Public Policy and the Degradation of Detroit

As a movie and a mayoral speech demonstrate, destructive policies of the past had a lot to do with the city's decline. What's needed is inclusive economic competitiveness.

Moviegoers arrive at the Fox Theatre for the premiere of "Detroit" in Detroit.
(AP/Carlos Osorio)
Every American with an interest in social justice and the future of our urban economies should watch two paradigm-shifting visual productions from last summer. One is a Hollywood film, and the other is an hour-long mayoral presentation to business leaders. Both are about Detroit, and both offer valuable insights into the roots of today's political and economic rancor. They testify to the value of the popular adage: "Everyone is entitled to his own opinion, but not his own facts."

"Detroit" is a Hollywood dramatization of the 1967 Detroit race riot. Detroit had the worst of more than 150 urban riots during what came to be known as America's "long hot summer." Unfortunately, the lessons of those severe sustained protests of economic and political policies hostile to people of color seem to have been forgotten.

Today, Americans turn their attention to massive protests in Iran, which erupted due to long-term economic distress and political corruption. Yet America was the scene of similar unrest just five decades ago for similar reasons. In the Motor City alone in 1967, 43 people died, hundreds were injured, 1,400 buildings were burned and more than 7,000 arrests were made. The riot was one of two major protests in Detroit's history that shaped it for decades. (The other was the 1943 race riot, which set the conditions for what happened in 1967.)

Before and during World War II, Detroit was a boomtown with a 90 percent white population. Today, it is a minority-majority city (82 percent black, 7 percent Hispanic) still reeling from the decline of the auto industry and decades of decay and economic deprivation that culminated in the largest municipal bankruptcy in U.S. history. The degradation of this once-flourishing city is highlighted in the second film that every American should watch: Detroit Mayor Mike Duggan's unforgettable presentation
at the Mackinac Policy Conference.

Every major American metropolitan area has a history similar to Detroit's policies of economic hostility to black residents. In presenting the racial history of Detroit to a packed house of business and foundation leaders, investors and policymakers, Duggan established the root cause of Detroit's present-day problems in policy decisions made by white supremacists decades earlier. Today, we view white supremacy as an ideology exemplified by openly aggressive and hostile attitudes toward people of color by extremist groups like the Ku Klux Klan, neo-Nazis and white nationalists. We forget that it has long been ingrained in federal, state, regional and local policies and practices.


Detroit Mayor Mike Duggan addresses last summer's Mackinac Policy Conference. (YouTube)

It would be hard to find a better example of those policies at work than the physical wall that was built in 1941 along an area at the edge of Detroit known as "Eight Mile." "There was a racially mixed neighborhood that was the pride of a number of African-American communities," Duggan recounted. "A developer wanted to build right next door. [The Federal Housing Administration] said we won't make the loan because you're adjacent to a mixed neighborhood. ... The developer had an idea. He said he would build a wall. The wall doesn't have to be so high it has barbed wire, but we won't make loans to black people on their side of the wall. And the FHA said great, and approved the project."

The wall still exists, but it is hardly an isolated instance of federal complicity in housing segregation. Duggan displayed FHA mortgage guidelines from the era that the agency included in its underwriting manuals for banks and other mortgage lenders:

• Incompatible racial groups should not be permitted to live in the same communities.

• Properties shall continue to be occupied by the same social and racial classes.

• Appraisers are instructed to predict the probability of the location being invaded by incompatible racial and social groups.

Policies like those produced segregation not only in housing but also in wages, education and transportation, creating a toxic mix of overcrowding of black residents in cramped, quarantined areas along with white hostility in the factories where blacks worked for lower wages. Racial animus in Detroit was fueled by government policies biased in favor of whites. "And in June of '43," Duggan told his Mackinac audience, "we had racial violence in this city over the housing issue in the middle of WWII. This happened then, when the country should've been pulling together."

In 1967, the year that that racial violence erupted again, 67,000 white residents left Detroit. Another 80,000 followed the year after. A city of more than 1.8 million was rapidly reduced in population. Today, Detroit's population is less than 675,000, and its once-flourishing economy has fled to suburbia in the pockets of wealthier white residents.

As a white man first elected in 2013 by a predominantly black population, Duggan said he recognized the responsibility and trust that Detroit residents placed in him, and he didn't blame the past 40 years of failure on black leadership. As mayor, he initially focused on shoring up basic infrastructure to get the city functioning properly. After his re-election last November, expectations for an economically inclusive, revitalized Detroit have risen. Recognition of the core problem -- systemic segregationist policies and practices -- empowers local leaders to address present-day needs by identifying and disrupting ingrained, sustained biases.

In his Mackinac speech, Mayor Duggan shared a vision of a new city built upon intentional "inclusive growth" economic-development strategies embraced not only by city leaders but also by business leaders, stakeholders and other influencers.

There are already encouraging signs. A new Detroit is open for business. It is welcoming everyone who wants to live in a vibrant multiracial, multicultural metropolis that's rebuilding and rebranding itself as a city designed on an economic strategy of inclusive economic competitiveness, equitable access to opportunity, and shared prosperity. And the lessons of Detroit apply beyond its boundaries. Like an inclusive Detroit, an inclusive America must invest in cultivating all of its talent to reap the rewards of a robust and vibrant globally competitive economy.

This has been updated to correct an editor's error and make clear that "long hot summer" refers to race riots that occurred in 1967.

Co-founder of ScaleUp Partners LLC