IF THERE IS a lesson from Detroit’s 2013 bankruptcy, it’s that going broke can only take a city so far. Municipal bankruptcy is a process that gets a city out of debts that it can’t pay. But city residents don’t get better services when those debts are canceled.
There are some things that ought to surprise people about city finances. When Detroit filed for bankruptcy in July 2013, residents found out that the group the city owed the most money to was not banks or bondholders or city contractors—it was the city’s pensioners. Former city employees accidentally became Detroit’s largest creditors because the city didn’t have
