Letter From America (About Detroit)

Suicide by Government

Detroit is responsible for its own demise.

By  Rich Lowry 

 

NATIONAL REVIEW ONLINE           

www.nationalreview.com          

July 23, 2013 4:00 AM

 

The case of the city of Detroit isn’t much of a murder mystery. Various suspects have been fingered in its demise: The global economy. The fall of the auto industry. The decline of manufacturing generally. But it’s simpler than that. Detroit died of its own hand.

The city undertook a controlled experiment in what happens if you are governed by a toxic combination of Great Society big spenders, race hustlers, crooks, public-sector unions, and ineffectual reformers. It spent and misgoverned itself into the ground. It tried to defy the axiom of the late economist Herb Stein that “if something cannot go on forever, it will stop.” Detroit’s bout of self-destruction lasted for a few decades, and now may finally stop only when there is little left to destroy.

The city was at the pioneering edge of urban liberalism and discovered that all the social spending in the world doesn’t deliver order, family stability, education, economic dynamism, or effective governance. In the hands of Detroit’s rotten political class, it proved inimical to all of those things.

The city’s downfall started long before anyone imagined that the Big Three would ever be anything but overwhelmingly dominant. Hardly anyone had heard of Toyota in 1967, when riots ripped the city and a long crime wave began that made it unlivable. According to Henry Payne of the Detroit News, the murder rate climbed from 13 per 100,000 residents in 1966 to 51 per 100,000 by 1976.

It was the city’s dysfunction that made it unappealing to the auto companies rather than the diminished state of the auto companies that made the city dysfunctional. The city’s mayor for 20 years, Coleman Young, was an ethically challenged black nationalist who hated the suburbs. Under Young, journalist Zev Chafets writes, Detroit had “all the trappings of a third-world city — the showcase projects, an external enemy, and the cult of personality.” And this was in the good old days of the 1970s and 1980s.

By this point, Detroit had already reached terminal velocity on its own. GM had nothing to do with the city council promising benefits to retirees that it couldn’t possibly pay. Chrysler didn’t disgracefully mismanage city agencies. Ford didn’t disastrously degrade the city’s human capital.

Detroit is a city that has celebrated and feasted on government for decades and yet is incapable of the most basic function of government. Crimes basically aren’t solved. The clearance rate is 8.7 percent. The report of the city’s emergency manager says this is driven by the police department’s “lack of a case management system, lack of accountability for detectives, unfavorable work rules imposed by collective bargaining agreements, and a high attrition rate in the investigative operations unit.”

This in a city that needs a first-rate police force. Its crime rate is five times the national average. Henry Payne notes that 80 percent of the city’s children grow up fatherless, and that of the 50 percent of black men who are high-school dropouts, more than 70 percent don’t have a job, and 60 percent have done time.

The city rewards anyone who can’t escape its boundaries — more than a million people have since 1950, when it had 1.8 million residents — with stifling taxes in a futile attempt to keep up with spending. It has the highest per capita tax burden in Michigan, despite the low per capita income of its residents. It can’t even collect its taxes well. An Internal Revenue Service audit called its tax system “catastrophic.”

None of this is the product of the “creative destruction” of capitalism; it is the destructive destruction of corrupt statism. Despite globalization, urban America is alive and well outside of Detroit. Pittsburgh experienced similar economic dislocation when the steel industry collapsed, but hasn’t descended into an urban dystopia. Cities in the South like Houston and Raleigh, N.C., are economically vibrant and attractive to new residents.

The way Detroit was once, a very long time ago.

— Rich Lowry is the editor of National Review. He is also the author of the recently released book Lincoln Unbound. He can be reached via e-mail:comments.lowry@nationalreview.com. © 2013 King Features Syndicate

Letter From America (About Detroit)

The Downfall of Detroit

It took only six decades of “progressive” policies to bring a great city to its knees.

By Mark Steyn

July 19, 2013 6:15 PM

National Review Online

 

 By the time Detroit declared bankruptcy, Americans were so inured to the throbbing dirge of Motown’s Greatest Hits — 40 percent of its streetlamps don’t work; 210 of its 317 public parks have been permanently closed; it takes an hour for police to respond to a 9-1-1 call; only a third of its ambulances are driveable; one-third of the city has been abandoned; the local realtor offers houses on sale for a buck and still finds no takers; etc., etc. — Americans were so inured that the formal confirmation of a great city’s downfall was greeted with little more than a fatalistic shrug.

But it shouldn’t be. To achieve this level of devastation, you usually have to be invaded by a foreign power.
In the War of 1812, when Detroit was taken by a remarkably small number of British troops without a shot being fired, Michigan’s Governor Hull was said to have been panicked into surrender after drinking heavily.

Two centuries later, after an almighty 50-year bender, the city surrendered to itself. The tunnel from Windsor, Ontario, to Detroit, Michigan, is now a border between the First World and the Third World — or, if you prefer, the developed world and the post-developed world. To any American time-transported from the mid 20th century, the city’s implosion would be literally incredible: Were he to compare photographs of today’s Hiroshima with today’s Detroit, he would assume Japan won the Second World War after nuking Michigan.

Detroit was the industrial powerhouse of America, the “arsenal of democracy,” and in 1960 the city with the highest per capita income in the land. Half a century on, Detroit’s population has fallen by two-thirds, and in terms of “per capita income,” many of the shrunken pool of capita have no income at all beyond EBT cards.

The recent HBO series Hung recorded the adventures of a financially struggling Detroit school basketball coach forced to moonlight as a gigolo. It would be heartening to think the rest of the bloated public-sector work force, whose unsustainable pensions and benefits have brought Detroit to its present sorry state (and account for $9 billion of its $11 billion in unsecured loans), could be persuaded to follow its protagonist and branch out into the private sector, but this would probably be more gigolos than the market could bear, even allowing for an uptick in tourism from Windsor.

So, late on Friday, some genius jurist struck down the bankruptcy filing. Judge Rosemarie Aquilina declared Detroit’s bankruptcy “unconstitutional” because, according to the Detroit Free Press, “the Michigan Constitution prohibits actions that will lessen the pension benefits of public employees.” Which means that, in Michigan, reality is unconstitutional.

So a bankrupt ruin unable to declare bankruptcy is now back to selling off its few remaining valuables, as I learned from a Detroit News story headlined “Howdy Doody May Test Limits of Protecting Detroit Assets.” For those of you under 40 — okay, under 80 — Howdy Doody is the beloved American children’s puppet, in western garb with a beaming smile and 48 freckles, one for every state, which gives you some idea of when his heyday was. The Howdy Doody Show ended its run on September 24, 1960, which would have made sense for Detroit, too. The city’s Institute of Arts paid $300,000 for the original Howdy Doody puppet — or about the cost of 300,000 three-bedroom homes.

Don’t get too excited — you can’t go to Detroit and see him on display; he’s in storage. He’s in some warehouse lying down doing nothing all day long, like so many other $300,000 city employees. Instead of selling him off, maybe they should get him moonlighting as a gigolo and sell it to HBO as Hungy Doody (“When you’re looking for the real wood”). What else is left to sell? The City of Windsor has already offered to buy the Detroit half of the Detroit/Windsor tunnel, perhaps to wall it up.

With bankruptcy temporarily struck down, we’re told that “innovation hubs” and “enterprise zones” are the answer. Seriously? In my book After America, I observe that the physical decay of Detroit — the vacant and derelict lots for block after block after block — is as nothing compared to the decay of the city’s human capital. Forty-seven percent of adults are functionally illiterate, which is about the same rate as the Central African Republic, which at least has the excuse that it was ruled throughout the Seventies by a cannibal emperor. Why would any genuine innovator open a business in a Detroit “innovation hub”? Whom would you employ? The illiterates include a recent president of the school board, Otis Mathis, which doesn’t bode well for the potential work force a decade hence.

Given their respective starting points, one has to conclude that Detroit’s Democratic party makes a far more comprehensive wrecking crew than Emperor Bokassa ever did. No bombs, no invasions, no civil war, just “liberal” “progressive” politics day in, day out. Americans sigh and say, “Oh, well, Detroit’s an ‘outlier.’” It’s an outlier only in the sense that it happened here first. The same malign alliance between a corrupt political class, rapacious public-sector unions, and an ever more swollen army of welfare dependents has been adopted in the formally Golden State of California, and in large part by the Obama administration, whose priorities — “health” “care” “reform,” “immigration” “reform” — are determined by the same elite/union/dependency axis. As one droll tweeter put it, “If Obama had a city, it would look like Detroit.”

After the Battle of Saratoga, Adam Smith famously told a friend despondent that the revolting colonials were going to be the ruin of Britain, “There is a great deal of ruin in a nation” — and in a great city, too. If your inheritance includes the fruits of visionaries like Henry Ford, Walter Chrysler, and the Dodge brothers, you can coast for a long time, and then decline incrementally, and then less incrementally, and then catastrophically, until what’s left is, as the city’s bankruptcy petition puts it, “structurally unsound and in danger of collapse.” There is a great deal of ruin in advanced societies, but even in Detroit it took only six decades.
 

“Structurally unsound and in danger of collapse”: Hold that thought. Like Detroit, America has unfunded liabilities, to the tune of $220 trillion, according to the economist Laurence Kotlikoff. Like Detroit, it’s cosseting the government class and expanding the dependency class, to the point where its bipartisan “immigration reform” actively recruits 50–60 million low-skilled chain migrants. Like Detroit, America’s governing institutions are increasingly the corrupt enforcers of a one-party state — the IRS and Eric Holder’s amusingly misnamed Department of Justice being only the most obvious examples. Like Detroit, America is bifurcating into the class of “community organizers” and the unfortunate denizens of the communities so organized.

The one good thing that could come out of bankruptcy is if those public-sector pensions are cut and government workers forced to learn what happens when, as National Review’s Kevin Williamson puts it, a parasite outgrows its host. But, pending an appeal, that’s “unconstitutional,” no matter how dead the host is.

Beyond that, Detroit needs urgently both to make it non-insane for talented people to live in the city, and to cease subjecting its present population to a public “education” system that’s little more than unionized child abuse. Otherwise, Windsor, Ontario, might as well annex it for a War of 1812 theme park — except if General Brock and the Royal Newfoundland Fencibles had done to Detroit what the Democratic party did they’d be on trial for war crimes at The Hague. 

— Mark Steyn, a National Review columnist, is the author of After America: Get Ready for Armageddon. © 2013 Mark Steyn

Douglas Wilson’s Letter From America

A Drunk Trying to Make the Next Lamp Post

Posted on Friday, July 19, 2013  

by Douglas Wilson 

The old Bobby Bare song, Detroit City, has a refrain that centered on the desire to “go home.” Unfortunately, everywhere else is turning into Detroit City. Pretty soon there will be no home to go to.
Detroit’s bankruptcy, announced yesterday, gives us an opportunity to go over a few fiscal realities, always a good idea if you are careening toward a whole series of fiscal reality checks.

The first thing we must grasp is that we are dealing with levels of municipal debt, state-level debt, and federal debt, that mean a necessary default is coming. If our problems are left untended, we will default. If we wake up in time, and address the pending problem, we will default. This is another way of saying that every genuine solution to the problems created by our fiscal irresponsibility will be a form of default. The only solutions now are defaulting solutions.

The only thing we don’t know is what kind of default it will be. The only thing we don’t know is who the unlucky victim of our defaulting will be.

Government does not make wealth.
If government has wealth, then this means it was taken. The only way that the government can acquire the means to pay its obligations and debts is by taking it. The only question left before the house is “who will they take it from?” There are a limited number of options.

When a politician says that we cannot allow our government to default on its solemn obligations, he either believes what he says, and is a fool, or he knows what he is saying is false, and wants us to believe that we must avoid Default A, which is what he is really talking about, and must select from defaults b, c, d, and e, which he does not really consider defaults “technically,” because the people who are going to get hosed by them are not part of his constituency.

The government does not make, and in order to have, must therefore take. Here are the basic ways in which such a taking can happen. The government can wage war on other countries, and take from them. The government can raise taxes, and take that way. The government can debase the currency, and take that way. The government can run up a big debt which it finds itself unable to pay, and take that way. And of course, given the realities of the ongoing political circus, the government can stagger between these options, like a drunk trying to make it to the next lamp post.

Beware of those reforms that hide the reality of the defaulting. Those kinds of reforms are probably the best way of proceeding, but only if they are honestly embraced as the least destructive way of defaulting. But don’t hold your breath. The government lies. The government cheats. The government welshes. The government steals. The government defaults, and hides it.

For example, if the retirement age for Social Security is extended by two years, this does make the program viable longer on paper. It does this by unilaterally changing the terms of a contract — by defaulting. It may be better than doubling down on the current lunacy and having the whole thing go up in a sheet of flame, but it is not better because it isn’t defaulting. It is just as much a default, but it may be less damaging to the recipient.
If you pay your creditor 50 cents on the dollar, that is a default. It does less harm to him than paying him 10 cents on the dollar, which in its turn is not as bad as paying him nothing at all.

Detroit is now defaulting on its bond holders, its pension holders, et al. Look at it straight on — it is hard to make out, but a line has formed and we are trying to make out who is next. Is it California? Illinois? New York? There are municipalities in there too. And if this spectacle becomes too grim, and a demand arises for the federal government to “do something,” this will just be an example of people opting for the coast-to-coast sheet of flame default, instead of the piecemeal approach.

One last thing. I would like to address a few words to those evangelicals who have been seduced by leftist economics, or who are in some way flirting with leftist economics. You may have cannonballed into the deep end, like Jim Wallis, or you may just be sidling sheepishly in that direction, with some cover provided by distributist literature. You think that the language of compassion is more biblical, and the idea of communitarian sharing makes you feel warm all over. You think that businessmen who know how to add and subtract are those who are in the grip of mammon-lust. You don’t like the hard lines of clear thinking, and the blinking sums on their calculators do nothing but harsh your mellow.

Do me a favor, and look at Detroit. Look at the failure of all the compassionate nostrums. Look at the collapse of real integrity. Look at the grasping and demented idiocy of the unions. Look at the abandonment of government’s true functions. Look at the wreckage of human lives. Look at the ruin of a once great city. Look at what aching greedlust does. Behold the handiwork of your compassion.

Look at what mammon in sheep’s clothing can do.

Reality Checks

Taking the Hit

Detroit has filed for bankruptcy.  To those who have followed such things it will come as no surprise.  It is not the first and it will not be the last–but it is notable, just the same.  It is the biggest US city ever so to file.  According to The Guardian,

The filing sets a new record for municipal bankruptcies and dwarfs the previous record filings by Jefferson County, Alabama, and Stockton, California. No other city of Detroit’s size has ever gone bust.

The causes of this final act are strikingly obvious.  But because the end has come after a lingering terminal decline folks assumed that because it did not happen quickly, it would never happen.  The bigger fools of the next generation would always be there to take the accumulated burdens of their predecessors.  What was the problem?  Municipal overspending led to growing debt which the city can no longer service, nor repay.  It was passed on to bigger fools.  It is like every bankruptcy.
 

There are two major classes of creditor: municipal bond holders (who lent the city money) and workers who are “owed” pensions.  Neither will ever see much, if any, of their money again.  The buck passed to others for decades has finally stopped with them.  They will take the fall.  Then, possibly, a new city will emerge.  But only if lessons are learned, and learned well.
 

[Michigan Governor] Snyder said he hoped the bankruptcy would be the beginning of the end of Detroit’s woes. “This decision comes in the wake of 60 years of decline in the city, a period in which reality was often ignored. I know that many will see this as a low point in the city’s history. If so, I think it will also be the foundation of the city’s future,” he wrote.

Where has the problem lain?  Clearly and most obviously, the US auto industry has been challenged by cheaper, better vehicle competition, particularly from Asia.  But the auto-industry is heavily unionised and has resisted change.  Competing auto companies preferred to set up manufacturing plants in states where unions could not dominate.  The resulting lower wage costs meant lower costs of production, which meant a growing market share for Toyota, Honda and the like.  The city of Detroit could no longer count on the Big Three US automakers being the geese to lay golden eggs for the city.  Repeatedly the US auto industry has gone begging to the taxpayer for handouts and bailouts.  Venal politicians, with eyes upon the next election and their career, were willingly complicit.  

But in the meantime, the city had committed to golden handshake payouts to municipal workers, along with high remuneration.  Retirement at middle age, with golden pensions, became the norm for police, firemen, and other municipal employees.  This has been the result of a city’s work force controlled by labour unions over decades.  The strike-threat system worked a treat.  The city began to run deficits.  Its losses had to be funded by borrowing.  Spend, borrow, hope became a way of life. 

Meanwhile, the city began to shrink as citizens migrated to other cities and other states for work.  But the costs, being locked in through labour contracts, did not diminish much.  Result?  Lower tax revenue, bigger deficits, more borrowing.  The circling, downward spiral became vicious.  No way out. 

All of this was easily predictable.  It was foreseen by many.  But only fools and horses think they can defy financial and fiscal common-sense forever.  If the city and the unions and the politicians had acted responsibly and sooner, it would never have come to this.  But ultimately the folly and irresponsibility was sanctioned by the citizens themselves.  Debt is a form of slavery.  Perpetuating debt is perpetual slavery.  Detroit and its citizens were perpetually enslaved a long time ago.  But the chains were invisible to them, such has been their moral torpor.  No longer.  They are now clearly visible.  They are heavy.  They cannot be unshackled–at least, not without gnawing, lingering pain. 

But for Detroit’s poor, bankruptcy is likely to make life even harder in the short term. About 60% of Detroit’s children live in poverty. Orr had planned to bus creditors to some of the city’s poorest areas so they could see what was at stake. Armed security would have gone along for the ride.

“If they can see what it’s like for Detroiters, what they endure every day in this city, I think they’ll begin to understand what’s at stake,” Orr told the Detroit Free Press. The tour was canceled as bankers became worried about the PR impact of captains of finance touring the city’s poorest neighbourhoods.

Detroit screams out to us all: “Look on my works, you mighty and be afraid.”