In debating the meaning of Detroit’s collapse, commentators on the right and the left have found evidence for the benefits of municipal bankruptcy as a way to put distressed cities back on track.
“More bankruptcies, please,” David Skeel wrote in the Weekly Standard, pointing to federal laws that might make adjustments in unfunded pension liabilities possible.
But the record on municipal bankruptcies -- from Central Falls, Rhode Island, to Vallejo, California -- demonstrates how such expectations ultimately come to little, and for good reason. Bankruptcy will never play a significant role in municipal reform beyond its rather modest current one.
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