Progressivism (Detroit) Declares Bankruptcy. Hallelujah!

By James Ostrowski

The bankruptcy of Detroit is a great victory for the Liberty Movement.  This is in spite of the fact that the Liberty Movement did nothing to achieve this glorious event.  It doesn’t matter.  Sometimes the enemy shoots himself in the foot.  Sometimes a football team fumbles the ball directly into your hands.  Look what I found!
With conservatism a muddled, spent and failed movement, only libertarianism remains a viable obstacle to progressivism, the nation’s ruling ideology for decades which is stronger than ever.  Progressives have run Detroit for many decades.  Progressives, with considerable assistance from conservative Republicans on the state and national levels, are responsible for the numerous policy failures that combined to turn a once great city into ruins.  Those policies include: government schools and busing, welfare, the drug war, public employee unions, oppressive taxes and regulations on business and citizens, and the overall concept of government as the political means of acquiring wealth as opposed to the old-fashioned approach of productive work. This is a great opportunity for libertarians to explain, as the media will not, how progressivism destroyed Detroit.  It is a great opportunity to promote libertarian solutions to Detroit’s problems.


The future of the Liberty Movement is direct action not politics.  As I explained in detail in Direct Citizen Action, politics is a rigged game.  Like the Union army at Gettysburg, the political class loves to be attacked at heavily fortified positions and where they can see the enemy coming a mile away.  We need to respond to the collapse of Detroit and other large Americans cities not by electing reform candidates or lobbying or circulating petitions but by direct action and entrepreneurship.  We need to withdraw from failed government institutions such as government schools and urge others to do likewise.  We need to encourage people to figure out how to solve their own problems without looking to politicians.  We need to figure out how to start business firms that compete with the failed government “services” such as the police.
As Karen De Coster has documented on this site, this movement is already well underway in Detroit.  The State’s collapse is the Liberty Movement’s opportunity.  Let’s not waste a crisis.
The fall of Detroit was itself the result of direct action.  Instead of staying and trying to change the City through politics, hundreds of thousands of residents fled to the suburbs or to other states.  They voted with their feet to unilaterally elect a different and less oppressive government.  While they did not so as part of an organized movement, voting with your feet is now an explicit and important tactic of the Liberty Movement thanks largely to the Free State Project.  In Direct Citizen Action, I discussed and endorsed the Free State Project—which urges libertarians to move en masse to New Hampshire to reinforce that state’s already libertarian direction.  Voting with your feet is a tactic the Liberty Movement should be heavily promoting and facilitating.
Another powerful direct action tactic is a massive simultaneous withdrawal from the government schools.  As with voting with your feet, this trend existed in modest form through homeschooling before it became an explicit part of Liberty Movement strategy and tactics.  Now, it needs to be explicitly promoted and facilitated by the Movement as I proposed in my book, Government Schools Are Bad for Your Kids.  An effort should be made to urge parents in Detroit to pull their children out of the horrid government schools there and into either private schools, or home schools or even some combination of the two.  Let’s start a National Homeschool Day in Detroit on the first scheduled day of school this September.
Progressivism is the fiction that government coercion can produce better results than voluntary cooperation among people.  A key implied premise of progressivism is that government action, government expenditure of resources, is cost-free.  Because the proposition is absurd on its face, it is never stated explicitly.  It is nevertheless implied in virtually every progressive idea or policy.  Progressives have no theory of costs.  If they did, progressivism as an idea would disintegrate due to the progressive’s inability to explain  why the benefits of their programs are worth the costs.  This they can never do because cost and benefit are subjective as Rothbard has explained better than anyone else has.  There is no rational, logical or scientific way to prove that $1000 taken from the taxpayer by force is worth $1000 added to the Mayor’s Summer Youth Program or any other government program.
Rather, the progressive simply ignores costs and pretends that resources are not scarce but unlimited.  Since there is no firm political limit to government growth, the progressive fantasy can appear to be true for a number of years.  There is, however, a natural limit to government growth that has been seen throughout history.  Government is a parasite on its host, society.  Too much parasitical activity, unrestrained by the rigged political system, will over time kill the host.  When the host dies, the government collapses.  Such is Detroit with the additional proviso that in the case of local government, the host can simply move away from the parasite with the same fatal results.
Thus, the collapse of Detroit illustrates the lesson of free market economics that all resources are scarce and ignoring that law of economics will lead to disaster.  Every progressive policy is a Detroit waiting to happen.
Another happy consequence of Detroit’s collapse is to create uncertainly among the political class about receiving the loot they stole fair and square.  The prevailing attitude among the political class, government employees, pensioners, grant recipients and contractors and T-Bill buyers is that the spigot will never stop flowing their way.  They believe that the government’s taxing, borrowing and inflating powers will ensure they will always be paid in full.  This of course is another way of saying that resources are not scarce.  Let us hope that, as with normal bankruptcies, the creditors will be paid only a fraction of what they are owed based on the limited assets of the bankrupt city.  This will serve as a warning and deterrent against those who seek to leave the working class and join the political class.
Finally, while Detroit may be broke, the city owns a huge portion of the real estate in the city.  Instead of bailouts from the state or federal government, the city should be forced to liquidate hard assets to pay creditors.  This will permanently return real estate and buildings to the private sector where their use will be determined by market forces as opposed to the short-term self-interest of politicians and bureaucrats.
All in all, the bankruptcy of Detroit was a great day for a Liberty Movement that has not seen too many good days in recent years as the progressive state speeds merrily along towards totalitarianism.  Let’s make the most of it!