The bankruptcy of Detroit should be watched very closely, not simply because of its immediate financial impact on the country and the pain of its citizens, which are important, nor even because it will be the model for probably many more such reorganizations to come, but because it will be a major turning point for the social compact that has been in place since the end of World War II. This compact was the model and Detroit was the primary face and the embodiment of the collaboration of big government/big business/big labor in the structure of American domination of postwar economic leadership, which for a time served the country well. But it has been for some time a badly broken system predicated on an unsustainable base of unrealistic commitments and entitlements across the board in the public and private sectors alike. The model must be scrapped, and the critical question to be answered is what will replace it. Will we face the fact that it is truly in need of “creative destruction” or will we be intimidated by the vested interests in the bankrupt system in an attempt to politically manage the pain and sustain the entitlement and dependency culture? The answer will help define the future of the country for the remainder of the century.
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