Are the residents of Detroit victims of de-industrialization or part of a culture that promotes poverty?
This is the debate raging among those attempting to tackle what, if anything, should be done to assist those living in the first major U.S. city to formally declare bankruptcy.
“You can’t solve the problems, because their problems are cultural,” conservative columnist George Will said Sunday on “This Week with George Stephanopoulos.”
Will went on to convey the argument of those who see the demise of Detroit as one that stems directly from those who live there, pointing the finger at unwed mothers and illiterate adults.
“You have a city, 139 square miles, you can graze cattle in vast portions of it, dangerous herds of feral dogs roam in there,” Will said. “You have have 3 percent of fourth-graders reading at the national math standards, 47 percent of Detroit residents are functionally illiterate, 79 percent of Detroit children are born to unmarried mothers.”
Yet not everyone is buying the claim that the Michigan city’s dilemma was caused by a cultural decline. Instead, many observers say it’s the result of industries who packed up and left in search of cheap labor.
“I find it really insulting to the people of Detroit,” Katrina Vanden Heuvel, publisher of The Nation, said following Will’s remarks. “I think there is a serious discussion about the future of cities in a time of de-industrialization. But in many ways, Detroit has been a victim of market forces.”
As the tax base of Detroit has declined, public services have shrunk along with it. As noted by Steven Rattner in a recent New York Times column, Detroit police response time has increased to 58 minutes due to a declining work force. This has contributed to a skyrocketing crime rate, triple that of St. Louis.
The education system has also been left in shambles. In 2011, more than 5,400 teachers received layoff notices. While many were hired back, it created an atmosphere among educators that was unsteady and unreliable.
Downward spiral of Detroit
Detroit, now home to 700,000 people, has experienced a dramatic population decline since its glory days of the 1950s, when it was home to 1.85 million.
What happened? Quite simply, the manufacturing jobs that once sustained the community disappeared when the three major auto industries folded up shop and left — and the residents went along with it. Yet that’s not the only thing that led to fewer jobs.
According to Tom Walsh of the Detroit Free Press, productivity gains at auto manufacturing plants also spelled disaster for the city’s workers. He points out that, in 1978, the industry employed 250,000 workers in Detroit. In 2009, it employed just 75,000.
This has resulted in a smaller tax base and a remaining resident base that is now educationally equipped to adapt to the evolving marketplace. The industry jobs that were once relied upon are gone, or at least there are fewer of them.
“OK, so despite some ongoing investment and philanthropic support from GM, Chrysler and Ford, the industry that became synonymous with Detroit cannot save it today — at least not with big numbers of traditional factory jobs,” Walsh writes. “The City of Detroit, therefore, is stuck in a financial pit with a scarcity of good jobs and a declining population and tax base, unable to afford a half-century of retirement promises made to city employees in headier times.”
All the union’s fault?
Detroit Free Press business writer Greg Gardner published an article Sunday addressing the myths surrounding the bankruptcy deal being thrown around by analysts, including a breakdown of what the city is paying public employees in terms of retirement funds.
At the top of the list is a claim made by FreedomWorks, a conservative Washington, D.C., lobbying group that blames the city’s financial woes on what it views as outrageously high pension deals pushed by unions.
“Government employees and their overbearing unions have been on a decades-long crusade to defraud the taxpayer and unjustly enrich themselves,” Daniel Amico of FreedomWorks wrote.
According to Gardner, the average pension for Detroit public workers is well below the average for major American cities. Detroit police and firefighters receive roughly $34,000 annually in pension funds on average — a figure he says is 25 percent less than counterparts in Kansas City, Mo., and 36 percent less than retirees in Dallas, Texas.
Unions have been adamantly opposed to the bankruptcy filing because it jeopardizes pension and health care payouts. The bankruptcy ruling is now cause for alarm, since other states could look to bankruptcy as a way to relieve public institutions of the need to fulfill pension obligations.
According to Amico, the release of pension burdens is actually a boost for the average taxpayer — unless that taxpayer is a victim of the bankruptcy ruling.
“Bankruptcy proceedings wipe the slate clean for a city, allowing politicians to look anew at the difference between discretionary and essential spending. If elected officials are no longer constrained by the spending promises of the past — typically made in economic boom — the taxpayer will be spared,” he writes. “Escaping the oppressive responsibility of lavish and opulent defined benefit pensions and other spending would do wonders for local reasurites.”
According to Rattner, leaving Detroit’s workers high and dry would not only be hard to imagine — it would also be a turn in a new direction for Americans, who he says are instilled with the ethical belief that they should help one another.
“Although retirees don’t have a lot of legal rights in the bankruptcy process, it is difficult to imagine — on either a human or a political level — an exit from bankruptcy that would include reductions of this magnitude,” he wrote in the Times.
Where does Detroit go from here?
Regardless of who is to blame, the question now for Detroit’s bankruptcy situation is where to go from here. A federal bailout for Detroit is apparently off the table, as Treasury Secretary Jack Lew has publicly stated that Detroit’s dilemma will have to be worked out between the city and its creditors.
“Detroit’s got serious financial problems,” Lew told CNN’s Candy Crowley. “They’ve been a long time in the making. We stand with Detroit and have been working with them, the technical advice, working with the kinds of normal programs the federal government has to see if there’s anything we can do to help in the Treasury Department.”
This could mean the federal government will extend a hand in terms of small assistance projects, but by no means is the Obama administration considering a city bailout of $18 billion.
During Will’s appearance on “This Week,” he was challenged by Rattner over whether, regardless of what or who is to blame for Detroit’s demise, America had a moral obligation to lend a hand to those living in the once-great city of Detroit.
“What do you want to do? Do you want to leave them sitting in the exact situation you just described, or, in the spirit of America, try to help people who are less fortunate, whether they are victims of natural disasters or their own ignorance, or whatever?” Rattner said. “Do you want to reach out and try to help them and try to reinvent Detroit, for not a lot of money … we’re talking a couple billion dollars here. This is small potatoes in the great scheme of life. Or else we could have your scenario, and just them all sit with feral dogs for the rest of their lives.”