Detroit has filed for bankruptcy because its population has shrunk by more than half and its government debt has grown to $18 billion. To pay that debt, every man, woman and child in the city would have to cough up $26,000, which is over $10,000 more than Detroiters' annual per-capita income.
This has liberal pundits throwing fits. They can't claim that Detroit's problems were caused by conservatives or libertarians who never governed it. So instead, they claim that Detroit is somehow a libertarian ideal.
MSNBC's Melissa Harris-Perry invoked a famous quotation from anti-tax activist Grover Norquist, asserting that "This is what it looks like when government is small enough to drown in your bathtub." On the same network, Ari Melber at least acknowledged Democrats' dominance of Detroit when he asserted that with its lack of basic city services, "Detroit is fast becoming the most libertarian city in the United States."
This is all fine if it helps liberals sleep at night, but such cartoonish depictions of libertarians as anarchists shed no light on what happened in Detroit. Libertarians advocate small government for many reasons, and one of them is that big, over-promising government led Detroit to its current anarchy.
Liberals often frame the debate over big versus small government as one of how much we want government to help us. But this is not sufficiently forward-thinking. There are limits to how much government can help before it ceases being helpful on net. And when it goes too far, government can become incapable of providing even what is absolutely necessary.
Government help comes with both immediate costs and opportunity costs. Money spent on government is not an unmitigated good for society because it has to be taken from society before it can be spent. That means we need to be judicious about government's role.
A universal consensus exists that some government services are worth the cost. If cops and firemen don't show up, or military invasions aren't repelled, then neither commerce nor humanity can flourish. But that does not justify every function that government can dream up for itself, nor the overstaffing, overtaxing and overpromising that so many American local and state governments indulge in.
Shikha Dalmia recently pointed to how Detroit accumulated a substantial amount of its debt - it built and funded corporate welfare packages, stadiums and casinos, even as the city's residential areas died on the vine.
Meanwhile, as the Detroit News reported in 2011, Detroit's city government was still one of the most overstaffed among U.S. cities of comparable size, despite a decade of personnel cuts. Indianapolis, a much better-run city with a larger population and land area, had 40 percent fewer employees.
As Detroit's emergency manager has noted, the city government kept itself fat as the city became lean. It reacted to a shrinking tax base by jacking every tax rate up to the state maximum. Detroiters' per-capita tax burden is now twice as high in dollar terms as some of their far wealthier suburban neighbors.
The opportunity cost to the city's economy been enormous, but now Detroit cannot cover even the immediate cost of operations. With $18 billion in debt and a cash-flow problem, the city struggles not only to pay its employees - one of every 55 city residents - but also to pay pensions and health care for those it employed when it was even more overstaffed. (As recently as 2000, one in 35 residents worked for the city.)
To hold up Detroit as a model libertarian city is not only misleading, but it also obscures the lesson everyone should be learning: Governments that make limited and realistic promises can keep them. Unrealistic big-government generosity, on the other hand, can produce as much anarchy as the most ideologically rigid form of anarchism.