Friday, July 26, 2013

Well, Inevitable Happened As Detroit Files For Bankruptcy

Well, the inevitable finally happened and the once grand city of Detroit, Michigan, became the largest American city to ever declare bankruptcy as they filed for Chapter 9 protection last Thursday.
Now, to understand the reason this came about, here are two photos. One of the Detroit of old. One of when this city was on the rise.
Above is the Detroit Masonic Temple. Built in 1926 at the height of the Roaring Twenties, this was at a time when the city was on the rise with the burgeoning American auto industry. The good thing is that it is still being used and maintained by local Masons.
But here more of the image that we are used to of the Motor City.
And this is pretty much what around one-third of the city of Detroit looks like today.
One wonders how it took this long for Detroit to come to this inevitability.
It is a combination of a lot of things to be honest.
Sure it is easy to point out, accurately, that the city has been in steady decline since the race riots of 1967. Very true.
It has seen not only so-called White Flight out of the city and to the surrounding suburbs. But there has been Black Flight as well for before 1967, Detroit was a mecca for Black Americans. Even an unskilled Black could go from poverty to the middle class. And once they did, they saw a lot of bad things as a direct result of the 1967 riots and a slew of incompetent political "leadership". So they joined their fellow Whites and moved to the suburbs.
Say, do you remember city councilman JoAnn Watson that I wrote about here? Do watch the video for she basically said that just as former Democrat Mayor Coleman Young did, the current mayor, David Bing, should just go to Washington, D. C., hat in hand and "bring home the bacon".
In other words, you and I from all 50 states should fork out money to Detroit so that they can continue to "govern" the way that they wanted.
And let's look at this statistic.
Detroit was the United States' fourth largest city in 1950 with a population of 1,849,568. Today in 2013, the population (as of the 2010 census) is 713,777. In reality is it at this point hovering at 700,000. It went from the fourth largest city to the 18th in 60 years.
One huge problem is that Detroit depended on the auto industry and nothing else economically. During the boom times of Detroit, there were more than just the big three we know today as Chrysler, Ford and General Motors. There was American Motors, Packard. De Soto, Studebaker, and many more. Eventually, many went by the wayside for a variety of reasons. Which left Detroit with the big three. At some point because of the end and or contraction of many auto makers, the big three thought that they were invincible.
But they were not.
The Chrysler company is a great example of that non-invincibility.
Thanks to the gas shortages of the 1970s, Americans went looking for smaller, cheaper cars, that got better gas mileage. Thus people began buying Datsuns (now Nissan), Hondas and Toyotas. And leaving the big three in the dust. By 1979, the company was in financial free fall and went to the federal government for a loan guarantee of what now seems a paltry sum of $1,500,000,000. Congress approved the loan and yes, it did give the company new life. But by the late 1990s, Chrysler was merged with Daimler-Benz, the makers of the Mercedes-Benz. But they could not save the company and it was sold to an equity firm and they realized, THEY could not save the iconic brand. So in 2008, the federal government essentially merged Chrysler with the Fiat car company from Italy. The irony is that Fiat left the American market about 30 years ago. Now they are back, thanks to the federal government.
During this time, the writing was on the wall, yet the big three decided to keep giving into the demands of the United Auto Workers and salaries continued to rise, but not profitability. One of the reasons at one time or another the big three were on the brink. The big three did not have the fortitude to say no to the unions and, voila, eventually they became what they are today.
And during this time, the political leadership of Detroit did not one thing to diversify the economy of the city and the area. They kept counting on the auto industry to somehow ride in on the White Horse and save this city. The problem is that no one saved the auto industry from themselves. The UAW, the same thing.
This column by the National Journal's Ron Fournier is a good one. Because he states the obvious about the lack of vision to move from the the manufacturing to another kind of economy.
Imagine that if the city leaders had to plan to make Detroit a Great Lakes Silicon Valley, no one would be writing about this demise of Detroit. Or maybe to be a place for insurance companies to do business. Anything. yet nothing was done.
One thing that Mr. Fournier writes about I touched upon earlier and that is the so-called White Flight that created the population shift that made Detroit a majority Black city. What Mr. Fournier did not write about is that once Blacks became part of the middle class, they followed Whites out of the city. And what is left is, dare I write this, a lot of people that probably wished they could be some place else.
Because the political class has made the average Detroit citizen feel like they are victims of fill-in-the-blank grievance, the idiocy of people like Councilman Watson rules the roost of government. They have no problem creating a victim class and at the same time trying to buy allegiance of city workers with unsustainable union contracts in good times. They have focused not on rebuilding the city as a whole, but the left's wondrous plans of downtown revitalization. And in that, sure they have attracted some thrill-seeking White hipsters to downtown lofts and the like. But what about the rest of the city.
Another great column is this one in The New York Times by Charlie LeDuff. When you read it, it sounds like Detroit has become a third-world city within the United States. I want you to read this carefully because if this was almost any other American city, we would be up in arms:

If this were New York, these stories would have ricocheted around the world. But this is Detroit and, of course, nobody gives a damn. Even here people have been conditioned to accept these things as
normal, a nuisance, the buzz of a fly.

Mr. LeDuff is correct. I mean, remember the Robo-cop movies? Where did they take place? DETROIT! And this was in the 1980s when things were not nearly in the dire straits that they are today.
So yes, sorry you 30,000 pensioners, you are screwed. You will have to live on less. Have less health care than you are used to. And the rest of you that are on the city payroll, you are pretty much screwed too. You will see the wonderful union contracts renegotiated by default. You will see you future pension benefits reduced. Your salary reduced.
And for the rest of the citizens of Beirut on Lake Michigan? A time for a fresh start a time to force those people who put you in the position of living in America's worst big city out. Bring in people that actually give a damn for you and the city.
This is the rock bottom that Detroit should have been in years ago. I suppose better late than never.

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