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Sunday, July 28th, 2013

Humiliating Detroit

As I’ve noted before, Detroit is all too frequently just a blank screen onto which people project their own personal bogeymen. So liberals see in Detroit racism gone wild, America’s comeuppance for its love affair with the automobile, and corporate greed. Conservatives see the ultimate end result of unions and where liberalism will take the US as a whole if it isn’t stopped.

There’s a bit of truth in all of these. The left would have us believe that having Democrats in charge of the city for so long had nothing to do with where it is today. But they reality is, they’ve got to own their piece of blame. Detroit certainly hasn’t been a bastion of conservative policy, that’s for sure.

On the other hand, Republicans should be aware that Detroit’s decline has been ongoing for quite a while, and there were definitely some mayors with R’s by their name who were in on the game. And economic forces shaped Detroit far more than they’d like to admit.

But ultimately what we see today is the left furiously spinning about Detroit (for example, see the book “Detroit: A Biography”) and the right trying to use it as a poster child for everything they hate. Yet on the right I can’t help but observe a particularly mean streak in the commentary, one that’s positively gleeful about Detroit’s demise. It’s as if, not content with letting the results speak for themselves about what happened under Democratic rule, the right seems determined to humiliate Detroit, reveling in its pain. It’s schadenfreude on steroids.

Let me highlight this. First Kurt Schlichter says that “Conservatives Should Point and Laugh As Detroit Dies.”

The agonizing death of Detroit is cause for celebration. It’s the first of the liberal-run big cities and states to fall, and we should welcome its collapse with glee.

Yeah, liberals, eventually you do run out of other people’s money.

The blue state model is a terminal disease, and Detroit is its poster child. Only this is one telethon where we should pledge that we won’t pay a single dime to keep the progressive party going a single minute longer.

Detroit represents the epitome of the blue state, Democrat machine liberalism that Barack Obama represents. Well, not one damn cent for Barry’s Kids.

Don’t hold back, tell us how you really feel. John Fund at the National Review is nowhere near vicious, but he does paint a target on Detroit’s art, basically arguing that the city should be forced to sell off its assets to satisfy creditors:

What no one wants to do, apparently, is sell the city’s assets. The city has largely unused parks and waterfront property that could be opened to economic development. The Detroit Historical Museum has a collection of 62 vehicles, including an 1870 Phaeton carriage and John Dodge’s 1919 coupe, that is worth millions. But the biggest sacred cow is the Detroit Institute of Art (DIA), one of the nation’s oldest and most valuable art museums. It has pieces by Vincent van Gogh, Henri Matisse, Andy Warhol, and Rembrandt. The Institute also owns William Randolph Hearst’s armor collection and the original puppet from the children’s TV show Howdy Doody.

The Detroit Free Press asked New York and Michigan art dealers to evaluate just a few of the 60,000 items in the Institute’s collection. The experts said the 38 pieces they looked over would fetch a minimum of $2.5 billion on the market, with each of several pieces worth $100 million or more. That would go a long way toward relieving the city’s long-term debt burden of $17 billion.

Let me get this straight. Instead of Detroit being $17 billion in debt, let’s sell off everything left that makes Detroit viable and end up still $14.5 billion in debt and still bankrupt. (Though only a few items were evaluated, they were clearly the handful of most valuable ones. Howdy Doody ain’t Van Gogh). Oh, yeah, that will help – if your definition of help is bailing out banks who loaned money to a city everyone has known is a basket case for many, many years. If those banks expected the art to be sold, they should have made the city pledge it as collateral.

Fund is right that Detroit does need to make tough choices about assets. I’ve made that argument myself. But the goal should be to create at a minimum a sustainably functional government and ensure the bankruptcy of the city of Detroit doesn’t undermine the broader region and state. Selling off secondary assets (and yes, Howdy Doody may be a good candidate) is worth pursuing if there’s cost/benefit. But saying that Detroit should sell off its regional cultural crown jewels is little more than an attempt to inflict counter-productive penance, to force humiliation upon the city. And it would also be completely unlike say a corporate Chapter 11 restructuring, which is designed to produce a viable firm on the other end and thus the most valuable assets are often retained.

Of course, Detroit’s own residents make it easy to act this way. A group of protestors referred to the bankruptcy filing as a “declaration of war,” saying that outsiders aren’t entitled to any say or even get the money back they loaned the the city, saying instead “the banks owe us.”

Still, have some compassion. It’s understandable Detroit’s residents are in pain and lashing out. Clearly they have tough medicine they haven’t reconciled themselves to taking. But there are better ways to respond to it. Andrew Biggs at the American Enterprise Institute took a more moderate path, suggesting that while a plain reading of Michigan’s constitution suggests it wouldn’t protect pensions in bankruptcy, there’s still reason to give pensioners some preferential treatment (thought not being made 100% whole, saying:

Does this mean that retired city workers should take the same haircut as municipal bond holders? I really don’t think so. Anyone loaning money to the city of Detroit was knowingly taking the risk that the city might not repay; that’s why bonds issued by Detroit paid a higher yield than Treasury securities, which are assumed to be riskless. As with any risk investment, sometimes it pays off, sometimes it doesn’t.

City employees, on the other hand, exchanged services today — along with employee contributions to their pension plan — for benefits to be delivered in the future. Sure, employees should consider the financial stability of their employer in its ability to deliver what is promised, but city employees seem to be a qualitatively different group than municipal bond holders.

This seems more rational type analysis and isn’t rooted in mean-spiritedness.

Though eager to point out how Democratic policies and corrupt Democratic politicians helped propel Detroit headlong in bankruptcy (which is certainly a valid political claim to make), having a vengeful streak only shows Republicans behaving in a ways that’s as hard hearted as Democrats say they are.

25 Comments
Topics: Civic Branding
Cities: Detroit

25 Responses to “Humiliating Detroit”

  1. Linnaeus says:

    I’m glad you wrote about this, because I’ve been noticing the same thing, though I think the tendency for projection has been particularly acute on the right. Andrew O’Hehir had a piece in Salon about why the right hates Detroit. His argument is that Detroit (and New Orleans) represent a multiracial culture that the right mistrusts and despises, so they want to see those examples fail.

    There’s some holes in O’Hehir’s argument, but I think he’s on to something.

    What’s amusing to me is that right-wing celebrants of Detroit’s problems rarely if ever offer up an example of a “conservative” city. I suspect that the examples they would give, when subjected to further scrutiny, would be beneficiaries of a lot of “liberal” policies, e.g., subsidies, etc.

    It’s also telling how many of these commentators live in “liberal” cities that are apparently one step away from total collapse.

  2. Frank says:

    What really bothers me is that the blame is placed on a city that hasn’t really been in control of its own fate for a century. The boundaries of Detroit haven’t been adjusted in 90 years, but the metropolitan area has grown enormously during that time. Metro Detroiters and Michiganders washed their hands of their responsibility for the city, dumped their problems within its borders, and lived the high life in comfortable, solvent suburbs while enjoying urban amenities like the art museum, nightlife and sports teams.

    In that environment, how could the city have competed at all it had cut services, sold assets and stripped pensions years ago as those on the right are now saying it should have? Frankly, Michigan should be grateful to those who stayed in the city and kept it going all this time, even if sometimes they made mistakes or fell into corruption. The fact is, this city was set up to fail, and fail it finally did.

    And I’ll say this: if the reorganization does not include regional governance and tax sharing, this will happen again, especially if assets are stripped and the core is left with even less of value than it has now. But I’m not holding my breath.

  3. May says:

    This is not about parties. Both are to blame. Detroit’s downfall started under the Republicans and both Republican and Democratic state leadership has failed the city. Republican states are poorer states-the South. The right to work laws have not made them suddenly wealthy and soon the laws will be for naught as their workers are replaced by more automation, AI and use of robots. They had over 50 years to get results. Midwestern GOP leaders who think right to work laws will be a magic bullet are soon to be disappointed!

    What matters is investment in human capital;which is not a strong suit of Republicans. It is the policy of some Democrat led regions;but not all. This may be a reflection of the culture of the place.

    By the way more poverty is on hand.

    http://my.earthlink.net/article/top?guid=20130728/f3ecb6be-ce7f-4f22-b5c7-986f067b2971
    Exclusive: 4 in 5 in US face near-poverty, no work

    With a reality like this few regions will be unscathed. Maybe Meredith Whitney’s pronouncement about major muni defaults to come was just a little early?

    Mass transit is also needed to connect the rising poor in suburbs to jobs. Too bad suburbanites resist supporting mass transit. Time is not their friend.
    http://nextcity.org/equityfactor/entry/mass-transit-per-capita-spending-economic-mobility-atlanta-detroit-san-jose
    Mass Transit Investment Also Matters for Economic Mobility

  4. John Morris says:

    Doesn’t anyone see the irony here? Half the stories say Detroit has too large a land area for its tax base and needs to shrink, urbanize and become transit oriented. The other stories (or sometimes the same one) say Detroit needs to merge into an 800 square mile monster absorbing every possible suburb.

    Taken as a whole Detroit’s suburbs have the same problems the city does with far too many fixed costs relative to the tax base.

    A problem largely caused by promoting sprawl cannot be fixed with more sprawl.

  5. May says:

    About pensions. Given the shrinking revenues that Detroit is facing, I do not think its pensions should be the burden of the city. Maybe the state or federal govt should take care of them? With increasing reductions in wages of local residents in growing localities, pensions are becoming an unfordable burden. I am wondering if the Federal Govt, should be the one to take on this burden and determine how much it will be responsible for. After all it can print money and the dollar remains the reserve currency. I also think US should change Social Security rules and allow Americans to receive benefits outside the country. American retirees should be encouraged to go and live where health care and cost of living is cheaper. Some Americans are already doing this;but maybe more should?

  6. May says:

    @John Morris.
    “Taken as a whole Detroit’s suburbs have the same problems the city does with far too many fixed costs relative to the tax base.

    A problem largely caused by promoting sprawl cannot be fixed with more sprawl.”

    You have a point. But this is about reducing costs and sharing tax base. And sprawl should be discouraged. The Detroit metro has the most Job Sprawl and it has poor mass transit. It is also acting as a talent repellent. The metro area needs a state of the art Transit system. Maybe the Michigan Governor should check out the German Bus-Tram Train model? BRT would be a help.

    I should mention that Seoul was inspired by Twin Cities tax base sharing. Seoul has high inequality. It is ironic that South Korea municipality could be inspired by the Twin Cities, while in the US where inequality is sky rocketing they have been resistant! I think those who make the decisions are infected by a bubble mentality. I mean if 4/5 Americans are poor or near poor this is the norm and not the exception. Note: according to census in 2011 1 in 2 were poor or near poor.

    I will also commend the Twin Cities business community for being much more evolved and intelligent about investing in human capital. That region is a cut above the rest and will prosper as rest of American regions unable to think along this line continue to slide. Check out the Itasca project.

  7. John Morris says:

    Meridith Whitney states the plain truth. Detroit’s unions did not seem upset about slashing city services to keep their benefits. At this point they can’t be taken seriously as people who put the residents interests first.

    http://www.nbcnews.com/video/cnbc/52568266#52568266

    We don’t no how all this play out but its unlikely residents could be doing much worse than they are now.

  8. John Morris says:

    Regional BRT plans in Detroit try to gloss over unsustainable job & housing sprawl by loading on another unsustainable fixed cost.

    Detroit needs to build up the number of jobs in and near core areas of the region. Selective transit plans like the Woodward light rail (eventually extended to Royal Oak) can drive that growth – if Detroit can get its fiscal house/ taxes etc… in order.

    I find it disturbing that the one plan supported by actual investors and employers with their own money is the one kicked to the curb. Detroit is seeing TOD type demand in its core and needs to really build on that.

  9. bettybarcode says:

    Republicans have conveniently forgotten their own municipal bankruptcy: Orange County, 1994. It was the largest in US history until 2011, when Jefferson County, AL filed.

  10. John Morris says:

    Nassau County was also quite a mess after the Al D’Amato machine era. Christie’s New Jersey is a crony-capitalist cesspool. However, comparing these situations to the epic disaster of Detroit is a stretch.

    Bottom line is that Republicans get in trouble when they betray their core small government values. Democrats get in trouble when they live their values.

  11. John Morris says:

    Sorry, but one can be both compassionate to the people of Detroit and still be lividly angry at the government of the city and want revenge.

    City services have been cut back for years so the unions who claim to care for the city could keep their benefits. Current employees didn’t know what was coming cause they didn’t want to know. If, as I believe, people were lied to about the true financial position of pensions- people should go to jail.

  12. Joe Beckmann says:

    I think relegating the issues of Detroit to parties misses the larger, longer, and broader implications and ignores a lot of history – out of Detroit. When Ford closed it’s primary Edsel plant, in 1958, in Somerville, Massachusetts, it dumped 4000 auto workers onto the streets with no real options. Not only had their city ripped out 17 miles of trolleys to satisfy the Ford potentates, but, once Ford left, that same city became the “chop shop” capital of the Mafia’s East Coast auto thefts from Florida to Maine, where those same auto workers cut up all the stolen cars to sell as parts to Europe. And that led to the “Winter Hill” gang, Whitey Bulger, and “The Departed.”

    That sequence wasn’t that different than the one Detroit has had. While it is not likely that everything Detroit has faced was exclusively the fault of the auto industry, it’s more than ironic that that same industry got bailed out by the same Washington that now can’t afford to bail their former host city. And the parties road on all those different rivulets to help their friends, wherever they may be or may have been.

  13. Racaille says:

    It’s always funny how conservatives forget places like Houston in ’80s and Orange County in the the ’90s.

    You know….those bastions of liberalism.

  14. May says:

    Oh by the way, listen up stuck in the past Americans, the world is moving forward on regionalism. When even Africa has joined the movement, it is now mainstream.
    Paris has joined Nice-Cote D’Azur has the 2d to form the new Metropole form. Due to its excessive fragmentation France has remained a world leader in integrated governance/regionalism since 1890. Oh and America, because of this several forms coexist under one roof because of this. You know the interlocal cooperation service sharing agreement financially strapped local governments are desperate to join in US- that is so old hat. They started that in 1890!

    http://www.theatlanticcities.com/politics/2013/07/why-expansion-paris-pretty-big-deal/6345/
    Why the Expansion of Paris Is a Pretty Big Deal
    https://docs.google.com/ viewer?url=http%3A%2F%2Fen. iju.hr%2Fccpa%2Fccpa% 2Fdownloads_files%2F007- Protiere.pdf
    The Status of Metropolises in France

    Please note World Bank is now educating developing countries about such systems.
    http://www.rethinkingcities. org/wp-content/uploads/2012/ 08/Andersson.pdf
    METROPOLITAN MANAGEMENT – APPROACHES AND
    IMPLICATIONS

  15. DaveOfRichmond says:

    Interesting series of historical maps of Detroit:

    http://www.wired.com/wiredscience/2013/07/mapping-detroit?pid=8431&viewall=true

    About 1/3 down the page are two side-by-side titled “1905 – 1934″, which are, perhaps, telling – looks like the sprawl is already well underway, just mostly within the city borders at that point.

  16. May says:

    @ John Morris:
    “Regional BRT plans in Detroit try to gloss over unsustainable job & housing sprawl by loading on another unsustainable fixed cost.” There are growing low wage earning workers in this region. BRT will help them get to jobs. Lack of transportation has prevented Detroit’s workers from getting to jobs in the metro.

    Evolved people in region and State understand they need to densify, including the current Governor. I want to know why MI doesn’t have a program which helps local governments in trouble. PA has one and it is not only state with such a program. What is happening in MI with all the takeovers is a because of the shortsighted state. And all these takeovers do not mean things will improve. Unless you are an Orange County and have string fundamentals you will still struggle. All these rust belt local governments in trouble have fundamental problems that will not be solved by takeovers. They are likely to be sooner or later take over again because the fundamentals do not change.

    MI needs to have a constant monitoring program like NC and it needs to establish a program to help local governmnts improve their local economies. This is a multi-year prospect.

  17. John Morris says:

    So you really think travelling 20 miles or more on two or three buses is a realistic job plan for low wage workers?

    All this is is spending a lot of money to evade the core problem- which is developing jobs in Detroit itself and creating affordable, livable neighborhoods.

    As far as the takeovers go. Detroit’s extreme finances show how far people let things slide- clearly it has been bankrupt for many years.

  18. John Morris says:

    @DaveOfRichmond

    We have talked about that. Detroit’s sprawl isn’t just about housing, but the movement of car makers in search of space for larger and larger plants.

    By 1960, most of the auto manufacturing jobs had already left.

  19. Derek Rutherford says:

    Regarding regionalism:

    Do advocates of regionalism want to let the overall region to have decision power over the central city in a metro area, or only to be on the hook to pay the bills?

    In a region with as poisonous racial relations as the Detroit area, this is a loaded question. When I hear of advocates for “regionalism”, they all-too-often seem to mean that the city gets to do what it wants, and make the suburbs pay for it. A consistent “regional” approach would be to simply have a larger population responsible for both decisions and payment.

    In some areas that has worked (Houston has a broad suburban area in its city limits, for example), but one of the reasons for Detroit’s misery is the deep divisions (race and class, which are almost the same thing in MI) between city and suburbs. The suburban perception is that Coleman Young chased the whites/middle-class out to the city (read a history of Poletown) and that they are refugees. The city/Coleman-Young perspective is that the whites/suburbanites still “owe them”. The net results is that Detroit is collapsing despite the northern suburbs (Troy, Warren, Birmingham) doing OK.

    IMHO, the key is combine decision-making and payment-responsibility functions. But in cases like Detroit, I suspect that the “refugees” from the city would have escaped to any distance in order to avoid the central city’s dysfunction. For those of us who live in other places (probably all of us), be thankful.

  20. Chris Barnett says:

    Derek, there are a couple of patterns for regionalizing (merging) city and suburban government. In the early Progressive era (turn of the last century) was the first wave of mergers: NYC, Philadelphia, San Francisco. All have merged City and County government, and constrained the city from further expansion. This has been done more recently in Indianapolis, Jacksonville, Louisville, and Denver. There have been two modern approaches in Toronto to “metro” government.

    I don’t know of any comparative studies of the various structures, strengths, and weaknesses. Perhaps other readers could point out some.

    I am most familiar with Indianapolis. At 40 years out, most observers now see that its “Unigov” was really a way of extending suburban/rural Republican control over the inner city…just the opposite of what you suggest might occur. For many years (until Rudy Giuliani’s election) Indianapolis was the largest city with a Republican mayor. (Unigov was only a partial merger. Police, fire, schools, and township property assessment and small claims courts remained separate. Four cities and towns kept their own limited government. Some additional consolidation has occurred, but it is still short of true “unified government”. Indy’s structure has the added issue of significant state-level constraints that require action by the state legislature to change.)

    The more modern way is massive annexation prior to, or during, suburban development waves. Oklahoma City and its suburb/satellite city Norman seem to be among the leaders, though Albuquerque, Phoenix, and Las Vegas seem to cover a lot of territory also. East of the Mississippi, Columbus seems to be the leader. This may be the more-equitable way of regionalizing, but it is not really available to landlocked central cities…which is almost all of them.

  21. Derek Rutherford says:

    Chris, thanks for the response and broader perspective. I had never seen this topic explained this clearly.

    The point I raised was that I think regionalism would have been a non-starter in Detroit, because (1) the city residents and leaders emphatically did *not* want to be amalgamated with the mostly-white suburbs, and (2) Detroit already had a very large area within the city limits (which I hadn’t mentioned, but has been commented on by many others). Arguably, Detroit was large enough that it already encompassed a “regionalism” framework, but that did not help the city. Adding even more area to the city is unlikely to have made a difference.

  22. Chris Barnett says:

    I think that regionalism is probably a non-starter in most places in the US. Many big cities’ regions bleed across state lines, though not Detroit or Indy. State legislators are unlikely to voluntarily reduce their own power and prerogatives.

    Clearly there is a racial angle in Detroit that doesn’t (and did not in the 70′s) exist to that extent in Indianapolis.

    Indianapolis-Marion County is about 25-30% African-American; the metro area as a whole “looks like America” at about 15% African-American. We have a significant number of poor Caucasian people, so poor does not equal African-American here.

  23. Alon Levy says:

    The problem with this analysis is that Detroit is purposely a ghetto. It didn’t elect progressive Democrats and subsequently decline. It didn’t even elect very progressive Democrats – San Francisco was on the cutting edge of gay rights and such, Detroit is just heavily Democratic. The history is reversed: it first turned into an economic ghetto and then became all-Democratic since the only people left in it were black. It wasn’t more liberal or more Democratic than New York, San Francisco, Boston, and other non-declining cities in the 1950s, and on racial issues it was substantially worse. Its current leadership is akin to the Jewish leadership of the ghettos in and after the Renaissance.

    The ghettoization is why regionalism won’t work in Detroit. It’s not that it wouldn’t be a good thing. It’s that the racial and economic divides between the city and Oakland County exist because the middle class wanted those divides to be there. Might as well propose voluntary desegregation in 1950s’ Alabama.

  24. Ziggy says:

    Detroit’s destruction has been engineered at the highest levels of the global plutocracy. Union supported auto manufacturing has long been seen as an arch nemesis and therefore a target of destruction. It’s Naomi Wolf’s “Shock Doctrine” come home to roost. Pulitzer Prize winning journalist Chris Hedges alternatively describes Detroit and its many parallel examples in U.S. cities as “sacrifice zones.”

    As Michigan’s outspoken native son Michael Moore so eloquently put, our country is awash in cash. It’s just a question of what’s valued by the people at the control stick. Only rich Republicans qualify for bailouts in the new world order:

    http://www.washingtonsblog.com/2013/07/the-federal-reserve-is-bailing-out-foreign-banks-more-than-the-american-people-or-economy.html

  25. Stephen Popolizio says:

    Not clear what Republicans have to do with Detroit’s demise. There hasn’t been one in sight since the 1960s. Let’s not get too esoteric in our analysis.

    There’s also a logical fallacy in attributing Detroit’s collapse to its being Democrat, or to its population being predominantly Afro-American, or to capitalism, or to the existence of municipal or labor unions, or to the decline of a major industry. In other words, a cum hoc ergo propter hoc fallacy, confusing correlation with causation.

    None of these factors alone is responsible for bringing Detroit down.

    What we know about Detroit is this: Over more than half a century, the crime rate steadily increased as the city’s racial imbalance grew, while an entrenched group of politicians, bureaucrats and unions fed themselves and their cronies at the expense of the city and its law-biding residents. Racial imbalance may have been enough to drive some white people away initially, but crime and dysfunctional governance completed the exodus.

    The city became a ghetto and it reveled in being one, keeping others out even as it became marginalized. As the city crumbled, its leaders righteously assigned blame to everyone but themselves. And they still do to this day.

    We should all feel compassion for the many who suffered and will suffer because of Detroit’s collapse, whether they are pensioners or bond holders, the more than 20,000 murdered in the city since the 1960s, the countless crime victims, or the working people who fled their homes. But no compassion is due for people whose arrogance, cronyism and willful mismanagement destroyed a city.

    Many American cities today have their embryonic detroits, largely segregated neighborhoods where crime runs rampant and where cities lack the political will or the legal recourse to eradicate the gangs, drug trafficking, and criminal violence that drive out middle class families and businesses. These neighborhoods, like the Austin or Englewood sections of Chicago among many others, look very much like Detroit.

    Let’s be clear: this is far from an exclusively African-American phenomenon. It could be (is and has been) an Hispanic, Irish, or Italian one, or one of any other ethic or racial group. But at this particular point in American history, it is largely an African-American phenomenon.

    The statistics for black crime rates including black-on-black crime are glaring and well known. The problem is compounded by a confluence of socio-political factors: the disintegration of black families, a 70% black birthrate to single mothers, an alarming high school dropout rate, a national sense of guilt and sensitivity over the history of black slavery and discrimination, a political class supported by an enabling media, and self-serving activists who seek to maintain influence by exploiting a narrative of victim and oppressor.

    Since little is done to address the root causes of the problem, the problem festers. People are hesitant to speak about single motherhood lest they be labeled as waging a war against women. Statistics on black crime rates are countered by accusations of discrimination within the judicial system. Police working to maintain order are accused of brutality. African-American political leaders divert attention to allegations of racial bias among the political opposition, whether it exists or not. Meanwhile, African-American commentators, from Shelby Steele to Benjamin Carson to Thomas Sowell, who courageously voice the true nature of the situation, are marginalized and ignored, if not harshly criticized.

    Detroit is a civic tragedy. We should not reduce it to politicised academic abstractions.

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