By Larry Leonard
[We ran this article last year, but it seems to be remarkably current today–Ed]
Something like 25% of the former car capitol of the planet is empty buildings, trashy plots of debris and rusting machinery. The cause? According to sources from the Wall Street Journal to Stewart Varney of FOX, it’s unions — in this case the public ones that, unlike the GM bunch haven’t been bailed out, yet. The approaching mostly public union debt for retirement packages and contractual medical coverage may total six billion dollars.
The Pot is Boiling
What is going on in this part of Michigan, today, is similar to what has been going on in nearby Wisconsin for years. The reason why the public (teachers and other government worker groups) in that state will be trying to recall their current governor in an election quite soon, is also the reason Detroit’s union representatives and members are threatening what sound like riots. (Some Black Panther types have said in plain English that if these contracts are altered they will burn Detroit to the ground.)
It’s the same thing that is bringing California to its collectivist knees. Public unions. Education. That sort of thing.
The difference between these two Great Lakes states is that Michigan has a few tools that Wisconsin doesn’t.* Specifically, in Michigan, the state government can install a kind of official who has the power to set the mayor of Detroit and other city officials (all of them bound like blood brothers to the unions) aside. You may think of this as a czar, except that this individual would have more power than even the Obama White House czars.
The various reports about Detroit almost all indicate that the state won’t bail out the city unless these contracts are altered, period. That makes financial sense because with a quarter of the city or more being a vacant lot, that same percentage of taxes on business, corporations and the lost work force are gone. Knock off the property taxes on the places where that departed work force used to live and work and the predictable decline in real estate values (thus potential resale revenues for the city) and the portrait is finished.
As we see it, and just looking at this one famous industrial pocket, if you set aside the Ford Motor Company and a few of Detroit’s famous pawn shops (doing tremendous business for obvious reasons), the place looks more like a western ghost town every day. In modern economic parlance, something like Greece. They used to make half the world’s cars in Motor City. They may set fire to the ones that are out of four bucks a gallon gasoline, this summer.
How ya gonna keep them down on the dairy farm? Let them take a look at Detroit