There are multiple reasons Detroit went under, and althought there are paople with various agendass who fit them to the situation there is no single cause. Paul Krugman has some good words on this.

As for the assertion that businesses like "business friendly" states, that is totally true, but then again what is "business freindly to one type of business is not so friendy to others. For example after all the textile industry moved from the South to Asia, there were a bunch of poor states with lots of low to mediaum skill labor who would jump at the chance to make cars, so you see an exodus from Michigan and you see all the foreign car companies moving in to South Carolina, Mississippi, etc, where there is no union protection, low wages, low taxes, etc. This is "business friendlt" for the auto manufacuring industry. Banking on the other hand, and all financial trading does better in New York, and the whole DC-Boston corridor. Why? Because the best schools and culture are there, and their employees demand that standard of living. It is more costly, but overall it is more "business friendly" to that kind of business. Ditto for the Northwest and Northern California where much of the hi tech stuff is. Again, a climate amenable to people in that industry, good schools, laid back lifestyle....business friendly for that kind of business. I could go on but the point is made. When words like "business friendly" start getting tossed around it leads some ignorant people to think it means low taxes and no regulation. This is not the case in all business, and so it should not become a clarion call for the "no gevernment" agenda favored by the tea baggers.