The
campaign against Detroit is the latest battle in a long war against the
American social contract. For that war to succeed, millions of
Americans must be convinced to see their fellow citizens – working
people, retired people, students, the poor – as the Other. From Social
Security to decent jobs, from a life’s education to a living wage, the
implicit agreements among us can only be broken if we think of our
neighbors as Other than ourselves.
That’s why Detroit’s fate is so important. Breaking Detroit’s
pension agreements would pave the way for breaking our national
agreement with
all retired Americans, and then with the rest of our national community.
The people of Detroit are not Other than us. They
are us. And if we sacrifice their neighborhoods, our neighborhoods won’t be far behind.
Outside the Green Zone
It’s true that Detroit is an extreme case. In places the landscape
looks more like Fallujah or Kandahar than the typical American city.
And the statistics are staggering: 40,000 buildings lie abandoned. 40
percent of the streetlights are broken. Unemployment and crime are
almost unmeasurably high.
Cities like Detroit may seem like the badlands of our economic war,
outside that Green Zone of relative security where most of us huddle
together and hope for survival. That makes it the perfect test case
for the dismantling of the American Dream. Detroit just seems so …
different.
But it isn’t different, except in the extremity of its pain. The
decimation of Detroit was caused by the same forces that have buffeted
the rest of the country: NAFTA and globalization. Predatory Wall Street
actions, including those that led to the 2008 financial crisis. The
absence of a national strategy for revitalizing our cities.
Detroit was hit harder than most places. But that doesn’t make it different.
Detroit isn’t a stranger in danger. It’s a neighbor in need.
The Doctors Are In
Economists Joseph Stiglitz and Robert Johnson held a press call last
week to discuss Detroit. Johnson, who is from Detroit himself, explored
banking’s role in Detroit’s current situation. Stiglitz, a Nobel
laureate, discussed the fact that metropolitan areas are often
prosperous as a whole, but inner cities are often carved out of the
local economy and left to “fend for themselves.”
There are good jobs in the Detroit area, but they’ve moved well
outside the city. A lack of adequate and affordable transportation
leaves many of the city’s residents unable to reach those jobs. Public
transportation is a metropolitan area’s circulatory system, in both an
economic and a human sense. Cut if off and the metropolitan “body”
responds in much the same was as a human body: the isolated limb becomes
gangrenous and rots away.
That’s a human loss, and an economic loss. As Joseph Stiglitz noted,
“We would have been better off preserving the assets of Detroit,
instead of letting the city decay.”
Stiglitz also addressed Chapter 9, under which municipalities declare bankruptcy:
“Chapter 11 says ‘Give corporations a fresh start.’ Chapter 11 says ‘Give our communities a fresh start.’”
Added Stiglitz: “It’s even more important in my mind to preserve communities than corporations.”
Share and Share … but not alike
There are all sorts of schemes for “saving Detroit,” many of which
give corporate interests a higher priority than the needs of the people
who live there. Felix Salmon of Reuters summarized two of them.
To the
New Yorker’s John Cassidy, Detroit represents an
easily-solved problem in social engineering. He notes that “Detroit
sprawls across a hundred and thirty-nine square miles, more than Boston
and San Francisco combined.” Cassidy wants to “raze its semi-abandoned
neighborhoods, consolidating its population into a smaller, more
manageable area.”
After Cassidy’s through with Detroit, Eminem’s famous “8 Mile” (named
for a Detroit road) will presumably be called “1.5 Mile.” As Salmon
writes, “What Cassidy is talking about here, under the happy euphemism
of ‘consolidation” is a massive program of destruction, displacement,
and forced relocation …”
Steven Rattner
plan includes the idea that Federal aid should be based on the concept
of “shared sacrifice.” That phrase, popular in certain influential
circles, is usually deployed to describe cuts to pensions, Social
Security, Medicare, or other earned benefit programs because they’ve
been deemed fiscally necessary – often by the same economists who
misread the economy in the decade leading up to the 2008 crisis.
But those who deploy the phrase, like Rattner, rarely mention that
the perceived fiscal need stems in large part from tax cuts for the
wealthy and corporations, together with the impact of the Wall
Street-created financial crisis. They emphasize the idea that elderly
retirees should give up earned income, while bankers might –
might - trim something off their ever-rising profit margins.
“Shared sacrifice,” remember?
As Stiglitz noted in the press call:
“There’s been a contract between the city and the
workers. Pensions are nothing more than deferred compensation. Workers
have already done their work. They didn’t do a careful analysis of their
risk. (But) those who provide finance to the city are clearly investors
who are engaging in deferred portfolios and risk assessment, and they
get compensated for the risk.”
Remember that: Investors got compensated for the risk. City workers didn’t.
Neither Rattner nor Cassidy suggest asking the residents of Detroit how
they’d like to handle this program. “Saving Detroit” rarely seems to include saving the people that live there.
Selling Out Seniors
There’s a striking similarity between the campaign to break Detroit’s
pension agreement and the campaign to cut Social Security. In both
cases we’re told “we can’t afford” to honor the agreement, that the
deal-breaking’s needed to “save” what’s actually being eviscerated. In
both cases the suggestion is made that retirees are somehow “too
greedy.” (Our own parents and grandparents can be labeled the “Other,”
too.)
And in both cases the complicity of corporations, and the fiscal impact of tax cuts for the wealthy, is conveniently ignored.
In the latest variation on the theme, the American Association of
Retired Persons (AARP) has teamed with the US Chamber of Commerce, house
organ of predatory mega-corporations, to offer its own plan for “saving
Social Security.” The
AARP/Chamber
plan would expand private retirement plans such as 401(k)s – plans
which make a lot of banking income for Wall Street (and are often hit
with excessive management fees on top of that.)
The tax breaks in their plan would increase the Federal deficit –
which magically disappears as a concern whenever profits are involved.
The plan itself would be far less economically efficient than a more
obvious and popular solution, strengthening Social Security’s benefits.
America’s corporations used to offer pension plans, like those
promised to Detroit’s workers. Those pensions were essential to the
financial security of the American middle class. But corporations
quickly learned that they could save money by ending those pensions and
replacing them with savings plans and other programs which offered
negligible retirement security – and that workers didn’t fully
understand the difference.
As one Fortune 500 CEO said to me about his benefit plans during
those years: “I want to give my employees less and make them think it’s
more.”
“Giving them less and making them think it’s more” is now the policy of the AARP – and of many politicians in both parties, too.
Panic in Year Zero
The media helps sow confusion, too.
US News
coverage of the AARP/Chamber plan incorrectly states that there is a
“doomsday clock” for Social Security that runs out in 2033. The truth is
that, according to current (and changeable) projections, the plan’s
surplus funds will run out in that year. From then on, say the actuaries, the plan would be able to pay 75 percent of planned benefits.
That’s hardly “doomsday.” Egregious and inflammatory misreporting
like this reflects badly on the journalistic profession in general and
bylined reporter Phillip Moeller in particular.
The estimated 2033 deadline could easily be fixed in any number of
ways: Polls show that Americans would pay more in payroll taxes in
return for increased benefits, for example. The payroll tax cap could be
lifted. A financial transaction tax would help the balance sheet while
safeguarding the economy.
But equitable solutions disappear from from the revisionist reporting
of the shared-consensus crowd, where the words “shared sacrifice”
really mean: They share, everybody else sacrifices.
Front-Line Detroit
From Detroit to Social Security is not a long march. Along the way we
could expect to see deeper cuts in education, job creation, and other
vital programs. If Detroit is allowed to die, if its retired workers are
deprived of their compensation, another bastion of our social contract
will fall. It will reinforce the media myth which says our social
contract is null and void, our future is bankrupt, our dreams dead.
How can most communities survive if retired people are barely eking
out a subsistence living, if young people can’t increase their earning
power through education, if middle-class people can’t find decent jobs
at decent pay? Who’ll buy the houses, keep up the lawns, pay the taxes
that pay the parks and schools?
It’s like they used to say under very different circumstances: There goes the neighborhood.
It doesn’t have to be this way. Detroit can become a test case, not
for gutting the American dream, but for building the American future. It
won’t be easy, and the rich and powerful will have to share in the
sacrifice, but it can be done.
The people of Detroit aren’t Other. They’re us. It’s as true now as it ever was:
As Detroit goes, so goes the nation.
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