Detroit – Collectivism’s Latest Poster Child

George Rebane

Detroit is cueing up as the nation’s latest testimony to collective mismanagement.  It is truly the poster child for what happens when you mix capitalist hubris, progressive pap, unions (public and private), and politically correct ignorance with generous dollops of corruption.  The result is a city that is now on the last stages of life support, a city where the remnants of those who can are leaving, and leaving it to those who can’t or won’t.  Or as the WSJ puts it, Detroit is “a sprawling city with $14 billion in debt, a depleted tax base, a legacy of government corruption—and very little time left to avert financial collapse.”  Chapter 9 bankruptcy is in the offing.

Few cities have had the geographical advantage and abundant gifts of commerce that blessed post-WW2 Detroit.  In 1950 its population was 1.5M, and today it has shrunk to 700K, as the productive and civilized are still taking their leave in droves.  The latest we hear is that the state of Michigan will take over, and run the city with an appointed ‘financial manager’.  Readers already know that Detroit has debt and unfunded liabilities hole too deep to climb out of (see ‘Hiroshima+66, Detroit+welfare’ and here).

Detroit is just the latest and most visible on the list of cities across the country going under.  (See nearby interactive map for the most recent jurisdictions filing Chapter 9.)  California, of course the leader in all things social and socialist, already sports a Chapter 9 club with Vallejo, Stockton, Mammoth Lakes, and San Bernardino as members.  And its crown jewel, the City of the Angels, is quietly fighting insolvency.  A look at the nature of LA’s fiscal countermeasures again gives lie to the leftwing denial that public service unions and their pension programs are not to blame for the nationwide scourge (here).  But there will be anything but crickets if LA has to declare insolvency.   I believe Sacramento will sacrifice everything except its socialist goals to keep that from happening.

Across the country teetering giant Atlanta is also fighting to avoid following in the footsteps of another big southern jurisdiction, Jackson County.  It is considering the sale of major city infrastructure assets to keep the wolves from its door (here).  And so this is a small sampling and an update of what it looks like on the other side of the tipping point as the feds continue to use their fiscal proctoscope to stimulate the country's jump off the real fiscal cliff.  As usual, the government always starts on the wrong end of the problem.

Comments

[Bill Tozer]

Slow moving train wreck. The link to the City of Angels is jaw dropping to say the least. Never in my wildest dreams would I ever conceived reading proposals that are coming out of LA: Raising the minimum retirement age from 55 to 67, paying retirees 75% of their working wages instead of 100% and dropping retirees' spousal health care bennies. Jaw dropping because this is sounding more like dealing with the actual problem and facts, a rare commodity in that neck of the woods. Gravy train is running out of tracks.

[TheMikeyMcD]

George, it sucks when 'rural myths' turn out to be as true as today's sunrise. It brings me great joy to see a spotlight on the immoral government employee compensation packages across our land.

Our country needs a new conscience and sunlight is the best disinfectant.

[TheMikeyMcD]

100 largest public pension funds alone have $1.2 trillion of unfunded liabilities, according to actuarial firm Milliman.

[Bill Tozer]

Detroit is set to run out of cash by June. It is a decaying city with chronic budget shortfalls, dismal public services, crumbling infrastructure, shrinking tax base, ballooning budget busting deficits and of course, riddled with corruption by the Democrat leaders of the city and throughout the city's administrations.

With that said, how do the Michigan Democrats view the Governor's actions? How does the Mayor and City Council members view the Governor (a former accountant) stepping in a taking over the city's finances? Quote of the day epitomizing the Great Divide:

City and state Democratic leaders opposed the governor's move. "I am deeply disappointed by today's hostile takeover of Detroit. We need to trust the democratic process, not throw it out," said Lon Johnson, chairman of the Michigan Democratic Party, in a statement on Friday.

Can't top that.

[Joe Koyote]

I wonder how much of the collapse and off-shoring of the US auto industry has to do with the collapse of Detroit and other iron belt cities?

[George Rebane]

JoeK 522pm - such wonderment should be contemplated with the understanding that millions of cars and trucks are being manufactured in America by American labor in states and cities other than Detroit, Michigan.

[Account Deleted]

A lot, Joe. The Dems and unions drove away or ruined much of the Detroit American auto industry starting way back in the 50's. By the 70's, mismanagement of the auto industry and union greed combined with Democrat political corruption spelled the end of Detroit. Leviathan reeled for decades, but even a large beast dead on it's feet can not stand forever. Detroit's biggest problem in the end was that even poor folk on welfare couldn't stand to live there for all of the violence and corruption. Not only the wealthy and middle class, but even the poor stampeded for the exits. You will have a hard time blaming Detroit's problems on conservatives. The Detroit political scene was proud of getting rid of them decades ago. Only the libs are left to blame here but they will still point fingers at Bush.

[TheMikeyMcD]

One can blame the off-shoring of jobs on many things (taxes, regulation, etc)... I blame it on labor union fat cats who only CLAIM to care about the blue collar folks (a progressive mantra).

Do progressives 1.) know why off-shoring is such a tasty option to would-be American employers 2.) have a solution that does not hurt the consumer, employer and ultimately the employees?

[Gerry Fedor]

Here's something very interesting when speaking about wealth in America.....

http://www.youtube.com/watch?NR=1&v=QPKKQnijnsM&feature=endscreen

[TheMikeyMcD]

Gerry,
Income/wealth inequality is not a bad thing.

Income/wealth equality is not a right.

Income/wealth equality can only be gained via slavery (shared misery).

[Dixon Cruickshank]

What the lib's haven't gotten is that higher and higher wages and beni's just don't make the employee more money, it only lasts a shorter and shorter period of time until all are unemployed. Actually they still don't get it, it just moved to private sector unions, since the business community would take it anymore.

[Bill Tozer]

Guess more and more people stopped wasting their time in Detroit City. Whatever happened to Mitch Ryder and the Detroit Wheels??
http://www.youtube.com/watch?v=dB1zY3UwyVM

[Russ Steele]

WSJ: The Reverse-Joads of California

Low- and middle-income residents are fleeing the state. Sacramento's liberal policies may bear much of the blame. [Emphasis added]

http://online.wsj.com/article/SB10001424127887324338604578326402863024028.html

[Peter]

"the productive and civilized are still taking their leave in droves."

George:

Did you really write this? It is totally racist and ignorant. I am disappointed!

[George Rebane]

Peter 213pm - What took you so long? But you must take a ticket, the line of progressives disappointed with RR is long and lengthening, and forms on the left (where else?).

On RR we like to say it like it is, Detroit is a basket case beyond political correctness - yes, by any measure the city's productive and civilized are still taking their leave. Recalling Einstein's definition of insanity, you should perhaps give Detroit's fossilized and corrupt Democrats a call and advise them to try something different, they may listen to one of their own.
http://usnews.nbcnews.com/_news/2013/01/04/16352612-weve-lost-respect-for-life-detroit-records-deadliest-year-in-decades?lite

[Russ Steele]

Here is a look at Detroit's decline:

http://www.time.com/time/photogallery/0,29307,1882089_1850973,00.html

In the mid 1990s I had an office in and commuted to Farmington Hills a suburb of Detroit. Several times we had to drive down town to the Cobo Hall preparing for the annual Auto show and it was like driving through a city destroyed by benign neglect, every thing was falling down. Burned out houses were every where along the route. It was sad them and it is worse now. This decline has been going on for years as the whites moved to the suburbs like Farmington Hills and the liberal blacks took over management of the City. It does not look like they did a great job managing the future of the City.

[Bill Tozer]

And the beat goes on:

http://www.latimes.com/business/la-fi-metlife-jobs-20130307,0,7702131.story