Detroit’s Bankruptcy: An Indictment On African America’s Institutional Power


Contrary to the commonly accepted belief, it is the risk element in our capitalistic system which produces an economy of security. Risk brings out the ingenuity and resourcefulness which insure the success of enough ventures to keep the economy growing and secure. – Robert Rawls

Hitsville 2

The year is 1988 and Berry Gordy is completing the sale of Motown Records to MCA and Boston Ventures LP for a reported $61 million or $121.6 million adjusted for inflation today. Motown Records was an African American institution for over two decades and in 1983 was the largest African American owned company in the United States according to Black Enterprise. It had been the stalwart of Detroit’s African American community and the home of legends like Diana Ross, Smokey Robinson, and global icon Michael Jackson. 25 years later the city of Detroit is a shell of its former self and filed the largest municipal bankruptcy in U.S. history at an estimated $20 billion. How did the symbol of African American power have such an inglorious fall from grace?

Detroit is 138.75 square miles and in terms of cities with 100 000 or more people in it there is no city with a larger African American concentration than Detroit with almost 85 percent of the population being African American. In 1950 the city’s population was near 1.9 million. Historically, Detroit was once home to 18 African American owned hospitals between 1917-1991, home to Lewis College of Business, the only HBCU located in Michigan, and First Independence Bank which is still one of African America’s largest owned banks with over $200 million in assets or almost 5 percent of all African America’s combined bank assets. The city’s African American population was thriving thanks to strong institutions throughout the city much like Motown, but many could argue that complacency settled in. The African American middle class there felt like they had “made” it. Time to set the ship on cruise control and go fishing. The problem? There was an iceberg ahead.

Today, none of the African American owned hospitals in Detroit remain, Lewis College of Business struggles to keep the doors open with no working website or functioning phone number, and the unemployment rate still hovers around 20 percent in the city for African Americans despite the country’s recovery. The political infrastructure seems to be more ripe with corruption over the past few decades than leadership doing more to inhibit progress than promote it. Corruption in the city would be epitomized by the fall from grace at the time by one of HBCU’s shining political stars, former mayor and Florida A&M graduate, Kwame Kilpatrick who is now serving 28 years in federal prison for laundry list of scandals as Detroit’s mayor. The city has a reported 70 000 abandoned buildings, 50 percent of the city’s street lights are not working, and over 40 percent of the entire city is currently below the poverty line. Often times it is confused that the auto bailout of General Motors and Chrysler was an assistance to Detroit. Great job on the public relations of that one to John and Jane Taxpayer who bought it hook, line, and sinker. Unfortunately, GM and Chrysler had long moved their headquarters and majority of operations out of Detroit to suburban areas that were more tax-friendly. They were Detroit in spirit only. The $80 billion they received in bailout was not though. A bailout out that would see U.S. taxpayers lose $11.7 billion as the government divested itself of ownership of both.

Detroit has fallen as its African American population has seen its power decline and some very questionable leadership at times from the aforementioned mayor’s office. However, there is real opportunity in Detroit for African America and the barrier to entry has been lowered because of the distress. Capitalism in a nutshell rewards the creation of chaos or the organization of chaos. The latter is what is present in Detroit. A real investment in Lewis College of Business would go a long way to stabilizing the education and social aspect of African Detroitians higher education access. Dan Gilbert, owner of Quicken Loans, Cleveland Cavaliers, and most notably known for his famous social media rant against LeBron James for leaving him, has invested over $1 billion the heart of downtown Detroit. As one Bloomberg reporter pointed out he is  basically sifting through the best of food at the top of the trash can. He has purchased 3 million square feet or the equivalent of 0.07 percent of the entire city. Not a major overhaul by any stretch of the imagination, but probably the best quality of what is there and any revitalization will leave Dan Gilbert reaping immense rewards. Despite a declining population this is still a city with 700 000 residents which means it is the 18th largest city by population in America and $6.7 billion in household income, but is being treated like a ghost town.

There is still a “Hitsville” in Detroit for those that can see through the chaos of the battered and broken city. A chance to bring a phoenix from the ashes if you will. The city is in need of industry and a way to stem its declining population which for someone with a background in community development is like the opportunity given to Michelangelo to paint the sistine chapel. If African America was ever looking for an opportunity for a home run where the stakes of high risk and high reward, then there is no better place in America right now than Detroit. Warren Buffett is famously quoted as saying “be fearful when others are greedy and greedy when others are fearful” and right now Detroit is screaming to African America for an opportunity to be greedy. With 137 square miles still left of needing investment, maybe it is time to put some of that $1 trillion of buying power to use.

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One response to “Detroit’s Bankruptcy: An Indictment On African America’s Institutional Power

  1. VERY insightful article ! I will be chiming in on the regular.

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