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Detroit's recent file for bankruptcy: a possible look into the future of what could happen to other cities here in the U.S.

Detroit just recently filed for bankruptcy, if you did not already know. The city was once a economically thriving city. The city's booming auto industry kept that city afloat since its birth. However, the auto industry here in the U.S. has saw drastically declined; we recently saw that with through GM. Labor costs here in the U.S. have pushed companies to international grounds.

Could we possible see other U.S. city's crumble because of off shore labor?
Also, what can we learn from Detroit's file for bankruptcy?


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  • Jul 24 2013: i'd be interested in seeing a breakdown of the expenses of detroit over time.

    more than 10 years ago now in australia, government went through a period of privatization where services were sold, to be then contracted out to private companies, on the argument that they'd be able to do it more efficiently and hence cheaper for residents. what happened was it worked; costs went down while quality of service remained ...for a time. what then started happening was roads that were built more cheaply started to need maintenance more often than roads that were previously built more expensively by the state, and infrastructure started breaking down as maintenance (deemed 'wasteful') wasn't carried out as often or as thoroughly as before so prices increased quarter on quarter for years (electricity prices are the worst, close to 10 times what they were a few years ago), and some councils found that there was only 1 company bidding on contracts they had offered so they had to pay whatever price that company wanted. very recently people have started talking about making services public again, since they've realised that what they previously thought was government waste actually wasn't at all.
    • Jul 24 2013: Yes I agree some of the companies are leaches.
      • Jul 25 2013: it's not that they are leeches, it's that any company must do things like that or they can't operate. if they did preventative maintenance to save costs in the long run, the balance sheet for year would be down, shareholders would be complaining about money being wasted on maintenance that wasn't yet necessary, and either the company would fold or the directors would be replaced and you'd have exactly the same problem.

        the whole idea of private companies providing civil services is incompatible, and that's without even going into the argument that every citizen in the country benefits if services are run at cost and are of higher quality than is absolutely necessary.
        • Jul 25 2013: What are the rules What are we engineering etc.
          More important What do we want?
          We've had high tariffs in the past and controlled our borders better in the past.
      • Jul 25 2013: good questions! i guess we want good services provided at reasonable cost, which private corporations aren't suitable for providing. best leave them to the optional consumer goods that's what they do best.

        what's your opinion on higher tariffs? i've been thinking about that myself lately, and if we put blanket tariffs back into the system, we'd encourage more local production and discourage outsourcing of jobs. it'd be bad for big multinationals but good for every other normal citizen just living and working.
        • Jul 25 2013: Exactly - that's why conservative Republican SMU economics Prof. Tavi Batra has been advocating it for years. He suggests it would be good for Australia and New Zealand too.
      • Jul 25 2013: yes it would, some australians are tired of getting treated like a 2nd-rate customer by the US (eg prices are double or even up to 4 times what they cost in the US, even for exactly the same product) so i'm no sure why we keep getting on board with the free trade thing. guess to most others 'free' sounds good.
        • Jul 26 2013: That was what he was writing about. I regret that I am not familiar with that, but as you describe it it sounds unfair. Ravi Batra suggested you could significantly raise your incomes by doing more of your manufacturing while not or only moderately increasing product prices. An advantage is in saving shipping costs and wastes. That's not the same as being against some trade It's just the extreme stuff we are seeing now. Our wage structure has been really messed up by these freebooters. I don't know if anyone else is concerned, but allowing everything to spread rapidly e.g. diseases and pests could be dangerous - unless someone likes cane toads and whatever.
    • Aug 6 2013: Or just make oil cos pay for their externalities, partic military costs, direct and indirect...

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