Detroit as a Model for Collapse
Note: Because the demographic collapse that took place in Detroit was driven by industrial collapse rather than a decline in birth rates, the headwinds that caused it are fundamentally different from the headwinds that will drive population or birth rate-based demographic collapse. Detroit can nevertheless serve as a case study demonstrating what a rapid decline in both population and tax revenue looks like in a developed nation’s city.
When we talk about “systems collapse” resulting from a rapid decrease in population, we are not speaking in hypotheticals. We have seen this happen before and thus have a fairly good model of (1) what many post-demographic-collapse cities may look like and (2) the mechanisms that will cause them to break. Specifically, Detroit lost around 600,000 residents between 1950 and 1980, leading to a 60% population decline.[[108]](#_ftn108)
This population exodus triggered Detroit’s bankruptcy. At the time of bankruptcy, half of the city’s $18 billion debt was dedicated to worker-related liabilities, including retiree pensions and healthcare.[[109]](#_ftn109) Not paying someone a portion of their salary until a future date while also not setting that money aside is functionally the same as taking out a loan from that person and should be thought of as debt on the city’s books. In the above scenario, 50% of Detroit’s income essentially went toward servicing debt. This is fine if the population grows by half, as that 50% of the budget becomes 33% and is quite manageable. But what if the tax base shrinks? If the city’s population and tax base shrinks by just 30%, its usable money does not decrease by 30%, but rather by 60%. In a city that everyone knew was shrinking, this made the books functionally impossible to maintain.
Therefore, the first point at which cities break in a rapid population collapse scenario is when they become over-leveraged through deferred portions of salaries, benefits, etc. owed city service workers that were hired when the city’s population was much higher.
Unused infrastructure presents Detroit’s next point of system failure. When thinking about a city’s population halving, many imagine lots of cheap real estate and extra room to live. This is not what emerges in practice. As anyone who owns a house knows, basic infrastructure and buildings are expensive and labor-intensive to maintain on a year-to-year basis. If a property’s value decreases (which it is if population is decreasing), then there is less motivation to continue to invest in its maintenance, which causes its quality to plummet (if your house might literally sell for $1, why improve it?). At scale, this manifests as urban blight, with decaying buildings as far as you can see.
Meanwhile, the infrastructure supporting these decaying buildings (the city’s power grid, streets, sewage system, etc.) is still maintained by the city—but with reduced efficacy due to plummeting property tax income. A sewer system built to service five million residents costs a lot more than half as much when a population shrinks to two and a half million. This is why fresh water and working sewer systems are often two of the first utilities to stop working as a population starts to shrink. The above two factors motivated Detroit’s plan to bulldoze around a fifth of the city.[[110]](#_ftn110)
Sometimes when we speak with people about Korea’s current birth rates leading to 4.3 great-grandkids for every 100 current Koreans,[[111]](#_ftn111) they start to imagine how cool it would be to have all that infrastructure for so few people. They imagine people living in giant apartments and extremely cheap houses. Run an image search for Detroit urban blight to get an idea of what post-population-collapse housing actually looks like.
The way cities are forced to react to all this creates a snowball effect that exacerbates the problem. Specifically, in response to its drop in residents, Detroit had to raise taxes, causing the city to charge the highest property taxes as of 2014.[[112]](#_ftn112)
Urban flight during systems collapse is usually initiated by the wealthiest residents, who gravitate toward the more classically liberal side of the political spectrum (Republican). Their departure therefore opens the floodgates for stricter regulations. In the case of Detroit, this dynamic produced an “economic freedom” ranking of 345 out of 384 metros.[[113]](#_ftn113)