Many are warning that the United States could become the next Greece. There is no need to look across the ocean to see a poorly governed area that is deep in debt and crumbling. Just look to Detroit.

That city was once the picture of American industrial might. Henry Ford deployed the production line there and helped create the modern middle class. During World War II, more than a third of U.S. war material was manufactured in the city. During the postwar boom, cars made in Detroit embodied the American success story.

Now, the Motor City is collapsing in every conceivable way.

The unemployment rate is 18 percent, meaning almost 1 of every 5 people is out of work. A big reason is that the city’s schools have failed. Just 7 percent of eighth-graders are proficient in reading. Only 12 percent of Detroit residents have college degrees. Yet Detroit teachers are the best-paid in the nation, the Mackinac Center for Public Policy says, when their pay is adjusted for purchasing power.

Meanwhile, Detroit is $327 million in the red and has no credible plan to get back on its feet. That was why Michigan Gov. Rick Snyder, a Republican, recently appointed an emergency manager. Kevyn Orr has 18 months to try to save the city. Even though he has broad power to sell assets and renegotiate contracts, his job will be difficult.

These days, there is more work to be done tearing down homes than building them. An executive at Pulte Homes has set up a nonprofit to do just that in Detroit. By reversing the building process, it can remove an empty house for $5,000, half what it would cost the city government to do so.

In fact, government is more a hindrance than a help. “If the government could fix the problem, they would,” urban artist Jenenne Whitfield told National Review. “Everything we know that’s historically held up this city is broken. It’s a bit of a radical way of thinking [but] our government has to change. It has to go back to what it was, going all the way back to the Constitution.”

A nonprofit group called Motor City Blight Busters has taken down some 1,500 houses. There are “a lot of rules and regulations that relate to removing property,” the group’s founder said. “The government [has been] interfering with our ability and others’ ability” to remove blight.

There are signs, however, that the city’s government has seen the light. “Our role is to support. And sometimes, our role is just to get out of the way,” Karla Henderson told National Review. Ms. Henderson heads up Mayor Dave Bing’s efforts to remove urban blight by helping people “navigate around some of these government bureaucracies that are sitting in the way.”

Detroit also needs to get a handle on crime. With all the empty buildings, arsonists strike more often in Detroit than anywhere else, with more than 10,000 fires per year reported. Forbes magazine has named Detroit the most dangerous city for four straight years. The city’s homicide rate is one of the nation’s highest. In 2012, Detroit’s crime rate hit its highest level in 20 years.

Help may be on the way, though, with some common-sense political reforms.

In a statewide election in Michigan last year, voters soundly defeated Proposal 2, a measure that would have made collective bargaining a labor right and given collective-bargaining agreements the force of law. Voters shot down the union-backed measure 58 percent to 42 percent.

In December, the Legislature struck a blow for workers’ rights. It passed a bill to make Michigan the nation’s 24th right-to-work state. This simply means that workers no longer will be forced to join a union, though they remain free to do so.

It’s possible that free-marketers eventually will rebuild on the ruins of Detroit. For now, though, it serves as a cautionary tale. Even a city with everything going for it can collapse under the weight of bad economic policies. The rest of us must learn from Detroit, not repeat its mistakes at the national level.