Come for the Politics, Stay for the Pathologies

Sunday, September 12, 2010

So, Mr. President, Who Do You Think Destroyed Detroit?

 DetroitSkylineatDusk Dusk descends on Detroit: skyline from the Ontario side

President Obama officially fired the starting gun at his Labor Day rally: “We didn’t become the most powerful nation in the world by just rewarding greed and recklessness,”  he told an assembly of AFL-CIO affiliates in Milwaukee.  Thus began the great American class war.

Next, in Cleveland on Wednesday, he drew clear battle lines, accusing the “haves” of  “cutting working class folks like you loose to fend for yourselves…”  as if that’s a bad thing. The speech was an eloquent turn of rhetoric: the sort of thing Obama is known for. The sort of thing that got him elected.

The villains in Obama’s narrative are the usual suspects: bankers, insurance companies, wealthy individuals and those he refers to as  “special interests.” These, we are to assume, are industry backed lobbyists. As distinguished from the truly special interests who weigh in on the right side of the issues: unions, trial lawyers, and well-meaning social services groups like ACORN  and Planned Parenthood - all of whom have their own well funded, powerful lobbies. Again, the President has pitched this as a conflict between the maligned “special interests” and  the middle-class – who are represented by the “good” special interests.

The overall tone of both speeches was that Republicans – in their greed and “recklessness” have destroyed the economy. I’d like to test the President’s  hypothesis that it is wealthy individuals, corporations and corporate interests who have destroyed the middle class, a group theoretically created by the labor movement.

Let’s use Detroit as our test case, since it has had its share of wealthy individuals, corporations and special interest groups over time. And it once had a prosperous middle-class, although that socio-economic demographic has all but disappeared from inside the city borders. So it presents the perfect Petri dish of cultures for this experiment.

Let’s see if we can ascertain who ruined Detroit, and is therefore responsible for the demise of the middle-class.


Let’s start with the schools, since this is something valued most highly by the middle-class. Who ruined the Detroit public school system? Was it GM, Chrysler, and Ford? I don’t see how we can hold the automakers responsible for the fact that barely 3% of Detroit’s 4th graders meet national math standards. Especially since they have all paid billions of dollars into the state and city treasuries by way of income taxes and fees that fund the schools. Nor are they the ones who determined how the money is allocated, the curriculum developed or the teachers hired.

That would be the purview of the Detroit Board of Education:  elected, tax-paid positions. The DBE is the incompetent and corrupt body that created and nurtured a school system with massive administrative overheads that was and still is ill-managed to the point of institutionalized fraud and corruption. The net result of this morass is a $332 million deficit –  up more than $100 million from the previous year and projected to continue through 2014 - and an embarrassing high school graduation rate of barely 25%.

Complicit with the Detroit Public School Board: the Detroit Teachers’ Union. Their demands for constantly escalating salaries and benefits despite continually decreasing enrollment and funding has fueled the deficit and apparently done nothing to educate the children of the city.


And who, exactly, ruined the infrastructure in Detroit? Was it Detroit Edison, MichCon and Ameritech Michigan? No, they are the ones who have collectively invested billions of dollars repairing and replacing lines, pipes and cables in the city, while simultaneously incurring massive write-offs each year for all the people in Detroit who take their services and don’t pay for them. Probably because they don’t have jobs.

It sure wasn’t rich businessman Mike Illitch, who negotiated to build the Joe Lewis Arena for the Detroit Red Wings and Comerica Park for the Detroit Tigers. Nor was it Bill Ford, heir to the Ford fortune, who worked to build Ford Field and bring the Detroit Lions back to the city of Detroit from the suburbs.

Is it possible that the crumbling houses, neighborhoods and streets in the city are more the result of years of local liberal governmental policies? Detroit has not had a Republican mayor since 1961 so liberals have pretty much ruled the roost here for 50 years. They are the ones who have managed the city’s resources for half a century now. Their ideas and programs have been developed by people who think it better to give people a fish than a fishing pole. Now they want a frying pan, and the city can’t even afford the fish anymore.


What about the City’s image? Who ruined that? Was it the philanthropic gifts of the Fords, Kresges, Dodges? The Manoogians, Fishers, Glancys? The Taubman’s and Skillmans? Possibly the Karmanos’, Illitches, and VanElslanders? Unlikely. Equally unlikely: any of the other wealthy philanthropists who have been pouring money into the city’s beleaguered cultural institutions and social programs for decades. Those sorts of gifts tend to build a city’s image up, not tear it down.

More likely the blame should be placed on those who have been tearing the city apart by waging an endless and bitter race and class war. Elected officials in this city have been running the table with that game since the inception of the Coleman Young administration in 1973. (Current Mayor Dave Bing is exempted. He’s not cut from that cloth, but since it  hangs over the city like a pall, its menace is ever present. God help him.)

Decades of the worst sort of cronyism has not only crippled the administrative functions of the city, it has crippled the city itself. The letting of contracts to inept companies who provide inferior work and inferior products while the taxpayers are charged top dollar has helped turn the city into a junkyard. City officials keep getting convicted of fraud, graft, corruption and sent to jail. But up until now, the people of Detroit never demanded more, assuming that the decrepit city was just the result of white apathy and neglect.

Within the past 2 years both then mayor Kwame Kilpatrick, and City Councilman Monica Conners (Rep. John Conyers wife) have been convicted of felonies and sentenced to jail. Mayor Bing, previously a successful businessman and former Detroit Piston, was put in office by a special election, and won the general election last November with 58% of the vote, despite the fact his opponent had the backing of most of the unions. So maybe the electorate has finally caught on.

The fact that elected officials have for decades been mismanaging federal, state and local funds by channeling lucrative contracts for inferior or non-existent services to cronies, relatives and crooks, might explain partially why Detroit lies in shambles. Which in turn might have something to do with Detroit’s “image” problem.

So might the parade of public “servants” who have been living large on the public dime for decades now. Talk about Nero fiddling. While these people traipsed all over the world on “official” business they did nothing to improve schools, adequately maintain infrastructure, control crime, gangs and drugs, or fix the crumbling neighborhoods and dysfunctional environments that spawn thugs, thieves, druggies and hooligans.

So unless you include elected and appointed city officials in the “special interests” group that the President disdains, I don’t think you can pin the image thing on the special interest groups either.

 Antagonistic Racial Atmosphere

Who created the antagonistic racial atmosphere in Detroit that disenfranchised white business owners and sent them fleeing in droves from the city? Was that GM? Chrysler? Ford? National Bank of Detroit? Doubtful; corporations have walked on eggshells around the race issue since the 70’s, for fear of being sued by employees, suppliers and/or the government (or worse, accused of being racist). No, the distinction of having made Detroit a glowing hotbed of racial animus and strife can best be laid at the feet of the late, honorable Coleman A. Young, Mayor of Detroit from 1973-93. He was race-baiting while Jesse Jackson was still coloring the bands of his Rainbow Coalition.

In addition to drawing the racial line in the sand at 8 Mile Road, the border between Detroit and the suburbs, Young created and left behind a legion of race-obsessed elected officials, administrators and minor functionaries with no aptitude, skill, or inclination for fiscal management. The Coleman Young machine was a deep pocketed political machine whose funding came from the same sources as all such machines:  grateful contractors (graft), local businesses (extortion) and unions (blind allegiance). It’s tentacles spread to incorporate the workings of  Wayne County government, whose geographic footprint includes the city of Detroit, but extends greatly beyond its borders. Through adoption, the Democratic machine was able to extend its reach to other locales that had more plums to pluck and apples to shake down. Although modified over time, the machine and legacy of corruption survives to this day. 

Not surprisingly, the downward spiral of  population loss continued:  first it was white flight, and later, black middle-class flight  for the same reasons: crappy schools, crime and high taxes.  There is now a negligible middle-class left to pin Detroit’s future on. Those left are there because they can’t afford to leave.

So now talk turns to “urban farming” as if taking a giant step backwards is somehow progress –as if it will somehow make the city viable again.

Still, the game never changes: there is a perpetual undercurrent of race-based antagonism between city and suburbs. The outward signs are mostly lobbed from the Detroit side. Everyone outside the city is afraid of being called a racist or an Uncle Tom. So when the ‘City’ sits at the table, it is poised to throw down the race card – which is trump - whenever it doesn’t like the hand it gets. The suburbs occupy all other seats at the table, but remain poised and ready to fold at the least provocation. As long as these are the rules, nobody ever really gets a winning hand.

So again, I don’t think it’s the big corporations, the wealthy individuals or the special interest groups who created this toxic atmosphere of racial animosity in Detroit. Unless you consider the Race Industry to be a special interest.


What about the decline of investment in Detroit - who “ruined” that vital aspect of life in Detroit over the years? Was it Michigan National Bank?  National Bank of Detroit? Manufacturers Bank? Comerica Bank? Did people, businesses and investment dollars flee Detroit because banks wouldn’t invest in the city? Or was it the businesses and individuals who were reluctant to invest in a declining urban area that showed no plan or commitment to do what was necessary to reverse the malignant decline? Hint: businesses go where there are prospects for making a return on their investments. It seems likely businesses shunned Detroit because the market was perpetually shrinking as more and more people of all races left town; again, due to grossly inferior schools, high income taxes and antagonistic business atmosphere (taxes, fees, permitting requirements and red tape). A chicken and egg situation perhaps, but someone killed the chicken.

I can tell you whose fault it definitely was not: wealthy, greedy Henry Ford II. Following Detroit’s devastating race riots in 1967 he founded Detroit Renaissance, a private non-profit development corporation, in order to build the Renaissance Center. It was his attempt to help rebuild and heal the city.

Although he did “recklessly” commit his own family’s money via the Ford Motor Company to fund its building, because neither it’s risk profile nor ROI met the requirements for traditional financing. So I suppose it could have been the Duce’s fault.


Prohibitively High Costs of Doing Business

Who made the cost of doing business in Detroit so disproportionately high? It is more expensive to insure autos, homes and businesses in Detroit. That’s because the rate of theft, fire and vandalism is higher. Insurance companies, not wishing to become non-competitive in other markets, charge clients accordingly. It’s the price you pay for living in a crime infested city. But again, the crime is due, in no small part, to the corruption and waste of a city administration that is more interested in influence peddling and pandering than in controlling crime and making the streets safe.

I don’t believe that it was the maligned Autos, Utilities or Banks that made business and personal income taxes so high in Detroit. Again, they’re the ones who pay the freight, not the ones who set the rates.

So in summary Mr. President, your economic theory doesn’t hold up here in Detroit, I’m not sure I can sign onto your crusade against wealthy individuals, corporations or even special interests – unless, like I said before, you want to include elected officials and big Unions in that last category.

Detroit’s demise is not due to GM, Ford, Chrysler, Michigan National Bank, Manufacturers Bank, National Bank of Detroit, Comerica Bank, Detroit Edison, MichCon, Ameritech Michigan, Blue Cross/Blue Shield of Michigan, Compuware, Campbell-Ewald, et al. In fact, I heard that your Car Czar forbade GM’s relocation from the downtown Renaissance Center to their Warren headquarters, because the loss of that tax base would have devastated Detroit (although it would have saved GM hundreds of millions of dollars annually). I would respectfully request that you go think about this concept for awhile, before launching your next anti-big business, anti-rich guy invective.

I believe I’ve acquitted the usual suspects of first degree murder in Detroit. Detroit’s demise was not due to rich people, big corporations or any of your alluded to “special interests.” What killed Detroit was lousy social policies, local government malfeasance and unions –all special interests, but not the ones you had in mind no doubt.

It would be helpful if you and the rest of the Democrats would stop thinking about the economy as a finite pie. It’s not; just because someone gets a big slice doesn’t mean that someone else must go hungry. Wealth is not a zero sum game. It’s created by something not generally associated with government:  adding value. Something not covered much in law school, community organizing, or, obviously, Washington.


nb: Of all the community based banks mentioned above, only Comerica survives. The rest are either defunct or have been swallowed by larger financial entities.

You may be interested in  some of Dewey’s earlier Detroit Chronicles:

A Short History of Detroit

Michigan Math

Live and Die in Detroit

Feral in Detroit

Detroit, Back to its Roots

You Can’t Handle the Solution!

Detroit Schools: Where We Eat Our Young

Detroit: A Ghost Story