Clause 61: The Pushback Blog

Because ideas have consequences

Detroit: Canary in the Entitlement Coal Mine

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King Canute, at least, had some sense of reality. When he commanded the tide to cease rising, he intended it as a proof statement to his courtiers that there were some things even kings could not do.

Michigan Judge Rosemarie Aquilina showed no such recognition of reality when she ordered Detroit Emergency Manager Kevyn Orr to withdraw the bankruptcy petition he filed on July 18. Yes, she technically has the state law on her side, although it is an open question with both constitutional and public policy implications whether the state law trumps federal bankruptcy law. However, and more to the point, it is patently obvious that Detroit is bankrupt.

Creditors are people that have been promised future compensation. To be bankrupt is to be legally insolvent: to be unable to live up to the promises either now or in the foreseeable future.

Mark Steyn provides a recap of the sorry litany of facts on the ground:

40 percent of its streetlamps don’t work; 210 of its 317 public parks have been permanently closed; it takes an hour for police to respond to a 9-1-1 call; only a third of its ambulances are driveable; one-third of the city has been abandoned; the local realtor offers houses on sale for a buck and still finds no takers; etc., etc.
— “The Downfall of Detroit”, http://www.nationalreview.com/article/353959/downfall-detroit-mark-steyn

One cannot blame the pensioners for wanting the city to keep its promises to them. The problem is that the wherewithal to do so does not exist. The vote-buying machine promised the wealth to too many people. Now the music has stopped, and many people do not have chairs.

The New York Times called the attempt to cut public sector pensions a “betrayal”. One interview that was featured summarizes the position accurately:

“Does Detroit have a problem?” asked William Shine, 76, a retired police sergeant. “Absolutely. Did I create it? I don’t think so. They made me some promises, and I made them some promises. I kept my promises. They’re not going to keep theirs.”
— “Cries of Betrayal as Detroit Plans to Cut Pensions”, http://www.nytimes.com/2013/07/22/us/cries-of-betrayal-as-detroit-plans-to-cut-pensions.html

Mr. Shine is technically correct, but that doesn’t help. It won’t help anyone who is without a chair when the music finally stops. When there is not enough wealth to keep all the promises, the keeping of the promises becomes itself politicized, and those who don’t have the clout are left in the cold.

Detroit is not an aberration, it is only a leader. If it is an outlier, it is just on the early tail, along with Stockton, California. All the promises that have been made cannot be kept. The wealth is not there to keep them.

The facts that make Detroit so nationally tragic, showing the decline from a prosperous city of 1.8 million in 1950 to a feral city of about 700,000 today, also provide insight into how it was possible. No one believed that the well could ever run dry. Like the country as a whole, Detroit was so rich that surely we could waste a little, spill a little, line our pockets with a little more, and no one would notice.

A million here, a million there, pretty soon, you’re talking real money.
— Senator Everett Dirksen

Ironically, it was Detroit-born Herbert Stein who said, “If something cannot go on forever, it will stop.” Detroit’s primary problem is not the auto industry, the private-sector unions or even race relations. It was the belief that we as a society could vote ourselves rich. Now Detroit looks like something out of a war that we lost. People are making coffee table art books about it: http://blogs.denverpost.com/captured/2011/02/07/captured-the-ruins-of-detroit/2672/. I find these pictures incredibly sad, and never expected to see scenes like these in the United States.

And Detroit is something out of a war that we are losing. It is a war of ideas, and ideas have consequences. The ideas that productive people don’t matter, that the wealth never runs out, lead to the feral city of Detroit in the pictures.

“Can we help Detroit? We don’t know,” Vice President Joe Biden said in a response to a reporter’s question about a possible federal rescue.
— “Feds Showing Little Enthusiasm for Detroit Bailout”, Tom Raum, http://finance.yahoo.com/news/feds-showing-little-enthusiasm-detroit-bailout-082050360.html

The nadir of the tragi-comedy is embodied by the recent calls for a federal bailout for Detroit. America as a whole has the same problem as Detroit in particular; the nation just isn’t as publicly, obviously, inescapably bankrupt. Yet.

 

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Written by srojak

July 22, 2013 at 7:34 pm

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