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Home Publications Blogs Beat the Press George Will Has a Point on Detroit: Those Who Rely on Democracy in a Kleptocracy Will Be at a Serious Disadvantage

George Will Has a Point on Detroit: Those Who Rely on Democracy in a Kleptocracy Will Be at a Serious Disadvantage

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Thursday, 01 August 2013 05:06

George Will had the obligatory union bashing piece, titled "Detroit's death by democracy," in the Post today. Will's story is that unions used their political power to get unaffordable contracts from the city government, thereby pushing it into bankruptcy.

For some reason he neglects to show the evidence of the union workers' bloated pay: wages that average $42,000 a year for non-uniform personnel and pensions of $18,500 a year. I suppose you might be able to get workers for less, but this probably is not most people's vision of the good life.

The main reason that Detroit died were structural factors that were determined largely outside of Detroit's city government. Certainly a high dollar policy that made U.S. cars less competitive, contributed a great deal to Detroit's decline. The growth of a parasitic financial sector that drew talented people away from productive industries like autos also played a role. And the economic collapse in 2008 that resulted from these folks' greed and incompetence was also a really important factor.

Race also played a major role, with whites fleeing in large numbers to the suburbs beginning in the 1950s. This cost the city much of its tax base and left it with sections of the city that were large depopulated but still required city services (look at Detroit on Google maps).

However Will has a point about democracy doing in Detroit. Detroit's representatives in Congress and their allies will push their case for federal aid in saving the city. But they are speaking with the wrong currency in Washington. This will be a question of the voting power of Detroit residents and the people who sympathize with them.

By contrast, when Goldman Sachs, Citigroup, and other Wall Street behemoths were facing death in 2008 they had strong advocates at the very top levels in the White House and Congress in both parties (e.g. Larry Summers and Henry Paulson). They did not need votes, they had the money to buy power. And of course they got the government to cough up the cash and guarantees that they needed to get through the crises they had created.

So Will is absolutely right in blaming Detroit's death on democracy. The city simply doesn't have the right currency to survive in the political system today.

Comments (13)Add Comment
When Negotiating With an Economic Predator Like George Will, Union Power is an Unfair Advantage
written by Last Mover, August 01, 2013 6:18

Funny how the mind of a simpleton like George Will works.

The car industry killed public transportation long ago but it's not dead enough for George Will who says what little is left, is socialism.

So the public highway and road system necessary for cars to exist, that's not socialism is it. That it cost effectively around $20/gallon of gas to use it in opportunity cost, that's not a subsidy is it. That it can take an hour to drive 3 miles in a traffic jam, that's not a negative externality is it.

That it involved unions of private military and highway construction contractors to maintain the supply of oil and the natural monopoly of the highway system is not the kind of unions George Will is talking about is it. That it involved contracts like CEOs get is not the kind of contracts George Will is talking about is it.

Wake up America. A union is a contract between a man and a woman and that's it. Beyond that everyone is a free agent to negotiate his or her economic worth on the chopping block with any economic predator of choice.

George Will loves the car industry. He just doesn't want it to get any more subsidies than it has already. Give it up autoworkers. Subsidize your employer in the name of freedom against public transportation.
Tthe role of the state
written by Jennifer, August 01, 2013 7:43
One of the most under-reported aspects of the Detroit bankruptcy is the role of the state of Michigan. The state made various cuts to revenue sharing which greatly decreased revenue. Detroit's income tax rate went from 3.5% and was cut to 2.45% over several years with the agreement that the state would not cut revenue sharing-which it did.
(From www.sensibleamerican.blogspot.com/?m=1 the former treasurer)
There are many other issues that Detroit faces that would require an involved and committed state government such as pooling municipal resources, considering regional government alternatives, cash infusions. You could argue this is a democracy problem as well since very few Detroit residents voted for the governor, and now he's basically in charge.
wrong link
written by Jennifer, August 01, 2013 7:47
Forced Busing, White Flight and Detroit...
written by david helveticka, August 01, 2013 9:38
The main element in the destruction of old ethnic neighborhoods in America's cities was forced busing. I guess I am old enough to remember when American cities were composed of little neighborhoods of African-American, Poles, Czechs, Ukranians, Italians...and then we had forced busing, where parents who got upset about their kis being bused across town were called "racists" by rich white liberals like Ted Kennedy---whose kids went to private schools.

So we had "white flight", where parents moved to the suburbs, where their kid could attend the neighborhood schools, far out ot the practical reach of the liberal courts and their doctrine of "forced busing"...

Minneapolis, Baltimore, New York, Boston---all of the cities I know followed this pattern. The cities were abandoned to the old, the poor and the blacks...and maybe the "yuppies"---rich whites without children...

Now the old ethnic neighborhoods are shells of their former selves, the old businesses, ironically the "diversity" that rich white liberals like to rant about--all gone. And rich white liberals who are rich enough to live in neighborhoods were their kids don't have to put up with the inevitable problems of "diversity" can look down on the working class who ironically want the same thing for their kids that rich white liberals have.

For instance the example of Detroit, versus Oakland County...see links:

http://en.wikipedia.org/wiki/Oakland_County,_Michigan

http://detroit.curbed.com/tags/oakland-county-versus-detroit

But I guess us working folks are just "racist" for wanting our kids to attend safe schools in their own neighborhoods where we know each other, and we know the parents of the kids they go to school with.
Objection!, Low-rated comment [Show]
Detroit's Failure
written by Aaron, August 01, 2013 11:52
George Will's approach to the Detroit budget reminds me of somebody, upon hearing that somebody who once earned $100,000 per year had lost his job and was only earning $20,000 per year, but was still spending $100 per week on food. Yes, the person might be able to cut food spending to save money, but the person's financial crisis resulted from his loss of income, not his food budget. Detroit's compensation structure and pensions aren't generous by national standards. The problem is that the city has lost most of its population and tax base, while continuing to have to provide municipal services to the same geographic area.

Will might have taken note of the fact that Detroit's emergency manager recruited a new police chief by offering a 60% pay increase over the salary of the most recent police chief. Does Will think that the Republican-appointed emergency manager was squandering money, or does he accept the emergency manager's position that Detroit's pay scale was far too low to attract and retain a properly qualified pool of candidates?

The collapse of Detroit is not a recent phenomenon and while the 2008 financial crisis didn't help, I don't see that as a causative factor. Here, for example, is an income distribution map for Michigan from the year 2000 - Detroit sits as a light pink low income area right in the middle of the wealthiest part of the state.

As you note the exodus of Detroit's population began well before the riots, and caused the visible deterioration of many neighborhoods by the mid-1960's. The terrible urban planning decisions of the 1980's (demolition for freeway construction, demolition of the Poletown neighborhood) destroyed functional areas as well as many of the warehouse buildings that have contributed to redevelopment and gentrification in other major cities. (The comment that attempts to blame Detroit's decline on school integration efforts in the 1970's... they kind of missed the bus on that one.)

Detroit had an odd structure as a city, in that many of its major employers were somewhat indifferent to the city itself (think of GM's former headquarters in the New Center, built at a considerable distance from downtown, or the fact that many workers lived in the city while performing their work at plants that were outside of the city limits). The auto makers started to decentralize their plants in the 1920's, and focused their post-WWII plant construction on areas outside of the city, in locations like Plymouth, Wixom, Madison Heights, Livonia, Warren and Romulus). Also, Detroit is a sprawling city, distinguishing itself from more densely populated cities in that even during its peak it was possible for a worker to live in a single family dwelling. It was possible for workers to move out of Detroit into a nearby suburban community without any significant impact on their work or commute. The auto industry killed the city's streetcar system, and if you already had a car it makes little difference when you drive from your suburban home whether your commute is to the east or to the west.

I think the three things Detroit most needs, if it wants to become a viable city, are: 1. A working consolidation plan, to empty out mostly-abandoned neighborhoods such that the city doesn't have to spend a small fortune providing police, fire and utility services to those areas; 2. the demolition and environmental clean-up of long-abandoned buildings and industrial sites, creating brownfields that are ready for redevelopment; and 3. A revised tax structure that doesn't deter companies from locating in the city (e.g., reducing or eliminating the city income tax, reducing the very high property taxes that result from the very low property valuations). It will take a massive infusion of money, albeit a one-time expense, to consolidate Detroit and remove decrepit structures, and Detroit may also require a subsidy as it transitions to a development-friendly tax structure. Lingering problems within its school system will also need to be addressed.
...
written by ejs, August 01, 2013 1:47
As with all American social and economic pathologies, corporate "free trade" also played a prominent part in the demise of Detroit. Look at so many cities in what is disparagingly referred to as the "Rust Belt." It's the same story everywhere.
a lack of Shrubbery
written by Downpuppy, August 01, 2013 2:13
You forgot Poletown!
redefining poverty up...
written by pete, August 01, 2013 7:57
Yeah I read $40K as the new poverty by Dean and scratched my head. Compare this to $10 a day minimum wage in Bangkok, and get a taste of reality. Americans with these basic skills should not anticipate keeping this massive wage differential for long. I really think more Americans need to take real vacations, not to the all inclusives, but really get around, see the world, see the conditions folks are living in. Not just the starving ones that are on TV from time to time, but the workers. Then $40K + pensions and health would look outrageously good. A 50% decline in the dollar would hardly put a dent in the real wage differential. It is simply a mountainous disparity in capital to labor ratios, which will take many years to correct. There is essentially a global shortage of capital, now that trade is almost universal. Thus, the relative returns to capital globally will continue to be high for quite a while.
...
written by watermelonpunch, August 01, 2013 8:33
Something tells me it's no picnic working for the city of Detroit.
The Republic We Must Reclaim
written by Perplexed, August 01, 2013 11:55
http://www.ted.com/talks/ lawrence_lessig_we_the_people_and_the_republic_we_must_
reclaim.html
http://pandawill.livesexbook.c...lysis.html
written by http://pandawill.livesexbook.com/21683576/How-to-apperceive-tissot-outlet-Structural-Analysis.html, August 06, 2013 12:09
...
written by NWsteve, August 10, 2013 8:02
@ Last Mover:
One single "+" is clearly deficient for your contribution...
thank you!

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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