City Journal Summer 2014

Current Issue:

Summer 2014
Table of Contents
Subscribe
Tablet Editions
Click to visit City Journal California

Readers’ Comments

Steven Malanga
Who Really Betrayed Detroit? « Back to Story

View Comments (44)

Add New Comment:

To send your message, please enter the words you see in the distorted image below, in order and separated by a space, and click "Submit." If you cannot read the words below, please click here to receive a new challenge.

Comments will appear online. Please do not submit comments containing advertising or obscene language. Comments containing certain content, such as URLs, may not appear online until they have been reviewed by a moderator.


 
Showing 44 Comment(s) Subscribe by RSS
The only workers possessed of a modicum of security these days are civil service workers, and that security is based on a failing foundation.

The only unions with clout these days are those that have a federal, state or city government to ensnare.

A government cannot move to Texas.

We need reform, but will we ever get it with all the immense power that government unions have?

In the blue states the Republicans kowtow to them as much as the Democrats; it is simply the political terrain that must be traversed.

I worked in both the private and public sector and I have seen some real disciplinary fiascos in both places. The difference is that in the government there is no accountability.

That is not to say there are not some very dedicated people in government. I have seen them working very hard to enforce the law, often with very poor resources.

I think enforcement agencies are often starved for funds while those doling out goodies just grow and grow unchecked.

But there is blame to go around. Who bought Detroit bonds while all this went on?

Where were the trustees with enough fiduciary sense and integrity to resign in a public way, telling all what was happening?

Aye, there's the rub! There is no sense of public spirit and public duty.

In professor Putnam's words, we are "Bowling Alone" and in Professor Murray's we are "Losing Ground."
For "Candidly"

While I recognize the sarcasm in your comment, I actually agree with your main point.

I saw it here in the Maritimes with Irving, and other big businesses. They basically blackmail various level's of government for funding......with the unspoken agreement of course, being, "If we don't get this tax break, or this "incentive" funding....we'll leave town and put hundreds out of work.

I am also opposed to corporate welfare. We can agree on that.
Today, Detroit’s supposedly Conservative newspaper, the Detroit News, reiterates this author’s charges. The Pension Trustees made decisions good enough for Detroit government work and Nelson Finley of the Detroit News tepid conclusion is that the pension board should include financial professionals as well as politicians and union officials in the future – although Finley doesn’t describe which politician or union flack will select these honest financial professionals.

Detroit’s corruption is so widespread and endemic Detroiters themselves seldom realize how pathetic their constant whining and begging appears to outsiders. Website comments on Finley’s mildly critical article cover the usual spectrum from “you’re just being cruel" to “other pension funds have the same problems”. Detroiters know it’s never their personal fault, the world conspires to hold them down. Detroit union guys hate to see unions attacked even when their own pensions will be reduced as a consequence – rocket scientists don’t join unions if that explanation helps to illustrate Detroit’s union mentality.

None of these hysterical people posting comments refute Finley’s specific points, the same points made by this author, they merely revert to the standard box of Kleenex logic – grab a tissue because your tears will flow once we explain how insensitive to the weak and helpless this article truly is. “It’s not our fault” should be the City of Detroit’s official motto and Finley mentions that financial help is on its way to those proverbial innocents who bear no fault. So-called private and government sources are trying to raise $500 million to bolster Detroit’s anemic pension funds – and the “government sources” reference means you the American taxpayer are the target suckers in this bedroom comedy.

Detroiters never refuse charity, but they do have their self-respect and personal pride. However, don’t go away without throwing some money their way and please leave that box of Kleenex on the table as you exit.
Quoting..." For years, the trustees granted annual bonuses to retirees and fattened worker-savings accounts with high guaranteed rates of return, siphoning crucial assets out of the retirement system, even as Detroit’s finances deteriorated. By one estimate, reported in the Detroit Free Press in September, the bonuses and guaranteed-interest programs cost the pension funds nearly $2 billion in contributions and foregone investment returns"

Steve, Talking to Public Sector Union workers is like talking to rocks. They see only what they WANT TO SEE and drink the BS their Unions tell them.

The ONLY culprits in this mess are the insatiably greedy Unions and the self-interested vote-selling, contribution-soliciting, Taxpayer-betraying elected officials who "promised"(but never intended to properly "fund") the VERY RICH pensions & benefits the Unions wanted in exchange for campaign cash and election support.

You said it, Halifax. We Albertans know all about welfare bums in our own country; we sure as hell don't need more coming here from Detroit. But I fear we may be too late ~~~ welfare bums have a homing device for the easy money. Here in Edmonton our welfare bums are mostly corporate billionaire ones ~ and we have our share of dim-witted, corrupt municipal politicians who are only too happy to exchange our taxes for their election support.
Hopefully, when the Detroit Refugess decide to leave the city....they prefer the warmer climes of the South.

We don't need them migrating North to Canada. We have enough of our own welfare bums in toronto.....
A Third World toilet. Fence it off from America.
Who Really Betrayed Detroit? – Detroiters themselves. Self-government in America requires critical discernment, independent thinking, emotional maturity and more than a dash of basic morality – and Detroiters possess none of these basic character traits. From the top elected official to the lowliest pensioner, a pyramid of corruption and self-interest is Detroit’s most obvious cultural failing. Some blame the Democrats, some blame the unions, others point the finger at past mayors and city council members – in reality, it’s all of these culprits plus the voters themselves because, like a mosquito ridden fever swamp, Detroit spawns a virulent cultural malaria without an effective treatment.

Kevin Orr, Detroit’s current mayor in all but official title, said it simply: “There’s no money”. And Mr. Orr uttered these simple words to get through to average Detroiters, most of whom have the intellectual capacity of a leaf blower. Orr is telling Detroit’s citizens that this time around there is no way out, no all encompassing federal bailout is on its way to the Motor City, no city imposed parasite tax on suburban businessmen will save them, nothing of intrinsic value can be sold to make up the entire shortfall in the City treasury. An all consuming plague has struck Detroit, it’s not a minor head cold this time around – and Orr wants Detroiters to realize and accept that fact so he can move forward with the bankruptcy. Cutting pensions goes without saying but Detroiters quickly grow very angry when they’re forced to give up what they see as their entitled money – and, in reality, it is solely their fault, they willingly fostered municipal corruption, they always have.

Good luck to Mr. Orr with that tough love tactic because Detroiters are hard-headed, obstinate and always angry people who believe they fully deserve financial charity and refuse to accept the fact no help is on its way. Addicted to other people’s wealth, a helping hand, voluntary or involuntary, has always saved them in the past, but not this time. Mr. Obama can’t offer to completely bailout Detroit for fear of Chicago, Oakland, Cleveland, South Bend, Philadelphia and all the other mendicants who will then line up at the White House’s beggars portal. And backdoor solutions accomplishing the same end, Mr. Obama’s signature tactic, are currently in the works but for far less than the $18 billion Detroit needs.

This bankruptcy will be ugly, it has to be, it’s politically preordained. Mayors and governors within other American states and cities must be forced to watch and learn. As for Detroiters, nothing will change them, they’re cultural cannibals who have lost their taste for honest meat and prefer to consume each other and any stray outsider who wanders into their midst. If you live anywhere from Maine to Oregon, Detroit will get your federal tax dollars one way or another – the question is how much will you allow them to grab? And beware of those who blame Democrats or unions in the entirety, that’s a transparent emotional ploy to score political points by castigating the few to justify helping Detroit’s 700,000 cannibals. To paraphrase Mr. Orr: “There is no money now and there won’t be any in the future unless we can put the bite on our fellow Americans” – by fellow Americans, that means you.
"If you rob Peter to pay Paul...you can always count on Paul's vote."

In the case of Detroit....Peter caught on and pulled up stakes and got the hell outta there....leaving the welfare bums, food stampers, and public sector workers to their own devices. When the people who actually produce something in society leave.......the only ones left are those who produce nothing.

That is Detroit in a nutshell.

No sympathy here......you asked for it...you got it.


Now deal with it.
Simple answer: Wacko Democrats....
No mention in this article of the extraordinary fees paid to the fund managers through out the years. There is no greater risk to the American middle class than Wall Street and their clowns in suits selling worthless investments for a fee. The people of Detroit have been robbed by the banks and the bonds they sold.
How about the Democrat politicians the union bought off?
i thought obama saved detroit.

huh.
For decades unions and Democrats have prospered in a mutually incestuous relationship. The unions shoveled massive amounts of campaign cash ... obtained from compulsory union dues taken from workers forced to join the union as a condition of employment ... to Democratic candidates. In return, Democrats offered the unions political protection and made sure that any efforts to reform them were dead-on-arrival.

Well, the bill has now come due. Detroit is a textbook example of what inevitably happens when liberal Democrats are allowed to run things for too long.

Look around the country. The cities and states that are doing well are, almost without exception, run by Republicans. The basket cases ... Chicago, California, Detroit, etc. ... are, again almost without exception, run by Democrats.

Anyone see a pattern here?
That's easy.

The 1st Black Mayor.

The 2nd Black Mayor.

The 3rd Black Mayor.

The 4th Black Mayor............................
Who betrayed Detroit? The indigenous residents who sold their votes to swindlers for a share of the boodle, only to find they were not cut in.
How to destroy a City, State or Nation turn it into a Population of uneducated Black and Hispanic governed by Democrats, bribed by unions and in a very short time you will have a high crime, third world waste land like Detroit!

With States like Calif., Ill. NY etc. and in a few years a third world Nation of Poverty, Misery, Crime and Corruption!.
Who betrayed Detroit? Unions and corrupt Democratic leadership.
Detroit residents have been sitting on the railroad tracks in front of the slowest moving train in history. The city is a disaster, still has farther to fall before its over, and Obama still commands over 90% of vote! Apparently people in this City will consider voting differently until every city block is actively on fire.
Detroit has two retirement systems.
General City is one and Police and Fire is the other. Police and Fire only issued one 13th check over the years and is 96% funded. Police and Fire did not contribute to social security and instead put 5% of their base pay into the fund for 25 years.
It is true that Detroit is broke , but it is not the fault of the public safety departments. Note that the last mayor of the city is in a federal prison. If there was justice in this world many more political hacks would be in there with him.
Unions Face Reality -

Both Detroit pension funds ran supposedly independent savings plans for retirement plan members, where members could deposit monies which were unrelated to retirement. However, the exorbidant interest paid on these savings accounts came out of retirement fund assets. And the pension fund trustees set these interest rates without regard to fund performance and were not under any contractual directive to do so.

Phen -

The Michigan State Auditor position has been occupied by 'Detroit friendly' ninnies who were terrified of challenging what was occurring. Racism charges are routinely used by Detroit political leaders to avoid accountability.
No time to read the article. I assume you are going to tell me it was George Bush
Detroit has been a city in the last stages of existence for the past 40 years...Bankruptcy is only the burial (Detroit started cremating itself years ago!!)... The lack of fiscal responsibility and decay of infrastructure was obvious when I last visited in 1972...Needless to say the "leaders" raped the city and then fled with their wealth...Bet it's hard to find anyone still living in the city who had a hand in the corruption...
Detroit is the fruit of the DNC and communist public sector unions. Eat it leftist scum!
"Pretty amazing that we have such clear cut evidence right before our eyes (Detroit, Chicago, Newark etc) that the Blue Model of Governing will almost always produce disaster!"

So if these cities had been voting Republican instead of Democrat, things would be totally different by now. I get it.

What I dont get is why (WHY?) the populations of these cities don't seem much interested in what the Republican Party has to offer. There must be something in commom among the demographics of these cities, but without the aid of the mainstream press and its brilliant pundits, I still don't know what it may be...
Pretty amazing that we have such clear cut evidence right before our eyes (Detroit, Chicago, Newark etc) that the Blue Model of Governing will almost always produce disaster!

Yet the Blue Model Democrats keep getting elected and re-elected in these urban communities across America?

Two things seem to be at play.

1st....the general ignorance and apathy of the voters.

2nd....the fact that the Blue Model has as its foundation, the buying of votes by making the voters dependent of government handouts.

A perfect example of the meaning of 'A Death Spiral'.

We would have added New York to that list if it hadn't been for Guiliani and then Bloomberg, neither Blue Model mayors!
All elected government officials have a fiduciary obligation to the tax payers when they negotiate any contract. If they knowingly create massive obligations which have zero basis of payment, they commit fraud. They buy votes via fraud to stay in power. They should follow Detroit's prior mayor into the penitentiary. As a minimum, in the Civil action, the court should put a brick on their benefit check(s).
Unions Face Reality December 05, 2013 at 10:26 AM
Just a follow on.

If the author means the "contribution" by the trustees was future promises of high guaranteed rates of return, e.g. promising 7% in 1999 and then 10% in 2000, then I stand corrected.
Unions Face Reality December 05, 2013 at 10:23 AM
This actually is incorrect:
"For years, the trustees granted annual bonuses to retirees and fattened worker-savings accounts with high guaranteed rates of return...."

Since the Detroit system is defined benefit, there is no real savings accounts. There is an investment account/pool with a hoped for rate of return. However, there is no "lock box" of real $$ savings dedicated that will cover all of the expenses to any one employee or group of employees . There is an amount of $$, say 30%, 40%, etc. needed to cover retirement, and a promises by the City of Detroit for the rest... someday... if the city can afford it. So what the City "fattened" the "savings" accounts with was more promises. No real money was given.

This is why retirement systems in private industry (outside fossil industries like auto and steel) converted to defined contribution retirement systems in the 80s. And... to point out, steel and auto all went bankrupt... just like Detroit.
So Detroit, together with Chicago and several other now-bankrupt cities in the US, went from being a white-majority municipality to being a black-majority one. And these places are basically Africa now. And you pundits are coming up with all sort of brilliant theories about why(WHY?) it happened.

No wonder you guys now have a guy like Obongo as your president.
Receiving 'extra' pension checks is very sipmly, theft. Theft is a concept that progressive do not understand.
Lisa Simpson: "Grandpa! Didn't you get suspicious getting a check in the mail every month for doing absolutely nothing?"
Grandpa: "No. I just thought the Democrats were back in power."
I don't recall who said it, but the quote with regards to the state of this city was,

"Detroit is an example of the parasite outgrowing the host"

Pretty much sums up ANY policy developed by a Democrat..don't you think?

Poor American Liberals.....you thought you were being progressive when you elected Obama, but you were just choosing the same type of leadership for America, as the people of detroit have chosen for the last 60 years.

You thought you were electing the first Black JFK....but instead, got stuck with the first -half-white Al Sharpton.

You correctly note that Wayne County, MI was ordered to fund 13th checks again. Two details that are worth mentioning:

Wayne County contains Detroit, MI.

The 13th check was ordered because of a union lawsuit that the 13th check had become 'contractual' and thus subject to collective bargaining.

This second point strikes me as absurd and worth a mention regardless of political beliefs.
Folks want to blame the city, the unions, the voters...but where was the State Auditor's office. That position exists almost entirely to stop this sort of thing from happening.
The Democratic Utopia known as Detroit is simply an example of things to come for America.

Our government and its shaky fiscal policy is based on expanding expenditures while revenues shrink. The politicians believe in the Roman bread and circus circuit and know that as long as they feed the masses crumbs they will comply.

We are destined for disaster if we do not return fiscal sanity to America.

That means we must wrest control from the socialist democrats and begin true austerity.

Are We The People ready to become responsible adults?
You should also mention the dubious, politically driven investments made by Detroit's two pension funds. The 24% drop in fund value in 2009 noted in the article was mostly due to the collapse of a lot of hare brained investments. This will prove to be at least as deleterious as the 13th check practice.
But, but, I thought GREED was confined to the private sector!

/sarc
There is a basic rule that when "something can not continue, it will eventually stop,". This what has happened to Detroit and is happening to other cities around the country. There has always been the problem that the politicians over promised and signed contracts which did not protect the city and eventually not the workers. Detroit's has been made worse by the greed and lack of financial prudence by the pension fund trustee's. I sympathize somewhat with the workers because most of them were ignorant of what would happen. Just as so many people believe that a city, a state, or eventually a country can not go bankrupt, we know that is not the case.
We let the Tiger out the cage with globalisation and he is growing bigger than the ring master himself.

I think in my Father's day the West had about 20% of the global population had 80% of global wealth, by the end of mine (X) we will be lucky to have 40%. I think we have to make some tough calls, that include massive reductions in expectations. I have a large vegetable garden and orchard, smaller car and buy from thrift shops and I work full time and a couple of evenings casual.

I can see that I will have to work to 70 and this is a step back to my grandfathers level of wealth. Modest returns, higher savings rates and long years of work are all necessary, but they will be a hard sell for any government.
At one time I recall, they were called"civil servants."

Ron Ronglien
Those 13th checks may have been illegal. In which case, clawback may ensue.

The question is how much can be recovered.
San Diego also gives its city pensioners a 13th check, despite the city's pension fund being seriously underfunded.
Until recently city workers could enroll in the "DROP" Deferred Retirement Option Program allowing them to retire and have their pension paid to a special account that received a guaranteed rate of return while continuing to work at their job/pay rate for another 5 years.
It was recently reported that when some employees were forced to actually retire at the end of the 5 years as they agreed to when signing up for the program, they applied for and received unemployment. This is now being investigated and hopefully they will be required to repay the entire amount.
Why do you insist in calling them "government workers."

Have you ever seen government employees in action? As a general rule, they are under worked and grossly over staffed. They are also over compensated for what they do.

Heck, an honest day's work for a month would kill many of them.