Monday, July 22, 2013

Detroit: The Audacity of Math


The city of Detroit has filed for bankruptcy. Like Stockton and San Bernardino California before her, Detroit has woken up from a thirty year bender and surrendered to the brutal nonpartisan reality of mathematics.

The voluntary relocation of a million people out of a formerly great, innovative and iconic city in a mere twenty years is quite a complicated story that cannot easily be reduced to a bumper sticker like “Democrats Suck”. However, since one of the goals of this blog is to make complicated things understandable while displaying as few actual credentials as possible,…here goes.

First, let’s destroy a few straw men.

“Detroit is bankrupt because it’s been run by blacks for forty years.”

Ok, aside from the fact that this is a blatantly racist notion, it is my belief that if the policies of Detroit over the past forty years had been administered by Opie Taylor and his band of blond Swedes, the results would have been the same.

“It’s all the fault of free markets.”

Yes, by all means, if it weren’t for those pesky Japanese and their annoyingly dependable cars, General Motors would still be making Chevettes, and auto mechanics would be the richest men in America.

“It’s all because of the greedy unions.”

It’s not the job of the municipal unions in Detroit to look out for the interest of the city of Detroit. Their job is to get the most lucrative contracts for its members. By all accounts, they performed splendidly.

 

So, Dunnevant, why is Detroit bankrupt? It’s all the fault of long division. A divided by B = C, where A = Detroit’s pension obligations, B= the number of taxable citizens and C= Solvency. So, what we have here is the City of Detroit piling up more and more A, while at the same time the number of B’s are dropping faster than Congress’ approval rating, all of which flows from two basic problems, one party rule, and the unionization of public employees.

 

 

Detroit’s politicians are 99% democrats, and as such it is the most monolithic government in America. Unfortunately for the citizens of Detroit, the most dependable voting block is the public sector unions, ie, city workers. So, here’s how this works. When it’s time to negotiate union contracts, there are democratic politicians on one side of the table, and on the other side are union bosses, the same ones responsible for their reelection. As a consequence of this incestuous relationship, there is no one in the room representing the tax payer. In this room, the unions do what they do which is wrench every possible nickel they can, and the politicians do what they do which is take care of their biggest and most dependable constituency. So, even during times of tight budgets, in lieu of pay raises, offer hugely rich retirement packages, kicking the fiscal train wreck down the road. The results of such an unhappy negotiation are contracts that pay the “horseshoer” who works for the Detroit Water and Sewer Department $56,000 a year, even though he has no horses left to shoe.

So, a city with only 700,000 citizens left looks at its future obligations and says, “no mas”. By filing for bankruptcy protection they are hoping that its Congressional delegation will have the clout to pressure Washington to step up for one more bail-out. My hunch is that they are correct. How can Obama rationalize bailing out the auto workers four years ago, and now turn his back on their corrupt city? The term “moral hazard” practically leaps off the page here, but to bring that up would probably shower me with charges of insensitivity.

“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.”

What knuckle-dragging, union-hating, big-business loving conservative Republican said this, you might ask?
FDR.