Humiliating Detroit

Detroit Sign.jpg

As I’ve noted before, Detroit is all too frequently just a blank screen onto which people project their own personal bogeymen. So liberals see in Detroit racism gone wild, America’s comeuppance for its love affair with the automobile, and corporate greed. Conservatives see the ultimate end result of unions and where liberalism will take the US as a whole if it isn’t stopped.

There’s a bit of truth in all of these. The left would have us believe that having Democrats in charge of the city for so long had nothing to do with where it is today. But they reality is, they’ve got to own their piece of blame. Detroit certainly hasn’t been a bastion of conservative policy, that’s for sure.

On the other hand, Republicans should be aware that Detroit’s decline has been ongoing for quite a while, and there were definitely some mayors with R’s by their name who were in on the game. And economic forces shaped Detroit far more than they’d like to admit.

But ultimately what we see today is the left furiously spinning about Detroit (for example, see the book “Detroit: A Biography”) and the right trying to use it as a poster child for everything they hate. Yet on the right I can’t help but observe a particularly mean streak in the commentary, one that’s positively gleeful about Detroit’s demise. It’s as if, not content with letting the results speak for themselves about what happened under Democratic rule, the right seems determined to humiliate Detroit, reveling in its pain. It’s schadenfreude on steroids.

Let me highlight this. First Kurt Schlichter says that “Conservatives Should Point and Laugh As Detroit Dies.”

The agonizing death of Detroit is cause for celebration. It’s the first of the liberal-run big cities and states to fall, and we should welcome its collapse with glee.

Yeah, liberals, eventually you do run out of other people’s money.

The blue state model is a terminal disease, and Detroit is its poster child. Only this is one telethon where we should pledge that we won’t pay a single dime to keep the progressive party going a single minute longer.

Detroit represents the epitome of the blue state, Democrat machine liberalism that Barack Obama represents. Well, not one damn cent for Barry’s Kids.

Don’t hold back, tell us how you really feel. John Fund at the National Review is nowhere near vicious, but he does paint a target on Detroit’s art, basically arguing that the city should be forced to sell off its assets to satisfy creditors:

What no one wants to do, apparently, is sell the city’s assets. The city has largely unused parks and waterfront property that could be opened to economic development. The Detroit Historical Museum has a collection of 62 vehicles, including an 1870 Phaeton carriage and John Dodge’s 1919 coupe, that is worth millions. But the biggest sacred cow is the Detroit Institute of Art (DIA), one of the nation’s oldest and most valuable art museums. It has pieces by Vincent van Gogh, Henri Matisse, Andy Warhol, and Rembrandt. The Institute also owns William Randolph Hearst’s armor collection and the original puppet from the children’s TV show Howdy Doody.

The Detroit Free Press asked New York and Michigan art dealers to evaluate just a few of the 60,000 items in the Institute’s collection. The experts said the 38 pieces they looked over would fetch a minimum of $2.5 billion on the market, with each of several pieces worth $100 million or more. That would go a long way toward relieving the city’s long-term debt burden of $17 billion.

Let me get this straight. Instead of Detroit being $17 billion in debt, let’s sell off everything left that makes Detroit viable and end up still $14.5 billion in debt and still bankrupt. (Though only a few items were evaluated, they were clearly the handful of most valuable ones. Howdy Doody ain’t Van Gogh). Oh, yeah, that will help – if your definition of help is bailing out banks who loaned money to a city everyone has known is a basket case for many, many years. If those banks expected the art to be sold, they should have made the city pledge it as collateral.

Fund is right that Detroit does need to make tough choices about assets. I’ve made that argument myself. But the goal should be to create at a minimum a sustainably functional government and ensure the bankruptcy of the city of Detroit doesn’t undermine the broader region and state. Selling off secondary assets (and yes, Howdy Doody may be a good candidate) is worth pursuing if there’s cost/benefit. But saying that Detroit should sell off its regional cultural crown jewels is little more than an attempt to inflict counter-productive penance, to force humiliation upon the city. And it would also be completely unlike say a corporate Chapter 11 restructuring, which is designed to produce a viable firm on the other end and thus the most valuable assets are often retained.

Of course, Detroit’s own residents make it easy to act this way. A group of protestors referred to the bankruptcy filing as a “declaration of war,” saying that outsiders aren’t entitled to any say or even get the money back they loaned the the city, saying instead “the banks owe us.”

Still, have some compassion. It’s understandable Detroit’s residents are in pain and lashing out. Clearly they have tough medicine they haven’t reconciled themselves to taking. But there are better ways to respond to it. Andrew Biggs at the American Enterprise Institute took a more moderate path, suggesting that while a plain reading of Michigan’s constitution suggests it wouldn’t protect pensions in bankruptcy, there’s still reason to give pensioners some preferential treatment (thought not being made 100% whole, saying:

Does this mean that retired city workers should take the same haircut as municipal bond holders? I really don’t think so. Anyone loaning money to the city of Detroit was knowingly taking the risk that the city might not repay; that’s why bonds issued by Detroit paid a higher yield than Treasury securities, which are assumed to be riskless. As with any risk investment, sometimes it pays off, sometimes it doesn’t.

City employees, on the other hand, exchanged services today — along with employee contributions to their pension plan — for benefits to be delivered in the future. Sure, employees should consider the financial stability of their employer in its ability to deliver what is promised, but city employees seem to be a qualitatively different group than municipal bond holders.

This seems more rational type analysis and isn’t rooted in mean-spiritedness.

Though eager to point out how Democratic policies and corrupt Democratic politicians helped propel Detroit headlong in bankruptcy (which is certainly a valid political claim to make), having a vengeful streak only shows Republicans behaving in a ways that’s as hard hearted as Democrats say they are.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile.


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Texas, and the Republican

Texas, and the Republican Governor's Association might be able to save the state of California and Detroit, indirectly.

If they continue to frame the successes of their state, as not being "California," in every appearance, every speech, even if it's just a throwaway line mocking the state.

Our policies work, and 30 states trust us with the governors mansions, and 27 trust us with both state houses. So if we wage in an indirect war, where we always take every opportunity, to knock Californiaism and Detroitism as being essentially "Leftism," at the state and local level, and constantly say to our constituents that we don't want to be like those Leftists in California or Detroit, then we can milk the demise of California and Detroit to our advantage, while knocking the faith that people have in both the California/Detroit model.

If we can frame our case in that manner, and make a meaningful reach out to Mexicans and Blacks and Gays and Women and get few on board with our message, then they will resonate better with friends and family in California, then the irrelevant GOP marketing machine ever could...

It would be a cold war, waged by proxy, to discredit a failed idea. And it can work. If we we see this economic failure for the gold mine that it is, and milk for all its worth.

We have 50 states, with 50 chances to experiment with 50 different forms of governance, economic models, and ways of life. We have to encourage states and municipalities to jump ship while they still can, by drawing the clear distinctions between their current actions, and the behaviors that Lead Detroit to its current fate, and is leading California to a similar, miserable fate. This doesn't mean that the Conservative model is necessarily the best model out there. I see a healthy cultural/social/economic/government mix between Washington State, Texas, Virginia, and North Carolina as a healthy model to move forward on, but it'll vary from region to region, state to state, city to city.

You can't fight faith with facts.

Great article Aaron, and I partially agree.

You have priestly interpretors such as Krugman, coming out, blaming California's decline on Conservatives and Conservative positions. You have Detroit, which votes 97% of the time for Democrats. How are we to fight their faith in Leftism, with facts Aaron? You show them their ways do not work, and it only hardens them into ascribing the motives of the devil to you: "You support the greedy banks," or "You are on someone's payroll." So it is pointless to continue to show them statistics, and case studies, and facts, because what you are essentially doing, is telling a religious leftist, that Leftism is not only unworkable, but that faith in its ability to create a good society is unmerited, and that is complete heresy. The Left has faith in its policies, so much as to lie outright that California is doing just fine, as Paul Krugman and California state economists have done in the past, lest a believer in the cause loses faith.

To understand the psychology behind this, let us visit the Leftist POV: "If Leftism fails, it isn't that Leftism is not workable, but rather, owes its failure entirely to human error and human implementation. So the Leftist impulse is on display in California, as it is in Detroit: "Let's move further towards equality, by doubling down with a more ideologically pure policy, of taxing the wealthy, the middle class, and the job-creators, increasing state regulations as to extend the reach of the state into every facet of life, and, increasing the amount we put into public employee pensions while decreasing their accountability to the taxpayers who pay them. If there's a problem, it is the job of the State, not the individual, to address it."

The problem with Detroit, as is the problem with California, is that it is part of a larger narrative war to prove, or disprove, the policies of either side. The reason we then crap on California, as we do on Detroit, is to undermine people's faith in Leftist Urbanist policies, and to keep it, and the narrative they are propagating, from the NYTimes to Academia, from being idealized by Municipalities and State Governments, who don't want to become insolvent, corrupt, and dysfunctional.Which I agree, is not healthy. All our criticism does is destroy the morale, when civilization depends on that human ingredient of hope. At the same time, you can't fight faith with facts. You can only undermine faith with doubt. The trick is to try and not lose your humanity in the process, but how does one do that?

I don't like the mean spiritedness that some on the conservative end are showing towards Detroit, even if it is more so attacking the "idea" of Detroit, and it's ruling regime who peddle that ideological narrative, then it is the actual people. But you shut people down from hearing what may be legitimate concerns, if it is communicated in an inhumane or hateful tone. Which I am fully guilty of, I'm not coming from a position of being holier then thou. I think Dennis Prager, David Brooks, and Robert Kagan do a pretty good job of dealing with ideologues on the Left, & have a pretty huge following from people who oppose them. Maybe they might have a thing or two to lend to the conversation, on how we're to go about destroying the Leftist narrative, undermining their faith, and yet not be "mean" like the routine hatred that emanates from the Left on a daily basis.

Leftism from scratch

So here is a thought experiment. Let's say we were to create Detroit from scratch and we are going to look at two models, an individual liberty based political system with a capitalist, free market economic system vs. a leftist/socialist political system with a state controlled command economy.

The socialist system cannot work from scratch because it doesn't create wealth, it just distributes it. So you would have nothing more than a commune with no economic growth. Statism / socialism requires a capitalist system to "go first" so it has an economic base to extract from and redistribute. In world history, most socialist forms of government have followed a capitalist system for this reason.

This why you see so much argumentation about Federal bailouts for Detroit either in the form of cash or new debt. It is presented as a morality play (people don't care about Detroit), but really it is that people don't trust the current corrupt governance model. This model can't survive on its own and now requires someone else's money to provide the (temporary) fix. Detroit needs to extract resources from somewhere else because there is no economic growth. And if you provide the bailout, then Detroit will just go along doing the same thing with ultimately the same result. Change the form of governance, change the system first, and economic growth could reduce (probably not eliminate) the need for bailouts and it would attract investment capital on its own. Capital is agnostic. Capital goes where it is wanted and where it sees opportunity for a return.

Actually, I think you are right

M & C

I think you are right that some bailout is necessary, I just want it conditioned upon change in form of governance (not just people). Otherwise you throw a lifeline to bad governance, corruption and encourage moral hazard.

Part of the moral hazard problem and what delayed the inevitable for so long is that the bond markets implicitly underwrote a bailout when lending more money to a broke municipality. This is why I think the bankruptcy is so important and why it is important to minimize the bailouts, as the bond markets and the unions will get the message that the backstop is no longer there.

I emphasize corruption a lot because I think, at the philosophical level, leftists believe they are "for the people" but at the operational level, it results in corruption, rule by force, and actual adverse impacts to the citizeny that continues to vote for these politicans. I think the corruption in Detroit is just not commented upon enough, it has been really bad. (Simple example, did you know that a majority of contracts in the transportation department had to be run by City Council before approval? Now why would that be? Council members wanted to influence who gets the contracts?)

I am with you 65-70% on your

I am with you 65-70% on your notion that Detroit does not need a bailout. The system of governance can literally transform things for the better, over night.

But I still think that the long road to recovery, by going such a route, will work against the city, if it doesn't have an infusion of cash to begin providing much needed services until the private sector can pick up the slack.

I know I'm sounding like a leftie here, but I don't have faith in the free market to make all the necessary reform to give the city some stability, and there is just no way the private sector will ever be able to fully pick up, and attract enough investment from abroad, considering all of the other issues facing the city, to bring in enough businesses back to the state. Moving to Detroit is buying into its problems, and picking up the tab for its past sins.

True. But the Left would


But the Left would simply throw out SF and NYC, alongside Sweden, Japan, and Germany, as proof that their ways work on the local and national levels, but it is odd... they never do any deeper inquiry as to why those places work.

NYC and SF are the Wallstreets of America, so that is unfair to credit Leftism with the advances of the wealthy in Finance, whose wealth that is largely made on the global market can insulate them against costly progressive policies as you see in the SF Bay Area.

Sweden, Japan, and Germany, have Universal Healthcare, because the American military makes it possible for them to do so. If there was no American military presence, with Moscow throwing its weight around its former colonies, and former potential colonies, and it will cause a dramatic % increase in military spending that will bankrupt the EU, let alone destroy it's entire welfare system. They couldn't afford a few air-craft carriers... or a fleet of F-16's, or a missile defense system... or a standing military... without cutting subsidizes for healthcare, transportation, infrastructure, welfare, education, and everything else that makes the "European experiment that never was," possible.

Noting that they will throw out examples that they do not fully understand themselves, like the ones mentioned above, and then insulate themselves against hearing out answers they don't agree with, or further examinations of what exactly makes Germany or San Francisco possible, it has to be noted that their beliefs is faith in the unproven/unseen is largely the culprit here. And with such destructive faith and adherence to seeing equality lived out in society, they will be ready to sacrifice entire countries, and the livelihoods of people, to make this corrosive religious tenant a reality. Therefore, policy prescriptions are pointless. 100% pointless. You are dealing with religious ideologues. You have to destroy their faith by planting seeds of doubt. Now that we know the "Why" of the situation, the difficulty becomes the "How." Maybe infographics will help. Maybe changing our language and adopting the language of the left will help. Who knows. But it is mission-critical for us to figure it out.

The author starts by telling

The author starts by telling us both the let and right get it wrong.
Then he goes to great lengths to show how conservatives are cold mean spirited. He then has to mention that some republicans were mayor of the city. How about in the last 50 freaking years. For Christ sake , get a clue. This is exclusively at the hands of the left. But no, let's write a piece to "share the blame." Well, you might fool the low information readers but you won't convince anyone else, especially those of us who live in Michigan. Nice try at rewriting history.

What I don't understand

What I don't understand about Renn's piece is that he doesn't mention in his article that the sense of "hate" he may be getting from the Right on this particular issue is what we on the Right get daily from the Left. We are mocked, dismissed, and described... but never answered.

    We are greedy.
    We are Selfish.
    We are mean.
    We are Racist.
    We are sexist.
    We are bigots.
    We are idiots.
    We are misinformed.
    We are xenophobes.
    We love Saudi Oil & big SUV's.
    We love to fence ourselves off from others in society.
    We love to poison the water & air.
    We hate animals.
    We hate women.
    We hate progress.
    We are anti-science.
    We are anti-poor people.
    We are anti-hungry people.
    We are closed-minded.
    We are angry.
    We only take the stupid positions we do to play politics.

The charges against Conservatives are endless, and routine in their frequency. Yet we attack Leftist principles, the idea of Detroit, it's city hall's history of recklessness, selfish unions, and the citizens who voted for their demise, and that is considered "mean?" Rarely do you ever see people on the Right attack individuals or the personhood of an individual. We might think that a person is wrong... or that they are deluding themselves... but we never assess their motives and ascribe bad character and evil intentions behind their actions.

If Renn is playing a game of moral equivalents here, then that is understandable, but not respectable. And in any event, I think he is reacting more so emotionally then anything else.

And as an unfortunate boilerplate that I have to throw out there in case I am misread: I don't mind criticism, I have been the recipient of a good many over the years, and I have a healthy serving to throw at the hypocrisy and idiocy of many on the Right. But I don't quite follow this opinion of his. I wish he'd write a part 2.

How about a grand experiment?


Good points that needed to be made. Fixing Detroit should not result in the humiliation of its citizens or punishing the current municipal government, rather the focus should be on what policy prescriptions truly result in turning this around. I also don't think this is a left vs. right thing, although the blue model which has definitely failed is more of a leftist worldview. I believe it is a corrupt "governing class" vs. its citizenry which is becoming a problem in varying degrees around the country. While there are some on the right that appear vengeful, I would submit that for many people it is a sense of "relief" that finally the Detroit blue model has hit the endgame that has been warned about for years with nobody listening. In other words, it is finally broken enough that there will be less organized (and corrupted?) political resistance to doing what need to be done to fix the City.

As for partial asset sales, I agree that it doesn't make a lot of sense to do this. It is only a partial solution to the financial problem and still doesn't address the governance problem and in fact may prolong the existing corruption. However, there are some enterprising people that are willing to take a chance on Detroit in total without hurting the citizenry and they are putting their money where there mouth is. One investment firm is willing to purchase the City of Detroit for the full $18.5B, fully funding the pensions and retiring all debts, but only under one condition.....allow them to govern the City with a "red model" or constitutionally limited and free market oriented model. Wouldn't it be great to try this out?

Just what I was hoping...!

Thank you very much indeed for that information.

I said these words a few days ago:

".....Detroit would become a better place to live, very rapidly, if the whole place was simply sold off, lock stock and barrel, to some uber-capitalist. People with an ideological objection to capitalism won't ever understand why, and won't ever let anything like it happen.

Don't get me wrong - I hate crony capitalism and rent seeking; it is Statists who never understand how they are played for useful idiots by crony capitalists. Every bunch of utopian bureaucratic central "planners" of a city's future, play straight into the hands of rent-seeking interests so fast that it would actually be preferable to just sell the whole place to one or more capitalists and let them run it, so that at least everyone knows where they stand.

It is ironic that people with tremendous faith in planning and government, lament "flight", yet cannot see that it is "flight" that would keep a capitalist "owner" HONEST. And there is a world of difference between the extraction of unearned economic rent, and the creation of amenity, which every good large developer of new urban centres understands very well; viz Bellevue in Seattle or "The Woodlands" near Houston.

Throw the politics of envy in the dustbin and hand Detroit over to some visionary capitalists......"