Detroit is the poster child for urban decline in North America. Detroit was the birthplace of the automobile and a prototype for a modern, car-centric metropolis. That model failed as the automobile allowed people to move out of the city altogether. The tax base collapsed, and maintaining the city’s services and infrastructure became increasingly difficult.
During the 2000s the local government decided that the city needed to “shrink” since it was too expensive to service. So it began knocking down some derelict neighbourhoods while auctioning vacant homes in hopes of attracting more ratepayers. This was too little, too late. The City went bankrupt in 2013.
Things have been looking up for Detroit since it went bust. If you arrive expecting Downtown to be dodgy, you’re going to be shocked. Most Downtown hotels go for over $300 now. It’s packed with tourists coming in for concerts and ballgames. It doesn’t look like anything out of an Eminem song. Of course, many parts of the sprawling city are still undeniably struggling. But a healthy downtown gives the city a ballast. It’s a reason to come to the city and spend money. It also means that businesses can operate in the city with confidence, knowing they’ll be able to attract employees who feel comfortable going to a downtown office in the not-so-long-ago derelict city.
Progress is palpable. You don’t have to talk to many people before you realize there’s some optimism about the state of the city.
What may surprise you is that despite all of Detroit’s challenges, Michigan is a wealthier jurisdiction than Ontario. It seems weird that a state whose major city is known for urban blight would be more prosperous than a province with a major global city like Toronto. Yet, as University of Calgary economist Trevor Tombe recently pointed out in these pages, Michigan’s per capita GDP was around $7000 higher than Ontario’s in 2022.
Ontario isn’t just lagging behind Michigan, but most American states. Our GDP per capita is just ahead of Alabama, which is in the bottom ten states and provinces (ahead of five provinces—also alarming).
There are a lot of lessons we could learn from Detroit and Michigan as a whole. But things we should and should not do. My purpose here is more of a benchmarking exercise.
The reason we’re lagging is both simple and complex: productivity. Canada’s productivity has lagged behind the United States for decades.