Detroit under Dictatorship

Mitch Barrows, Spring 2015

By: Mitch Barrows, SM ’16, for the Spring 2015 Issue (PDF version)

Detroit under Dictatorship

In 2014, six individuals in the state of Michigan operating entirely within state law wielded, and actively exercised, the power to terminate elected officials, rescind labor contracts, privatize government services, auction off public assets and raise revenue—completely without need for consent or consultation from locally elected officials. No, the Great Lakes State isn’t technically home to six dictatorships, but recent years have indicated the distinction might only be by name.

In 1990, then-governor James Blanchard signed Public Act 72 into law with the objective of establishing a framework for state intervention in school districts and municipalities facing financial emergencies. Under threat of severe budget crises, or even bankruptcy, the governor would appoint an “emergency manager” to work with elected officials on remedying these struggles. This version of the law granted the manager a fraction of the drastic powers listed above, and mimicked most other emergency manager laws in the country—which currently exist in about half of U.S. states. In 2011, however, this changed when current governor Rick Snyder passed Public Act 4, a new version of the emergency manager law that definitively placed itself as the most oppressive, undemocratic, and racist in the nation.

Despite being repealed by statewide referendum, a slightly altered version of the bill made it to Governor Snyder’s desk a mere month later, and his immediate signature set the stage for Detroit’s takeover. Within months, Detroit’s democracy was eliminated by a “declaration of financial emergency” by Snyder. Elected officials were summarily stripped of executive powers, and soon after, the new Emergency Manager Orr unilaterally filed for bankruptcy in Federal Court, without a vote of the Detroit City Council, a move ostensibly unconstitutional in Michigan. In a controversial ruling, a federal judge accepted the filing. The same judge would later approve pension cuts, another ostensibly unconstitutional move. Governor Rick Snyder has consistently pointed fingers at local government, city pensions, and the beleaguered DWSD (Detroit Water and Sewage Department) as key causes of Detroit’s fiscal worries. The problem, he claims, is the lack of “accountability and transparency” in local government. However, the story is much more complicated than that.

Prior to the financial collapse, the nation’s top investment banks and insurance companies put together a $1.44 billion deal to fund the city’s pension obligations using innovative but complex and highly risky derivatives and credit-default swaps. The failure of derivatives and credit-default swaps made Detroit one of the largest casualties of bank deregulation in the country. The public workers and pensioners who are being forced to pay for this recovery didn’t cause the ‘debt crisis,’ despite accusations that the city government has gone on a forty-year spending spree. That wasn’t reflected in the bankruptcy deal, however, as pensioners suffered a 4.5 percent cut and a removal of all cost-of-living adjustments over the course of their lifetime.

In contradiction to the common belief that Detroit’s budget is ballooning due to public worker benefits, the city government slashed its payroll by almost half between 1990 and 2013. In the last six years alone, the city government cut total public spending by almost half a billion dollars. The state of Michigan didn’t make matters any better, slashing $67 million in state revenue sharing with the city. About $24 million of those cuts were triggered by Detroit’s declining population, but the majority, $42.8 million, were cut at the discretion of the state legislature. Meanwhile, Michigan pondered the best use of its nearly $1 billion 2014 surplus. Somehow, these facts get left out when the governor decides to spout his “local accountability” narrative. The Governor and legislature’s response was to exacerbate the financial crisis, and ultimately they used the opportunity to impose radical right-wing policies.

At the time, five other cities had appointed emergency managers: Allen Park, Benton Harbor, Ecorse, Flint, and Pontiac. Flint and Benton Harbor are the only two cities that aren’t suburbs of Detroit, but each municipality was once a thriving center of industry, trade and commerce supported by Detroit’s auto industry. But even more salient a connection, all but Allen Park are majority black.

With just these six cities under emergency financial management, almost 10% of Michigan’s population was disenfranchised at the local level—a level which is arguably the most omnipresent level of government in the everyday lives of citizens. Most horrific, however, is that with the takeover of Detroit, the law revoked the right of self-determination for half of the state’s black citizens. The fact that our state’s black population is concentrated in a small number of financially ruined urban centers is no accident and no fault of blacks themselves, but we speak of Detroit and others’ financial ruin as if they dug the hole on their own.

In each city, the story is roughly the same: unemployment rivaling or exceeding Great Depression era rates caused by the decades of decline in manufacturing, spatial dislocation between workers and jobs, massive white flight from the inner city and an accompanying precipitous decline in tax revenues, cuts to city services, and rapid rises in the most ominous indices of public safety and health.

Blacks have always been the most vulnerable to large-scale economic shifts, as decades of institutional racism has systematically denied them equal access to government social programs offering low cost mortgages, general assistance, home loans, educational loans and loans to jump start small businesses. These are all programs my white grandparents accessed and used to increase their economic security—the benefits of which I and many of my white peers still ride the coattails of today. Additionally, Detroit’s redlining denied minority buyers mortgages and access to homes in white neighborhoods, and shameless real estate agents encouraged white flight by stoking fears of black people moving in next door. Poor, urban blacks were left alone and marginalized in concentrated poverty, and still today we blame them for their own struggle.

Poor, urban blacks were left alone and marginalized in concentrated poverty, and still today we blame them for their own struggle.

Detroit’s problems stem from decades of manufacturing decline, harsh racial segregation, a history of explicit racism and a slow and painful population bleed that stresses infrastructure built for 1 million more people that it currently serves. But none of this makes it through to Governor Snyder’s constituents. A Rassmussen Reports poll asked Michigan voters: “Whom or what is primarily to blame for Detroit’s bankruptcy…the decline of the U.S. auto industry, bad government, the voters, the economy in general, the flight of middle-class taxpayers from the city or something else?” 54 percent said bad local government. The Republican Party of Michigan has successfully convinced the broader population that Detroit’s woes are nothing but decades of bleeding-heart-liberal fiscal mismanagement, when in fact the city’s economic hardship has little to do with city policies and more to do with broad structural realities of the past 60 years—realities that the state of Michigan and Washington have defiantly turned a blind eye to. They say that the alternative of bankruptcy would foist the burden onto the shoulders of state taxpayers, as if Detroit and other urban centers were responsible for the demise of manufacturing and the persistence of institutional racism all on their own.

The emergency manager law only serves to reinforce the notion that the citizens of Detroit are leeches to their own community—an idea all too painfully expressed by this past year’s emergency-manager-initiated water shutoffs, which left tens of thousands without clean drinking water while leaving the taps on for golf courses and stadiums who owed hundreds of thousands to the city. The idea was to shore up DWSD’s finances, preparing it for eventual privatization.

Media outlets like Fox and Friends only amplified the freeloader narrative by publicly shaming residents and justifying the shutoffs— disregarding the fact that 40% of Detroit citizens, most of which are black, live below the poverty line, and are forced to choose one of three bills to pay every month: rent, electricity, or water. Never mind the fact that water prices have risen to double the national average as people have fled the city over the years. Detroit’s white suburbs pay notably less.

Similarly to pensioners, Detroiters facing water shutoffs find themselves bearing the brunt of the blame and cost for DWSD’s debt, despite the fact that businesses actually make up a disproportionate amount of the debt. While the poorest Detroiters have their water cut off for owing as little as $150, downtown private businesses were let off the hook, and JPMorgan Chase, UBS, Loop Financial, and Morgan Stanley were paid $537 million in termination fees on interest rate swaps out of $1 billion in DWSD bonds.

Every winter, hundreds of aging pipes spew water from leaks, and the water isn’t turned off in thousands of abandoned houses and boarded up businesses where frozen pipes also lose huge amounts of water. The state showed explicit bias in only targeting the poor and not going after commercial accounts or fixing leaks and shutting off valves in the city’s infamous number of vacant residences. This policy intervention terrorized the poor in an effort to shore up delinquent accounts— as if the only issue is a simple refusal to pay. The thousands of Detroiters subjected to shutoffs were treated as criminals: their communities were stalked and their property marked with red spray paint; some lost their homes and some had their children taken away; the young and elderly succumbed to disease; some families were broken up and some retreated into the shadows for fear of prosecution.

The viewpoint that black Detroiters are a financial drain on their community has prevailed, despite the fact that more and more, increasing retrenchment of public social programs on the city, state and federal level have left the black urban poor outside the reach of the safety net. Most notably, the 1990s welfare reform (popularly known as ‘workfare’) has made large swaths of Detroiters ineligible for public benefits. Black Detroiters have historically relied heavily on public employment, thanks to private sector discrimination, dramatic reduction in low-skill jobs and employer discrimination based on criminal background. Black Detroiters have also relied on public pensions as primary sources of income. These public sectors jobs and pensions have been the first to go under emergency management.

This speaks to a larger problem of neoliberal criminalization of poverty in the city, the state of Michigan, and the United States more broadly. When the poor and marginalized can’t pick themselves back up after a crisis, it’s seen as a personal failing on the part of each individual citizen. We place the burden of recovery on the individual, and ignore the structural realities in place that set the stage for ongoing crisis. The focus of our public policy becomes behavioral sanctioning, rather than structural adjustment.

Banks, billionaires, and corporations will make out royally post-bankruptcy. The same can’t be said for the city’s residents, and one cannot help but wonder if that’s the way it was always meant to be. Why else would the state government help manufacture a crisis, mislead the public about how it happened, remove democratic institutions from power, and impose a neoliberal ideology on a city that certainly wouldn’t have voted for it? In effect, the state government has relegated the city’s residents, who are primarily black, to a marginal status as second class citizens, unworthy of self-determination, benefit of the doubt or clean water—all in the name of corporate profit and minimal government. The worst part is they’ve gotten away with it.

Rick Snyder was recently re-elected by a sound majority last November, and even though Kevyn Orr is gone, the next three years will see Detroit’s mayor and city council under the watchful eye of a “Financial Review Board.” The Detroit Free Press reports “the board has the authority to reject contracts, spending and borrowing by the city. If Detroit can stay within budget and meet terms of the bankruptcy exit plan for three years in a row, the commission could go dormant so long as Detroit stays on track financially.” The Financial Review Board will all but ensure that Detroit public schools will remain dismantled, its pensions weakened and its parks and art and land in the hands of private corporations.

Governor Snyder wants the country to think he pulled a drowning Detroit above water. His supporters will tout the newly clean, youth-infused, and increasingly gentrified downtown area as the epitome of Detroit’s comeback. But for this Detroit to exist, Snyder had to evict and eviscerate the identities of hundreds of thousands of its citizens and relegate them to the political shadows. It should be said that I don’t mean to portray this resilient and vibrant city so passively. There are countless individuals organizing their communities in resistance to the neoliberal hegemony imposed upon them. But one cannot ignore that fact that, disproportionately exploited by Snyder’s emergency managers, black Detroiters continue to endure high rates of poverty, a deteriorated city school system, inadequate social services, and wide-scale unemployment. The prospects for broad-scale community renewal look no better post-bankruptcy than they did before.

Detroit under Dictatorship

Image: Detroit Water Brigade

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