When the city's eventual downfall began is debatable I will say however that the city's fate was sealed with the construction of the Poletown plant. The city removed over 4,000 residents who not only worked within the city limits but lived there as well and replaced them with people who would come in to work and leave at the end of the day.
A city's economic well being comes from having money spent within it's borders. The jobs created by the Poletown plant did nothing but remove citizens from the city who were spending money within it's limits.
Lets play an alternate history game where the city of Detroit does not side with General Motors and the Poletown plant is never built. As the nation comes out of the 1980's the Clinton era economic boom hits if at this point in history Detroit begins construction on Comerica Park and Ford Field at the same time as well as the Greektown casinos the city would still be financially strong today.
In the 90s there was burgeoning music scene in Michigan which could have been capitalized on by the city of Detroit if there had been a push to open live music venues around the stadiums by offering huge tax breaks to club owners. This entertainment district would have attracted recent college graduates who to the area creating a need for new multifamily housing units that would have rented for much more than the units that were there. Bringing in recent college graduates would have created a need for restaurants, coffee shops and clothing boutiques all of which would have created a permanent tax base to fund the city.
Now lets turn our attention to Poletown. If the Poletown neighborhood still existed in the late 90s something very interesting would have started happening there. A neighborhood with a rich ethnic heritage is always attractive to hipsters, for lack of a better word. The strong Polish neighborhood would have been slowly taken over by a hipster population thus increasing the value of the neighborhood. Today this neighborhood would be more like Williamsburg Brooklyn than anyplace else. Which would see increased property values that would be taxed again funding the city.
By not opening the Poletown plant the city would have began to cut it's ties to the auto industry in the 80s thereby diversifying the region's economy. Also by breaking ties to the auto industry it would have been easier to expand the "People Mover" into being the type of public transportation that is important to large metropolitan areas. This would allow more people within the city limits to be able to partake in the entertainment in the Greektown/Stadium district without having to drive. Which would make the neighborhoods further away from the entertainment district more valuable which would lead to a larger tax base.
Had the city of Detroit made moves such as this not only would Detroit have a thriving economy but the State of Michigan would as well. With a major city designed to cater to the needs of recent college graduates sitting in Southeast Michigan there would be the mass exodus of the alumni of the five relatively large Universities in the state. Instead the graduates of the Universities move away taking with them any hopes of a rebuilt economy.
To put all of this another way Detroit went bankrupt when it failed to gentrify. Gentrification is what keeps cities viable. It increases property values which are taxed and used to fund city services. It creates well paying service jobs because the new residents would rather eat at expensive restaurants than fast food. In every way it is good for the city.
Now you may say this is all in hindsight however over the course of two days in 1998 I made this exact argument in a Property Class at Detroit College of Law. At that time I told the professor who supported manufacturing jobs over entertainment that it would lead to the city's collapse.
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