Career Calling

August 4, 2013

Is Detroit Bankrupt or Conquered?

Detroit is broke.  That’s what the media and the politicians like Governor Snyder tell us. It’s an easy story to tell given the way the city looks.  It’s also easy to tell when the politicians and their banker allies only give one alternative.  What they don’t say is that unions tried to work out a deal that would have prevented the bankruptcy.  The governor and his Emergency Manager (Appointed Dictator) would not talk to them.  A cynical person might even think that the governor had some reason for wanting the city to declare bankruptcy.

Common Dreams has reprinted an article by the Nation’s John Nichols that examines how democracy is not working in Michigan’s largest city.  Michigan and Detroit voters both rejected Snyder’s Emergency Manager program, only to have the governor revive the program during a lame duck session of the legislature.  Nichols interviews experts who point out that several American cities have problems similar to Detroit.  As the nation’s industrial base broke down, the federal and state governments responded by cutting funds sent to big cities.  Rather than blame local officials as the governor does, Nichols suggests that we look at state government as part of a complex problem.

John Cassidy of the New Yorker looks at the story from the perspective how the city came to the bankruptcy “solution.”  He asks the often unasked question:  Was this move necessary?  Were there alternatives?  He points to gentrification in parts of the city.  The Emergency Manager, Kevyn Orr seems only interested in giving pensioners as little as possible (as little as 20%) while offering bank creditors (as much as 75%).  Cassidy ends ominously by quoting a municipal bankruptcy lawyer who calls Detroit, “a test case.”

The same day Detroit declared bankruptcy, Chicago bond rating was hit with a big downgrade.  A couple of weeks later, the city’s school system had its bond rating slashed.  Do you see a pattern?  The same politicians who failed to fund pensions are now using that action to say pensions need to be cut.  They robbed Peter (workers) to pay Paul (bankers).  And now they’re asking Peter to pay the bill.

What happens in Detroit will be a test case.  If working people don’t wake up, they will pay the bill of the bankers while city workers, including those who have already retired, will have to live on a fraction of the pension they should have received as part of their compensation.  Pensions are not welfare.  Retired workers are not takers.  If Americans don’t wake up to this new make-the-rich-richer scheme, we will all lose.

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