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News Link • Economy - Economics USA

How Cronyism And Corruption Brought Down Detroit

•, by Tyler Durden
The central planners in government needed the powerful corporations, and the powerful corporations came to depend on the bureaucracy, too. The marriage worked well for the politicians and for their corporate cronies, but Detroit itself entered a decades-long decline. America watched as Detroit slowly bled people, jobs and revenue. Politicians tried spending money. They tried raising taxes. The more they taxed and spent, the faster the city declined.
Detroit still had its "Big Three" auto manufacturers, until two of its crown jewels, General Motors and Chrysler, imploded in 2008 under the weight of reckless and subsidized mismanagement.
Instead of allowing market forces to rebuild Detroit and the auto industry, the United States handed billions of dollars to General Motors and Chrysler.
Five years later, the city of Detroit is bankrupt and almost $20 billion dollars in debt. Meanwhile, General Motors has a cash balance of over $20 billion, still owes the taxpayers over $10 billion dollars that outgoing CEO Dan Akerson said will not be paid, and the company continues to benefit from an unprecedented $18 billion tax gift from the bankruptcy.

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