Mayor abruptly slashes wages to minimum for Scranton City Workers

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129. Poor

I didn't make any argument as to whether anyone is poor or rich.

You've been reading too much Krugman if you're going to boil down a local economy's woes to being a problem of aggregate demand at the national level. Even if his ideas were right, production by the overall national economy couldn't help Scranton's local government with it's mismanaged budget anyway. Local governments are primarily funded by property tax, and there's nothing that's going to bring housing values skyrocketing back to where they were before. The housing market is correcting itself and even if it were as simple as waving a magic Krugman wand and directing that supposedly idle capacity to some useful means of production, it couldn't possibly be in the area of housing. Now, if they were lucky enough to be sitting on the next industry that would boom from the Krugman-wand-wave bubble, then sure, they'd have all the new revenue they'd need. Other than that, it's just going to be a hard slog out of it for them.

It's not as if hard times have never befallen a municipality before. Asheville, NC went through it and it just took a really long time to pay down their debt. It also resulted in Asheville remaining one of the best Art Deco downtowns anywhere.

Because of the explosive growth of the previous decades, the 'per capita' debt owed by the city (through municipal bonds) was the highest of any city in the nation.[19] By 1929, both the city and Buncombe County had incurred over $56 million in bonded debt to pay for a wide range of municipal and infrastructure improvements, including the courthouse and City Hall, paved streets, Beaucatcher Tunnel, school buildings and municipal parks. Rather than default, the city paid those debts over a period of 50 years. From the start of the Depression through the 1980s, economic growth in Asheville was slow. During this time of financial stagnation, most of the buildings in the downtown district remained unaltered. This resulted in one of the most impressive, comprehensive collections of Art Deco architecture in the United States