So Detroit- what went wrong?

[Lee-Lee]

I admit I haven't followed it much, other than to see the usuall mocking of the state of the city over the last decade or so.

How did it get that way? What did it?

I have a few right of center friends I enjoy some lively debate with over beers now and then, and they are big on the "decades of Democrats running the city" and "poster child for what unions do" memes. I am sure they are wrong, but haven't followed this story well enough to know the debate.

So what is the real cause of the problems that led to bankruptcy?

[Recursion]

1. I'll take "corruption and nepotism" for 200, Alex (nt)

[Puzzledtraveller]

24. I can go with that.

[Safetykitten]

2. Kicking the can down the roadism. Pensions, TBTF bank loans, Wall Street fuckery.

[Javaman]

3. So, weren't one of those republican "city managers" running the city?

correct me if I'm wrong.

[hack89]

4. They have lost 60% of their population since 1950

toss in corruption and poor financial management and you have a huge mess.

[MrScorpio]

5. Quite simply, Detroit and much of what was industrialized Michigan, is a testament...

A testament to the failure of American capitalism and the inadequacy of our political system to cope with it,

We've been discarded here... And it can happen to just about anywhere else in this country.

We are the canary in the coal mine.

[Cal Carpenter]

11. This^^

I think people find it easier to think that the city government was just fucked up - which it has been, at times, sure - but this is just a symptom caused by the economics of the place.

Others find it easier to think it was the fault of greedy unions. I won't elaborate on what I think about workers blaming other workers...Divide and conquer bullshit at its finest.

The only thing in your post I take exception with is calling it "American capitalism". It's just plain capitalism. This is what it does, this is the inevitable result. It cannot be tamed, not in a lasting way. And it is more powerful than any city government, or even a national one that tries to resist. Sure, some countries are a little less willing to colonize themselves the way we are now here, but they still colonize other parts of the world for resources, labor, and 'investment' resulting in the same thing. It is a global system. It goes beyond our borders. And it often comes from beyond our borders.

It is a danger for people to treat Detroit as some unique case study of 'doing it wrong'. This is happening in many places. Neglecting infrastructure while giving tax breaks to corporations which are using up and spitting out workforces and leaving the poorest people and most impotent governments to try to clean up the mess. Privatization of public resources. Here in SE Michigan we are ahead of the curve. Lucky us

Btw, Mr Scorpio, I always appreciate your insight on Detroit issues among other things, so thanks for taking the time to try to spread some truth.

[Javaman]

23. Two full generations from now, the US as it is today and the wreckage of what it once was

will be eliminated from the landscape and replaced by a completely brainwashed population who is ruled by and dictated to by the corporations who will run everything.

"this supreme court ruling is brought to you by, Target for all your law abiding needs".

[datasuspect]

25. Carls Jr., Fuck You, I'm Eating!

welcome to Costco, I love you.

[handmade34]

26. spot on n/t

[chimpymustgo]

29. Great comment, and many in this thread. Detroit is AMERICA.

K&R

[MrScorpio]

31. We are now are fascist/corporatist experimentation chamber

They've already destroyed any semblance of democratic/republicanism.

We're no longer citizens... We are now subjects under the control of what was once the Great Michigan Republican Party.

The Nerd and his cronies are all pissing on that legacy.

[Javaman]

32. We stopped being citizen when the started referring to us a consumers

and none of us made a peep.

[byeya]

38. + +

[Crepuscular]

6. Shrinking

population and tax base without a corresponding shrinkage in the cities capital outlays. Not to mention an ingrained culture of crime, corruption and nepotism.

[KharmaTrain]

7. Decades Of Decline...

...in short Detroit was a company town whose company left town. Large industries, most notably the auto industry, that once employed hundreds of thousands of employees have downscaled and outsourced...with few jobs replacing those blue collar jobs. Also, with the decline of the auto industry were the many companies that were associated with it. Entire neighborhoods became ghost towns with the city losing more and more revenue while urban decay began to set in. A once proud city lost a large percentage of its population and tax base while the city has had to take up a bigger and bigger load of social services. It was a downward spiral that began nearly 50 years ago and, sadly, there's no end in sight.

Detroit is not alone...urban decay is in every major American city and for similar reason...the loss of jobs and with it the decline in taxable revenues. The U.S. has changed from a manufacturing to information-based economy and left the cities behind...

[Igel]

21. Sure.

I grew up in a kind of isolated "suburb" outside Baltimore.

It suffered a decade or more of decline as the industry that sustained it slowly died. Any profits were diverted to keep the stock prices high or were union bait. After 20 years of almost no investment, when overseas imports kicked in--long before "free trade agreements"--the company was strapped. It fought with the unions to get money freed up for building a huge new plant on some of the company's unused territory. It would save some jobs by being vastly more productive at putting out massive amounts of product. It would have the same standards for quality.

The company misread the market. A couple of years later imports were ramping up with the fairly low-quality stuff that this company produced. Standards had increased so the specs for what clients wanted were much more precise. The huge, new plant couldn't keep up. It was undercut for low-mid quality stuff, it couldn't catch up for high-quality, precision stuff.

The town died. All doom and gloom. Suicides spiked. For a couple of years. The old working class mostly moved out (but not all). New people moved in. To some extent it became a bedroom community. But the location and land prices made it attractive for some entrepreneurs to move in--and there was no reason *not* to move there. It's better off now as a neighborhood than when it was maintained by a single industry. It's more diverse in many ways, better educated, and more resilient.

Detroit boomed because of one industry. That industry largely left. Nothing much replaced it. Population left, nobody new wanted to move in. Location was good. But there was no real draw and lots of reasons to avoid it.

[byeya]

40. The Bethlehem Steel plant at Sparrows Point did not have to be closed. It was closed because

management felt it get get a larger return on investment with cheap labor and management was miffed because they were threatened with not being able to continue to use the Chesapeake Bay as a dumping ground for their toxic waste.

This plant was once one of the largest in the world.

[Demoiselle]

43. What Kharma Train says....

[kwassa]

49. Agreed. Detroit is also a one-industry economy,

and the auto companies abandoned plants in Detroit for other locations around the US, killing the tax base, and throwing people out of work. The auto jobs themselves moved away, to other parts of the US, and many just moved abroad as the Japanese and other countries successfully marketed their cars here.

[Liberal_Stalwart71]

8. The state of Michigan (Governor Snyder) stripped Detroit of all its independent authority and

replaced their elected leaders with rightwing sycophants!!!

That just about sums up what happened.

[Bay Boy]

27. The ball was rolling long before

Snyder was in the game.

[geek tragedy]

9. Everything. nt

[reformist2]

10. Unionized Detroit abandoned by Big 3 for non-unionized locales in the South.

Also, you just don't need as many workers on the assembly lines anymore, no matter where the factory is.

[mstinamotorcity2]

12. Governor Rick Snyder and Dennis Archer and Kwame Kilpatrick and years of

mis-managed city funds. We have had a loss in population over several years. Those of us who have lived here most of our lives have watched our city go from having thriving businesses with owners of all cultural backgrounds. To a culture of well I will take a little bit off the top. And by the time it was time to take care of the city's needs there was little money to do so. Theft went all the way to the school cafeterias. When ever the citizens would bring in new people who would do the jobs with integrity, old school thieves would engineer to get them fired. Like former school superintendent, Debra McGriff, she came in and started finding the instances of theft in the school administration and was quickly ostracized. There was also a lack of vetting. They were stuck on political name recognition. No one gearing our young into city Government that are truly vested in the city. There are some who welcome the Federal Government, to oversee it in a well structured manner. Not with EFM. They are really ambulance chasers. We have a fire sale going on you wouldn't believe. But there is really no consideration for those that are left here meeting the challenges of our neighborhoods. They always show abandoned homes and blocks with low residency. They won't show you where it may be one house on the block and that homeowner keeps the whole block cut and free of debris. They never show the low income neighborhoods with cut grass, block clubs, citizen participation. No you will never see that. but it does exist. So what went wrong??? Everything.

[tavernier]

13. I spent the first 35 of my 66 years

in Michigan. I will probably get pummeled for this, but here it is: Detroit has always been considered the ghetto of the state. We would shop, vacation and visit anywhere else, but never Detroit. It was populated by people you didn't want to run into after dark and most of the city wasn't very pretty in the daylight. Crime was rampant.

Sure, there were a lot of suburbs where the wealthy lived and flourished, but they had their own malls and social clubs and rarely ventured into the city.

I think most big cities head in that direction after a while: New York , Chicago, Etc. - and it takes good management and a caring populace to put them back on the right track. I think Detroit sank because it had neither until far too late.

[whttevrr]

14. I think a better question would be what can be manufactured there?

There must be something...

Microchips?

Solar Panels?

Jeans?

Something... Imagine what our cities would be like if we spent all our "War Money" on developing manufacturing.

[Chisox08]

15. Outsoucrcing of good decent paying jobs.

Replacing those jobs with min. wage jobs. People leaving the city due to lack of jobs.

[KG]

16. 'reagan democrats'

[Oilwellian]

45. Best answer!

[JPZenger]

17. Factories moving to suburbs, school quality, corruption, corruption, corruption

The auto industry in particular needed large one floor complexes, and moved out to the suburbs. The quality of the US auto industry went down the toilet during the 1970s, opening up strong demand for imports and causing waves of massive layoffs. When the US auto industry did come back, it was heavily automated, and all of the new plants are in states with open shop laws for unions.

With any city, the quality of the public schools often is a detriment to attracting and keeping middle class families. It was probably worse in Detroit than in many other cities.

Massive corruption multiples all existing problems.

[last1standing]

18. I think there are a lot of correct answers in this thread that need to be combined.

I've lived in Metro-Detroit my entire life, 45 years now, and I've seen Detroit go from a city of over a million to the little over 500,000 living there today. As such, I think I can at least give a shallow answer to what went wrong.

First, Detroit's initial boom relied on one industry, automotive manufacturing. While much of the actual assembly line work was done in suburbs like Dearborn, Pontiac, and Hamtramck, the Big Three ruled the city for many years and used this influence to keep out any real alternative industry that could possibly usurp their place. They also forced out mass transit in their push to show Detroit as the model city for automobiles, hence "Motor City." As the Big Three became more complacent and the Reagan insane trade deals with Japan allowed more foreign cars into the US market (as well as allowing them to dump steel below cost), the jobs started to dry up.

Of course, the loss of jobs and tax revenue in the city meant less influence which was used by out-state legislators to cut funding for services such as schools, police, medical care, etc..., which is another reason Detroit has failed. There has always been an antagonistic relationship between Metro-Detroit and the rest of the state, and even though a majority lives in areas directly influenced by the city the majority of legislators come from districts that are either considered "out-state" or from republican havens such as Oakland County or the Grosse Pointes. These legislators have always had the knife in for Detroit and use it at every opportunity. Much of this hatred stems from "white-flight" which occurred in the late 60's through the 70's which led to Detroit having a population that is currently 90% African-American. I was just a kid during this time but I still remember the rampant racism where I lived. Black jokes were considered polite conversation and rarely objected to and this racism still lives on in the congressional halls of Lansing.

With declining funds for education, the population became less and less educated. Modern companies do not want to relocate to an area where the work force must be taught the very basics like how to read or add and subtract. Even when the schools did have massive budgets, the corrupt school board used the funds for personal gain. I wish I could say it was a few bad apples but it wasn't. The corruption was spread throughout the entire board with very few exceptions. Almost none of the money the schools received went to educating children.

And the corruption wasn't limited to the school board. Coleman Young started out as a decent mayor with a grand vision, unfortunately by the time he finally retired, his legacy was one of nepotism, fraud, race-baiting, and downright theft. I remember when he died, they found he had invested heavily in South African krugerrands during Aparthied - at the same time he was advocating the boycott. We did get a very good mayor, Dennis Archer, but he only stayed on for two terms before the infamous Kwame Kilpatrick was elected. Kilpatrick wanted to be the first 'gansta' mayor and that was probably his only successful venture before finally being convicted and sent to prison. His only accomplishment was in managing to take credit for the deals Archer had set up before leaving office. Now we have Dave Bing who has never had a chance to be a good, or bad, mayor because the funds aren't there to work with.

Racism, corruption, an uneducated population, and a single-industry economy that went south are the major reasons Detroit has declined through the years, not the unions. As has always been the case, the unions helped turn Detroit into one of the best places to live for many years by establishing wages, work hours and worker safety rules that created the middle class in America. Labor costs have never been the major detriment to building cost effective cars. The problem has always been a lack of innovation, short term profits over long term strategy, and ever increasing executive pay.

I hope this helped.

[DoBotherMe]

28. Fantastic summary!

kick!

[moondust]

35. Excellent.

"The problem has always been a lack of innovation, short term profits over long term strategy, and ever increasing executive pay."

I think a lot of people, myself included, saw management as the problem with the U.S. automotive industry, at least from the 80s into the 2000s, screwing Detroit and much of the Rust Belt through the "greed is good" Reagan/Rand era and beyond. Hopefully the management problem has been fixed with the bailout.

Good luck to you and Detroit for better days ahead!

[JaneyVee]

19. Destroying unions, outsourcing jobs, crushing wages.

[FarCenter]

20. Boom and bust

Large number of people moved to Detroit during the first half of the 20th century when the growing volume of car manufacturing required large numbers of employees doing relatively manual tasks. This reached a peak during WW II when Detroit was the "Arsenal of Democracy", and during the following years when pent up demand for cars was being satisfied.

After the car business moved out of the city to larger manufacturing spaces, and built more manufacturing and assembly plants across the country (e.g. St Louis, San Antonio, etc.), manufacturing in the City of Detroit declined. As economic stresses built, race relations deteriorated, businesses and whites left for the suburbs, and the population declined.

Detroit City government and expenditure did not decline as fast as the population and the tax base.

Hence it is now bankrupt.

Detroit is just a big example of the process that creates Ghost Towns.

America's Coolest Ghost Towns

Of course, gold (or lack thereof) isn’t the only reason towns have failed. “There are as many reasons for towns dying as there are towns,” says Gary Speck, a ghost town expert and author of books including Ghost Towns: Yesterday and Today. “Some towns were bypassed when highways were built or, in one-economy towns, when production decreased, like in logging camps. If the need for the town was gone, the town went bye-bye—unless it could adapt.”

[NCTraveler]

22. Complacency, corruption, crime.....

a generation of youth reaching adulthood who only know poverty. Really too many things to list. I would put complacency and corruption at the top of the list.

[gollygee]

30. Detroit is an industrial town in a post-industrial US

People in Detroit aren't more corrupt than people anywhere. Now Gov. Snyder has decided to go in with an axe and chop apart what's left so no one gets their already bargained for and agreed upon pensions. But his plan has been judged to be unconstitutional so we'll see what happens.

http://www.freep.com/article/20130719/NEWS06/307190075/Judge-says-Detroit-bankruptcy-filing-unconstitutional-must-withdrawn

LANSING — An Ingham County judge says Thursday's historic Detroit bankruptcy filing violates the Michigan Constitution and state law and must be withdrawn.

Gov. Rick Snyder and Detroit emergency manager Kevyn Orr must take no further actions that threaten to diminish the pension benefits of City of Detroit retirees, Judge Rosemarie Aquilina said today in a spate of orders arising from three separate lawsuits.

“I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” Aquilina said.

“Plaintiffs shouldn’t have been blindsided,” and “this process shouldn’t have been ignored.”

[ceonupe]

33. andthe courts and the law ignore them

the courts and law ignore this judge and ruling because this is federal.

I expect the feds to step in as there is no way Obama and CO let the retirees take such a huge bath.

[gollygee]

34. The AG says Snyder has to follow both the US and the MI constitution

not one or the other, but both. It's in the article.

[ceonupe]

37. Federal bankruptcy supercedes this order

Sorry to tell you but this order means nothing now that the federal bankruptcy case was filed. That means this order is great theater but carries zero weight. Heck even msnbc admitted it had zero effect.

I suspect that the unfunded liabilities in the system will take a huge write down unless the Feds step in to rescue but that opens a huge can of worms I don't belive the Feds want to touch and with the power of unions declining I don't know of unions have the political power to make such a push.

[Motown_Johnny]

39. Got a link?

I think you are wrong.

The state government can't violate the state's constitution. Just because they filed federal bankruptcy it doesn't mean that the suit needs to go forward. If the Michigan Supreme Court ends up deciding that this violates the Michigan Constitution, then it can't go forward.

[FarCenter]

42. The state can request that the filing be withdrawn, but it is up to the Federal court to dismiss it.

[Motown_Johnny]

50. and if the state can't pursue the case because it is declared unconstitutional

isn't it reasonable to assume the case would be dismissed?

[FarCenter]

52. The case could proceed with the creditors represented.

And the Federal judge can hold the state judge in contempt anyway.

Legal battle brews over Detroit bankruptcy filing

http://www.usatoday.com/story/news/nation/2013/07/19/detroit-bankruptcy-unconstitutional/2569481/

DETROIT -- While Detroit emergency manager Kevyn Orr on Friday was offering short-term reassurances to thousands of city pensioners whose benefits are in jeopardy, his lawyers were waging a whirlwind legal battle over the constitutionality of the bankruptcy filing that could land both sides before a federal judge early next week.

On Friday, Michigan Attorney General Bill Schuette said he will appeal an Ingham County judge's ruling that Detroit's bankruptcy filing must be withdrawn because it violates the Michigan Constitution and state law.

However, the order from Ingham County Circuit Judge Rosemarie Aquilina ultimately could have little effect because the bankruptcy case already was filed in federal court, and federal law generally trumps state law. The city filed a motion requesting to include the state as a party in the bankruptcy code's provisions that put on hold all lawsuits against the city, a clear attempt to fight the Ingham County ruling by preventing the state from being sued in similar fashion. The city is asking U.S. District Judge Steven Rhodes to hold a hearing on Tuesday, or earlier, to decide this and other matters.

University of Michigan law professor John Pottow said the issue could travel up the court system, all the way to the Michigan Supreme Court. Or it could be answered decisively and quickly in bankruptcy court, he said.

"There's nothing that precludes a federal judge from adjudicating the constitutionality of the Michigan statute," Pottow said. "The bankruptcy judge can interpret Michigan law."

What we know for sure is that a lot of lawyers will spend a great number of billable hours on this case in the next years.

[Motown_Johnny]

53. We shall see..

with any luck a Constitutional issue will trump a civil suit.

[FarCenter]

54. The US Constitution grants Congress the right implement bankruptcy law

Bankruptcy in the United States is governed under the United States Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Congress has exercised this authority several times since 1801, most recently by adopting the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and commonly referred to as the "Bankruptcy Code" ("Code&quot . The Code has been amended several times since, with the most significant recent changes enacted in 2005 through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Some law relevant to bankruptcy is found in other parts of the United States Code. For example, bankruptcy crimes are found in Title 18 of the United States Code (Crimes). Tax implications of bankruptcy are found in Title 26 of the United States Code (Internal Revenue Code), and the creation and jurisdiction of bankruptcy courts are found in Title 28 of the United States Code (Judiciary and Judicial procedure).

While bankruptcy cases are filed in United States Bankruptcy Court (units[1] of the United States District Courts), and federal law governs procedure in bankruptcy cases, state laws are often applied when determining property rights. For example, law governing the validity of liens or rules protecting certain property from creditors (known as exemptions), may derive from state law or federal law. Because state law plays a major role in many bankruptcy cases, it is often unwise to generalize some bankruptcy issues across state lines.

http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States

[Motown_Johnny]

55. But the MI State constitution does not give the Governor the ability

to bring the suit.


We recently had the Prop. 8 decision from the Federal Supreme Court. They found that the plaintiff did not have standing to bring the case. A similar decision is possible here.

[FarCenter]

56. The case has already been filed

Judge Steven Rhodes Chosen to Handle Detroit Chapter 9 Case

Judge Rhodes, who was poised to retire at the end of the year, has been put in charge of the 686,000-resident city’s case after handling one of the state’s rare cases of Chapter 9, which is used by cities, counties and municipal authorities.

Judge Rhodes, 64 years old, was tapped to handle the massive Chapter 9 case by Judge Alice M. Batchelder, the chief judge of the U.S. Court of Appeals for the Sixth Circuit. In court papers, she said she chose Judge Rhodes after “having reviewed the levels of experience and the respective caseloads of the judges” within the Eastern District.

In a letter filed with the U.S. Bankruptcy Court in Detroit, fellow Bankruptcy Judge Phillip Shefferly called his colleague “one of the most accomplished bankruptcy judges in the country.”

Judge Rhodes “is very knowledgeable about the relationship of federal bankruptcy law to state constitutional and other state law, which will likely be an important issue in this case,” he wrote.

Another federal judge wrote that Judge Rhodes has “outstanding administrative and management skills, which of course will be necessary in handling a case of this magnitude.”

http://blogs.wsj.com/law/2013/07/19/judge-steven-rhodes-chosen-to-handle-detroit-chapter-9-case/

[gollygee]

46. I am saying what the Republican AG who represents Snyder said to the paper

and the Republican AG does not have an motivation to make things harder for Snyder and is better educated about this than you.

[Crepuscular]

36. Would set an interesting precedent

While Detroit is one of the worst financial situations, it's by no means the only US city in dire straits financially. US cities have an estimated two trillion in unfunded pension liabilities, no way the Federal Government could bail out all of them, so what makes Detroit special?

[PETRUS]

44. $2 trillion over what time period?

20 or 30 years? Which makes it what, 4//10ths to 6/10ths of a percentage of GDP? Big freakin' deal. Give the people their damn compensation.

[DCBob]

41. The auto industry built Detroit...

and then took it down.

[MountainLaurel]

47. Book recommendation

Detroit: An American Autopsy. My boss says that if you want to see where the US is going with the death of the middle class, it all started with Detroit, and this book will show you.

[Lee-Lee]

48. Thanks folks. I learned a lot n/t

[AnotherMcIntosh]

51. Years of nation-wide support by politicians for let's-send-manufacturing-jobs-to-foreign-countries

"free-trade" agreements.

The DOW is not the economy for Detroit or any other American city that has lost its economic base.

Does your city have any kind of economic base? Just be patient. Just wait until the latest "free-trade" agreement (NAFTA on steriods) is signed.