Emergency Financial Managers: A lesson in harsh reality

[Bill Mattocks]

A problem confronting Detroit and many other cities in Michigan is this; after years of financial mismanagement and monstrous deficit spending, Detroit and some other cities are essentially bankrupt; they cannot pay their bills, and they cannot borrow more money to pay them with.

In Michigan, the solution to this problem is that the Governor appoints an Emergency Financial Manager, who comes in and replaces the elected officials, making cuts, raising fees and taxes, and breaking union contracts and renegotiating them, until the city is financially solvent again.

On the one hand, this is contrary to concepts of democracy. The people no longer have a say in what happens; their elected officials are set to the side. This is not a good thing.

On the other hand, the citizens have been offered tax and mill levy increases, which they have rejected at voting time. Their elected officials have failed to enact needed cuts, the unions have refused to renegotiate (or they have renegotiated, but not enough costs were saved), and the deficits continued until the bills could no longer be paid. We have a situation now where the public utilities are REPOSSESSING STREET LIGHTS and turning off the phones and power in City Hall. Yeah, it's that bad.

There is NO solution set whereby the citizens get to keep their services, not have taxes go up, and deficit spending continues forever. If they cannot elect officials who can balance the budge, or if those elected officials cannot or will not as they are required to do, this is what happens.

So, a cautionary tale; if you love Democracy, make sure your elected officials balance your budget. If you think you can get high social spending and low taxes, you are mistaken. And in the process, you could lose your ability to vote for the leaders you want. Tough noogies for Detroit. But to hear them whine and cry, it's pretty clear they can't figure that one out.

 

[Makalakumu]

A problem confronting Detroit and many other cities in Michigan is this; after years of financial mismanagement and monstrous deficit spending, Detroit and some other cities are essentially bankrupt; they cannot pay their bills, and they cannot borrow more money to pay them with.

In Michigan, the solution to this problem is that the Governor appoints an Emergency Financial Manager, who comes in and replaces the elected officials, making cuts, raising fees and taxes, and breaking union contracts and renegotiating them, until the city is financially solvent again.

On the one hand, this is contrary to concepts of democracy. The people no longer have a say in what happens; their elected officials are set to the side. This is not a good thing.

On the other hand, the citizens have been offered tax and mill levy increases, which they have rejected at voting time. Their elected officials have failed to enact needed cuts, the unions have refused to renegotiate (or they have renegotiated, but not enough costs were saved), and the deficits continued until the bills could no longer be paid. We have a situation now where the public utilities are REPOSSESSING STREET LIGHTS and turning off the phones and power in City Hall. Yeah, it's that bad.

There is NO solution set whereby the citizens get to keep their services, not have taxes go up, and deficit spending continues forever. If they cannot elect officials who can balance the budge, or if those elected officials cannot or will not as they are required to do, this is what happens.

So, a cautionary tale; if you love Democracy, make sure your elected officials balance your budget. If you think you can get high social spending and low taxes, you are mistaken. And in the process, you could lose your ability to vote for the leaders you want. Tough noogies for Detroit. But to hear them whine and cry, it's pretty clear they can't figure that one out.

That seems like a micro-example of what's going to happen on the national level if we can't make some tough decisions. We essentially lose democracy to our creditors.

 

[Bill Mattocks]

That seems like a micro-example of what's going to happen on the national level if we can't make some tough decisions. We essentially lose democracy to our creditors.

Yes, and no. It does resemble what may happen in nations like Greece, yes. I do not think it would happen to the US. However, US cities and states can indeed go bankrupt, and when they do, they lose their right to self-govern. If nothing else, it's a practical matter. The alternative is that the city or state literally dissolves and stops providing services of any kind and everyone has to leave. Imagine that; the lights and gas and phones go out, the police no longer exist, there is no more fire department, the schools are all closed, no services of any kind. An abandoned city, completely abandoned. Ugly.

 

[Makalakumu]

Yes, and no. It does resemble what may happen in nations like Greece, yes. I do not think it would happen to the US. However, US cities and states can indeed go bankrupt, and when they do, they lose their right to self-govern. If nothing else, it's a practical matter. The alternative is that the city or state literally dissolves and stops providing services of any kind and everyone has to leave. Imagine that; the lights and gas and phones go out, the police no longer exist, there is no more fire department, the schools are all closed, no services of any kind. An abandoned city, completely abandoned. Ugly.

Two thoughts.

1. Italy and Greece, by the way, have had unelected bureaucrats installed to take care of business in the fashion that you have described. If it can happen to Italy, Greece, and others in the debt pipeline, why couldn't it happen to us? Does the US wave it's big guns and tell the world to STFU about the money?

2. Would people really leave or would they just find ways to provide other services? I tend to think the latter is probably more realistic. I can see a sort of grassroots privatization popping up.

 

[Bill Mattocks]

Two thoughts.

1. Italy and Greece, by the way, have had unelected bureaucrats installed to take care of business in the fashion that you have described. If it can happen to Italy, Greece, and others in the debt pipeline, why couldn't it happen to us? Does the US wave it's big guns and tell the world to STFU about the money?

2. Would people really leave or would they just find ways to provide other services? I tend to think the latter is probably more realistic. I can see a sort of grassroots privatization popping up.

1) Greece and Italy are having to suck it up because they want a bailout. There is no group that can bail out the USA. If we go broke, sucks to be everybody.

2) I have no idea. I know if I lived in a city that no longer provided police or fire services, I'd leave immediately.

 

[Makalakumu]

1) Greece and Italy are having to suck it up because they want a bailout. There is no group that can bail out the USA. If we go broke, sucks to be everybody.

2) I have no idea. I know if I lived in a city that no longer provided police or fire services, I'd leave immediately.

Yeah, the world economy pretty much is broken if the US goes down, but that doesn't mean that it can't happen. It could happen.

And I would probably feel pretty unsafe in a community where no one is providing police or fire services. If I couldn't leave, I might organize some people and try to get it done as best as I could. Volunteer Fire Departments work, don't they?

 

[Bill Mattocks]

And I would probably feel pretty unsafe in a community where no one is providing police or fire services. If I couldn't leave, I might organize some people and try to get it done as best as I could. Volunteer Fire Departments work, don't they?

With what water?

But seriously, you have to see Detroit to understand. The police take 20 minutes to respond to murders. The crime rate is through the roof. Ambulances don't even bother showing up when you call 911 anymore. Society inside the city is breaking down; if you get robbed, you get killed, because no one cares anymore. The last report on the murder rate in the Detroit city limits noted that the rate might be even higher than reported, because people have even stopped reporting murders; there's no point to it. Burned-out buildings everywhere. Traffic lights go out and stay out. Cars abandoned and set on fire; the burn to the ground and stay where they were burned; no one tows them away. Power lines down across roads; no one comes to fix them. Closed schools looted for copper and then set on fire; scrappers die pretty much every day cutting down building walls to get to the copper until the building falls down on them; or they get electrocuted climbing electrical poles to cut down copper wires that happen to be live. People have reported that their air conditioning units on the roof or in the backyard have been stripped of copper in broad daylight, in front of everybody. Detroit is more or less dead.

If you can organize a private city out of that, good luck.

 

[Sukerkin]

Holy Hannah, Bill! That is a disgrace! Yay! Go Debt Based (Fake) Free Market Capitalism! Everything's fine until you run out of credit and 400 people have more money than half the population added together.

 

[Makalakumu]

With what water?

But seriously, you have to see Detroit to understand. The police take 20 minutes to respond to murders. The crime rate is through the roof. Ambulances don't even bother showing up when you call 911 anymore. Society inside the city is breaking down; if you get robbed, you get killed, because no one cares anymore. The last report on the murder rate in the Detroit city limits noted that the rate might be even higher than reported, because people have even stopped reporting murders; there's no point to it. Burned-out buildings everywhere. Traffic lights go out and stay out. Cars abandoned and set on fire; the burn to the ground and stay where they were burned; no one tows them away. Power lines down across roads; no one comes to fix them. Closed schools looted for copper and then set on fire; scrappers die pretty much every day cutting down building walls to get to the copper until the building falls down on them; or they get electrocuted climbing electrical poles to cut down copper wires that happen to be live. People have reported that their air conditioning units on the roof or in the backyard have been stripped of copper in broad daylight, in front of everybody. Detroit is more or less dead.

If you can organize a private city out of that, good luck.

Good point, I'd probably leave. It sounds like Mad Max! Some things sound good in theory, but the reality of the situation is so messy that it's better to just let it go and start over.

 

[Bill Mattocks]

Good point, I'd probably leave. It sounds like Mad Max! Some things sound good in theory, but the reality of the situation is so messy that it's better to just let it go and start over.

http://www.time.com/time/photogallery/0,29307,1882089,00.html

 

[Ken Morgan]

Detroit lives:
http://documentaryheaven.com/detroit-lives/

 

[ballen0351]

Most of the Major US cities are Cesspools infested with drugs, crime, and violence. Its sad because some of the old buildings and houses in Detroit looked like they were amazing back in the day.

 

[Carol]

Detroit lives:
http://documentaryheaven.com/detroit-lives/

That was excellent :asian:

 

[Bill Mattocks]

That was excellent :asian:

No, it's crap. They pointed out that there is a 'new' Cass Tech high school. Yes, there is. And Detroit has a 25% high school graduation rate. Not drop-out rate, graduation rate. 3 out of 4 kids don't even graduate from high school.

Slows BBQ is a great place. It's on a single block about one block in 'Corktown' from the vacant lot that used to be Tiger Stadium, across from the abandoned train station. you have to park on the block at Slows; park two blocks away and you'll get murdered if you do it at night.

http://www.huffingtonpost.com/2012/01/02/detroits-homicide-rate-ex_n_1179383.html

The city's homicide rate was among the highest in the country in 2010, and the 2011 statistics, expected to be released this week, appear just as grim.

Murders in Detroit jumped from 308 in 2010 to at least 346 in 2011, an average of about three more per month, according to Detroit Police Department statistics and police reports.

They show a pedestrian overpass. That's one. Several of the others are so old, they're rusted to the point where you can't walk on them; they're not being replaced.

Pulling weeds? On the news EVERY NIGHT are stories of people's trees falling down in the street, blocking traffic; the city never shows up to remove them EVER. Citizens have to buy chainsaws and cut up and remove them themselves. When traffic signals fall over, they lay there in the street. No one comes to fix them.

If you don't live here, you have no idea.

 

[Carol]

No, it's crap. They pointed out that there is a 'new' Cass Tech high school. Yes, there is. And Detroit has a 25% high school graduation rate. Not drop-out rate, graduation rate. 3 out of 4 kids don't even graduate from high school.

Slows BBQ is a great place. It's on a single block about one block in 'Corktown' from the vacant lot that used to be Tiger Stadium, across from the abandoned train station. you have to park on the block at Slows; park two blocks away and you'll get murdered if you do it at night.

http://www.huffingtonpost.com/2012/01/02/detroits-homicide-rate-ex_n_1179383.html



They show a pedestrian overpass. That's one. Several of the others are so old, they're rusted to the point where you can't walk on them; they're not being replaced.

Pulling weeds? On the news EVERY NIGHT are stories of people's trees falling down in the street, blocking traffic; the city never shows up to remove them EVER. Citizens have to buy chainsaws and cut up and remove them themselves. When traffic signals fall over, they lay there in the street. No one comes to fix them.

If you don't live here, you have no idea.

I believe you. I like how the clip spotlighted people working together to achieve some common goals. That's what we're trying to do with our hackerspace/makerspace...albeit on a much different scale.

 

[Bill Mattocks]

I believe you. I like how the clip spotlighted people working together to achieve some common goals. That's what we're trying to do with our hackerspace/makerspace...albeit on a much different scale.

There are a lot of things to like about Detroit; and there are a number of people trying very hard to bring things back. However, some basic facts remain. The city is about 1/3 the population it was, but the land and the abandoned houses remain. The city doesn't have the money or the resources to even tear down abandoned or burnt-out houses, and on many streets, there are one or two houses left; they rest are burned down and gutted or have been taken over by crackheads. And by the way; the city of Detroit will not evict squatters; they have 'rights' you know; only the property owner can (usually the city, for back taxes), but they don't. So the few decent people left have to live with high crime and drug addicts and shootings in their front yards on a daily basis. There is no money, the infrastructure looks like Beirut after the Marine barracks blew up. There are pockets of 'good places' here and there, but they are so far apart and so small. The former mayor is in prison; most of the city council went to prison also or were prosecuted for bribes, kickbacks, and so on. It's one scandal after another.

There are good people in the city; but most who could leave have left. People don't want to move to Detroit. We had a survey here recently; what would it take to get you to move back into the city from the suburbs? Well, let's see. I have good infrastructure here, it's safe, and I don't pay a city income tax. Detroit has no infrastructure, it's not safe, and they have a 2% city income tax...hmmm. Uh, nothing could induce me to live in Detroit. I would be willing to risk it for myself, but the idea of putting my wife in danger by living there? NOT HAPPENING. EVER.