When I was little, I would visit relatives in the Detroit suburb of Wyandotte. It was just wonderful. I would go into Detroit and
get my hair cut at Hudson’s Department Store, have a wonderful tea lunch and buy lovely dresses in the children’s department. Detroit was a bustling big city and whirled with life.
Flash forward to the 90’s when I had to visit the city on business. It was really ugly. I walked down streets with abandoned manufacturing plants. Windows gone and literally wind blowing debris up and down deserted streets. It felt like a bombed out city then. I had to travel to Pontiac to visit GM and I felt downright threatened just to be there. It was eery, scary and smelled of decay.
Why has it taken so long to file bankruptcy?
The question I wonder now, is why has it taken so long for Detroit to file bankruptcy? It was like a lingering cancer that wouldn’t let the patient die but would continue to eat it to death.
Last year I had to return to downtown Detroit for a big birthday bash for the family. We, my four children and I, rented an SUV at the airport and drove to the party. That was wonderful and grand but then we decided to go to the Tiger’s baseball game in their great new stadium. The stadium was fun and the fans loyal but the area! We parked in a protected, paid lot but when leaving the lot, we were told to move the car as they couldn’t stop someone from “jacking” the car. It seems just pumping your gas in daylight or parking the car in the wrong “safe” spot could cost you.
Although your city may not be Detroit, or come close to their situation, we should take a look at what Detroit is telling us. Here was a city that was basically a one trick-pony. It did cars. It did big, fat American cars driven by big Americans on wide, Midwest roads. It never paid attention when the Japanese put their toes in the water in the 70’s and started to supply America with smaller, inexpensive cars of good value. Detroit was unable or unwilling to adapt to the changes. Instead, it made itself less competitive by heavy union expenses and lower quality workmanship. Its’ priorities were not innovation, diversification or education. It’s priority was the status quo, profits and protection of the huge payroll of auto workers.
Over time, whites fled the inner city, the population dropped to almost half of what it had been and the tax base from businesses cratered. The auto plants moved to other states with right-to-work laws and the Japanese cars took over the markets. Now the market is global competition with Japanese, German and Korean top sellers in America. Here on the West Coast, unless you are driving a pickup, your car is most likely to be one of the foreign manufacturers. The government threw a lifeline to General Motors and Chrysler when they were filing bankruptcy and they have managed to stay afloat but not Detroit. The train left, the party is over, the clean up is ugly and they will fight it out in court. The lawyers will be the winners. Even as recently as last Thursday, the unions have sued in the courts to stop the bankruptcy stating that they have it written in the State Constitution that retirement benefits are protected from bankruptcy. Is this a joke?
What does this mean for other American cities?
What does this mean for other American cities that cannot pay union benefits for retirees and general-obligation bonds. Coming down the road, Oakland, California, Chicago and Philadelphia. Just this past week Chicago laid off 2100 public school employees. Mayor Emanuel blames it on the $400 million spike in pension payments. Moody’s downgraded the city’s general-obligation bonds due to rising retirement and debt service costs. Oakland recently laid off 100 police so they could fund retirement benefits and pension-obligation bonds. Guess what, murders and robberies went up nearly 25% in 2012. Oakland is trying to ward off deeper cuts to city services and is borrowing additional $210 million to finance pensions. (Wall St. Journal, July 22,2013) Is this a joke?
Here is what Detroit citizens now experience: inadequate and old fire department equipment, leaky hoses and old trucks, highest property taxes in the state, police force cut by 40% in 10 years, police response times are five times longer than the national average, 70% of the parks have closed since 2008, the business tax has doubled in 2012 and four in 10 street lights do not work.
This challenge of the municipalities to do the right thing and take care of its citizens first is becoming more and more difficult. Cities are watching what happens in Detroit to see how the court rules in handling the investors and the employee benefits. If you think it cannot happen to your city or your muni-bond investment, think again. Who are your employees running your city? Who did you employ in office and what have they done behind closed doors that you are now responsible for? Do you know? Do you care? You better! Mayor Rahm Emanuel of Chicago has warned that pensions in Chicago will triple by 2015 and the bill could force a 150% spike in property taxes.
The saga of Los Angeles (America’s 2nd largest city)
Los Angeles has the highest paid city council members in the nation. Their base salary is $178,000 plus benefits, including staff, auto, pensions etc. These are elected employees of ours who either came out of other political positions in Sacramento or were staff members for other City Council members. All are men, all are basically professional politicians.
At our Department of Water and Power (our electricity, water and sewage) total pay for DWP employees rose 15% between 2008 -20012. The average DWP worker (everyone from highest-paid engineers to the lowest-paid temps) made $101,237 in 2012. The biggest average went to custodians, up 25% from $56,060 to $69,995. Welders’ and machinists’ pay grew on average 18% to $132,548 and $142,562 respectively. Employees seeking anonymity made $110,730 on average in 2012, 12.4% more than workers whose names were released. It is also not unusual to see summer electricity, sewage and water bills exceed $500/month in warmer parts of Los Angeles. We recently had a Mayoral election. The DWP candidate, Wendy Gruel, was backed by DWP to the tune of $1.65 million. She lost. People are weary of the sham.
While city employees salaries went up 9% during 2008 – 2012, Los Angeles residents’ salaries dropped 6%.
Pay attention to your cities. Detroit is the canary in the coal mine. She was easy to ignore but her death is not. It should strike a warning bell to us all that you need to know what is going on in your city. Who is minding the store and who do your employees think they work for? Do they work for you?
America is changing from the inside out. Some feel their very existence is being threatened. Our economy is being challenged from every which way, corporations, banks, global markets, government policies and cultural norms. Corporations have risen to extreme power and influence. It may feel as if we need to bring back the hippies of the 60’s. This period of turbulence is necessary for the evolution of America. She is reworking herself and will visit the original intentions of the Declaration of Independence the Constitution. More is coming.
Do not despair. The Soul doesn’t come here to retire. See this new period as break down and renewal. Detroit has had the breakdown for years. The country just ignored it.
Taking good care of one’s health during this period is essential. We have about another 10-12 years to go through this correctional period. Connect the dots of seemingly disconnected events and you will see the patterns.
We will find leaders to help us but not yet.
I think Gail is anti-union. I will retire out of the state of Washington in a few years, but won’t get much money. I have to wait a few years after Social Security kicks in to have enough to live on. I’ve worked for 40 years and I’m tired. I want to continue working, but not full time. I will probably get into politics and work against the power of corporations. They are truly demons. The problem is the more, more, more mentality in our culture. We are surrounded by beauty in nature. What else do we need?
Ok, I believe that we are responsible for those we elect as our representatives in politics, and that it is we who elect the politicians who represent the good of the people, who are honest, the ones who care about our future in regards to the environment, etc. I vote and feel that I’m doing the best I can in selecting those with the message of substantial ethics and for good of the people.
Aren’t we all, myself and your readers, voting the best that we can for the overall improvement of our nation in wanting to see the old American values survive? We are voting for our interests just as the fundamental Christians are doing as well, or the capitalists of big business, or people who would love to see the TransCanada pipeline go right over the Ogalala Aquifer in Nebraska, which is the main source of water in that part of the country.
What about talking about Americans and their huge consumption and greed problem? Or capitalism? Doesn’t that subconsciously but ultimately motivate how and who we vote for? Or that we all have certain expectations now that we’re used to so much luxury and that this feeling of entitlement is adding to our messed up economy and that we may have to do with less (say as our parents or grandparents), living with more simplicity, in order to see things improve on a national level?
Or what about discussing the problem of overpopulation? Aren’t we just having too many babies, with reproduction being out of control? Road rage, murders, lies, cheating, gimmicks are just a tip of the iceberg with this many people trying to live together and on top of each other. This in itself will destroy the planet because it can’t possibly support this many people and the continuation of a population that is only growing, with personal self interest, and the consumption of more and more and more.
Yes, I see the need to vote for good people in our elected officials, but the problem of America is so much larger than this. And because we are all extremely selfish, myself included, and want to consume as we have in the past, what good is voting at all? I mean really, considering all things.
There is one fact that you mentioned, Gail that is sadly incorrect. Perhaps the Unions in the past did ask too much of their employers…be that as it may…fast forward to the past 10-15 years. The Unions have given up plenty in order to save the industry…while CEO’s didn’t adjust their salaries.
Up to today…you didn’t mention this and I know for a fact that 33 unions have banded together to try and find a solution for Detroit’s travails.
Bankruptcy has been sought to try to pay back the bonds, those who invested in them. Those bond holder will get their money which they invested knowing that there was always a risk. They will no doubt be paid before the employees whose pensions were assured.
This is indeed a complicated situation. I, myself, was a teacher who traditionally took less money annually because I (along with my colleagues) took the deal of a better pension. Now the state of Illinois wants to gut the pensions…why? Because they systematically borrowed money from our healthy pensions over 15 + years and never paid it back…now our healthy pensions are no longer healthy…we teachers continued to pay in, even while our “caretakers” never paid us back.
I’m having a wonderful time on vacation, seeing Oregon grade school classmates, attending a conference at Asilomar, and concerts at Bach festivals.
Now on my way home, in 2600 miles of roads, I have seen fewer pot holes than seen on any single day of driving in Los Angeles. Before leaving home, I had an early maintenance service done on my nice 8 year old Japanese car. The fellow also paying his bill was purchasing a new wheel rim because the original had been damaged in a Beverly Hills pot hole.
Really I do not understand why Our area seems to have more potholes than everywhere else. Driving in other states, such as Oregon, Nevada, or Arizona, often I have found myself commenting on how smooth their streets are! Well of course they are smooth! Am I from a third world state?
Are pot holes also canaries?
Keep up your good work! Gail