There are many facets and variables to the Detroit bankruptcy filing a few weeks ago. You hear lots of reasons why it happened.
"Contrary to what some commentators have been arguing, however, Detroit’s troubles can’t be traced simply to bloated payrolls and intransigent public-sector unions: decades of deindustrialization are the main culprit. The population peaked in 1950, at 1.85 million. Since then, as the auto industry declined, and almost all the city’s white residents moved to the suburbs, the population has dropped by about sixty per cent. The city’s payroll has fallen even faster. In 1951, Detroit employed nearly thirty thousand people. Today, it employs about ten thousand five hundred people, and their salaries and their benefits are hardly extravagant.Like many other cities, Detroit is also facing sharply rising costs for providing its employees with health care, which it has been funding by issuing more debt. The city’s outstanding liabilities currently amount to eighteen billion dollars. ... But shouldn’t one of America’s iconic cities be rebuilt, rather than picked apart? If so, it is going to require the leadership, and the financial support, of the federal government.
Still, the Administration can do more than just shrug and say, as it did last week, that “this is an issue that has to be resolved between Michigan and Detroit and the creditors.” That stance amounts to ceding the initiative to Governor Snyder and his conservative supporters, some of whom see the bankruptcy as a template for showdowns with public-sector unions across the country."