BOOK REVIEW: “Reinventing Detroit”
By H. Barrett Strong[i]
American Legislative Exchange Council (ALEC) Review
Paid for by Koch Industries
“Reinventing Detroit; The Politics of Possibility”
Michael Peter Smith and L. Owen Kirkpatrick, Editors
Multiple contributors of 13 individual essays
(Transaction Publishers 2015)
Vol. 11 – Comparative Urban and Community Research
Articles from Jean Vortkamp and Katie Stech
Excerpt from Stech: “Detroit protesters shut down a public forum meant to celebrate the city’s progress since it emerged from bankruptcy protection exactly one year ago, showing that many residents are still raw over the deep cuts made to their to health-care benefits and monthly pension checks.”
By Sarah Rahal
December 10, 2015
“On Wednesday evening, WDET hosted Detroit Bankruptcy: One Year Later, a talk featuring Gov. Rick Snyder, Mayor Mike Duggan, and retired bankruptcy Judge Steven Rhodes at Wayne State University. The panel was set to answer questions from journalists from the Detroit Journalism Cooperative; however, a fiery-tempered audience cut the event short. One audience member called out Snyder’s “baloney.” Protestors interrupted Judge Rhodes, who walked offstage, and Duggan did not make an appearance.”
By Frank X Murphy
December 1, 2015
On Tuesday, November 24, Michigander of the Year Maureen Taylor of the Michigan Welfare Rights Organization appropriately schooled infamous Michigan EMFs Darnell Earley and Eric Scorsone in the real world implications of their perfidy.[i]
Dr. Scorsone admits guilty knowledge of the risk. He says Governor Snyder’s totally unaccountable EMFs have to ask “how far can you go before you start to endanger public health.”
By Shea Howell
November 7, 2015
It has been one-year since Detroit exited bankruptcy. The corporate elite are celebrating their success. On November 19 the Michigan Bar Association will gather at the Detroit Institute of Arts to give the 11th Annual Dennis Archer Public Service Award to bankruptcy judges Gerald Rosen and Steven Rhodes. Without a hint of irony or shame, lawyers are invited to stroll through the DIA to enjoy gourmet food and an open bar. They are promised that the money raised by the event will support “justice initiatives” for foster children. Guests are assured they can “get home in time to read our own children a bedtime story.”
Perhaps it will be a bedtime story about how a city celebrating African American political power and ingenuity was stolen by white corporate elites through legal fictions. Probably not. The bedtime story the corporate elite like to tell is that they charged into the city to save it from itself. In the process they saved the art of the DIA, got rid of overblown pensions, jolted people out of a culture of not paying their way, and got rid of crooked politicians.
Both Emergency Manger Kevyn Orr and his follow up Mayor Mike Duggan agree that the bankruptcy is a success. “I think the early indicators exceeded our expectations,” Orr said in an interview last month. Duggan weighted in with the Detroit News saying that there are signs of a substantial recovery. Buses meet schedules, police and ambulance response times are improving, and more than 7,000 homes have been torn down. New housing set for the riverfront and the Red Wings arena district all lead to the Mayor to say, “We’ve got jobs coming back, and we’re feeling good.”
These storytellers acknowledge dark clouds on the horizon. Mostly they don’t think they have done enough to get rid of pensions. In a recent article assessing bankruptcy, the News pinpoints the “balloon pension payment” coming in 2024 as a major problem. For most of Detroit, this bedtime story is pure fiction. It begins with the false claim that there was no alternative for the city but bankruptcy. It is a fiction that evades the real costs of this legalized theft from elders whose pensions were decimated. As was widely reported, but generally ignored by the corporate elite, of the $7 billion eliminated from the debt, “ nearly 80 percent is being taken from retirees.”
Now we have street lights to illuminate the 100,000 people shut off from water, the foreclosures of more than 62,000 homes, and the use of money that was supposed to help people stay in their homes and repair them being used instead to tear them down.
This reality cannot continue to be ignored. Bankruptcy has achieved nothing but the legal framework to strip pensions, hurt unions, and drive out the most vulnerable. It is resulting in a whiter, wealthier city at the expense of the poor and people of color.
Since the very beginning of this story, Detroiters have argued there is a better way. We have argued that it is possible to have fair, just, and shared development. It is no bedtime tale. It is pragmatic policies. We need legislation to collect suburban income tax and to allow rent control. We need our fair share of our revenue sharing. We need community benefits legislation, the elimination of corporate tax breaks, and a moratorium on water shut offs and foreclosures. We need an income based water affordability plan.
Unless we face reality, the stories we tell to our children will be of collective failure to meet the critical challenge of redeveloping a city for all of our people.
… on [Dan Gilbert’s] annual pilgrimage to a pumpkin patch with his wife and five children, a stranger offered advice that shook him to the core: “Carve your pumpkin from the bottom.” … he’s turned his not-insubstantial carving skills on an entire city.
Now look, I’m a trial attorney. I can cut somebody’s throat and leave them to bleed out in the gutter with the best of them. But I didn’t want to do that. That’s not my role in this job. My role in this job is sort of the zen of emergency management.
– Detroit Emergency Manager Fascist and Jones Day Law Firm Bankruptcy Partner Kevyn Orr (June 10, 2013) http://www.freep.com/article/20130610/NEWS01/306100080/Kevyn-Orr-Wayne-State-University-emergency-manager-meeting
Q: What is the scope of services for Jones Day’s contract with the City of Detroit?
A: The core restructuring with a fee cap, and “carve outs” (i.e., additional fees) for everything else.
– David G. Heiman, the head of Jones Day’s global restructuring practice (i.e., Orr’s boss) and lead attorney in the Detroit Chapter 9 Bankruptcy (4/5/13) (As of mid-September 2014, Jones Day had reportedly billed Detroit nearly $50 million; Heiman bills $945/hour – a 10% discount!) http://www.wsws.org/en/articles/2014/09/17/detr-s17.html
Orr’s actions [transferring DWSD to Duggan] are a result of sustained and heroic activism by Detroit citizens, and a concomitant international outcry. …
The state of Michigan has undertaken a remarkable course to deal with the inefficiencies inherent in democratic accountability by appointing “emergency” managers who are essentially free from such accountability, in the hopes that they will be able to make politically unpopular decisions for the sake of overall efficiency — and allegedly the public good. It’s worthwhile to examine Michigan’s experiment in challenging the wisdom of our founding fathers with an eye toward addressing two questions. First, has Michigan’s experiment resulted in policy that does maximally serve the public good? And second, in what sense is Michigan’s experiment consistent with the basic principles of democracy? …
Orr has chosen instead to make the citizens of Detroit bear the brunt of the financial pain. City services have been slashed. Detroit is a city that sits atop the world’s greatest reserve of fresh water, the Great Lakes. Yet Detroit is shutting off water to customers who are more than two months late on their bills and who owe $150 or more. So far, about 2 percent of Detroit’s citizens have had their water cut off; nearly half are under threat. Single mothers are heating up (expensive) store-bought water in microwaves to clean their children’s faces; the disabled are hobbling down the streets to fill buckets to flush their toilets. During this time, the debts of golf clubs and hockey arenas have largely been ignored.
… The Nazi political theorist Carl Schmitt was a fierce critic of liberal democracy. He argued that liberal democracy was incoherent because of what he called the problem of the exception. In emergency situations, there is not enough time to act democratically. In an emergency, someone would have to declare an exception to suspend the normal democratic process and handle the emergency. Schmitt argued that whoever had the power to declare an emergency situation and override the democratic process would be tempted to overuse that power, and declare nonemergency situations to be states of exception. This person would be in effect the sovereign.
The language of the emergency manager laws is that of exception. Calling the situation an “emergency,” and the undemocratically selected financial manager an “emergency manager” is nothing other than a declaration of the anti-democratic nature of what has occurred. Detroit does not face an immediate threat from a hostile invading army. To suppose that financial exigency or advancing an agenda of privatization for corporate gain are reasons to suspend democracy is to capitulate to its worst enemies.
The chief values of democracy are freedom and equality. The willingness to subsume freedom to claims of efficiency is one sign of an undemocratic culture. Toleration of the denial of fresh water to others is another. After all, it is hard to imagine denying fresh water to those one regards as political equals. The pressure that has resulted in the decision by Detroit’s emergency manager to turn back control of the water department to the mayor, however temporary, is, one can hope, one small sign that the drought in Detroit’s democracy may be ending.
See the original article here: http://opinionator.blogs.nytimes.com/2014/07/29/detroits-drought-of-democracy/
1701: Following the establishment of the City of Detroit, the supply of drinking water in Detroit and its surroundings evolved from individuals collecting water daily from the river in leather buckets…
2014: On July 9, ex-City Council Member Sheila Cockrel, is featured on WDIV’s Flashpoint, and in upholding traditional Detroit values from 1701, claims “People can go down to the river and pick up a bucket of water. That’s your right.”
On July 21, in the presence of Bankruptcy Judge Rhodes, the deputy director of the Detroit Water and Sewerage Department agrees to halt shut-offs for 15 days. Despite this promise, the department allows Homrich contractors to pursue “illegal turn-ons” and commercial customers full force, and the department shuts off an entire apartment buildings because they fall under the commercial category of customers.
See the full timeline here: http://michigancitizen.com/timeline-the-story-of-detroits-water/
View Wayne State Law Professor Peter Hammer’s open letter to Judge Rhodes here (pdf), or read the ‘Reader’s Digest’ version below.
Any legitimate analysis of the Detroit Bankruptcy and the City’s Plan of Adjustment must be situated in the context of the Three R’s – Race, Regionalism and Reconciliation. From that perspective, I am deeply disappointed by the neglect of these issues in the Court-Appointed Expert Martha Kopacz’s Report.
Nowhere in the document are the words “race,” “racism,” “discrimination” or “segregation.” While the phrase “white paper” appears twice, the phase “white flight” does not appear at all. These are the root causes of Detroit’s current financial crisis and yet they are completely absent from the report. The Report looks at the root causes of failures of generic IT Systems, but never once examines the root causes of the fiscal crisis underlying Detroit’s municipal distress.
My concern about the Three R’s stems from my training as an economist. I operate on the perhaps naive assumption that if you do not know the cause of a problem, it is very difficult to figure out how to solve it. This is particularly true for complicated economic and social problems. Rather than placing the financial problems of Detroit within the context of race and regionalism, Section D of the Expert Report, which is devoted to “Context,” adopts the odd and vacuous notion of accepting Detroit “as is.” (p. 22, 24-25).
Without even defining the notion, the “as is” label becomes a substitute for analysis. As such, the Report’s only effort to even obliquely raise the issue of race in its analysis produces a sentence that is nearly incomprehensible: “Black, white, Republican, Democrat, poor, wealthy, educated, illiterate and everyone in between have an opportunity to contribute to the virtuous cycle of revitalization, or not.” (p. 24). What does this mean?
No effort is made beyond this to state why these phenomena occurred. There is no discussion of an eighty year history of discrimination, segregation, racial tension and white flight, producing a dysfunctional region. There is no discussion of how economic markets nested in a hostile and highly fractured geopolitical space fail to thrive. These are the core forces that produced the Bankruptcy, yet they are not recognized in the Expert Report at all.
One has to try hard not to see the effects of these forces on the physical landscape of Southeast Michigan. Detroit is a city where nearly 40% of the population lives below the federal poverty level, yet it sits in a region that is defined by its relative wealth and prosperity. Detroit remains one of the most racially and economically segregated regions in the country, yet there is no trace of this realization in the Expert Report.
There is an acknowledged economic, political and financial crisis in Detroit. Given that the POA fails to identify the root structural causes of the crisis and implement necessary structural reforms, one must invent a hero to single-handedly rescue the City from the current crisis, if there is to be any hope.
The heroes here are the Mayor and the Emergency Manager. “I have confidence in Mayor Duggan. My opinion of feasibility is favorably influenced by my view of Mayor Duggan as a leader and an operational executive.” (p. 164). Indeed, as in any good myth, if it were not for the new-found hero riding to the rescue, all would be lost. The Report places the economic assessment of the feasibility of the entire Plan of Adjustment on a knife’s edge. The day is saved by placing the burden of feasibility squarely on the shoulders of the mythically invoked hero. “I can say, unequivocally, that without the positive and capable leadership of Mayor Duggan and the constructive relationship between the City Council and the Mayor, I would be unable to opine that the plan, as currently proposed, is feasible.” (p.29)
I find this statement as remarkable as it is troubling. As an economist and someone who understands complex systems, I can envision no scenario in which a single individual, no matter how gifted, could rescue the city in the absence of having appropriate systems, structures and processes in place to address the root causes of the City’s financial distress. Individuals, without the aid of properly designed systems have no such superpowers. Such a conclusion is indefensible and absurd form a systems perspective that properly weights the role of economic and structural analysis. It is magical thinking. The reliance on myths and the invocation of heroic archetypes are often revelatory of the knowledge gaps and weaknesses embedded in the expert’s own tools, analysis, training and epistemic constraints. This is why the foundational methodological framing stressed earlier is so important. If you do not ask the right questions and adopt the right methodologies, you will not get useful insights and answers. It is a predictable aspect of human nature to resort to myths to restore order when our own frames and tools are inadequate to the task.
It is not excusable for the Report to fail to address the current tax and mortgage foreclosure crisis (both of which are reflections of the endemic high levels of poverty in the city) in its assessment of future property tax revenues. Remarkably, the word “foreclosure” appears nowhere in the Expert Report. The Report repeatedly cites the Detroit Blight Removal Task Force Report (DBRTFR), but fails to incorporate its teaching on tax foreclosures.
Since 2008, the beginning of the Great Recession, more than 60,000 Detroit properties have gone through the tax foreclosure process. (DBRTFR, p. 200). The numbers in the tax foreclosure pipeline are even greater. “At this moment, more than 76,000 properties across Detroit are subject to tax foreclosure because the property owners have not paid their taxes in more than three years. More than 42,000 are tax distressed and on their way to foreclosure, with unpaid taxes for at least one year (but not yet three years delinquent).” (DBRTFR, p. 200). That is a total of nearly 180,000 properties either tax foreclosed or at risk since 2008.
These are mind blowing statistics that bear directly on the issues of reasonableness and feasibility. They document the devastating effects of poverty in Detroit and the complete collapse of the City’s real estate market. These numbers represent people losing their homes for the inability to pay taxes, let alone the need to pay for water, utilities, insurance and mortgages. How can an Expert Report ostensibly examining the reasonableness of future property tax revenue forecasts not even raise this issue?
The tax foreclosure crisis does not stand in isolation. To this disaster must be added the mortgage foreclosure crisis, fueled by racialized predatory Wall Street practices. Adkins v. Morgan Stanley is a class action race discrimination case brought by the ACLU challenging sub-prime lending practices in Detroit tailored to meet the demands of the secondary lending market. The case is now pending in the Southern District of New York. In denying Morgan Stanley’s motion to dismiss, Judge Harold Baer directly linked the issues before him to the Detroit Bankruptcy.
Detroit’s recent bankruptcy filing only emphasizes the broader consequences of predatory lending and the foreclosures that inevitably result. Indeed, “[b]y 2012, banks had foreclosed on 100,000 homes [in Detroit], which drove down the city’s total real estate value by 30 percent and spurred a mass exodus of nearly a quarter million people.” Laura Gottesdiener, Detroit’s Debt Crisis: Everything Must Go,
Rolling Stone, June 20, 2013. The resulting blight stemming from “60,000 parcels of vacant land” and “78,000 vacant structures, of which 38,000 are estimated to be in potentially dangerous condition” has further strained Detroit’s already taxed resources. Kevyn D. Orr, Financial and Operating Plan 9 (2013).
And as residents flee the city, Detroit’s shrinking ratepayer base renders its financial outlook even bleaker. Id. Given these conditions, it is not difficult to conclude that Detroit’s current predicament, at least in part, is an outgrowth of the predatory lending at issue here.
All of these issues are interrelated. The tax and mortgage foreclosure crises, endemic poverty, the collapse of the Detroit real estate market and the question of the reasonableness of the POA’s projection of future property tax revenue. If the economic connections are so clear to a federal judge sitting hundreds of miles away, why are these issues completely absent from the Expert Report?
The most important decision the court is likely to make in the entire bankruptcy proceeding will be its legal and factual determinations regarding feasibility. This is the only legal frame in the bankruptcy process where the needs of the average Detroit citizen are given priority. The court’s decision will determine not only the quality of life of the citizens of Detroit for decades to come; it will also determine the fates of scores of similar cities that will likely pass through Chapter 9 proceeding in the coming years. Like Detroit, the majority of these cities will be characterized by endemic poverty. Since poverty is racialized in this country, these cities will also predominately be majority minority central cities, most often, like Detroit, surrounded by wealthier white suburban regions. As such, the bankruptcy determination of feasibility is also a determination of the future lives and livelihoods of the citizens of these cities and what stake they will be given in the larger American dream.
The 50th anniversary of the 1967 urban rebellion in Detroit is on the horizon. Echoes of urban unrest resonate in the recent confrontations in Ferguson, Missouri.
Central cities have become separated, unequal, minimal cities, with minimal wealth, minimal opportunity and minimal city services. The question for this court is whether Chapter 9 determinations of feasibility will be the instrumentality that legally and financially ratifies the second class status of these economically deprived minimal cities.
Nobel Prize winning economist Amartya Sen lists five types of instrumental freedoms that governments have an obligation to provide: 1) political freedoms, basic civil rights, including rights to vote and participate in democratic governance; 2) economic facilities, the ability of individuals to fully participate in economic markets and have fair access to economic resources; 3) social opportunity, including access to quality education and health care; 4) transparency guarantees, mandates of openness in governance, including disclosure rights and protections against political corruption and financial irresponsibility; and 5) protective security, including social safety nets, unemployment benefits, income supplements and the provision of physical security.15 One can also envision the basic building blocks necessary for a healthy society as basic reference points: physical security, food security, social security and economic security.
How does the POA rate on these scales? The City’s POA embodies the complete devolution of distressed cities into second-class “minimal cities,” as lamented by Michelle
Anderson. While a slight oversimplification, the POA envision a post-bankrupt city that essentially provides only 1) police protection; 2) fire protection; and 3) the demolition of blighted buildings. At its base, this is an anemic list of “essential” services that provide only a shadow of the services required to take care of the needs of city residents and to provide them any meaningful opportunity for the future.
When the POA is juxtaposed to the opportunity mapping of Southeast Michigan, the implications are clear. The state-appointed Emergency Manager wants this court to ratify as feasible and, therefore, legitimize the de facto existence of “two societies, one black, one white – separate and unequal.”
Young men are not out scrapping for metals in abandoned homes because that is the first best use of their time in an ideal society. People make the best choices that are available to them. When a whole range of productive, healthy and fulfilling choices are denied, other choices are made. If the POA is ratified with its focus on physical security and not human security, it will result in an endless spiral of violence and increased physical repression as people in deprived minimalist cities become more and more opportunity starved and desperate. Civilized societies invest in the other building blocks of society not because they are luxuries, but because they are necessary for the existence of civilized societies.
If there is any analytic substance to the legal definition of feasibility, then the separate, unequal and segregated minimalist Detroit future city outlined in the POA is not feasible.
Casual review of the people consulted in the Report (Exhibit 3) reveal few voices outside the 7.2 miles of Downtown, Midtown and New Center. It is the people of the nearly 132 other square miles of the City, however, who must live with the daily consequences of the POA. The feasibility
of the POA should rightly focus on their needs.
Systems matter. Structure matters. History matters. In pretending that they do not, and in eschewing the Three Rs’ of Race, Regionalism and Reconciliation, the Expert Report has placed an analytical straightjacket on itself to the point that it cannot see the plain facts in front of it. The Report does not see the reality of endemic poverty, water shutoffs and tax foreclosures. It does not see the reality of the segregation of race and wealth and regional conflict that underlie the bankruptcy.