Bail Out Detroit!

The news that Detroit filed for bankruptcy surprised no one.  The lack of news about an imminent bailout for the city of Detroit was equally unsurprising.  Our federal government has bailed out a long list of private (and quasi-private) sector companies, including the auto industry and banks, for over $ 606 billion and with a net loss of $124 billion.  The net loss alone is more than six times the amount of debt faced by Detroit.

Arguments in favor of these private sector bailouts abound, including assumptions that they save jobs.  But public sector jobs actually are far more likely to provide a living wage, stronger benefits and steady employment (and in fact compensate employees over 30% more).  Equally important, many public jobs are employing people in sectors such as education, health care, and housing that are essential for ensuring our basic human rights.

While no public fiscal crisis in the U.S. has been addressed with explicit regard for the human rights of residents, when New York City faced bankruptcy, Governor Hugh Carey created the Municipal Assistance Corporation which used a combination of strategies: borrowing, state loans, new taxes, financial oversight and seeking what would be today the equivalent of $ 9 billion of federal assistance.  New York was in deep disarray with deteriorating services and increasing poverty, both which lead to high crime rates and a pervasive sense of decay and fear.  In other words, it struggled with many of the same issues Detroit faces today.

But today we fail to see leadership to protect both the public sector and the residents of the City of Detroit, which it serves.  Instead, an unelected emergency manager has been forced upon the city’'s population, replacing basic democratic processes.  Detroit’'s majority African American citizenry is looking on, largely deprived of their voice and struggling after many years of abandonment.  This is not a crisis made today; the auto industry (which continues to enjoy the benefit of government loans) abandoned Detroit years ago and the city has long suffered from failed development and market-driven policies that led to racial segregation and the impoverishment of the city as wealthier suburbs were created.

It is unclear what the effects of bankruptcy will be on Detroit residents in the current context, but if past is prelude the residents of Detroit have good reason to be concerned.  At minimum, bankruptcy law fails by human rights standards to give primacy to the fundamental needs of people over market interests.  Moreover, bankruptcy and selling off assets gives rise to serious threats of selling off public goods to private actors to the severe disadvantage of city residents over the long term.  Such privatization would further hamper the city in its ability to guarantee basic economic and social rights.  The need to restore democracy in Detroit and create a public debate about alternatives for the city’'s future is imperative, not only for the residents of Detroit, but for a country that keeps bailing out banks while families across the country continue to drown in a sea of economic inequity.