The rust belt cities have been the victims of two great forces, one internal, one external. The internal force is the incompetence of democratic city governanc

The rust belt cities have been the victims of two great forces, one internal, one external. The internal force is the incompetence of democratic city governance. Detroit had utterly incompetent elected leaders who in the 1960's and 70's allowed rioters to loot and burn large swaths of the city. Homicide rates rose by an order of magnitude. If you look at homicide rates in Europe, you have to back to the 12th century to find homicide rates as high as those in modern Detroit. Order and security are base requirements for economically productive societies. When the violence came, industries and productive residents fled. This process happened in major cities across the country: St. Louis, New Haven, Cleveland, Baltimore, etc. Unfortunately, in a democracy the quality of government is proportionate to the human capital of the voting population. Now that the human capital has left, effective governance is even more unlikely. Thus the prospects for Detroit look grim indeed. The only hope is to put the city into receievership and grant a competent executive the authority to clean up the city (perhaps this would be a good job for General Petraeus). The second factor is the American seinorage empire. Since the end of Bretton Woods in 1971 the primary export of the United States has been its own currency. China, Japan, Korea, etc, ship cars and steel to the United States. The U.S. ships back freighters full of dollars in return. As a result of China and Japan buying the currency, the exchange rate is artificially low. That makes it very hard for domestic manufacturers to compete with the Asian producers. What should have happened is that as American industries failed, we would have less exports which would weaken the dollar, making foreign products more expensive, thus increasing the profits of domestic manufacturers and stopping the cycle of decay. Instead, China and Japan continued to ship us cheap goods, and in return bought treasuries and financial products from Wall St. This greatly enriched the U.S. government and Wall St., but screwed over domestic manufacturers. The result was a growth in "service jobs" which were essentially jobs feeding off of the ever growing Washington bureaucracy. The United States is playing the role of 16th Century Spain. It exports a currency in return for foreign goods, while the domestic industries die. The final blow to Detroit has been dealt by monetary incompetence on the part of Washington. The U.S. is currently experiencing a monetary contraction. Monetary contractions should never happen with competent economic stewardship. The government can always simply renominate the currency and avoid the problem. When a monetary contraction does occur, people dramatically cut spending on durable goods. Thus again, Detroit is punished for events completely outside of its own control.