Michael Tanner

Free markets and limited government are to blame for the largest municipal bankruptcy in U.S. history. That is the new meme to explain Detroit’s plight.

Former Michigan Governor Jennifer Granholm blames “free trade” for the decline of Detroit’s auto industry and thus the city itself.

New York Times columnist Paul Krugman suggests that “for the most part the city was just an innocent victim of market forces.”

MSNBC’s Melissa Harris-Perry claims that “this is what it looks like when government is small enough to drown in your bathtub,” referring to conservative Grover Norquist’s famous nostrum about the ideal political system.

Another MSNBC contributor, Michael Eric Dyson, suggests that “racial animus” was the real culprit.

Detroit has indeed had its share of racial problems. A long history of discrimination exploded in riots in 1967, followed by white flight to the suburbs. And as an almost-single-industry town, Detroit was hit hard by the decline of General Motors Co. (GM), Ford Motor Co. and Chrysler Group LLC.

Yet other cities, such as Pittsburgh and Cleveland, that have struggled with the same challenges have managed to bounce back or at least stay afloat. And auto manufacturing continues to thrive in states such as Alabama and Tennessee.

As for “small government” being to blame, one has to go back 52 years to find Republicans in control of Detroit’s government. Even then, one would not mistake Louis Miriani, the city’s last Republican mayor, for Norquist.

No, one has to look elsewhere for the reasons Detroit hasn’t been able to recover from its troubles.

Unfunded Obligations

Michael Tanner

Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.