Chicago Is Not The Next Detroit


Meredith Whitney says Detroit will be just the first in a tidal wave of municipal defaults.

Those who share a similar if perhaps less extreme view have fingered Chicago as the next big city to go under.

The city just got downgraded by Moody’s, and is now having to lay off teachers.

Pete Saunders, an urban planner who grew up in Detroit and now lives in Chicago, offers evidence that outcome is unlikely.

Writing in Crain’s Chicago Business this week, he lays out three main elements that will allow Chicago to escape Detroit’s fate:   

1) Chicago is way bigger:

A report from the federal Bureau of Economic Analysis released in February shows that Chicago metro area GDP in 2011 was $548 billion annually, making it the third largest in the nation after New York and Los Angeles. That makes the Chicago economy nearly three times larger than Detroit’s, which checks in at $199 billion. Chicago’s economy is also more diverse than Detroit’s, with no one industry sector making up more than 13 per cent of the metro area workforce.

2) Chicago’s fiscal structure is less concentrated than Detroit’s:

the dozens of municipal corporations and special-purpose districts here, lacking in Detroit, meant the fiscal burden could be spread around. As a result, City Hall ends up having fewer direct responsibilities and a slightly rosier fiscal picture.

3) The two cities have fundamentally different characters in a way no one really talks about:

There was a certain disposableness built into Detroit — cheaply built homes and low-quality business districts dominate much of the city. Disposability long ago sent a message to Detroiters: As you move up, you move out. Chicago, meanwhile, was built with a sense of permanence. Chicago has a physical character that tells its residents that it is worth having, worth saving.

In sum: Chicago has problems, but Detroit remains a unique mess.

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