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Opinion

Opinion

Opinion: Detroit faces rendezvous with reality

August 5, 2013

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— Gazing from the 14th floor toward the city center and the fragile sprouts of urban development along the river, Detroit’s Caesar says laconically: “One hundred and thirty-one to go.” Kevyn Orr, Detroit’s emergency manager appointed by Gov. Rick Snyder, means that housing in this vibrant enclave is 97 percent leased. The enclave is, however, only eight square miles of this city’s 139 square miles. 

Here in Greece on the Great Lakes, Orr, a Washington bankruptcy lawyer, is Detroit’s real government. He recently spoke in the governor’s office in Cadillac Place, an enormous 90-year-old building with brass door frames and a lobby as cavernous as a cathedral. The building, an architectural echo of vanished grandeur, was General Motors’ headquarters until the company moved into the magnificently misnamed Renaissance Center, a gleaming anomaly that towers over Detroit’s decrepitude. It opened in 1977, when Henry Ford II proclaimed: “Detroit has reached the bottom and is on its way back up.”

Orr became “emergency manager” in March after the City Council, having accepted a 21-item consent decree stipulating reforms, ignored it. How many items did the council fulfill? “Not one,” Orr says.

He is black, so some race-mongers of the sort who helped reduce Detroit to prostration, now, with tedious predictability, call him an Uncle Tom. Orr calls himself a “yellow dog Democrat,” a Southern expression (although he has undergraduate and law degrees from the University of Michigan, he is a native Floridian) for someone who would vote for a yellow dog if it were a Democratic candidate.

He is empowered to alter budgets and labor contracts, and to sell city assets. The City Council retains the power to complain.

In his five-month immersion in Detroit’s dysfunction, Orr has been startled by “the fact that people had gotten used to the city like this — people were tolerating the abnormal.” But Detroit’s decline began in the 1960s, well before the auto industry’s downward spiral (the United Auto Workers’ membership peaked in 1979). A half-century of the abnormal made it the norm.

Orr has found “bureaucracy on steroids” — for example, “more than two dozen layers of approval for planning and zoning.” Each layer was an opportunity for cronyism and corruption. And there was what he delicately calls “dissonance” in the political class’s thinking, which he compares to the Tulip Mania that gripped Holland in 1637. His explanation for the heedless, unsustainable pension and other promises made to unionized city employees is: “IBG, YBG” — I’ll be gone and you’ll be gone when the reckoning arrives.

Orr’s negotiations with unions and others having been unfruitful, a bankruptcy judge will allocate pain. Especially deserving of it are Detroit’s enablers — the creditors who bought the city’s bonds, assuming they would be paid first. But paid with what? Because the city is broke, they will be paid pennies on their dollars. Other cities will probably suffer the malfeasance Wall Street encouraged in Detroit: The cost of municipal borrowing should increase when lenders add a new risk premium to the cost of credit.

Also facing a rendezvous with reality are former city employees, some of whom retired at 50 on pensions exempt from some taxes. Government retirees have assumed that their benefits would be protected by Michigan’s Constitution, which says pensions “shall not be diminished or impaired” by any Michigan government’s actions. But Chapter 9 of federal bankruptcy law says insolvent cities may restructure their obligations, and the U.S. Constitution makes any U.S. statute “the supreme law of the land.” 

Until now, the long shriveling of private-sector unions has been somewhat offset by the unionization of government employees. But when these workers realize that their union dues (which help to elect compliant officials who dispense the wealth of third parties — taxpayers) do not buy inviolable protection from arithmetic, will they still pay them?

Orr is determined to find $1.25 billion to spend over a decade on restoring some semblance of public services. But $125 million a year will not go far in a city in which 40 percent of street lights are out and the police department is so strapped its officers have no business cards to give citizens who might call for help — if the average time it takes the police to respond to 911 calls ever declines from the current 58 minutes. 

Someday, Orr will return to Washington, and Detroit’s political class will return to power. Then that class may discover that democracy is not as fun as it was before money, like the largess of lenders, disappeared.

— George Will is a columnist for Washington Post Writers Group.

Comments

1southernjayhawk 1 year, 4 months ago

Fasteddy, the leadership is certainly in place for the entire country to head down this same path.

voevoda 1 year, 4 months ago

Why is George Will placing all the blame on the unions? By his own admission, the decline started decades ago, when the auto manufacturers cashed out their personal profits instead of investing in the updating of their products, modernizing their plants, and building the infrastructure of their home town. All the unions did is negotiate the best deal they could for their members. That's their job--just as it is the job for the corporations to give the best possible income to their shareholders. But at least the income paid to the union members stays local, going back into the local economy, if not directly into the coffers of the city of Detroit. Can the same be said to the income that went to the big bosses and their corporate shareholders?

The problem was not with the unions or with the manufacturers so much as with the mindset: future growth in wealth would not only cover obligations, but also increase prosperity all around. And if it doesn't work, well, by the time the chickens come home to roost, they'll be gone. It's the same logic behind Governor Brownback's fiscal policies. But it's easier to be gone when you have 7 homes and a platinum-plated parachute than it is when you have one home in Detroit that has no market value and a sanitation worker's pension.

Richard07 1 year, 4 months ago

"The problem was not with the unions or with the manufacturers so much as with the mindset:" What bigger mindset is there than of a union? Detroit has been a den of corruption and fiscal malfeasance since the 1970. The bullet that killed Detroit was shot 60 years ago.

voevoda 1 year, 4 months ago

"What bigger mindset is there than of a union?" Easy, Richard07: the mindset of giant corporations. The mindset of political machines. They both have money and power beyond anything that unions can muster. Ultimately, unions have only the power of their membership--the power to withhold their labor if they don't like the wages and working conditions, and their loyalty to their chosen leaders. If politicians took bribes, then they are at least as guilty as the union bosses who offered them. If politicians and corporate bosses negotiated contracts that they couldn't afford to pay, then they are the ones at fault; they were the ones who were supposed to keep the "big picture" in mind and make responsible decisions. They were the ones who invested in all the failed development projects; that wasn't the unions. The politicians were the ones who issued the municipal bonds and the corporations were the ones who invested in them; that wasn't the unions. The politicians were the ones who created the labyrinthine system of regulations; that wasn't the unions. So it wasn't the unions that pulled the trigger 60 years ago; it was the corporate leaders and the politicos. They left the city bleeding on the street, and now have the nerve to say that the ETMs, the only ones who are keeping the city operating at all, are a bunch of criminal thugs who are too well paid.

kochmoney 1 year, 4 months ago

Why don't you simulate a typical arrest and disarming procedure for us, Pheps? I hear the glitches are mostly worked out.

Armored_One 1 year, 4 months ago

Oh come on... no mocking Robocop references. Detroit earned them and then some, and we all deserve a chuckle. Well, those of us that catch the joke, that is.

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