegans are less prone to obesity, which would lower health-care costs. And think of the chickens! "I don't know if you know, but twenty thousand chickens an hour being killed for Detroit," Newkirk says. "So if we could make all government workers try a vegan diet, that's a lot of chickens not having their throats cut."
5. Move federal workers to Detroit
Another way to increase Detroit's population would be to move federal workers to the city. There's a precedent for this: the U.S. Patent and Trademark Office opened a satellite office in Detroit last year.
The feds could do this on a larger scale. There are about 2.7 million federal civilian workers. If 10 percent of them moved to Detroit over the next decade, that would be an extra quarter-million people. Many workers would bring their families with them, and their spending would create additional jobs in the city.
Federal agencies could open satellite offices in Detroit and require most new federal workers to work there. Existing workers could be offered financial incentives to relocate voluntarily. Detroit's extremely low cost of living would be an added draw. And not only would this help to save Detroit, but the federal government would save money on office space.
6. Give Detroit to Canada
Detroit is one of the few parts of the United States (other than Alaska) that's actually north of Canada: The city of Windsor, Ontario, lies south of it. So why not make this Canada's problem? Much of the city's fiscal problems boil down to retiree benefits. For example, it has $5.7 billion in unfunded retiree benefits and $3.5 billion in unfunded pensions. Luckily, Canada has a single-payer health-care system and not one but two publicly funded pension systems. Let those pay off the debt!
Canada's provinces do more for municipalities than our states do for cities. Toronto gets 19 percent of its budget from the Ontario and Canadian federal governments. That's much more than U.S. cities typically get. Ontario's generally in better shape than Michigan, which is good news for tax money going to Detroit. Toronto and Ottawa are better cities to have helping you out than, say, Flint.