Detroit is bankrupt - will Philadelphia follow?

Should our city pursue the solutions currently in vogue, or do we look for other approaches? My view is that if you have a brain tumor, you don't get relief by treating the headache it causes, since you will still die from the cancer. Failing to address the underlying causes of the financial problems will only lay the foundation for the next failure.

So, why did Detroit fail? The explanations are many but you have to start with the simple fact that older, industrial cities were caught in a tsunami of change triggered by automobiles, highways, and technological innovation. The suburbanization of households and manufacturing was the death knell of traditional city economies.

The result was a massive depopulation of cities in the Northeast and Midwest.

In some ways, Philadelphia is like Detroit. Both had thriving manufacturing sectors that disappeared. Both suffered huge outflows of households to the suburbs. Philadelphia, once the nation's third-largest city, has lost 25 percent of its population and is now the fifth-largest city. Detroit lost more than 40 percent of its residents and is now just the 18th largest.

The negative impact of the massive thinning of the population on the cost of government has not been recognized. Detroit was built to hold more than two million people. It is down to 700,000. Similarly, Philadelphia could house 2.5 million people, but the population is roughly 1.5 million. Despite this loss of taxpayers and businesses, neither Detroit nor Philadelphia - nor other similar cities - adapted its government or land-use pattern to the smaller population.

That failure is the root cause of the financial problems facing Detroit and those Philadelphia is dealing with, as well.

Low-density costs

Lower city densities mean higher service costs. Even if only half the number of homes on a block are occupied, the city still must provide services. A police car must patrol the streets. Trash collection and snow removal still have to occur. Fires still need to be put out. The significantly smaller population requires services whose costs are not proportionally lower, driving up government expenditures dramatically.

If cities do not return to their roots as high-density locations, they will continue to stumble from one financial crisis to another. Cities cannot afford to have few people living in large areas. Services cost too much. It wastes land and exiles residents to dangerous neighborhoods, which businesses avoid. It prevents employing the land for more productive purposes.

What is needed is a "clear-cut" approach to land use: Areas should be totally depopulated and the land banked. If large tracts of land can be amassed, commercial and industrial business can be attracted. To accumulate that space, properties may have to be sold to the city, development corporations, or private investors, or taken through eminent domain. The suburbs, with their large open spaces, created industrial parks. Cities must do the same. Some land will also be available for parks or other public uses.

Unfortunately, this is a harsh solution with huge human costs. People must be relocated, hopefully to better areas with improved housing. Indeed, new housing must be developed first so the receiving neighborhoods are more desirable alternatives. Though "clear-cutting" increases density, most of those relocated will be poor, who have little other than their homes. And let's face it - there is a racial component to this. This reminds people of urban renewal, which was nicknamed "black removal." That makes it difficult to even consider such a policy, let alone implement it.

Making tough choices

That said, failing to address the economic disadvantages created by very low-density housing will condemn cities to high service costs. Consider the current solution du jour: reducing pensions. Cutting retirement expenses will unquestionably resolve some of the current financial problems. But you still have the same economy, which will not grow faster. The burdensome costs of providing other public services will ultimately overwhelm the gain in cash flow.

If Philadelphia is to avoid major financial problems, it must focus on rationalizing its service provision. Doing that could allow the city to control school, police, and fire protection expenses without cutting services. The new open spaces could be marketed to businesses, growing the economic base. Companies that are looking for urban locations would have places to grow. New parks and recreational facilities would add to everyone's quality of life.

Accomplishing this will take a huge amount of political courage - and time. But the alternative is to take the aspirin and ease the headache while you slowly die from the cancer. That is not an option that makes sense to me.

Joel Naroff is the president and chief economist of Naroff Economics Advisors Inc., of Holland, Bucks County. Contact him at