Detroit Is the Front Line

[xchrom]

http://www.commondreams.org/view/2013/08/06-7



The campaign against Detroit is the latest battle in a long war against the American social contract. For that war to succeed, millions of Americans must be convinced to see their fellow citizens – working people, retired people, students, the poor – as the Other. From Social Security to decent jobs, from a life’s education to a living wage, the implicit agreements among us can only be broken if we think of our neighbors as Other than ourselves.

That’s why Detroit’s fate is so important. Breaking Detroit’s pension agreements would pave the way for breaking our national agreement with all retired Americans, and then with the rest of our national community.

The people of Detroit are not Other than us. They are us. And if we sacrifice their neighborhoods, our neighborhoods won’t be far behind.

Outside the Green Zone

It’s true that Detroit is an extreme case. In places the landscape looks more like Fallujah or Kandahar than the typical American city. And the statistics are staggering: 40,000 buildings lie abandoned. 40 percent of the streetlights are broken. Unemployment and crime are almost unmeasurably high.

[Fire Walk With Me]

1. Absolutely. They've long since been attempting to establish precedent for their goals. n/t

[branford]

2. How do suggest saving Detroit and her pensioners?

Detroit's problems are sadly well known and have been steadily worsening for 60 years. Other cities may be bad, but the many factors that rendered Detroit bankrupt are seemingly unique.

Businesses and people who can afford to continue to rapidly leave, tax collection is worse than Greece, unemployment grows by the day, the infrastructure is, quite literally, crumbling, 40% of streetlights are inoperable and almost 80 properties are vacant and need to be torn down, high schools have a 70%(!) drop-out rate, violent crime is some of the worst in the nation, and the response time of EMS and police is embarrassing.

Additionally, the promises made to both current and retired municipal employees could not realistically be kept during prosperous times, they have already borrowed egregious sums of money simply to continue minimal operation, Michigan tax revenues have already disproportionately gone to the city, tax rates are already high, and no one will lend to them, no less at non-usurious rates or without the security of the few assets of value that remain within the city. All this for a geographically large city built for over 2 million residents, that now only contains about 700,000 largely poor citizens and declining. These hard facts do not even touch upon the poor leadership and corruption that has always plagued the city (see, Monica Conyers and Kwame Kilpatrick).

GM, the one remaining auto manufacturer still (barely) in the city, does not have the will, inclination or resources to even begin to address Detroit's problems.

And most importantly, no money is likely to come from Washington. Even many liberal democrats do not want to discuss anything approaching a bailout. These politicos have already seen the wrath of voters over the auto bailout, their own towns and cities could desperately use additional funding, and the current political climate focusing on the debt and deficit (and sequester) makes talk of additional monies to Detroit politically untenable. And, these are the Democratic politicians! Soulless Republican are expressing schadenfreude at Detroit's misery.

Neither you, nor I, want to see the retirees suffer or bear the burden for incompetent leadership and poor planning. Regrettably, I do not see how Detroit manages in the short-term, even with bankruptcy protection and stiffing the retirees, without further drastic, near unconscionable action, no less revitalize and grow in the medium and longer terms.

At this point, I clinically hope other cities learn from Detroit's mistakes and other large, municipal bankruptcies do not spread. We already are facing the risk of rising costs in the municipal bond markets which could have significant negative national repercussions, including reductions in infrastructure projects, higher taxes and diminished social programs.

Your talk of the break-down of the social contract may be true, and if so, the responsibility lies at the feet of both Democrats and Republicans for many generations of national mismanagement. However, I am more concerned with possible cures that apportioning blame.

[badtoworse]

3. The social contract is not the only contract to which Detroit is a party

Detroit's debt obligations are also contracts and if those are not respected, it will impact virtually every state and municipality that borrows money with substantially higher borrowing costs. That in turn will impact residents there with higher taxes, reduced services and in some cases, increased risk of bankruptcy. I would expect that many towns and cities would be unable to borrow money, period. There is a reason why rates on secured debt are significantly lower and if lenders see their senior position eroded, they will price new debt accordingly (and the same people who are screaming about how the banks raped Detroit will be screaming about the impact high interest rates are having on social services elsewhere). In addition, much of the money that was lent to Detroit likely came from individual investors who were counting on the interest to live on. Break the lending contract and they get screwed, despite the fact that they bought secured debt.

Detroit is a hopeless situation. Everyone involved with the city's finances is going to get hurt, pensioners, banks and individual investors alike - there is no way around that.

[socialist_n_TN]

4. Who gets hurt the worst?........

Recently I saw a post that said that Orr was offering the banks a 25% haircut on their investments through the Bk filing. Yet he was offering pensioners a 90% haircut.

Of course, we all know that in the dictatorship of capital, contracts only apply to the banks and the monied interests, NOT the people. Contracts that are supposed to protect people are only so much toilet paper.

[branford]

7. Not that simple.

One of the primary issues is which creditors are secured and the priority of debt established under law. Risk and return is calculated based on these factors.

Most importantly, those "evil" banks invested the savings of many hard working individuals, and it is their fiduciary obligation to see that they maximize the returns for them. Are pensioners in Cleveland or Omaha who invested in Detroit through their banks any less important or deserving than municipal retirees from Detroit?

Unsecured creditors like the retirees and many banks will receive pennies on the dollar, Detroit simply does not have any money. However, many other creditors are secured by liens on other assets or otherwise have a priority. For instance, those creditors (many retirees themselves) holding certain water and sewer infrastructure bonds have priority and will continue to get paid, for now. However, even they will likely take some haircut before the bankruptcy is complete.

You can rail against capital all you want, but nothing in life is free. Salaries, infrastructure, pensions, commodities, energy, etc. all cost money. Detroit lived well beyond its means, planned poorly (really, negligently and criminally) and continuously borrowed. In order to maintain their lines of credit, Detroit needed to offer incentives and security for creditors to assume such an awful risk. The bill has long since come due.

Large banks, small banks, retiree and pensioner investors, municipal retirees themselves, and others will all share in the misery that is now, and has long been, Detroit.

[socialist_n_TN]

8. Save the neo-liberal claptrap for somebody else...

It's ALWAYS "not that simple" when it comes to screwing over the working class and breaking the "contracts" that supposedly protect them while holding sacred and holy the contracts that protect capital. Show me where a "contract" that protects workers has ever won out over a contract that protects banks and capital. I sincerely doubt if you can, but if a there's one out there, it's going to be pretty lonely.

[branford]

11. Claptrap, indeed.

Detroit is not a college seminar on labor rights and solidarity. It requires real, hard choices and sharing the misery.

The evil banks argument is also becoming tiresome. Most of these banks hold and invest the savings of the very workers you claim to support. As I asked before, are these workers (those who have the temerity to invest with the banks) no less valuable and deserving as the retirees from Detroit?

You obviously do not agree with my analysis. That's fine. I simply ask what real solutions you propose for Detroit that are even remotely feasible, both economically and politically.

[badtoworse]

14. Don't expect an answer

Screw the banks only works if you overlook their fiduciray responsibilities to depositer and investors. The implicit assumption is that only the 1% have money in banks and they would be the only ones hurt if the rights of senior, secured debt are not respected. As we know, however, that is not reality.

[TBF]

17. "Sharing the misery"

When are the 1% going to share in the misery?

Austerity bullshit.

[branford]

18. As I always ask, what then is the solution to what ails Detroit?

Solutions that have at least a chance of implementation, economically and politically.

Also the 1% will lose their investments in Detroit jut like everyone else.

[TBF]

19. The solution is to get rid of Capitalism.

Any other questions?

[badtoworse]

20. What an erudite response. Capitalism isn't going away anytime soon.

How about an answer that might have a chance of working

[TBF]

23. It's the correct response if you have any concern for

most of the people in this country.



Income Inequality in America --> http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

[branford]

21. Good luck with that.

However, neither I, nor those Detroit city workers and retirees, are looking for a debate on comparative economic theory.

Now, do you have any ideas that would even be remotely considered by most Americans, Democrat and Republican?

[TBF]

22. You may be surprised -

as conditions warrant the idea of getting rid of capitalism is going to be far more favorable than you might think.

As for band-aid approaches, yes there are many thoughts out there on mixed economy solutions. I personally don't think they work all that well because capital always pushes back (evidence: 1980-present) - but just for starters we can increase the minimum wage, re-form strong unions, do away with all treaties and tax benefits to outsourcing jobs, raise taxes on corporations and high-wealth individuals (estate taxes, taxes on trades, capital gains taxes etc...) in order to promote income equality. Cut defense drastically & close most overseas bases.

As for Detroit specifically I think that boat has already sailed. But if we do the things I detailed above maybe we can save other cities from decay.

[branford]

24. I'm glad you acknowledge Detroit's desperate condition, yet I take no joy in its misery.

As for your other ideas, we live in a free country and your are certainly entitled to peacefully pursue your political and economic goals. I personally believe they are mostly abstract, unrealistic and would ultimately hurt American workers in our globalized world, but the future is yet to be written.

[TBF]

25. It is not abstract and unrealistic to focus on the goal

of helping workers. The silver lining I see in the "globalized world" is that at some point workers are going to realize they can globally fight back against capital. And that is where my "unrealistic" ideas about a more equitable and democratic system may be welcome. Even in this capitalist paradise.

[branford]

26. The current global trend is towards more capitalism - see China, India and Brazil.

I also do not believe that a comfortable and prosperous workforce is necessarily incompatible with capitalism.

Additionally, humans are flawed. Even if there never is a "capitalism paradise," a "workers'/communist/socialist paradise" is similarly unobtainable so long as human beings are in charge, particularly in anything resembling a democracy.

Nevertheless, anything is possible, and I would never discourage anyone from peaceful advocacy. You have a long road ahead.

[leftstreet]

27. ...and more Socialism for the rich n/t

[cap]

5. Nationalize municipal pensions

There is a plan out there to
Offer federally backed annuities. Swap pensions for annuities.

The rest is a good old fashioned bail out of a city like NYC was
During the 70s. Send people to jail for not being fiscally prudent.

Get manufacturing going. Set up 3d printing incubators . Detroit has skill set to do that. Next stage of 3d printing is merger of product design with advanced computerized control systemS ... Think arduino on steroids.

[branford]

9. How and by whose authority?

The federal government is never going to nationalize public pensions. There is no current authority (or money) to do so, no will in Congress for such drastic action, even among most Democrats and liberals, and even discussing it openly encourages the sort of gross fiscal mismanagement, corruption and impossible and irresponsible promises that cause crises like this to materialize.

I also wouldn't cite the bailout of NYC in the 1975 as a model. The terms were set so intentionally onerous that it was meant to terrify any future city from even contemplating such action. The bailout was also only successful because it required the wholesale modification of services and contracts, including forcing union retirement funds to "buy-in" and back millions in loans to the City. Do Detroit unions even remotely have the resources to contemplate such action? Despite its poor fiscal management, NYC was still a premiere world-class city with great wealth, businesses, tax revenue, a very large and loyal population, vast cultural offerings and great infrastructure. An investment in NYC was very likely to be paid back with interest. Detroit has absolutely none of those advantages.

Suggestions like 3d printing, pot farming and green manufacturing are meant with the best of intentions, but are simply ludicrous. Who is going to build and run the manufacturing infrastructure and why would they and their potential employees choose Detroit with its high crime, poor schools and third-world conditions (except labor costs)? More importantly, how will such small niche industries save, no less continue to financially support, a city with hundreds of thousands of mostly poor residents.

Your heart is certainly in the right place, but such pie-in-the-sky suggestions only reinforce the desperation that is Detroit.

[cap]

29. 3d printing can be done on many different scales

From very large to cottage industry. Detroit has people with machining skills already. Detroit doesn't need to start at the very bottom.

I would break up Detroit and scale it back to where city limits were 100 years ago. Start incorporating smaller areas with people as suburbs.

[badtoworse]

10. So the federal government assumes liability for the pensions that states and cities failed to fund?

Where will the feds get the money for that? We're talking about what it will take to save Social Security and this would make that problem much worse.

In NYC's case, there was a reasonable expectation that it would get back on its feet fiscally in a reasonable amount of time. Bonds were issued by the Municipal Assistance Corporation (backed by the state) which the city made good on. Detroit is a basket case and any entity that gives them money should have no expectation of ever seeing it again.

[HereSince1628]

6. Yes, at the front...the no-man's land between political trenches.

In war such places are always destroyed in the effort to save one or the other conflicted ideology. The tactics involved in these campaigns seem too often to be argued by the serious elites in distant capitals over champagne and caviar.

[Eleanors38]

12. Treat Detroit as a frontier territory...

We may have little control over pension funds. But government can play a big role in re-creating this city. Already, housing costs are quite low, and evidently zoning laws are now liberal enough to allow for farms and other businesses on the same sites as residential prop. In frontier days, "qualified" folks could get a free 1-way train trip to free property in the West or other frontier areas. Once there, people can get low cost loans to rebuild and capitalize. Trade marts and perhaps low-cost shipping & warehouse facilities could be waiting, along with university-sponsored R&D centers which could assist in finding viable markets, new opportunities, tech expertise & biz advice and planning. Concentrating activities in centers (Detroit city limits are huge) would allow for more efficient concentration of functioning utils, police, EMS, fire, etc. All gov. functions would sunset after an allotted time.

We've done this before.

[branford]

13. Who is going to fund and build the trade-marts, warehouses, R&D centers, etc, no less offer loans ?

Also, housing costs are low because properties are grossly dilapidated, city services are absent, crime is rampant and schools are a disgrace by any standard.

I do, however, believe that rezoning, tax incentives, and possibly "homestead" enticements, might offer some help, but Detroit is so far gone it would be like treating cancer with a Tylenol.

[Eleanors38]

15. Well, we could always treat it like Chernobyl...

But millions of people voted with their feet when they expanded into the frontier where there was nothing to dilapidate, where no sewers, schools, power and streets were in place, and emergency response times might be measured in weeks.

Trade marts, biz. advice and R&D can be consolidated into unused bldgs and funded through existing agencies of the feds & state, as well as Wayne State U. Are there no monies at all going into Detroit now? Re-direct those funds; this is a crisis.

Clyde to Ben as he threw his bags into the train:

"Ben, whataya gonna do when you get to New fuckin' Mexico? The houses are shot, the streets have potholes, they cut the power and sewer pumps, and that trainin' center cain't guarantee you a job!"

Ben to Clyde: "Clyde, you need to cut back on the whiskey. I ain't travelin' to no futuristic paradise."

And Ben's numbers are growing.

[branford]

16. I very dearly hope you're right and appreciate your optimism.

But this isn't the 19th century where farming, ranching and prospecting fueled much of the drive west. People in 2013 also demand much, much more in services and creature comforts that our frontier forefathers.

And, sadly, very little money is available for anything in Detroit. Any funding, whether federal, state or local taxes and revenues, goes to pay off their debts or trying, literally, to keep the lights on. Given police and EMS response times and the fact that 40% of streetlights do not work, I am not left with much hope.

I also think Ben and Clyde moved to the Detroit suburbs with the rest of the white flight after the riots in 1967, and recently voted for Snyder for governor. At least their Motown record collection has increased in value.

[leftstreet]

28. DURec