Quotes of the day

“Can you help Detroit?” ABC News’ Ann Compton asked the vice president.

“We had a meeting yesterday just getting a brief on the status. The question is, um, we don’t know at this point,” Biden responded.


According to the paperwork, the city owes billions of dollars to more than 100,000 creditors, including bond holders and city pension funds. Orr, a state-appointed bankruptcy attorney who is trying to clean up Detroit financial mess, has said the city is insolvent, meaning it can’t pay what it owes with the taxes it collects…

He’ll likely point to the “moratorium” Detroit imposed on some bond payment last month. And he’ll cite unsuccessful efforts in recent weeks to negotiate lower payments with bond holders and union officials representing retirees.

Orr was able to win concessions from some secured creditors to accept 75 cents on the dollar for about $340 million in debt. But his offer to pay about $2 billion to unsecured creditors owed about $11 billion in debt went nowhere.

Now, he hopes to convince the bankruptcy court that the city can only afford to pay bond holders, retirees, city vendors and the rest of the list of creditors just a dime on the dollar.


“It’s not safe here. It’s a war zone,” Terrence Coleman, a 52-year-old resident, said as embers from a blaze on Detroit’s east side rained down on him. “This whole neighborhood is going to burn down one day, I’m afraid.”…

In Detroit, arsons are so frequent – about 5,000 estimated last year by the Detroit Fire Department – that authorities can only investigate about one of every five suspicious fire cases, Fire Commissioner Don Austin said…

In a city that averages about 14 arsons a day, there are only 11 arson investigators, down from more than 20 in 2009…

With more than 80,000 abandoned buildings spread across 139 square miles, Detroit is fertile ground for arsonists. Homes that could never sell on the market are burned allegedly for insurance money, and people tired of abandoned buildings torch them, according to fire investigators. Thrill-seekers toss Molotov cocktails at vacant structures in drive-by arsons.


Detroit’s bankruptcy has just teed up one of the most consequential court cases in recent memory. As part of the plan to help the city exit bankruptcy, the government will likely cut pensions promised to city workers, a move allowed under federal law. But there’s a catch: the state constitution of Michigan forbids it

Detroit’s situation seems almost unprecedented, and it’s not clear how the city can best respond to it. The unions’ biggest problem is that Detroit simply cannot pay their pension claims without destroying city services. Detroit doesn’t have the money to provide even minimal services to its current population while paying off the large numbers of retired workers, many of whom hail from times when the city was larger and richer.

Because there is no money, there is no solution that gives the unions the relief they seek. Total obedience to the state constitutional mandate might not be possible, and that’s a problem. The government can pass a law saying that everyone has a constitutional right to a free trip to the moon, but if it doesn’t build the spacecraft that can get you there the right is void.


[W]hile Michigan Gov. Rick Snyder has capably overseen Detroit’s march to Chapter 9, neither the state nor the federal government has evinced any inclination to provide meaningful financial assistance.

That’s a mistake. No one likes bailouts or the prospect of rewarding Detroit’s historic fiscal mismanagement. But apart from voting in elections, the 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.

America is just as much about aiding those less fortunate as it is about personal responsibility. Government does this in so many ways; why shouldn’t it help Detroit rebuild itself?…

When President Obama rescued the auto companies, his decision was politically unpopular. By the time of last fall’s presidential election, a majority of Americans had swung in favor of the move. History could repeat itself.


The case will also set a legal precedent that will be watched closely by other major cities across the country struggling under the weight of years of accumulated debt and underfunded pensions covering millions of public sector retirees.

“Everyone will say, ‘Oh well, it’s Detroit. I thought it was already in bankruptcy,’ ” said Michigan State University economist Eric Scorsone.

“But Detroit is not unique. It’s the same in Chicago and New York and San Diego and San Jose. It’s a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems.”…

“There’s no way Detroit can afford to service 140 square miles anymore,” said Scorsone. “So for parts of the city, if your streetlight’s out, they’re not going to fix it. If your road has massive potholes, it’s going to turn it to gravel. It’s that stark.”


Yes, Detroit has been atrociously managed, as Edward Glaeser documents in Triumph of the City. Faced with the decline of US auto industry, Mayor Coleman Young, who led the city from 1974 through 1993, decided the city’s salvation was to be found in building things rather than “trying to attract smart, wealthy, entrepreneurial people.” In the 1970s, for instance, Detroit built an expensive new hockey arena for the Detroit Red Wings and then rented it to the team at bargain rates. In the 1980s, it built the People Mover monorail, what Glaeser calls the “single most absurd public transit project in the country.” The $350 million Renaissance Center created millions of square feet of new office space, a complex eventually sold to GM for $100 million.

But fundamentally, Detroit’s demise as an industrial city stems from a failure to adapt — as seen in its preference to invest in things rather than people — as automation allowed automakers to make more cars with fewer workers and globalization brought cutthroat international competition. The story of Detroit is the story of the transformation of global manufacturing, including the auto industry, in a gale of creative destruction…

Instead of a top-down effort, better to create the organic conditions that will draw those smart, wealthy, entrepreneurial folks Glaeser writes about — especially immigrants — to Detroit. Maybe turning Detroit into a sort of Hong Kongesque tax haven — one with decent schools and safe streets — to encourage startups and a more diverse economic base than relying on one manufacturing sector. At best it will be a long slog with no guarantee of success, but the odds will be a lot better with policies that invest in people rather than things.


With bankruptcy temporarily struck down, we’re told that “innovation hubs” and “enterprise zones” are the answer. Seriously? In my book After America, I observe that the physical decay of Detroit — the vacant and derelict lots for block after block after block — is as nothing compared to the decay of the city’s human capital. Forty-seven percent of adults are functionally illiterate, which is about the same rate as the Central African Republic, which at least has the excuse that it was ruled throughout the Seventies by a cannibal emperor. Why would any genuine innovator open a business in a Detroit “innovation hub”? Whom would you employ? The illiterates include a recent president of the school board, Otis Mathis, which doesn’t bode well for the potential work force a decade hence.

Given their respective starting points, one has to conclude that Detroit’s Democratic party makes a far more comprehensive wrecking crew than Emperor Bokassa ever did. No bombs, no invasions, no civil war, just “liberal” “progressive” politics day in, day out. Americans sigh and say, “Oh, well, Detroit’s an ‘outlier.’” It’s an outlier only in the sense that it happened here first. The same malign alliance between a corrupt political class, rapacious public-sector unions, and an ever more swollen army of welfare dependents has been adopted in the formally Golden State of California, and in large part by the Obama administration, whose priorities — “health” “care” “reform,” “immigration” “reform” — are determined by the same elite/union/dependency axis. As one droll tweeter put it, “If Obama had a city, it would look like Detroit.”…

Like Detroit, America has unfunded liabilities, to the tune of $220 trillion, according to the economist Laurence Kotlikoff. Like Detroit, it’s cosseting the government class and expanding the dependency class, to the point where its bipartisan “immigration reform” actively recruits 50–60 million low-skilled chain migrants. Like Detroit, America’s governing institutions are increasingly the corrupt enforcers of a one-party state — the IRS and Eric Holder’s amusingly misnamed Department of Justice being only the most obvious examples. Like Detroit, America is bifurcating into the class of “community organizers” and the unfortunate denizens of the communities so organized.


This is where blue governance has brought Detroit in the end: not even a liberal Democratic administration will step in to save the pensions of thousands of public workers and African Americans, condemning countless innocents to having their pensions and health benefits gutted in bankruptcy court…

Progressive politicians, wonks, and activists can only blame big corporations and other liberal bogeymen for so long. The truth is that corrupt machine politics in a one-party system devoted to the blue social model wrecked an entire city and thousands of lives beyond repair. The sooner blues come to terms with this reality, the greater chance other cities will have of avoiding Detroit’s fate.