Don’t buy the right-wing myth about Detroit

Money Won't Change You
Money Won’t Change You

David Sirota has an excellent point about the conservative narrative about Detroit. Notice how many times pensions get mentioned in coverage of Detroit’s bankruptcy and how many times corporate welfare does. 50 times to once? Something like that kind of ratio. Basically ignored, in other words. Corporate welfare is sacrosanct; pensions, not so much.

That brings us to how this all plays into the right’s push to enact ever more regressive tax cuts, protect endless corporate welfare and legislate new reductions in workers’ guaranteed pensions.

These latter objectives may seem unrelated, but they all complement each other when presented in the most politically opportunistic way. It’s a straightforward conservative formula: the right blames state and municipal budget problems exclusively on public employees’ retirement benefits, often underfunding those public pensions for years. The money raided by those pension funds is then used to enact expensive tax cuts and corporate welfare programs. After years of robbing those pension funds to pay for such giveaways, a crisis inevitably hits, and workers’ pension benefits are blamed — and then slashed. Meanwhile, the massive tax cuts and corporate subsidies are preserved, because we are led to believe they had nothing to do with the crisis. Ultimately, the extra monies taken from retirees are then often plowed into even more tax cuts and more corporate subsidies.

We’ve seen this trick in states all over America lately. In Rhode Island, for instance, the state underfunded its public pensions for years, while giving away $356 million in a year in corporate subsidies (including an epically embarrassing $75 million to Curt Schilling). It then converted the pension system into a Wall Street boondoggle), all while preserving the subsidies.

Similarly, in Kentucky, the state raided its public pension funds to finance $1.4 billion a year in tax subsidies, and then when the crisis hit, lawmakers there slashed pension benefits — not the corporate subsidies.

The list of states and cities following this path goes on — but you get the point. In the conservative narrative about budgets in general, the focus is on the aggregate annual $333 million worth of state and local pension shortfalls — and left out of the story is the fact that, according to the New York Times, “states, counties and cities are giving up more than $80 billion each year to companies” in the form of tax loopholes and subsidies.”

The mythology around Detroit, then, is just another version of this propaganda.

(click here to continue reading Don’t buy the right-wing myth about Detroit –

Stilton with candied lemon peel
Stilton with candied lemon peel

and those evil, greedy workers are always the problem. How dare they depend upon $19,000 a year pensions – that they paid with their work for 20 years or longer – when corporations need free cheese! $80,000,000,000 a year in free cheese – cheese that could be spread elsewhere…

So, for instance, from the administration of right-wing Gov. Rick Snyder, we are hearing a lot of carping about the $3.5 billion in pension obligations that are part of the city’s overall $18 billion in debt. The focus leads casual onlookers to believe that — even though they on average get a pension of just $19,000 a year — municipal workers’ supposed greed single-handedly bankrupted the city. What we aren’t hearing about, though, is the city and state’s long history of underfunding its pensions, and using the raided money to spend billions of dollars on corporate welfare.

For a good sense of some of the most expensive, absurd and utterly wasteful boondoggles in the Detroit area over the last few decades, read this piece from Crain’s Detroit or see this 2011 article entitled “Detroit’s Corporate Welfare Binge” by Detroit News columnist Bill Johnson. Alternately, recall this is in the heart of a region that infamously spent $55.4 million in 1975 (or a whopping $180 million in inflation-adjusted dollars) on a football stadium and then sold it off for $583,000. Or, just note that Detroit is the largest city in a state that, according to the New York Times, spends more per capita on corporate subsidies — $672 (per capita) or $6.6 billion a year — than most other states.

It Pays to Play
It Pays to Play

There’s more to the myth of course, NAFTA, taxes and the like.

In the conservative telling of this particular parable, Detroit faces a fiscal emergency because high taxes supposedly drove a mass exodus from the city, and the supposedly unbridled greed of unions forced city leaders to make fiscally irresponsible pension promises to municipal employees. Written out of the tale is any serious analysis of macroeconomic shifts, international economic policy failures, the geography of recent recessions and unsustainable corporate welfare spending.

This is classic right-wing dogma — the kind that employs selective storytelling to use a tragic event as a means to radical ends. In this case, the ends are — big shocker! — three of the conservative movement’s larger long-term economic priorities: 1) preservation of job-killing trade policies 2) immunity for corporations and 3) justification for budget policies that continue to profligately subsidize the rich.

Read David Sirota’s entire indictment yourself, and remember it when you next hear a bloviator discuss Detroit pensions, or austerity…

Commonwealth of Belle Isle

Zoot Suit in Detroit

Zoot Suit in Detroit – source Shorpy


An another addition to the crazy urban planning file, though probably less realistically going to happen than our last sojourn into Detroit…

In his book, titled “Belle Isle: Detroit’s Game Changer,” Rodney Lockwood, an executive with a successful Detroit-area real estate firm, outlines a very specific plan on how to develop the city-owned, uninhabited 928-acre island in the Detroit River, between U.S and Canadian waters.

Lockwood’s pitch is for a group of wealthy investors to buy the island from Detroit for $1 billion and “build a supercharged community with its own laws, customs, transportation systems, taxation and currency, transforming Belle Isle into the ‘Midwest Tiger,’ rivaling Singapore and Hong Kong as an economic miracle,” according to Lockwood’s website.

The island would then be developed into a city-state of about 35,000 people, complete with “its own laws customs and currency, under United States supervision as a Commonwealth.”

Belle Isle would be founded on the principles of limited government, “exceptional” aesthetics and “respect for all citizens,” Lockwood says. Citizens would be submit themselves to criminal background checks before moving to the island, and once there, would not pay any corporate or income taxes.

Lockwood imagines that people would immigrate from all over the world to live on Belle Isle, but to gain citizenship, people would first have to apply and be approved and then post a fee of about $300,000, which would be used to repay the group of investors as well as finance infrastructure and back the nation’s own currency.

The island would also be an environmental haven.

“Served by a monorail, Belle Isle is a walking community, with restricted hours for vehicles. With emphasis on great planning and architecture, people from all over the world come to Belle Isle, to be part of its freedom and opportunity culture,” Lockwood writes.


(click here to continue reading Detroit author Rodney Lockwood presents island utopia concept to revive depressed metropolis – NY Daily News.)

Ok, you join first, and if it works out, maybe I’ll come visit…

Vast Land Deal Divides Detroit

Detroit Michigan 1906
Detroit Michigan, 1906.jpg

Hmm. Urban blight vs. maples. Or the oak vs. the maples, whatever. Still better than Houston…

John Hantz says he has a dream: to purchase 140 acres of derelict land in the heart of Detroit and turn it into the world’s “largest urban farm.”

A Web site set up by Mr. Hantz, a wealthy entrepreneur, to advance his proposal says the farm would return the city “to its agrarian roots.” The repurposed lots — cleared of blight and planted with roughly 15,000 hardwood trees — would establish an economic zone, raise property values and return vast tracts of abandoned land to the city tax rolls, according to Mike Score, the president of the venture, Hantz Farms. Ideally, the enterprise has signaled, it would eventually become a major source of local food.

In a city where entire blocks of foreclosed homes and crumbling buildings have been bulldozed, the proposal has drawn some support, notably from the mayor, Dave Bing, and some city council members. But the proposed sale has drawn objections from some residents and city officials who say it would amount to a land grab.

“This is not the way to grow a vibrant city,” said Kwame Kenyatta, a City Council member. “Just because we have vacant land doesn’t mean we should turn Detroit into a farm.”

The council is set to vote on the proposal on Tuesday.

(click here to continue reading Vast Land Deal Divides Detroit –

Just A Little Bit of Daydream
Just A Little Bit of Daydream

My quick reaction is that since this land has been derelict for decades, why shouldn’t it be reclaimed? If Detroit had the money to repair these areas, they would have, but they don’t, and won’t any time soon. Why not try something new? Of course, John Hantz has ulterior motives, but that seems a fair price to pay.

Per the Hantz Neighborhood proposal PDF, the proposal includes such provisions as:

Hantz Woodlands will give the City a Cash Payment for the total purchase price at closing, as well as cover the estimated costs for property title work ($750,000), demolition of dangerous structures ($2 M) and removal & disposal of illegally dumped debris ($450,000)

Hantz Woodlands will demolish or improve dangerous structures within the development zone (at the very least, 50 structures within two years).

Hantz Woodlands will clean up and maintain all parcels, removing illegally dumped trash and mowing at no more than a three week interval.

Hantz Woodlands will plant at least 15,000 trees during the first two years of the agreement.

Residents who have community gardens or have maintained vacant lots prior to December 2012 will be offered first option to purchase at a price lower than that paid by Hantz Woodlands.

The agreement involves approximately 1,500 of the 5,200 parcels in the development zone – leaving more than 70% of the parcels owned by other parties.

If I had a vote, I’d vote for it…

Let Detroit Go Bankrupt – By Mitt Romney

Let Detroit Go Bankrupt – by Mitt Romney. Read it yourself and see if Smirky McSmirkenson actually can claim credit for GM, Ford, et al not being bankrupt. (Answer, he cannot, at least with a straight face).

Paul Krugman noted at the same time:

If the economy as a whole were in reasonably good shape and the credit markets were functioning, Chapter 11 would be the way to go. Under current circumstances, however, a default by GM would probably mean loss of ability to pay suppliers, which would mean liquidation — and that, in turn, would mean wiping out probably well over a million jobs at the worst possible moment.

and yet, Obama is having a hard-sell convincing folks in states impacted by the bailout to vote for him.

Ohio and Missouri are traditionally important swing states. But in St. Charles County, where Wentzville is, it’s not Mr. Obama but his Republican opponent, Mitt Romney, who is predicted to win by a large margin. In heavily Democratic Lordstown, Mr. Obama is expected to prevail, but Mr. Romney is likely to carry two neighboring counties that also benefit from G.M.’s success.

“That’s surprising,” John Weaver, a political consultant and former John McCain adviser, told me this week. “I think especially with swing voters, they look at the auto industry and they see that government did work for them. It’s not just Wall Street that got help. It worked in a practical way in an industry that’s important to their state.” (Mr. Weaver isn’t working on the Romney campaign.)

I spoke this week with residents of both towns, and no one disputed that, from their perspective, the G.M. rescue has been a success.

“G.M. has been the catalyst for everything,” Wentzville’s mayor, Nick Guccione, told me. “They’ve already hired about 700 people, and they’re talking about bringing in over a thousand new jobs. And these are real jobs, with real wages. G.M. has brought in 1,300 construction workers for the new plant. We’re told that for every job they bring in, that creates five more jobs. It’s made Wentzville a more vibrant community. People can work, play, spend, shop.”

(click here to continue reading In Towns Helped by Obama’s GM Bail, Support for Romney)

Jobs, Jobs and Cars

Chrysler Royal
Chrysler Royal

Paul Krugman writes, in response to the lame Mitch Daniels response to the 2012 State of the Union speech:

Why does Apple manufacture abroad, and especially in China? As the article explained, it’s not just about low wages. China also derives big advantages from the fact that so much of the supply chain is already there. A former Apple executive explained: “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away.”

This is familiar territory to students of economic geography (corrected link, PDF): the advantages of industrial clusters — in which producers, specialized suppliers, and workers huddle together to their mutual benefit — have been a running theme since the 19th century.

And Chinese manufacturing isn’t the only conspicuous example of these advantages in the modern world. Germany remains a highly successful exporter even with workers who cost, on average, $44 an hour — much more than the average cost of American workers. And this success has a lot to do with the support its small and medium-sized companies — the famed Mittelstand — provide to each other via shared suppliers and the maintenance of a skilled work force.

The point is that successful companies — or, at any rate, companies that make a large contribution to a nation’s economy — don’t exist in isolation. Prosperity depends on the synergy between companies, on the cluster, not the individual entrepreneur.

But the current Republican worldview has no room for such considerations. From the G.O.P.’s perspective, it’s all about the heroic entrepreneur, the John Galt, I mean Steve Jobs-type “job creator” who showers benefits on the rest of us and who must, of course, be rewarded with tax rates lower than those paid by many middle-class workers.

And this vision helps explain why Republicans were so furiously opposed to the single most successful policy initiative of recent years: the auto industry bailout.

The case for this bailout — which Mr. Daniels has denounced as “crony capitalism” — rested crucially on the notion that the survival of any one firm in the industry depended on the survival of the broader industry “ecology” created by the cluster of producers and suppliers in America’s industrial heartland. If G.M. and Chrysler had been allowed to go under, they would probably have taken much of the supply chain with them — and Ford would have gone the same way.

Fortunately, the Obama administration didn’t let that happen, and the unemployment rate in Michigan, which hit 14.1 percent as the bailout was going into effect, is now down to a still-terrible-but-much-better 9.3 percent. And the details aside, much of Mr. Obama’s State of the Union address can be read as an attempt to apply the lessons of that success more broadly.

(click here to continue reading Jobs, Jobs and Cars –


Michigan Central Station

Michigan Central Station ought to be preserved, don’t you think? Maybe like some sort of urban decay museum. Clean it up a little bit, charge a small admission fee, allow photographers and tourists to explore it. I’d pay.

The last train pulled away more than 20 years ago from Michigan Central Station, one of thousands of “see-through” buildings here, empty shells from more auspicious times.

Many of the blighted buildings stay up simply because they are too expensive to tear down. Yet Michigan Central is in a class of its own. Some city officials consider it among the ugliest behemoths to pockmark Detroit and have ordered its demolition, but others see it as the industrial age’s most gracious relic, a Beaux Arts gem turned gothic from neglect but steeped in haunting beauty.

Now Detroit has become embroiled in an urgent debate over how to save what is perhaps its most iconic ruin — and in the process, some insist, give the demoralized city a much needed boost.

“People compare it to Roman ruins,” said Karen Nagher, the executive director of Preservation Wayne, an organization that seeks to protect architecture and neighborhoods around Detroit. “Some people just want it left alone. But I’d love to see that building with windows in and lights on again.”

[Click to continue reading Detroit Journal – Seeking a Future for a Symbol of a Grander Past –]

I found over 800 photos of the Michigan Central Station on Flickr1 but have not taken any myself, unfortunately.

“It’s the quintessential example of urban decay in Detroit,” said John Mohyi, a Wayne State University student and founder of the Michigan Central Station Preservation Society, a nonprofit group formed to save the building. “To see redevelopment of that station would have a major impact on morale.”

Having lost nearly a million people in the last 60 years, Detroit has a backlog of thousands of empty office buildings, theaters, houses and hotels. Downtown alone, more than 200 abandoned buildings are on the National Register of Historic Places. Most are examples of the Art Deco and neo-Classical styles that were popular before World War II, when Detroit was booming.

But with 500,000 square feet of space on 14 acres of land, Michigan Central Station is “different from your standard vacant building,” said Mickey Blashfield, a government relations official with the station’s owner, CenTra Inc., a trucking and transportation company that acquired it by default through a property transfer in 1995 and has struggled to find a use for it since.

“Architecturally and historically,” Mr. Blashfield said, “it has more of an emotional connection with people than virtually any building in the city.”

  1. limited to Creative Commons licensed items only []

Reading Around on October 21st through October 28th

A few interesting links collected October 21st through October 28th:

  • Eat More Black Pepper to Increase Your Food’s Nutritional Value [Health] – Black pepper is often thought of as a last minute ditch to save a flavorless dish, but it really plays a powerful role in your bodies ability to absorb nutrients from the foods you eat—even the healthy ones.The amount of nutrients your body consumes from a food is called bioavailability, which is always less than what your food truly contains.
  • They Eat Horses, Don’t They? : Horsemeat is a delicacy in many countries, but not America – CHOW – Eating horsemeat in America is perfectly legal, according to Steven Cohen of the USDA’s food safety and inspection service. If it seems wrong, that’s not the law—that’s, well, you. But bear in mind that the Japanese and many Europeans eat all kinds of horse: horse sashimi in Japan; horse tartare or steak in Belgium; pastissada, or horsemeat stew, in Italy’s Veneto. Fears of mad cow disease in recent years prompted a spike in horsemeat prices in Germany and Italy.If it seems wrong, that’s not the law—that’s, well, you.
  • Auto bailout: Steven Rattner on how the Obama team did it – Oct. 21, 2009 – We were shocked, even beyond our low expectations, by the poor state of both GM and Chrysler. Looking just at the condition of GM’s finances and Chrysler’s new-car pipeline, the case for a bailout was weak.…Everyone knew Detroit’s reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

Explaining a No Vote on Stimulus in Michigan

Actions have consequences, and if Congress-critter McCotter and others of his ilk lose their jobs because their constituents run them out on a flaming rail, I’d celebrate the fact.

Newstand on State Street circa 1996

[Representative Thaddeus] McCotter — whose suburban district west of Detroit is laced with unemployed autoworkers, shuttered automotive plants and struggling manufacturers — could become a test case of whether House Republicans’ united front against the economic measure was the wise political and policy course.

Democrats are mounting a new campaign to remind voters that Mr. McCotter and 11 other Republicans in competitive districts in harder-hit states opposed the stimulus package, which the president says will provide middle class tax cuts and millions of jobs — 7,800 in Mr. McCotter’s district alone, according to a calculation by the White House.

“Did you know Congressman Thad McCotter voted against President Obama’s economic recovery plan, endorsed by the U.S. Chamber of Commerce?” says the script of an automated telephone call that the Democratic Congressional Campaign Committee plans to direct to homes in his district this week. The message will encourage voters to call Mr. McCotter and “ask why he voted to raise taxes on middle-class families.”

[From Explaining a ‘No’ Vote on Stimulus in Michigan –]

The Vulgar Pig Boy1 has convinced so many working class people that the Republicans have working class Americans interests at heart, despite consistent behavior that demonstrates the complete opposite. Wouldn’t it be cool if the stimulus package opposition was the beginning of the end of this Republican lie?

  1. aka Rush Limbaugh []

Bailing Out 100 Rich Investors in Chrysler

Now that I think about it, why should taxpayers foot the bill for an investment gone bad? Cerberus Capital Management has plenty of profits in their other investments. Why should we support Dan Quayle and John Snow’s extravagant lifestyle? Digging a little deeper, Cerberus also owns 51% of GMAC – the financing arm of General Motors.

From Hoovers Online:

Named after the mythical three-headed dog that guards the gates of hell, Cerberus Capital Management has become a driving force among private equity firms. One of its more recent moves is the purchase of 80% of Chrysler from Daimler in 2007. Cerberus was also the lead investor of a group that acquired 51% of GMAC, the financing arm of General Motors. The company also owns bus manufacturer Blue Bird and car parts maker TA Delaware (formerly Tower Automotive). Other holdings include a 45%-stake in Japanese bank Aozora, real estate services firm LNR Property, and a 52%-stake in ACE Aviation Holdings, the parent company of Air Canada.

Cerberus has become heavily involved in the automobile industry because it believes that the sector has long been undervalued. In addition to its GMAC, Chrysler, and Tower Automotive holdings, the company now has an interest in CTA Acoustics (automobile insulation), Guilford Mills (automotive seating products), and Peguform Group (plastic auto interior and exterior parts).

A key to early success for the Cerberus-Chrysler deal may well be found in its new labor agreement with the United Auto Workers (UAW) union. While Chrysler has already announced plans to reduce its workforce by some 20,000 and to shutter at least one manufacturing facility, its biggest battle could still be to reduce labor and associated health-care costs.

Red Night of the Soul

Louise Story wrote:

Last year, Cerberus and about 100 co-investors bought 80.1 percent of Chrysler for $7.4 billion from the German carmaker Daimler. It also bought a controlling stake in GMAC, the finance arm of General Motors. Since then Chrysler has eliminated more than 30,000 jobs and struggled to keep itself afloat while its sales have plummeted. Cerberus is pressing to have Chrysler merge with G.M., but G.M. has said a tie-up is off the table. Chrysler is asking the government for $7 billion to get through the next few months.

Cerberus, named after the mythical three-headed dog that guards the gates of Hades, has a fierce reputation on Wall Street. Many bankers and investors are reluctant to talk openly about the company, which is renowned, even feared, for its hard-nosed deal-making.

But Cerberus is also pursuing its interests aggressively in Washington, where some lawmakers have questioned why the government should assist the privately owned Chrysler. In addition to Mr. Snow, the firm’s chairman, Cerberus’s Washington hands include Dan Quayle, the former vice president, and Billy J. Cooper, who has worked as partner at the lobbying firm Patton Boggs.

The firm has also hired Arnold I. Havens, a former general counsel of the Treasury Department; John B. Breaux, a former senator from Louisiana; David Hobbs, former assistant to President Bush for legislative affairs; and Christopher A. Smith, former chief of staff in the Treasury. So far this year, Cerberus has spent nearly $2 million on lobbying, while Chrysler has spent $5 million, according to Senate records. Ford has spent more than $5 million and G.M. $10 million.

[From Chrysler’s Friends in High Places –]

and I’m with Representatives Maxine Waters and Elijah E Cummings:

But some lawmakers have begun voicing concern that bailing out Chrysler would amount to bailing out Cerberus. On Friday, Representative Maxine Waters, a California Democrat, pointed to Cerberus’s riches. “It seems to me that Cerberus is doing pretty well,” she said.

In an interview, Representative Elijah E. Cummings, a Democrat from Maryland, said he thought Cerberus should put more of its own money into Chrysler before asking for taxpayers’ help.

“I’m not saying they have to get all the money from Cerberus, but at least show a good faith effort,” Mr. Cummings said. “Chrysler should come back to Congress and say, ‘This is what we’ve asked Cerberus for, and this was their response.’ I think the public is due that.”

and especially because Cerberus opposed raising fuel efficiency standards:

“They are very, very well-connected,” said Harry Cendrowski, a consultant and co-author of the book “Private Equity: History, Governance and Operations.” Senator Bob Corker of Tennessee can attest to that. Last year, he was on vacation when his phone began ringing. It was Mr. Snow, and then Mr. Quayle, both calling on behalf of Cerberus. They wanted the senator to know that Cerberus opposed new fuel efficiency standards, Mr. Corker recalled. Days later, Mr. Feinberg visited Mr. Corker’s Washington office. Mr. Corker told Cerberus he was unmoved.

“I really did feel badly for these guys,” Mr. Corker, a Republican, said. But others point out that Chrysler landed on Cerberus’s lap practically free. The price it and its co-investors paid for their stake was roughly equal to the book value of Chrysler Financial. The car operation was just icing.

Mr. Snow and Mr. Feinberg declined to comment for this article. Cerberus does not have much of its own money riding on Chrysler and GMAC. The two investments amount to about 7 percent of its assets under management, and this past July Cerberus and its co-investors lent $2 billion to Chrysler. But its reputation is at stake, and it is eager to keep Chrysler and GMAC out of bankruptcy.

Talk about socialism! Republican style socialism, also known as public costs and private profit.

Waxman Should Head Energy Panel

Henry Waxman should succeed John Dingell – even though the Congress usually rewards longevity over competence. Dingell has been a member of Congress since 1955, but things have changed since then, and Dingell hasn’t. Dingell is part of the reason you can rent a Ford in Europe that gets 45 mpg, and cannot rent a comparably fuel-efficient Ford in the US.

Formal and solemn revocation

California Rep. Henry Waxman won backing from a key group of Democrats in his bid to unseat Michigan Rep. John Dingell as chairman of the powerful House Energy and Commerce Committee.

At stake is the direction of crucial legislation during a period of solid Democratic control of Congress. The committee’s mandate is broad, with oversight of everything from climate change to health care to telecommunications.

The Democrats’ Steering and Policy Committee, which helps allocate committee memberships and chairmanships, voted 25-22 Wednesday to nominate Mr. Waxman for the post. The full House Democratic membership will decide Thursday whether to heed the panel’s recommendation.

The starkest difference between the men may concern so-called greenhouse gases, which trap the sun’s heat in the atmosphere and contribute to global warming. Mr. Waxman favors stricter and faster regulation of such emissions than Mr. Dingell, who has been one of the auto industry’s staunchest allies in Congress. His ouster from the chairmanship would be a major setback for Detroit’s auto makers at a time when they are seeking assistance from Washington.

[From Key Group Backs Waxman to Head Energy Panel –]

Of course, the chairman hasn’t yet been rewarded; I am sure Dingell has plenty of favors to call in among the Congress members who are about to vote. Let us hope that Waxman presents a better case to those same members. From my perspective, Waxman is better fit with President-elect Obama. Danny Davis, are you listening?