So much is packed into the dramatic event of Detroit’s fall — the largest municipal bankruptcy in American history — that it’s worth taking a pause to see what it says about our changing economy and society, and what it portends for our future, writes Joseph Stiglitz on the New York Times' Opinionator blog.
Stiglitz is an economics professor at Columbia University and a recipient of the Nobel Prize in economics.
In his essay, Stiglitz draws attention to the geography of metro Detroit.
"Detroit’s most serious problems are confined to the city limits. Elsewhere in the metropolitan area, there is ample economic activity. In suburbs like Bloomfield Hills, Mich., the median household income is more than $125,000. A 45-minute drive from Detroit is Ann Arbor, home of the University of Michigan, one of the world’s pre-eminent hubs of research and knowledge production.
"Detroit’s travails arise in part from a distinctive aspect of America’s divided economy and society. As the sociologists Sean F. Reardon and Kendra Bischoff have pointed out, our country is becoming vastly more economically segregated, which can be even more pernicious than being racially segregated. Detroit is the example par excellence of the seclusion of affluent (and mostly white) elites in suburban enclaves. There is a rationale for battening down the hatches: the rich thus ensure that they don’t have to pay any share of the local public goods and services of their less well-off neighbors, and that their children don’t have to mix with those of lower socioeconomic status.
"The trend toward self-reinforcing inequality is especially apparent in education, an ever shrinking ladder for upward mobility. Schools in poorer districts get worse, parents with means move out to richer districts, and the divisions between the haves and the have-nots — not only in this generation, but also in the next — grow ever larger."
Stiglitz notes that the metro area is divided into separate political jurisdictions, isolating the poor not only geographically, but politically as well. The result: a separate, poorer inner city with a dearth of resources, made even worse because the industrial plants that had provided the core of the tax base are shut down.
Stiglitz is an economics professor at Columbia and the recipient of the Nobel prize in 2001. He is a former senior vice president and chief economist of the World Bank, and is a former member, and chairman, of the Council of Economic Advisers.
