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The Detroit Discontinuity

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  • R. Warren Anderson

    (University of Michigan-Dearborn)

Abstract

The popular refrain for Detroit’s economic downfall is the collapse of the auto industry. This is unsatisfactory as the manufacturing decline affected the entire Detroit metro region but all of Detroit suburbs have not suffered the same fate as the city. This article offers a different yet more complete argument for Detroit’s poor performance by analyzing the politics of the city along various dimensions. Detroit differs from its neighbors by having more corrupt and destructive politics accompanied with high tax rates. Tiebout competition allows for Detroit residents to leave its poor yet expensive governance. While the decrease of auto-manufacturing jobs clearly negatively impacted the city, poor governance set Detroit apart from nearby areas and better describes its long run condition.

Suggested Citation

  • R. Warren Anderson, 2018. "The Detroit Discontinuity," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 35(3), pages 167-184, September.
    • Handle: RePEc:spr:homoec:v:35:y:2018:i:3:d:10.1007_s41412-018-0073-8
    DOI: 10.1007/s41412-018-0073-8
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    More about this item

    Keywords

    Taxes; Detroit; Corruption;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization

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