The only sure result of Detroit's bankruptcy is that armies
of lawyers will make bales of money.
The other shoe finally
dropped in Detroit.
The once-proud city —
variously known as “Motown,” “the Arsenal of Democracy,” and “the City of
Champions” — filed for bankruptcy. There’s a local effort to head off the
filing, but most people don’t think it will get anywhere.
Detroit’s the largest
American city ever to do this, and it’s been coming for a long time. Detroit’s
been a mess for decades, but that shouldn’t blind us to how astonishing the
event is.
How does a city that was once the nation’s fourth-largest go bankrupt? How does a city that was the first to make “working class” a synonym for “middle class” become the equivalent of homeless?
In other words, how
does a city go bankrupt? It’s a city, for crying out loud. It can’t go sleep
under a bridge.
Yet that’s where it
finds itself. Some of its wounds are self-inflicted, largely by the long string
of incompetent and corrupt politicians its voters kept electing.
No one elected the man
who filed for the bankruptcy, however. He is Kevyn Orr, the well-regarded
bankruptcy attorney Governor Rick Snyder made emergency manager of the city.
The state legislature bestowed czar-like powers on him, which he’s clearly
using.
Detroit now owes
nearly $20 billion to 100,000 creditors, mostly banks and pension funds, yet is
unable to even keep up with current expenses.
It has long since cut
services to the bone, with many city offices manned by a skeleton staff. It
hasn’t been enough.
The average response
time to a 911 call (in a city with one of the highest murder rates in the
nation) is so long that many residents have given up using it altogether.
Confronted with an emergency (like a heart attack for example), they simply
deal with it on their own.
It’s what happens when
virtually all of the people with any resources whatsoever decide to abandon a
city en masse.
That’s what’s happened
in Detroit. They used to call it “white flight,” but since black people with
the option to leave bolted too, it’s more like “middle-class flight.”
Detroit had many
problems, but the chief one was that it was a one-industry town. It made cars.
When that industry, unable to keep up with foreign competition, began to leak
jobs and the leaks eventually became a flood, Detroit’s vitality ebbed away.
Then there was the
problem of race. The city was always a racial tinderbox (it’s been the scene of
three major race riots in the past 150 years), but the riot of 1967 was
particularly ill-timed and destructive. It turbo-charged the ongoing
middle-class flight.
Before you knew it, a
city built to accommodate nearly two million people had only 700,000
inhabitants rattling around, many of them destitute or close to it.
Moreover, as much as
two-thirds of the tax revenue being brought in by its reasonably prosperous
downtown area was being sucked up by pension payments to retired government
workers.
That’s the way you get
to be Detroit.
Czar Orr wants to
solve the city’s problems by making its creditors take a haircut that amounts
to a scalping, settling debts for as little as 10 cents on the dollar.
Some of the creditors
want the city to first sell its assets, which include the multi-billion dollar
contents of its world-class art museum and Belle Island, the crown jewel of the
city’s once iconic park system.
Who knows where it
will end? The only sure result is that armies of lawyers will make bales of
money.
The federal government
says it will not bail out the city. The state won’t either. Understandable,
perhaps, but tragic.
A hundred billion
dollars for Iraq, but not one red cent for Detroit. That’s our motto. The city,
it seems, will be left dependent on the kindness of strangers.
That didn’t work out
well for Blanche Dubois in A Streetcar Named Desire. I don’t expect
it will help Detroit either.
OtherWords columnist
Donald Kaul grew up in Detroit and now lives in Ann Arbor, Michigan.
OtherWords.org