We’re all Detroit

by Cleveland Frowns on August 1, 2013

At least we’re not Detroit” might seem like an especially comforting idea these days. Here’s Dave Zirin at The Nation on some “mind boggling headline juxtaposition” from the erstwhile Motor City:

You have, on one day, “Detroit Files Largest Municipal Bankruptcy in History.” Then on the next, you have “Detroit Plans to Pay For New [$650 million] Red Wings Hockey Arena Despite Bankruptcy.” Yes, the very week Michigan Governor Rick Snyder granted a state-appointed emergency manager’s request to declare the Motor City bankrupt, the Tea Party governor gave a big thumbs-up to a plan for a new $650 million Detroit Red Wings hockey arena. Almost half of that $650 million will be paid with public funds.

This is actually happening. City services are being cut to the bone. Fighting fires, emergency medical care and trash collection are now precarious operations. Retired municipal workers will have their $19,000 in annual pensions dramatically slashed. Even the artwork in the city art museum will be sold off piece by piece. . . .

They don’t have money to keep the art on the walls. They do have $283 million to subsidize a new arena for Red Wings owner and founder of America’s worst pizza-pizza chain, Little Caesar’s, Mike Ilitch, whose family is worth $2.7 billion dollars … [thereby] siphon[ing] money out of the city services—things like schools and hospitals—while creating the very kinds of jobs that are the antithesis to those that once built Detroit into the third-largest city in the United States. No living wages. No job security. No tax base. Just spanking new stadiums for suburban sports fans, which Detroit residents will be able to enter only if they’re selling foam novelty fingers. . . .

As legendary Detroit activist Grace Lee Boggs put it, a conservative agenda has “been strip mining cities by privatizing almost all services, attacking public workers and their unions, while at the same time providing billion-dollar tax cuts for large businesses and cutting revenue sharing to the cities.” In a city that’s 83 percent African-American and built on union labor, it’s a pelt long desired by the Snyders of this world. Neoliberalism has destroyed Detroit. Free trade deals have destroyed Detroit. Corporate welfare has destroyed Detroit.

It’s not exactly Dan Gilbert leveraging the popularity of the LeBron-era Cavaliers to buy an election to win a license to trap welfare checks in a city where wealth and income inequality continue to worsen by historical measures. And ground zero of the Haslam family’s public poison for private profits campaign is still a few states away for now. But the priorities that have played to such disastrous effect in Detroit are the same ones that have taken hold in Northeast Ohio and everywhere else in the U.S., and, absent a massive change of course, there’s little to no reason to believe that the rest of the country won’t end up in Detroit’s place eventually, if by slightly varying routes, if it’s not there already.

Welcome to Hockeytown

Which is why the rest of this post is mostly an excerpt from an excellent book by Professor David Harvey of the City University of New York, titled, “A Brief History of Neoliberalism.”

In this book, Harvey examines the history and impact of the ideology that’s come to be known as ”neoliberalism,” which holds, at least in practice, that humanity has “no alternative except to live under a regime of endless capital accumulation and economic growth no matter what the social, ecological, or political consequences.” Much of Harvey’s book, including the excerpt below, speaks specifically to ”the practice of prioritizing the needs of banks and financial institutions” at the expense of the well-being of populations at large, a function of neoliberalism that’s been systematically implemented for most of the last 40 years by the world’s dominant nations. While published in 2007, this excerpt specifically anticipates Detroit’s present and future, and explains that the conditions that gave rise to the nation’s current mess of runaway inequality and social and ecological decay have been the natural consequences of a plan set into motion in the 1970s that crystallized in significant part with New York City’s fiscal crisis of that decade.

Before this section on the New York crisis, Harvey first discusses a confidential memorandum to the U.S. Chamber of Commerce dated August 23, 1971, written by soon-to-be-confirmed Nixon appointee to the Supreme Court, Lewis Powell. In this memorandum, Powell urges U.S. business leaders to mount an attack against opponents of the nation’s ”free enterprise system,” and explains that, ”[s]trength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”

From his discussion of Powell’s memo and its exponential impact on the Chamber of Commerce’s campaign chest, Professor Harvey continues:

The New York City fiscal crisis was an iconic case. Capitalist restructuring and deindustrialization had for several years been eroding the economic base of the city, and rapid suburbanization had left much of the central city impoverished. The result was explosive social unrest on the part of marginalized populations during the 1960s, defining what came to be known as ‘the urban crisis’ (similar problems emerged in many US cities). The expansion of public employment and public provision – facilitated in part by generous federal funding – was seen as the solution. But, faced with fiscal difficulties, President Nixon simply declared the urban crisis over in the early 1970s. While this was news to many city dwellers, it signaled diminished federal aid. As the recession gathered pace, the gap between revenues and outlays in the New York City budget (already large because of profligate borrowing over many years) increased.

At first financial institutions were prepared to bridge the gap, but in 1975 a powerful cabal of investment bankers (led by Walter Wriston of Citibank) refused to roll over the debt and pushed the city into technical bankruptcy. The bail-out that followed entailed the construction of new institutions that took over the management of the city budget. They had first claim on city tax revenues in order to first pay off bondholders: whatever was left went for essential services. The effect was to curb the aspirations of the city’s powerful municipal unions, to implement wage freezes and cutbacks in public employment and social provision (education, public health, transport services), and to impose user fees (tuition was introduced into the CUNY university system for the first time). The final indignity was the requirement that municipal unions should invest their pension funds in city bonds. Unions then either moderated their demands or faced the prospect of losing their pension funds through city bankruptcy.

This amounted to a coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had earlier occurred in Chile. Wealth was redistributed to the upper classes in the midst of a fiscal crisis. The New York crisis was, [Robert] Zevin argues, symptomatic of ‘an emerging strategy of disinflation coupled with a regressive redistribution of income, wealth and power’. It was ‘an early perhaps decisive battle in a new war’, the purpose of which was ‘to show others that what is happening to New York could in and some cases will happen to them’.

Whether everyone involved in negotiating this fiscal compromise understood it as a strategy to restore class power is an open question. . . . [b]ut [it] was certainly what investment bankers like Walter Wriston had in mind. He had, after all, equated all forms of government intervention in the US and Britain with communism. And it was almost certainly the aim of [then-President] Ford’s Secretary of the Treasury William Simon (later to come head of the ultra-conservative Olin Foundation). Watching the progress of events in Chile with approval, he strongly advised President Ford to refuse aid to the city (‘Ford to City: Drop Dead’ ran the headline in the New York Daily News). The terms of any bail-out, he said, should be ‘so punitive, the overall experience so painful, that no city, no political subdivision would ever be tempted to go down the same road’.

While resistance to the austerity measures was widespread, it could only, according to [Joshua] Freeman, slow ‘the counterrevolution from above, it could not stop it. Within a few years, many of the historic achievements of working class New York were undone’. Much of the social infrastructure of the city was diminished and the physical infrastructure (for example the subway system) deteriorated markedly for lack of investment or even maintenance. Daily life in New York ‘became grueling and the civic atmosphere turned mean’. The city government, the municipal labour movement, and working-class New Yorkers were effectively stripped ‘of much of the power they had accumulated over the previous three decades’. Demoralized, working-class New Yorkers reluctantly assented to the new realities.

But the New York investment bankers did not walk away from the city. They seized the opportunity to restructure it in ways that suited their agenda. The creation of a ‘good business climate’ was a priority. This meant using public resources to build appropriate infrastructures for business (particularly in telecommunications) coupled with subsidies and tax incentives for capitalist enterprises. Corporate welfare substituted for people welfare. . . . . [T]he investment bankers reconstructed the city economy around financial activities, ancillary services such as legal services and the media (much revived by the financialization then occurring), and diversified consumerism (with gentrification and neighborhood ‘restoration’ playing a prominent and profitable role). City government was more and more construed as entrepreneurial rather than a social democratic or even managerial entity. Inter-urban competition for investment capital transformed government into urban governance through public-private partnerships. City business was increasingly conducted behind closed doors, and the democratic and representational content of local governance diminished.

Working-class and ethnic-immigrant New York was thrust back into the shadows, to be ravaged by racism and a crack cocaine epidemic of epic proportions in the 1980s that left many young people either dead, incarcerated, or homeless, only to be bludgeoned again by the AIDS epidemic that carried over into the the 1990s. Redistribution through criminal violence became one of the few serious options for the poor, and the authorities responded by criminalizing whole communities of impoverished and marginalized populations. . . . [Mayor] Giuliani was to claim fame by taking revenge on behalf of an increasingly affluent Manhattan bourgeoisie tired of having to confront the effects of such devastation on their own doorsteps.

The management of the New York fiscal crisis pioneered the way for neoliberal practices both domestically under Reagan and internationally through the IMF in the 1980s. It established the principle that in the event of a conflict between the integrity of financial institutions and bondholders’ returns, on the one hand, and the well-being of the citizens on the other, the former was to be privileged. It emphasized that the role of government was to create a good business climate rather than look to the needs and well-being of the population at large.

From there, the business class organized to “capture the Republican Party as [its] own instrument” to destroy consumer protection and labour laws, deregulate industry, agriculture, and resource extraction at all levels, and rewrite the tax code (including by slashing the marginal tax rate on the nation’s highest earners (35%) to more than half of what it was for most of the century (70-90+%)), all while steadily replacing the vote with the dollar as the fundamental unit of democracy. And here we are in 2013, with redistribution of wealth to the upper class in the midst of fiscal crises just another day at the office, income distribution in New York “on par with countries like Sierra Leone, Namibia, and Lesotho,” and the rest of the U.S. well on its way. With a “good business climate” that provides for bankruptcy laws that allow governments to forfeit their pension obligations and build $600 million hockey stadiums at the same time, and plenty of available houses to stack the bodies in.

In other news, Cleveland’s only daily newspaper, the Plain Dealer, terminated one-third of its editorial staff yesterday, “about fifty experienced journalists,” because when the advertisers buy the government they don’t leave a whole lot for the media to mediate. But if the season ended today, the Indians would be in the playoffs. Burn in hell forever, Ariel Castro. Ki Yi Waugh Woop.

  • http://www.clevelandfrowns.com/ Cleveland Frowns

    Zoom out on this map of Detroit and look at the colors. http://www.city-data.com/income/income-Detroit-Michigan.html

  • http://www.eclecticworld.org/ Jim Macdonald

    For many years, when I lived in Washington, DC, I helped to organize against neoliberalism in the form of the World Bank and the IMF, who have often leveraged against nations in the Global South to privatize basic needs of the people (like water – see what happened in Cochabamba, Bolivia) in order to receive loans or aid. In many of these countries, people can no longer live, and suddenly we wonder why there are so many immigrants risking so much to come into a country illegally, where they are so unwelcome – but at least have some chance not to starve.
    That we see this occur within our own country is obviously no surprise, and it’s often more effective. Most people here aren’t quite in desperate straits as many in the Global South, and so the privatizing of public institutions – as well as the corporate welfare to benefit the richest – is not surprising. It often gets a pass. People are still eating; no one has yet privatized their sidewalks – though they do spend an awful lot of money just to drink clean water – often by products owned by Coca Cola (the same company ruining drinking water in places like India). See http://www.killercoke.org.
    We are all Detroit indeed. At least we’re not Pine Ridge?

    • http://www.clevelandfrowns.com/ Cleveland Frowns

      Harvey has a lot to say about the World Bank, the IMF, and the WTO as organizations of immense power that are subject to no accountability whatsoever. Even the U.S. Federal Reserve is effectively outside of any democratic control.

      I can’t recommend this book enough. http://www.amazon.com/Brief-History-Neoliberalism-David-Harvey/dp/0199283273

      • http://www.eclecticworld.org/ Jim Macdonald

        One reason Americans are not yet hungry under the onslaught of our own internal neoliberalism is that we force countries like Haiti to buy American rice, even though they have farmers who produce more than enough of their own rice. We dump products on a market because we can. This obviously helps Americans in the short term, as we are at the top of this food chain, but when the people in these countries can no longer take it, they rise up. And, America’s neocolonial hold weakens, as we are already seeing in South America. When we can no longer feed ourselves on the backs of the poor elsewhere in the world, then the Detroitification of America will only accelerate.

      • dukem1

        Ahhhh…the international bankers who secretly control the world.
        Life is just too short for me to read all this stuff, but if you’re saying the US should disassociate from all these outfits – especially financially, …I am with you and I am all in.
        And, since this is now a site about hockey, I must wax nostalgic:
        When I was a lad, my uncle Jack took me to a Barons game. Between periods, we went up to get a snack. We stopped at a stand selling shots of booze, and he stopped and had one. I had been at a few baseball games in my life, and knew that guys drank beer there. But having a shot was, to my young eyes, really something. And, in retrospect, really cool – I remain to this day all in on that business as well.
        Plus also, when I used to walk to school down Victoria Ave. in Lakewood, there was some guy who lived on that street who was a long-time player on the Barons. Can’t remember his name anymore, but whenever we went by we’d always say “that guy lives there.”
        PS: to Frownie – railing about the Federal Reserve puts you ’bout a half step away from full-tilt posse comitatus stuff. Save some energy. We got a few big games coming up.

      • cranky m

        I’ve been preaching about the Fed’s autonomy and lack of accountability for many moons, and everybody always acts like i’m a conspiracy theorist. It’s true! It’s an independent institution owned by private stockholders and not subject to governmental control. Madness.

  • jamick6000

    deindustrialization has hollowed out the industrial midwest.

  • Biff T. Financial

    Excellent piece, Frownie.

  • bupalos

    Great read.

    >>>The Red Wings are the sixth most valuable NHL franchise. Yet public money is being ponied up to give them a new home.>>>

    One thing that tends to be missing in these subsidized sports complex arguments is the actual relation between these two sentences. “Yet” doesn’t capture it. It should be something closer to “because.” You can see this most clearly in the stratospheric rise in NFL franchise values after they started shooting hostages in the 80′s– a large part of the value of a franchise is created by the possibility (one can now almost say inevitability) of extorting public dollars by threatening to move. Particularly distressed areas with long historical attachments to their teams are particularly valuable in this game.

    • mrdot

      No kidding. I wonder when the Browns are going to start crying for a new stadium. Given that at least part of the talk surrounding Haslam’s takeover last year concerned building a dome and much consternation about the poor repair of the current facility, I’m betting it’s going to be sooner than later.

      • Steve White

        The current facility is less than 20 years old. Why on earth would it need replacement? And why is it not well maintained?

        • BigDigg

          I think his point is that these owners and teams can pretty much ask for anything they want, regardless of there being any sense in it all. The more desperate the city, the more leverage…

    • BigDigg

      Very convenient that the NFL has ruled out public ownership after seeing how well this has worked out for Green Bay. It’s also very convenient that LA remains without team.

  • Junior Ortiz

    Great stuff. Thanks.

  • bupalos

    Wow just looked at the valuations. The public portion of the financing is about a third higher than the total value of the franchise. Detroit should just buy the team.

    What’s that now? They aren’t allowed to? Wow I wonder why the NHL would put that in their bylaws.

    • ChuckKoz

      the city of glendale, arizona is paying over 2 times the value of the coyotes just to keep them in town. this stuff is nuts.

    • actovegin1armstrong

      Bupa, you know I love you, but please remember, much like the rest of the world, it is “Buylaws”.

      • bupalos

        Duly noted. Your love sustains me Acto.

  • Steve White

    In the end this is nothing more than another way of saying “crony capitalism” — the cronies latch onto the public teat and milk it for all it’s worth. I live in Chicago now and it’s quite an education to watch it happen here while the schools fall apart and 8 to 12 young men get shot every weekend.

    Grace Boggs isn’t quite right: it isn’t “conservative” principles that wrecked Detroit, it was the cronies, the movers and shakers, the nod-and-wink guys, the new nomenklatura of America. Ilitch is perfect in that regard as is Gilbert. They all know how to game the system and so they do. There’s nothing conservative about it, unless by that you mean it’s been happening for the last 5,000 years of recorded human history.

    Meanwhile the chumbalones (a Chicago word), that is, you and me, get to pay for it.

    Let the Red Wings move to another city if they can’t play another decade in Joe Louis Arena.

    • BigDigg

      Speaking of privatization and the many benefits it bestows to society – how’s the parking meter and skyway deals working out for you?

      • Steve White

        Aaaargh. City pissed away the money in a year on each. Now of course the pension mess will wreck the city, and the state (which governs the pensions) can’t come up with a fix. I’ll have to work until I’m 75 so that a city clerk can retire at 55.

        Did I say, Aaaargh?

  • nj0

    Do you want to know the terrifying truth or do you want to see me hit some dingers?

  • Dave Kolonich

    Thanks for sharing this, Peter. Tying into the PD cuts, I have to think of something David Simon said on the demise of the newspapers and journalism:

    “It’s a great time to be a crook in this country.”

  • ChuckKoz

    good stuff frowns.

    these stadium issues fascinate me. for others interested, I suggest following: http://www.fieldofschemes.com/

  • dukem1

    I’m a Browns’ fan and I like this site..
    Lots of smart, funny stuff not otherwise available to those of us in the diaspora.

    Never particularly occurred to me I could get disappeared from here.
    Huh. Never too old to learn something new, I guess.

    • http://www.clevelandfrowns.com/ Cleveland Frowns

      Thanks, duke. It’s very much appreciated. Please try not to take this personally, but your comment, which boiled down to “who has time to think about this shit, lighten up” was in violation of this website’s official policy on comments and free speech so it had to go. The official policy on comments and free speech is available here for your review. http://www.clevelandfrowns.com/2012/07/official-policy-on-commenting-and-free-speech/

      Thanks again.

      • actovegin1armstrong

        Here in Frownieland, even stupid, off topic posts are respected. That is why I am here….. stupid is all I have.

  • Motts

    I appreciate your unique and educational perspective…thank you. I think back to American, French, Latin and Russian revolutions only to remember that all of these had visionary political philosophy to move forward (right or wrong is not of emphasis). Yes, they all identified the economic and political ills to be cured, but then they planned forward. Where is our visionary principles that will move us forward in our post post-modern country? And where will the critical mass come from I wonder?

    • http://www.clevelandfrowns.com/ Cleveland Frowns

      Here’s a simple idea for starters:

      1) Put the tax code and social safety net back where they were before Reagan; 2) Print enough money for a massive public works project with the aim of reducing greenhouse gas emissions, freezing the icecaps back up, and completely overhauling the farming industry so that it’s ecologically sound. JOBS JOBS JOBS; 3) Use remaining nuclear arsenal on the nations that don’t play ball.

      Just spitballing, of course, but some version of this is just a no brainer.

      • Petefranklin

        How come the U.S. takes the majority of the blame for greenhouse gasses when it is obviously third world nations industrializing themselves that are tipping what’s left of the iceberg over? Remember the “Save The Rainforest” campaign in the 80′s? Well the rainforests are vanishing and taking out the Earths lungs with them. I am convinced the problem comes from Asia and South America, not the U,S. and Europe.

  • Redz.Harvest

    Another take that I found insightful, from a Chicago Blog, with more really good links:

    http://gapersblock.com/mechanics/2013/07/26/detroits-not-dead-its-not-even-detroit/

    ” . . . in our collective vulnerability as generalized others, unsure of how this all works and being “together, alone,” Detroit’s problem becomes our problem.

    This isn’t even a story about Detroit.

    Given the underlying racial dynamics that have indeed played a
    dramatic part in the story of Detroit and the story of America, it’s
    hard not to hear Ellison’s invisible man, who could just as easily be
    asking now, for/as Detroit, to a fearful nation, “Who knows but that, on
    the lower frequencies, I speak for you?” “

    • http://www.clevelandfrowns.com/ Cleveland Frowns

      Great read. Thanks for posting.

  • Mad_Elf

    Could not agree more, Frownie. Been watching the death spiral of Rock City for well over a decade. While the misguided policies of Urban Sprawl most certainly have as much to do with Detroits current situation as anything, this last election cycle was most certainly the nail in the coffin.

  • S. Gompers

    A tax rate of 70 to 90% for the highest bracket? I would create a lobby to attack that rate, if I was in such a financial situation. Justice Powell’s memorandum effectively led the charge to topple the AFL-CIO with his call to arms. Unions give awful employees cover to continue being awful and largely overpaid. I see it every day.

    • bupalos

      I’m glad you came to your senses Sam. The only way to better yourself is to figure out whatever the lowest wage in the world is and then work for a little less than that to show your spunk and moxie to the Cap’n. If everyone in Detroit had just done that back in 1910 instead of all this “rights this” and “education that” stuff, it would be a freaking Nirvana.

      >>>It was difficult to organize certain Black workers because, being only half a century removed from slavery, they did not have the same conception of their rights and duties as did the white workers and were unprepared for fully exercising and enjoying the possibilities existing in trade unionism.>>>

  • mddawg

    Late to the party but this is one of your best posts Frownie. Having spent part of my youth in a 3rd world country I can attest that the great US of A is becoming increasingly similar to one. Widening income gap, militarisation of the police in lieu of an open paramilitary force and increasing surveillance of the population. If it walks like and talks like a duck it’s duck.

  • bupalos

    Hey Yallsies– http://rustwire.com/2013/05/07/artists-call-for-entries-make-larry-dolan-into-grinning-idiot-mascot/

    There’s a $100 Turn-Dolan-into-Wahoo contest here.

    • bupalos

      my initial entry…

    • http://www.clevelandfrowns.com/ Cleveland Frowns

      Whoa how did we not see this before?

  • notoriouswoj

    One of the best reads I have had in a long time. Scary as hell….but fantastic.

    • http://www.clevelandfrowns.com/ Cleveland Frowns

      Thanks. Spread the word about things that people should know.

  • Siper Bowl

    That picture cannot be real, is it?! Good God… It looks third world.

  • Chris Mc

    “First Energy made no money in the second quarter.”

    http://www.cleveland.com/business/index.ssf/2013/08/firstenergy_made_no_money_in_t.html#incart_river_default

    Everything connected to Cleveland sports goes to shit expeditiously. Hail Chief Wahoo.

    I’d also like to point out that CEO Anthony Alexander was awarded just south of $20 million for this fantastic display of leadership.

    http://www1.salary.com/Anthony-J-Alexander-Salary-Bonus-Stock-Options-for-FIRSTENERGY-CORP.html

    • bupalos

      I think their explanation, that everything was eaten up by charges relating to closing coal fired plants is likely enough. There is a massive and pretty sudden shift to frack gas going on. Which–strictly from the electric generation side of things– is not a bad thing.

      The CEO pay thing is such a joke. How is it not obvious that these guys are being paid for one thing and one thing only….to pump the stock price. 17MM in stock!

      • Chris Mc

        $17mm of which he only pays capital gains tax (13.9% I think?) when he liquidates it. I wish I could work out that deal at my place of employment.

        • Petefranklin

          How do I join his Union?

  • MichaelTheRed

    once again Cleveland fans make us proud chanting “detroits bankrupt”.

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