Thursday, August 22, 2013

Lessons from Detroit for Indian Cities

An interesting op-ed with this title, by Kala Sridhar of the Public Affairs Center, was published last week in India's Economic Times.

Focusing on the poor state of city services in India, she suggests that high quality public services are important to keeping a city financially viable, and that if a city cannot provide critical services like safety, we should be happy that they declare bankruptcy.

Connecting Detroit to city services, rather than to the immediate financial causes of bankruptcy (high bond servicing costs, pension obligations, etc.) is an interesting angle on the problem.

While the short term lessons from Detroit for Indian cities are clear--if you promise your workers too large of pensions and if you borrow too much money, eventually you won't be able to meet your obligations--I would say the bigger picture lesson is to highlight the need to attract and keep productive people.  The weather in Detroit is not ideal, but neither is it in Chicago, and I do know many young, intelligent, creative and hard working people who have already moved there.  Chicago offers its residents economic opportunities and a high quality of life.