John Nichols, writing in The Nation, criticizes U S Bankruptcy Judge Steven Rhodes’ decision to allow Detroit to file for bankruptcy, arguing that “the process has been framed in a manner that runs the risk of undermining the city’s long-term recovery by taking money away from the most vulnerable residents of Detroit.” Quoting parties who are politically interested in not allowing Detroit to file for bankruptcy (the National Public Pension Coalition, Demos) Nichols argues that the city doesn’t really have a major fiscal problem and that investors (whom he defines as “Wall Street”) should bear the burden of Detroit’s problems and that pensions should be entitled to all of the money and benefits they were promised when the spendthrifts elected to run Detroit were handing out money.
The gist of the piece is that the entire process is a subversion of Democracy because the people of Detroit overwhelmingly voted against the governor who appointed the city manager and the mayor has been stripped of most of his authority. ‘Unfair!’, cries Nichols, who apparently thinks that democracy means that if a law is passed which defies fiscal reality then reality should bend to the law. Under the Nichols’ philosophy of government, if the city of Detroit bans gravity and people don’t start to float away then that is an indication that the universe is wrong.
Nichols’ choice of language in decrying the appointment of an emergency manager to resolve the fiscal crisis in Detroit is telling. Apparently he believes it is the job of the mayor, when faced with a massive fiscal hole, to shield public employees and pensions, not to fix the long-term problems. Under Nichols’ formulation, the taxpayers of Detroit and the people who loaned Detroit money, with guarantees, should take whatever hits come and his favored constituencies should get a free pass:
Snyder had to develop the new emergency manager law after a previous version of the legislation—which he had used to take over smaller cities—was overturned by Michigan voters in a statewide referendum. In Detroit, 82 percent of voters said they did not want the emergency manager law. But they got it anyway. So it is that, while Mayor Duggan may be assigned some responsibilities, he will not have the clearly defined authority that an elected mayor should have to protect pensions, preserve labor agreements and set priorities when it comes to the delivery of basic services.
Nichols talks a lot about democracy, but nowhere does he mention that we don’t operate in a democracy, we operate in a republic, and that applies to the states, too. The states are sovereign bodies, but the cities are not. Detroit is not independent of Michigan, and its authority stems from power that Michigan grants it. It doesn’t matter what Detroit voters want – Detroit voters are the ones who elected the politicians that bankrupted the city. If the voters had been more responsible in their choices perhaps the city would be in better shape. Or perhaps not, systemic forces may have doomed Detroit anyways. Regardless, the idea that because Detroit’s voters are against a law then the law shouldn’t take effect is ludicrous in a system where the state is the sovereign.
Finally, here is my favorite section of the article:
By relying on what the Demos study identifies as “extraordinarily aggressive assumptions”—and by accepting premises advanced by the same financial institutions that urged Detroit officials to make unwise financial choices—the judge has shaped a bankruptcy process that errs on the side of helping Wall Street rather than the citizens of Detroit.
At the same time, the judge has empowered an emergency manager who has a track record of acting on those “simply inaccurate” premises, rather than the officials just chosen by Detroit voters to guide their city toward fiscal and social stability.
To sum up the situation, for years, the voters placed irresponsible, and sometimes criminal, politicians in charge of Detroit. For years, politicians made promises that were fiscally irresponsible. For years, Democrat-controlled unions, allied with the city politicians, pushed through increases in wages and benefits that were unsustainable in the long run. Now, argues Nichols, the officials chosen by Detroit voters, who have such a great track record of fiscal management, should be entrusted to “to guide their city toward fiscal and social stability. Perhaps they should pass a law declaring Detroit solvent. That should solve the problem.