Richard Escow on the Looting of Detroit

The following op-ed, authored by Richard Escow, originally appeared at the Campaign for America’s Future website last Wednesday:


Nearly 100 years ago two young Detroit girls visited a now-vanished island park that had a dance pavilion, amusement rides, and swimming, and wrote that they were “having fun” on a piece of paper. Then they put the paper in a bottle and tossed it into the St. Clair River, where a diver found it last June.

They wouldn’t recognize the place today. Detroit, which grew and prospered for much of the last century, has become a wasteland of abandoned buildings, lawlessness, and municipal debts.

Somebody’s going to pay for that.

It’s not going to be the politicians whose decisions undermined Detroit. And it’s not going to be the industrial and financial executives who made bad decisions, yet retired with their full pensions and portfolios.

Who’ll pay the price for the fall of Detroit?

There was never going to be any other answer, not in today’s political climate: The bill’s going to the teachers who educated Detroit’s children. The gardeners who tended its public parks. The drivers who carried its people from place to place. The trash collectors who did the city’s dirty work at the break of dawn. They’ll be told they’re paying for decisions they didn’t make.

Those workers didn’t break the economy with Wall Street fraud and recklessness. They didn’t sign those trade deals, or eviscerate the union movement, or allow the ever-growing wage inequality that robbed Detroit’s cars of their markets, its citizens of their spending power, and its children of their hopes.

But they’ll get the bill anyway.

Ritual Sacrifice

Scapegoats have been purged from societies since the dawn of time, and always for the same reason: so the people in charge don’t get blamed.

Detroit’s democracy has already been sacrificed. Under Michigan’s “Emergency Manager” law, the city has already lost most of its right to self-determination to an unelected City Manager. Kevyn Orr was appointed by a Republican Governor who represents precisely the policies that destroyed Detroit in the first place. He’s a viceroy for the corporate/political class.

Photo courtesy Molly Riley/Reuters

Orr is putting the patrimony of Detroit on sale, selling the city’s goods to pay its debtors. How much will that bring in? We’re told the zoo’s healthy, breeding female giraffe could fetch up to $80,000 on the open market. That won’t make much of a dent in the city’s $15 to $17 billion debt, but it would certainly send a message to the people of Detroit: Who do you think you are? A community, a city, a polity? Zoos are not for the likes of you.

There’s no word on the corporate viceroy’s plan for the giraffe, or whether it includes making sure she gets a good home.

Other city property might bring in a little more cash, including as much as $1 million for the Detroit Historical Museum’s prototype 1963 Ford XD Cobra. A million dollars is a lot for a car, but selling it won’t be a problem. The soaring wealth inequality of the last forty years has left the country with tens of thousands of people who can drop that kind of cash for a car without blinking...

...along with millions who don’t know where there next meal’s coming from.

Orr’s fire sale won’t raise much money. Even Detroit’s half of the tunnel to Canada is only worth about $65 million. That’s about 1/230th of Orr’s debt estimate, at most. So why do it? Because it sends a message to Detroit’s citizens: You’re not in charge. You don’t deserve these things. You can’t stop it.

The message is: We dismantled your jobs. Now we’re selling off what remains of the world you knew.

Targets

The struggle now taking place between Detroit’s Mayor and its City Council is, in a local columnist’s words, “pantomime theater.” It means nothing. Orr’s calling the shots, and he’s made his lofty declaration: Pensioners must accept “significant cuts” to their benefits, because pending contributions “will not be made.”

As Reuters’ Felix Salmon observes, the city’s bondholders won’t take a loss. (The companies which guaranteed those bonds will take a hit, reasonably, given their bad bets.) And as Cate Long of Reuters points out, Orr’s proposal “seems to be in good faith for bondholders, but less so for the city’s retirees.” Long calls it an attempted “leveraged buyout” conducted on “public employees’ backs.”

As Long says, Orr’s proposal is an “opening gambit” with unions. But what a spectacle: The city’s elected officials are so powerless they’re not even in the picture. And the only budget confrontations being staged are with ordinary retired workers, not the political and corporate forces responsible for Detroit’s troubles.

What’s taking place isn’t just a budget discussion. It’s more symbolism, this time targeting the very concept of public employment. Cops, firefighters and bus drivers are being ritually blamed for the economic breakdown of municipalities all across the country. A decent government job, where you honor your part of the bargain by working for thirty years and then get what was promised, is being treated as self-indulgence.

How distracting. How convenient.

And yet, despite all the claims that pensions are the top problem, Emergency Manager Orr’s fiscal report states that pension and health obligations are only about one-third of the city’s $15-$17 billion debt. And even some of that will be going to bankers, not retirees, as repayment of obligations for “derivatives instruments.”

The Looting of Detroit

In 1967, rioting destroyed 2,000 buildings in Detroit. Today’s economic devastation has left the city with nearly 80,000 abandoned buildings, of which nearly 40,000 are considered safety hazards. And now, after the mismanagement, disenfranchisement and the ritual sacrifices, comes the real payoff.

As a privatization expert told the Detroit Free Press, the real money is in urban assets with a “revenue stream.” That means a city’s water, sewer and transit systems, its parking meters and roads and bridges.

That’s where the money is.

First the people of Detroit will pay with their benefits. Then they’ll give up the city’s few green spaces and other amenities. And after that they’ll pay each and every day – in their utility bills, bus fares, or daily commutes.

It’s not just a ‘leveraged buyout’ financed by other people’s money. It’s a hostile takeover of democratic zones. It’s the Looting of the American City.

Detroit’s hostile takeover is being mirrored in cities across the country. State legislatures are passing corporate-backed bills allowing Emergency Managers to replace democratically elected officials, and these “technocrats” are echoing Orr’s ideologically-motivated actions.

Hostile Takeover

And it’s not just a Republican game. The Democratic Mayor of Chicago, Richard M. Daley, cut a parking-meter deal with a private company that began letting the meters fall into disrepair after promptly quadrupling rates.

An audit later concluded that the company should have paid twice as much for the meter business than it did, but the people of Chicago can’t do anything about it. The money’s already changed hands. Today Chicagoans struggle with their parking meters, but the former Mayor’s a prosperous man. And his successor Rahm Emanuel, handpicked by President Obama, is busy privatizing schools and other city functions.

Rahm Emanuel’s a prosperous man, too.

The ones who break a city are never the ones who suffer. They never pay for the damage. They’re first in line when the legally-sanctioned looting begins. And they’re always the first to endorse “bipartisan” or “technocratic” moves which send the middle class a message: Your way of life is over.

If their hostile takeover isn’t stopped, they’ll be right. A century from now the middle class will only be a distant memory. Future Americans will never know what it was like to have decent jobs with health insurance and a pension, or cities with affordable and efficient services.

They’ll only be able to imagine a world that no longer exists, sent down in memory like a message in a bottle.

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance and information technology.