September 5, 2013

The Real Story Behind the Decline of Detroit … And Yes, Great Things Are Happening There Too

http://www.alternet.org/economy/real-story-detroits-economy-good-things-are-really-happening-motown?akid=10872.227380.9-CyPq&rd=1&src=newsletter890789&t=3&paging=off



...At the height of the depression Congress added a new tool, Chapter 9, to the Bankruptcy Code to address financial failure by local governmental bodies. While it’s true that “failed states,” or in this case a failed city government, are different in various ways from a corporation, the basic issues of who owes who how much are the same. Admittedly municipal bankruptcy is not as common as private sector bankruptcy. (Not yet anyway.) So, up to a point, the “look, look, a man is biting a dog” scenario is justifiably in play. Further, because cities are units of elected governments, there is understandably a different sense of the stakes. In that context, what the MSM is mostly missing is the extent to which bankruptcy is but the latest incremental step in a long running destruction of democracy for African-Americans. As of this writing more than 55% of Michigan’s African American population lives in communities under some form of Emergency Management. That means state government has already taken away the authority of locally elected officials. Bankruptcy just moves that disenfranchisement to the federal level.

That does make news though because unlike state “emergency manager” laws, Chapter 9 federal bankruptcy puts the banks, bondholders, bond insurers and hedge funds who lent the city money at risk. That is something Michigan Governor Rick Snyder had worked very hard to avoid. Back in June of 2011, he made a pledge to his Wall Street friends. "Detroit's not going into bankruptcy," Snyder told reporters, as he beamed with encouragement from his meetings Monday with three top bond rating agencies in New York.

Predictably, what also excites and dominates MSM coverage is the blame game. The liberals did it or the blacks brought this on themselves, scream the “conservatives.” It’s the racists and the right wing’s fault, say the “liberals.” The noise can be deafening. What follows is I hope a quieter version of what the “bankruptcy” of Detroit means. The government is bankrupt. Detroit is not.



There are four economies in play in Detroit.

One is the old economy.

That means preindustrial and industrial. It’s old money. A lot of it is auto related. Especially these days, capital is highly mobile and it has virtually no loyalty to any geographic entity. If it’s not bound to a nation, it is surely even less loyal to a city. Thus the old money led the disinvestment that removed so many of the economic assets that once gave Detroit a version of what passed for prosperity in the mid-twentieth century. Long before Detroit-based capital was relocating to Mexico and China, it was moving from Detroit to its suburbs.

My name for the second Detroit economy is the pizza economy.

Others might call it the entertainment economy. As industry was moving out, the pizza economy was moving in, personified by Mike Illitch, patriarch of the family that founded the Little Caesar’s Pizza chain. Illitch bought the Detroit Tigers, the Detroit Red Wings and a premier downtown concert hall, the Fox theatre. Among other things. Most of his properties have received some sort of city, state or federal subsidy. Even now, bankruptcy notwithstanding, he is scheduled to receive $650 million in subsidies from Detroit taxpayers for a new hockey arena. Three gambling casinos also joined the Detroit entertainment scene. The core idea was that even if you couldn’t persuade white people to live in Detroit you could build an economy around getting them to visit. Sensing something was happening downtown, FIRE (finance, insurance, real estate) gazillionare Dan Gilbert (Quicken Loans among other assets) more recently jumped into the fray and now owns 19 downtown Detroit properties and is probably buying another one right this minute.

Then comes what we might call the SLOWS BarBQ economy—economy number three.

SLOW’s proprietor, Phil Cooley, personifies the urban pioneers who saw opportunity in the ruins of Detroit. So did Jackie Victor and Anne Perrault who founded the socially responsible Avalon Bakery way back in 1997. Cooley has now added a Detroit business incubator to his restaurant and real estate interests. Avalon recently acquired a huge abandoned factory in the city to service their growing business. There is big buzz about Shinola (manufacturing high end watches and bicycles) in mid-town. Within the last few months Whole Foods and the Meijer superstore chain opened stores in Detroit proper too.

And then there is economy number four—everything else. I’ll have more to say about #4 later. For now I’ll say this. Everyone has some sort of template in his or her mind about how a city is supposed to operate. Detroit hasn’t fit that template for at least 40 years. But as the disinvestment in Detroit stripped its conventional assets—good public schools, effective law enforcement, most of the good union jobs, taxes derived from healthy middle class home values and so on, what was left was a different kind of economy. Economy #4 is driven by the assumption that help is decidedly not on the way. Hundreds of thousands of people, mostly African-American, still live in Detroit. They do get by. They do constitute an economy. Some have a connection to economies one through three. Many do not. Despite the resourcefulness they repeatedly show, economies 1-3 generally consider them a problem, not an asset.

So now, back to the bankruptcy. What has astounded me again and again in recent years is that every single one of Detroit’s four economies is investing. A lot. Capital of all kinds is pouring into Detroit. A recent issue of Crain’s Detroit Business reports on 24 new businesses that have opened in midtown Detroit in the last year. Scores more have started up in downtown and other neighborhoods too. Foundations, (the “trickle down” creations of economy number one) have spent at least 2 billion dollars in Detroit in recent years. Dan Gilbert keeps closing offices in the suburbs and bringing those jobs to downtown Detroit. In some parts of the city rents are rapidly rising.

If Detroit is so bankrupt and dysfunctional, how can that be?

Government? Apparently, we don’t need no stinkin’ government. Not economy 1. Or 2. Or 3. Or 4. That’s the lesson to be learned from watching what people do as opposed to the hand-wringing things some people say. Want to see a close up of the shared dream of Karl Marx and Grover Norquist? Come to Detroit where the “state” has truly withered away, or been drowned in the bathtub. Take your pick. Well some of government as we know it anyway—the part where Detroiters had some say in their own destiny. The reality is that Detroit has been “governed” for some time by a dizzying array of state “emergency managers” and other state agency takeovers; private/public partnerships; private services for security, waste management, worker training and many other things formerly done by elected government and regional authorities of various kinds, not to mention many foundation invented organizations. (Detroit Free Press reporter John Gallagher does a good job of describing some of these dynamics in two books, Reimagining Detroit and Revolution Detroit. He also profiles many of the authentic grass roots initiatives underway in the city.)

Illustrating the theory that the exception proves the rule, the sound of wailing recently heard about the possible sale of artworks from the Detroit Institute of Art (DIA) is an example of one Detroit asset suburbanites care about that they did not get around to protecting or relocating.

MASSIVE INDICTMENT OF RACISM AND THE FOURTH ECONOMY'S FUNCTION--WELL WORTH READING THE WHOLE THING. FRANK JOYCE PREDICTS HOW THE ECONOMIC COLLAPSE WILL PLAY OUT NATIONWIDE--HE CLAIMS DETROIT IS THE MODEL OF OUR FUTURE.


Frank Joyce is an activist and author. He can heard on Dave Marsh's radio program, "Live from the Land of Hopes and Dreams," SiriusXM 127, 1-4pm EST.

September 2, 2013

ObamaCare Staggers Toward the October 1 Finish Line (2) By Lambert Strether of Corrente

Perhaps this will be a useful metaphor to explain how ObamaCare really works:

Imagine you walk into a hospital seeking health care: Perhaps for something major, like heart failure, or something minor, like a broken arm. You sign in at the front desk and explain your situation to the nurse on duty. In response, they reach under the desk and pull out an extraordinary contraption: A combination, it seems, of a miniature steam engine, the Wheel of Fortune, a cuckoo-clock, and a football scoreboard. There’s a crank on the side of it, which the nurse, having rolled up their sleeves, turns vigorously with one arm, while feeding lumps of coal into the steam engine’s firebox with the other. Clutching your chest (or your arm) you notice two doors behind the desk. They have signs which read: Special Limited Facilities, and Service Grand Royale. The cranking stops: The steam engine emits three shrill whistles: The Wheel of Fortune judders to a halt at $500: you hear “Cuckoo, cuckoo”: and see (in lights) 42. The nurse notes these results, consults a large three-ring binder, and points you to the door marked Special Limited Facilities. Or perhaps it’s your lucky day, and Service Grand Royale is yours, all yours!

Yes, that really is how ObamaCare works: ObamaCare is a machine that delivers random results; unfair results, unequal results. The health care will actually be available to you will vary capriciously by past (and projected (and reported)) income, jurisdiction, geography, family structure, employment on Capitol Hill, age, existing insurance coverage, jurisdiction, and market segment. But the suffering from heart failure (or from a broken arm) is the same for everyone, so why isn’t the same health care available to everyone? So, when ObamaCare apologists say that ObamaCare helped some people* — or, when they want to really pile on the emotional blackmail and start taking hostages, they ask “Why do you want my spouse to die?” — ask them “Why don’t you want to everyone to get the help that some do?” or “Why don’t you want everyone to get the help your spouse does”? And if you get a good faith answer, offer to write a joint letter to the editor with them, supporting single payer Medicare for All. (Congressional offices pay attention to Letters to the Editor as, you will find, do your neighbors.)**

CONTINUES AT LINK

http://www.nakedcapitalism.com/2013/08/44889.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29