Saturday, June 15, 2013

Who mourns for Detroit? The lessons of ancient city-states

Thousands of years ago, as early as the 8th century BCE, there was a very prosperous city on the coast of the southern Atlantic portion of the Iberian peninsula known as Tartessos. Located near the mouth of the Guadalquivir River, the city (really, it was a small civilization) became quite wealthy via trade. Metals mined in the north and locally from the river and surrounding marshes formed the basis of this trade, as sea-faring cultures of the period like the Phoenicians visited Tartessos frequently. In fact, the Spainsh city of Cadiz, located someways to the South of Tartessos, was founded by the Phoenicians specifically for the purpose of trading with Tartessos (Cadiz was known then to the Greeks as "Gadir"). The growth of coinage in the following centuries only increased such activity and Tartessian wealth. Initially, at least.

At some point after the classical period of the Greeks (5th to 4th centuries BCE) Tartessos went from significant city-state to basically nothing. It is unclear what happened in this regard. But by the dawn of the common era, Tartessos was no more, it was but a memory, a name of a city that appeared in the histories of various writers in the classical period and before.

I first became aware of Tartessos when I was in high school and was pouring over the legends of Atlantis. For Tartessos has been offered up by some as a possible real-world source of Plato's Atlantis, mostly because it was one of the few (the only?) advanced civilizations known to the ancients that was beyond the Pillars of Hercules, a critical aspect of the Atlantis story woven by Plato. And because Tartessos seems to have simply disappeared, both historically and archaeologically, it has been theorized that it was more or less swallowed by the sea, which again fits well with Plato's story. This website provides a list of some other ways Tartessos mirrors the legend.

Whether or not Tartessos was the basis of Plato's Atlantis story, it still may very well be the case that Tartessos was ultimately a victim of changing geography. The Guadalquivir Marshes were once less extensive and surrounded a large inland lake (shown in the above map) to the north of Tartessos--known as Lacus Ligustinus--that likely served as fishing grounds and a trade-hub for the hinterlands along the Guadalquivir. As that lake slowly disappeared, so might have Tartessos.

But there is an alternate explanation, or at least a secondary one: perhaps Tartessos collapsed because the basis of its wealth disappeared. As the Greek and Roman civilizations expanded, new sources of metals appeared, as did new trade routes. Tartessos ceased to be a critical hub in this regard. The history of Cadiz--the Phoenician colony--supports this idea, as it went from being an insanely wealthy trading center to basically a naval base by the 2nd century BCE, as it came under Carthaginian then Roman control. Tartessos, minus it's dominance in the metal trade, might very well have been a casualty of war; offering a less-strategic position than Cadiz, conquerors may have found no reason to maintain it.

The point of this history lesson, however, is the perilous position of a city, city-state, or similar entity whose economy is largely driven by a single class of commodities. If the entity ceases to be the dominate source for such things--and has no secondary source for wealth--it cannot maintain the same level of civilization, of existence, as a matter of course.

Which brings us to the case of Detroit.

I've delved into Detroit's situation previously. As I noted than--just about one month ago--the city's problems are wound up in wasteful and excessive spending:
The commonalities in these stories--and many others out of Detroit--are obvious: money being needlessly wasted and unions with limitless appetites feeding at the trough of the city. That's a very simple recipe for disaster. Yet, correcting these two issues represent the largest hurdles by far for anyone concerned with actually saving the city of Detroit (and many other American cities).

The problem is that far too many so-called public servants believe the system exists to serve them, not the other way around. And this mindset is fostered and protected by Democrats and the Left, by and large, there's no way around it (which explains why public employee unions like the American Federation of State, County and Municipal Employees donate money almost exclusively to Democrats). "Union busting" is a phrase--given its history--that stirs up emotions. But the fact of the matter is that entrenched unions are destroying cites like Detroit. And union officials know it. They really do.
Such a pattern is not a problem for a city with money to burn, a city that is prospering economically. Detroit is no longer such a city. When it was the automotive capital of the world, things were different. But that hasn't been the case for decades now. Each successive year sees Detroit lose more of its share of the automotive market. Yet, it has never really addressed this shift in a meaningful way. In fact, in the 1990's, the city embarked on a costly program of "urban renewal," funded not by new growth but by debt, by bonds offered with the promise of such growth in the future. And it never came.

Yesterday, the writing on the wall became a reality, as Detroit's emergency manager Kevyn Orr announced that the city could no longer meet its debt burden. Once the first payment is missed, this will put the city into default. And bondholders for the city's debt will soon find themselves in a position similar to that of the Greek bondholders: a potential huge loss of their investments, including principals. The city will have to negotiate with the bondholders, of course, but with such limited options bondholders will likely have to settle for pennies on the dollar.

And then the trick will be getting out of default for the city, which will ultimately need to issue new bonds. The marketability of these bonds will hinge on interest rates--they'll have to be high--and on changes to the financial structures of the city. There's no other way out. But the city's unions still think they have cards to play:
Leaders of some of Detroit's 48 public sector unions were upset by Orr's proposals, which included spinning off water and sewer services into an independent authority, as well as making the changes to pensions and health care coverage.  
"When you're backed into a corner, the only thing you can do is fight and the only way we can fight is to strike," said Mike Mulholland, secretary and treasurer of AFSCME Local 207, the union that represents water and sewer workers.
If the unions take this path, Detroit has little hope of continuing to exist as a major metropolitan area. The city needs to reinvent itself, one way or the other. Pretending that it can just go forward with its current structures is a path to non-existence. Like Tartessos, it will become nothing but a name in the history books, a city whose demise will be puzzled over by future historians.

Cheers, all.


  1. Detroit's real potential value is to serve as a cautionary tale, a value so far essentially ignored.

  2. Having a city dependent on one industry is a terrible way to go...I've been trying to convince people for years that Wichita needs to draw in far more than aircraft. Thankfully, we don't have the unions entrenched in the public sector as badly as Detroit, but still...