Obama, Detroit, and the New Gilded Age

If you don’t see yourself in my hometown, you’re not paying attention.

DETROIT, MI - OCTOBER 28: Retired City of Detroit worker Donald Smith protests in front of the U.S. Courthouse where Detroit's bankruptcy eligibility trial is taking place October 28, 2013 in Detroit, Michigan. Michigan's Governor Rick Snyder is expected to testify today at the trial. Judge Steven Rhodes will decide to authorize the largest municipal bankruptcy filing in U.S. history, if the City of Detroit is eligible to enter Chapter 9 bankruptcy.
National Journal
Ron Fournier
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Ron Fournier
Dec. 5, 2013, 5:39 a.m.

The best lede of the day may be this: “Someday, De­troit’s bank­ruptcy may well be seen as the start of an era of broken prom­ises.”

Writ­ten by Mary Wil­li­ams Walsh of The New York Times, the para­graph sets the table for a story about the biggest losers in mu­ni­cip­al de­cline: city work­ers and pen­sion­ers. The story con­tin­ues:

For years, cit­ies have prom­ised rock-sol­id pen­sions without set­ting aside enough money to pay for them, aided by lax ac­count­ing prac­tices, easy bor­row­ing and some­times the ex­pli­cit en­cour­age­ment of labor uni­ons.

Of­fi­cials were count­ing on rich in­vest­ment gains to fill the holes; uni­ons and their re­tir­ees were count­ing on leg­al pro­vi­sions — like Michigan’s Con­sti­tu­tion — that said pen­sions were un­as­sail­able and that be­ne­fits would al­ways be paid, wheth­er through high­er taxes or budget cut­backs else­where.

But a bank­ruptcy judge, Steven W. Rhodes, threw a wrench in­to that think­ing on Tues­day, rul­ing that pen­sion be­ne­fits could be re­duced in a bank­ruptcy pro­ceed­ing. The de­cision re­cast the land­scape and gave dis­tressed cit­ies lever­age to back­track on their prom­ises.

Wil­li­ams’s story doesn’t lay blame for De­troit’s bank­ruptcy on a single source. While oth­er writers ex­ploit their op-ed pages, blogs, and so­cial-me­dia ac­counts to cast blame and pur­sue polit­ic­al agen­das, Wil­li­ams leaves room to find a broad­er truth. De­troit’s de­mise is the res­ult of the sys­tem­at­ic fail­ure to ad­apt to wrench­ing eco­nom­ic change, of cor­rupt and in­com­pet­ent politi­cians, of ri­gid in­sti­tu­tions (in­clud­ing the auto in­dustry, labor uni­ons, and school sys­tems), and of chron­ic debt and ra­cism. As I wrote in Ju­ly, these are the things that bank­rup­ted De­troit, mor­ally and fisc­ally, and they’re an ex­ag­ger­ated re­flec­tion of the na­tion’s chal­lenges.

Which brings me to the best speech of the day—the one Pres­id­ent Obama de­livered on so­cial and eco­nom­ic in­equal­ity as Rhodes’s ruled on De­troit. Like he did two years ago in Os­awatomie, Kan., Obama stirred echoes of the Gil­ded Age, when vast eco­nom­ic trans­ition at the turn of the 20th cen­tury threatened to suf­foc­ate the concept of so­cial mo­bil­ity, the cent­ral prom­ise of Amer­ic­an ex­cep­tion­al­ism.

“We know that people’s frus­tra­tions run deep­er than these most re­cent polit­ic­al battles. Their frus­tra­tion is rooted in their own daily battles, to make ends meet, to pay for col­lege, buy a home, save for re­tire­ment,” Obama said. “It’s rooted in the nag­ging sense that no mat­ter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be bet­ter off than they were.”    

Cov­er­ing the speech for The Wash­ing­ton Post, Zachary A. Gold­farb wrote, “Obama ac­know­ledged that his ad­min­is­tra­tion has not ar­res­ted two stub­born trends: widen­ing in­come in­equal­ity and de­clin­ing mo­bil­ity, where lower-in­come people have a harder time find­ing a path to the middle class.”

These are ex­ist­en­tial trends (I’d call them crises). Our polit­ic­al and busi­ness lead­ers can choose to ad­dress them, as we did a cen­tury ago, or use them as wedge is­sues, which is the habit today. My ho­met­own De­troit is a sad ex­ample of what will hap­pen to oth­er cit­ies, counties, states, and even the na­tion as a whole if we dith­er and blame.

One more point about blame and dither­ing in De­troit. There is one group of people who did not bank­rupt the city: its mu­ni­cip­al work­ers and pen­sion­ers. Po­lice, fire­fight­ers, am­bu­lance med­ics, sewage work­ers, garbage col­lect­ors, and the like—these men and wo­man work hard for mod­est pay and the prom­ise of a mod­est pen­sion. Now they face drastic cuts, and will stand in line be­hind banks, bond­hold­ers, and oth­er mod­ern-day rob­ber bar­ons for mea­ger shares of De­troit’s bank­ruptcy pay­out.

Take it from the son of a re­tired De­troit po­lice of­ficer, city work­ers don’t get rich. If you don’t be­lieve me, vis­it my ho­met­own. Ask an ex-cop or a cur­rent fire­fight­er what it’s like to live so lazy and fat. I dare you.

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