the “us vs. them” mentality is very strong and it goes in both directions.
It was a negotiated contract between UAW and management. Management said it was either that or the jobs would go away. So the union took it, and the jobs still went away. Worse, the pay cut endangered families by rendering them unable to pay existing debt. One could argue that they shouldn’t have run up that debt, but one would have to be an idiot to say that.
I object to Chefguy’s implication that racism led to white flight from Detroit. Racism would be if African-Americans showed up and white people left, while nothing else changed. Instead, Detroit ended up with the highest murder rate in the country, and THAT’s what prompted the flight. I’m sure African-American auto workers got the hell out too.
New York also has a very large black population, but as crime has fallen, people of all races have been moving back in. 1980, the peak of New York’s “ungovernable period”, saw a 10% plunge in population. In 2000, they got those people back. Last I checked, the black people didn’t move out.
In order to file for bankruptcy protection under Chapter 9 of the federal bankruptcy law, the municipality must be authorized to do so under state law. See 11 USC § 109(c)(2).
If a state court finds that such an authorization was not valid under the State Constitution, then the Bankruptcy Court will have no jurisdiction in the case (or at least until the problem is resolved). Detroit can file certainly, but the court can’t grant their petition without valid permission from the state.
I understand that many people use the term “bankruptcy” in an informal sense to mean “they’re broke.” Nothing that happened today changes the fact that they are broke. But despite being broke, they can’t receive bankruptcy protection without satisfying the requirements of the bankruptcy code. The legal definition of bankruptcy is not the same as the informal one that people use.
And, before anyone asks, a state cannot file for bankruptcy no matter how broke they are. There is no provision for it in the bankruptcy code.
So if an entity can’t legally file for bankruptcy, and is legally obligated to pay pension costs, doesn’t that mean they’d have to sell off assets and fire most of their workers?
Works for me. A message should be sent to governments about making promises they can’t keep. And taxpayers should have an incentive to force government officials to represent THEM in contract negotiations rather than government employees.
So you’re saying that a fund you paid into your entire career should be raided to pay other people instead? (Yes, you can argue that the government paid it, but that’s pure semantics. Dollars that went to pension were dollars that weren’t available for salary.)
Let me put it this way: While I’m sure there are lots of lily-pure and blameless people who may get the shaft, there is no longer a non-shafting option. More than likely, everybody is going to get shafted. And frankly, the level of corruption, inefficiency, and generally-don’t-give-a-damnitude seems to extend to a lot of the people who, year after year, shoved Detroit into the corner. They were content as long as they got (or were going to get) theirs.
Now the whole thing is collapsing. Unless Detroit suddenly got a massive ongoing economic boom for an extended period, there’s very little which can be done to save it. Even dumping cash from orbit is only going to temporarily allow the city to keep circling the drain. The city’s finances, government, and culture have become so toxic and unbalanced that it’s simply not going to work.
The details simply don’t matter, and in Detroit, the details amount to billions upon billions of dollars. It doesn’t matter to whom these obligations are owed - not even if it’s owed to the Blessed Virgin Mary, Holy Mother of God and Queen of Heaven. It cannot be paid back. That is the reality, but most parties who hold the debt are desperately to avoid facing it. The only issue now is trying to put Detroit itself back on even footing so that it can hopefully have some kind of recovery, because the longer this continues the worse off it will be.
At this point, I’d be surprised if the city was able to get any unsecured debt. Which is another way of saying that things are really bad, as the city is going to have to start handing out actual stuff or (effectively) liens on stuff. It’s already negotiated a substantial principle decrease with its big financial creditors, who are unlikely to take another one voluntarily. And Detroit needs them to function a lot more than it needs the pensioners and so forth.
I’m saying that if the promises made were based on raising taxes on future people, then those who made the deal don’t deserve it.
Only, in Toronto, the downtown core subsidizes the suburban part of Toronto. The old city of Toronto would be a lot wealthier if it didn’t have to provide services to the far-flung corners of the city (where it is significantly more expensive to run buses, water, hydro, provide police services, etc).
The benefits are hugely apparent; CPC ridings get lots of money and low tax rates. It was a stroke of genius; Harris’ party is made up of moochers sucking at the public teat, and he bought them off.
The big financial creditors will survive and be fine. Its the people who depend on their pensions to survive who deserve the money. Its better for the large corporations to make less so that the poor can have a way to survive. Pensions should come first
Please tell me that the city, in order to save money, is going to contract its police services to OCP.
No, city services to the poor should come first, followed by pay to current workers. Pensioners can collect Social Security.
Well it’s backwards in Ottawa. The satellite communities were better off, and more financially prudent, before amalgamation.
I stand by my statement that amalgamation is better off overall. The buses and transportation you are providing are bringing people into your city to work and spend money in your city.
I don’t know why this would be a problem now that these communities are part of the GTA. Enlighten me please.
This is a good point. Cities are like people - during the good times they make all kinds of commitments because they think the gravy train will keep rolling. When hard times hit, there is no plan for accommodating those obligations. A couple of cities here in northern CA (Stockton and Vallejo) gave generous contracts to their police and fire departments during the tech boom, largely based on real estate tax revenue. They took on massive debt to build baubles like fancy city halls and civic structures. When the downturn hit, and building homes stopped, and people moved away - uh-oh - they now have promises they cannot keep.
Of course, the city leaders who made these promised during their terms are long gone. Something to think about when selecting your own city government.
Not all cities and states do it though. There’s always a temptation to overspend in good times, but some governments consider every time to be a time to max out. If there’s a recession, they must spend more to alleviate misery. If there’s a boom, they have an opportunity to spend more because they are flush with money. Eventually it all comes crashing down.
Go back and reread. The racism part of it was the housing discrimination that led to the rapid development of ghettos. More affluent blacks were forced to live in poorer communities whether they wanted to or not, as there were no laws preventing people from refusing to rent or sell to minorities. As the factories began shutting down, flight to the 'burbs accelerated. Most blacks didn’t move because the 'burbs were also racially segregated and they ended up trapped without jobs in Detroit proper. As both blacks and whites moved further out and nobody moved back in, revenue dropped.
Detroit became the murder capital because of loss of tax revenue to pay for cops and equipment. A few years ago, Detroit police brass made a big show of how the murder rate had dropped below that of Baltimore. Turns out, they were creatively cooking the books.
I have to say, when I first read about this, I was somewhat taken aback that it was legal to snatch people’s pensions? (I’m pretty sure that won’t fly in Canada, no matter how much hot air you deploy!)
So they have carefully planned a retirement within their means and, BAM!, not any more.
I think they should consider switching elected officials to being unsalaried volunteers. Maybe you’ll get people really interested in fixing the fundamentals?
If there’s no money, there’s no money. Canada isn’t immune to financial realities either, which is why Canada switched from being profligate in the 70s and 80s into probably the healthiest country on the planet in terms of fiscal health.
PLus…Baltimore? Baltimore almost takes a perverted pride in their dysfunction at times.
I think the joke at the time was “We’re bad, but at least we’re not Baltimore.” They managed to remove some 25% of the murders from the books by reclassifying them as something else and having a separate category of “homicide”, which wasn’t considered murder. Also, all cop and fireman murders were exempt from the count. :rolleyes: