If Detroit were its own city-state — a bizarro version of prosperous Singapore — it would be a place the U.S. State Department would regularly issue travel warnings about, where “long-term, protracted conditions make a country dangerous or unstable.” Detroit’s murder rate, for instance, would be higher than that of all but a handful of other countries. The Democratic Republic of Detroit would also be relatively poor, with annual per capita income of around $15,000, making it a middle-income country like Mexico.
Except Detroit would be a nation in decline rather than on the rise. Detroit would be a nation literally dying off, its shrinking population abandoning territory the central government could no longer afford to supply with basic services. Oh, yeah, its disastrous public finances. Well, maybe those would be a minor bright spot in this alternate reality: Detroit could always pay creditors, at least for a while, with devalued Fords, the local currency named after one of its founding fathers.
Eventually, however, this shrunken, crime-ridden, impoverished city-state — with no one willing to bail it out — might be forced to make a choice: capitalism or collapse. Out of options, it might just make the China choice. A key part of Deng Xiaoping’s pro-market economic reforms in 1979 was the creation of four Hong Kong–inspired “special economic zones” of liberalized labor laws and tax incentives to attract foreign investment. One of these little pockets of economic freedom, Shenzhen, located just north of Hong Kong itself, is now a center for technology manufacturing and one of China’s richest cities.