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Doin’ It To It in Michigan

Gov­er­nor of Michi­gan?

COMMENT: With dra­con­ian pro­vi­sions on the books in Michi­gan to dis­man­tle demo­c­ra­t­ic process in the name of finan­cial emer­gency, we are see­ing the begin­ning of the real­iza­tion of the laws’ intent.

“This is sad news for democ­ra­cy in Michi­gan,” said Mark Gaffney, pres­i­dent of the Michi­gan AFL-CIO. “With the strip­ping of all pow­er of duly elect­ed offi­cials in Ben­ton Har­bor … we can now see the true nature of the emer­gency man­ag­er sys­tem.”

“Emer­gency Man­ag­er Cuts Roles of Ben­ton Har­bor Offi­cials” by San­ti­a­go Esparza; The Detroit News; 4/16/2011.

EXCERPT: In a move believed to be the first under sweep­ing new state leg­is­la­tion, Emer­gency Man­ag­er Joseph Har­ris sus­pend­ed deci­sion-mak­ing pow­ers of city offi­cials Fri­day.

Offi­cials only can call meet­ings to order, adjourn them and approve min­utes of meet­ings as part of the order issued Fri­day.

The action is like­ly the first since Gov. Rick Sny­der signed into law in March a new statute that grants more pow­ers to emer­gency man­agers appoint­ed by the Trea­sury Depart­ment to take over dis­tressed schools and com­mu­ni­ties.

At least one elect­ed Ben­ton Har­bor offi­cial was san­guine about the order. “It does­n’t both­er me,” said City Com­mis­sion­er Bryan Joseph. “I’m in favor of it.”

Joseph said he has watched finan­cial mis­man­age­ment for decades, which was one of the rea­sons he ran for elec­tion in 2008.

But the move drew a strong rebuke from the AFL-CIO. The union rep­re­sents admin­is­tra­tive work­ers, among oth­ers.

“This is sad news for democ­ra­cy in Michi­gan,” said Mark Gaffney, pres­i­dent of the Michi­gan AFL-CIO. “With the strip­ping of all pow­er of duly elect­ed offi­cials in Ben­ton Har­bor … we can now see the true nature of the emer­gency man­ag­er sys­tem.” . . .


Discussion

7 comments for “Doin’ It To It in Michigan”

  1. Detroit May­or Dave Bing to request an “Emer­gency Man­ag­er” for Detroit — unless unions agree to his demands:

    http://michiganmessenger.com/48687/bing-to-call-for-emergency-manager-for-detroit

    Mean­while, in oth­er union-bust­ing news, Mass­a­chu­setts DEMOCRATS (??!!) strip unions of col­lec­tive bar­gain­ing rights:

    http://www.rawstory.com/rs/2011/04/29/massachusetts-dems-vote-to-strip-public-unions-of-bargaining-rights/

    Just a reminder: Among Hitler’s pri­or­i­ties upon seiz­ing pow­er were to out­law labor unions, on May 2, 1933.

    Why? Because the only cure for a fas­cist coup is a gen­er­al strike from labor unions, the only orga­nized oppo­si­tion when all oth­er checks & bal­ances are gone.

    Posted by R. Wilson | April 30, 2011, 10:13 pm
  2. Any­body who thinks this is going to help the state of Michi­gan in any sort of any way is either com­plete­ly naive or a com­plete moron.

    Posted by Steven | May 1, 2011, 7:11 am
  3. Michi­gan has been tran­si­tion­ing to a more fas­cist state for a very long, long time. Long before I was ever born. It can be said that, on a fed­er­al, nation­al scale, the Unit­ed States is an invert­ed total­i­tar­i­an­ism. On the state and local lev­el, every­thing has been increas­ing­ly more fas­cist and author­i­tar­i­an, more­so than it was before. To some extant, this is because of tech­no­log­i­cal advance­ment. And tech­nol­o­gy is the tool and instru­ment by which gov­ern­ment (fed­er­al, state or local) can increase its con­trol.

    Posted by Joshua Laudermilk | May 1, 2011, 8:55 am
  4. Oh look, Michi­gan’s gov­er­nor just declared that anoth­er city is going to get an viceroy “emer­gency man­ag­er”: Detroit. Fiat cur­ren­cy is appar­ent­ly anath­e­ma to civ­i­liza­tion, but fiat gov­ern­ment is our only hope:

    Bloomberg
    Sny­der Says Detroit Needs Emer­gency Man­ag­er to End Fis­cal Cri­sis
    By Chris Christoff — Mar 1, 2013 11:14 AM CT

    Michi­gan Gov­er­nor Rick Sny­der plans to name an emer­gency man­ag­er to han­dle Detroit’s fis­cal cri­sis, strip­ping pow­er from local offi­cials in a with­ered city that in 1940 was the fourth biggest in the U.S. and a thriv­ing cap­i­tal of indus­try.

    Sny­der, 54, said today at a pub­lic meet­ing in Detroit that he plans to take a step he avoid­ed a year ago. The move punc­tu­ates decades of decline in the home town of Gen­er­al Motors Co. (GM) His deci­sion may inflame oppo­nents, as the admin­is­tra­tion of a white Repub­li­can seizes con­trol of a place that is pre­dom­i­nant­ly black and Demo­c­ra­t­ic.

    “It’s a sad day, a day I wish nev­er hap­pened, but it’s a day of promise,” Sny­der, who is in his first term.

    Detroit, with a bud­get deficit of about $327 mil­lion and more than $14 bil­lion in long-term oblig­a­tions, would be the sixth Michi­gan city put under state con­trol as Sny­der tries to pre­vent what could be the largest U.S. munic­i­pal bank­rupt­cy. Start­ing lat­er this month, a man­ag­er would have the pow­er to can­cel labor con­tracts, cut spend­ing and sell assets.

    ...

    No Michi­gan local­i­ties have entered bank­rupt­cy. A review panel’s deter­mi­na­tion Feb. 19 that a finan­cial emer­gency grips Detroit cleared the way for Sny­der to act to avoid one.

    Oppo­nents say state takeovers dis­en­fran­chise vot­ers by strip­ping elect­ed offi­cials of their pow­er over munic­i­pal­i­ties or school dis­tricts, and may pro­tect bond­hold­ers at the expense of employ­ees, ser­vices and tax­pay­ers.

    ...

    May­or Dave Bing, a Demo­c­rat, has said law­suits, union con­tracts and a lack of cash has stymied his turn­around plan.

    Some have said a takeover is racist because, along with Detroit, cities where almost half of Michigan’s black res­i­dents live would be under state con­trol. Man­agers are already in charge in Allen Park, Ben­ton Har­bor, Ecorse, Flint and Pon­ti­ac.

    ...

    Yes, the may­or blames those pesky unions, always caus­ing trou­ble. So what should we expect from Detroit’s new “Man­ag­er”? Well, per­haps we could ask one of Michi­gan’s five oth­er emer­gency man­ager’s about the kinds of chal­lenges they face. What kinds of pri­or­i­ties would oth­er “man­agers” rec­om­mend Detroit’s “man­ag­er” set? Hmmm...I won­der what those pri­or­i­ties could be:

    Orig­i­nal­ly Pub­lished: Feb­ru­ary 19, 2013 2:09 PM Mod­i­fied: Feb­ru­ary 20, 2013 2:43 PM
    Pon­ti­ac emer­gency man­ag­er: EM is prefer­able to bank­rupt­cy for Detroit
    By Kirk Pin­ho

    Louis Schim­mel has been the emer­gency finan­cial man­ag­er for the city of Pon­ti­ac since Sept. 11, 2011. He pre­vi­ous­ly was the emer­gency finan­cial man­ag­er in Ham­tram­ck and the court-appoint­ed receiv­er in Ecorse. Here’s what Schim­mel had to say to Crain’s reporter Kirk Pin­ho about Detroit’s get­ting an emer­gency man­ag­er or, even, falling into bank­rupt­cy.

    What can the city of Detroit learn from Pon­ti­ac’s expe­ri­ence with an emer­gency finan­cial man­ag­er if it does find itself under the con­trol of some­one like you?

    I would do in Detroit, if I were the emer­gency man­ag­er, exact­ly like I did in Pon­ti­ac, Ecorse and Ham­tram­ck. I would accu­mu­late a list of the issues, and abol­ish and con­sol­i­date every­thing into one, in terms of the finance area. We can’t have all these areas work­ing on financ­ing.

    The prob­lem with Detroit is that they are def­i­nite­ly going to need emer­gency man­ag­er pow­ers to deal with all the union issues down there. In every city that is in finan­cial trou­ble, it’s almost guar­an­teed that 80 per­cent of their prob­lems are union issues – pub­lic ser­vice, basi­cal­ly. Police and fire is a hor­ren­dous cost. The union con­tracts are nev­er out of whack in salaries. Nev­er attack the salaries. Always attack the ben­e­fits, which have just become so out­ra­geous that they are unsus­tain­able.

    The first thing you do in the emer­gency man­ag­er process is all of the union issues. Then you go on with the rest of the list and do all of the things you need to do.

    It may be impos­si­ble, even for an emer­gency man­ag­er, to deal with all of the issues. That’s why I believe the (law) was amend­ed to pro­vide what we call item No. 4, which is the bank­rupt­cy option. I believe that I fixed Pon­ti­ac, which is prob­a­bly almost as bad as Detroit, and I fixed it with­out hav­ing to go to the bank­rupt­cy pro­vi­sion.

    ...

    Posted by Pterrafractyl | March 1, 2013, 11:26 am
  5. Whoops, left out the link to the last excerpt in the above com­ment. Here we go!

    Posted by Pterrafractyl | March 1, 2013, 11:47 am
  6. The Great Aus­ter­i­ty Grift is both a sci­ence and an art:

    DIA’s art col­lec­tion could face sell-off to sat­is­fy Detroit’s cred­i­tors
    9:57 AM, May 24, 2013
    By Mark Stryk­er and John Gal­lagher

    Detroit Free Press Staff Writ­ers

    The once unthink­able is sud­den­ly think­able.

    Detroit emer­gency man­ag­er Kevyn Orr is con­sid­er­ing whether the multi­bil­lion-dol­lar col­lec­tion at the Detroit Insti­tute of Arts should be con­sid­ered city assets that poten­tial­ly could be sold to cov­er about $15 bil­lion in debt.

    How much is the art at the DIA worth? Nobody knows exact­ly, but sev­er­al bil­lion dol­lars might well be a low esti­mate.

    Even the pos­si­bil­i­ty has set off a sharp reac­tion. The DIA hired a bank­rupt­cy lawyer to advise it, and phil­an­thropist and DIA patron A. Alfred Taub­man said this evening that “it would be a crime” to sell any of the DIA’s col­lec­tion to sat­is­fy city cred­i­tors.

    “I’m sure Mr. Orr, once he thinks about it, will cer­tain­ly not choose that as one of the assets,” Taub­man said. “It’s not just an asset of Detroit. It’s an asset of the coun­try.”

    Liq­ui­dat­ing DIA art to pay down debt like­ly would be a mon­strous­ly com­pli­cat­ed, con­tro­ver­sial and con­tentious process nev­er before test­ed on such a large scale and with no cer­tain out­come. The DIA is unusu­al among major civic muse­ums in that the city retains own­er­ship of the build­ing and col­lec­tion while dai­ly oper­a­tions, includ­ing fund-rais­ing, are over­seen by a non­prof­it insti­tu­tion.

    DIA Exec­u­tive Vice Pres­i­dent Ann­marie Erick­son said the muse­um has hired New York bank­rupt­cy attor­ney Richard Levin of Cra­vath, Swaine & Moore to advise ways to pro­tect the col­lec­tion from pos­si­ble loss­es. Levin is one of the nation’s lead­ing bank­rupt­cy attor­neys and was active in the Gen­er­al Motors bank­rupt­cy and oth­er high-pro­file cas­es.

    “We are stand­ing by our con­tention and belief that we hold the col­lec­tion in trust for the pub­lic,” Erick­son said this evening. “And although to some it may seem to be an asset, we do not.”

    Bill Nowl­ing, a spokesman for Orr, said the art col­lec­tion at the DIA must, how­ev­er reluc­tant­ly, be con­sid­ered one of the city’s assets in the cur­rent finan­cial emer­gency as the city heads toward a pos­si­ble bank­rupt­cy fil­ing.

    “We have no inter­est in sell­ing art,” Nowl­ing said this evening. “I want to make that pret­ty clear. But it is an asset of the city to a cer­tain degree. We’ve got a respon­si­bil­i­ty under the act to ratio­nal­ize that asset, to make sure we under­stand what’s it’s worth.

    “We have to look at every­thing on the table,” he con­tin­ued. “As much as it would pain us to do it, and it does, I’m a great lover of art and so is Kevyn, we’ve got a respon­si­bil­i­ty to ratio­nal­ize all the assets of the city and find out what the worth is and what the city holds.”

    As emer­gency man­ag­er, Orr has great lat­i­tude in sell­ing city assets to sat­is­fy debt. But the scope of that pow­er to sell off city jew­els, such as the DIA col­lec­tion, Belle Isle or the city’s water depart­ment, for exam­ple, has yet to be exer­cised and like­ly would be test­ed in court.

    Under Chap­ter 9 of the fed­er­al bank­rupt­cy code, nei­ther a judge nor cred­i­tors can force the city to liq­ui­date its assets. But bank­rupt­cy experts say the judge and cred­i­tors can push for a sale of assets and that the pres­sure could be hard to resist under some cir­cum­stances.

    “The cred­i­tors can real­ly force the issue,” Nowl­ing said. “If you go into court, they can object and say, ‘Hey, I’m tak­ing a huge hair­cut, and you’ve got a bil­lion dol­lars worth of art sit­ting over there.’ ”

    Nowl­ing said that some cred­i­tors already have asked Orr whether the DIA col­lec­tion is “on the table.” Nowl­ing would not iden­ti­fy which cred­i­tors, but he said, “These are peo­ple savvy enough to know where all the mon­ey for the City of Detroit is.”

    The pos­si­ble forced sale of some of the DIA’s great­est trea­sures — includ­ing some of the world’s most famous paint­ings by Pieter Bruegel the Elder, Hen­ri Matisse, Vin­cent van Gogh, and scores of oth­er mas­ter­pieces, is send­ing shock waves through the muse­um world.

    ...

    Even by con­sid­er­ing sell­ing off art­work, Orr, the DIA and the city are enter­ing unchart­ed ter­ri­to­ry. Art law experts said that they were unaware of any prece­dents of a city being forced to sell works in a munic­i­pal bank­rupt­cy.

    Under nor­mal cir­cum­stances, sell­ing art to raise oper­at­ing funds is strict­ly for­bid­den by the eth­i­cal codes and gov­ern­ing bod­ies in the muse­um world. Muse­ums that run afoul of the rules are ostra­cized, and the threat of no longer being able to mount trav­el­ing exhi­bi­tions or bor­row works is typ­i­cal­ly enough to pre­vent such sales — though the degree to which the DIA’s peer insti­tu­tions would hold it account­able in the case of a forced sale remains an open ques­tion.

    ...

    Posted by Pterrafractyl | May 24, 2013, 12:27 pm
  7. P.J. O’Rourke has a plan to save Detroit and...surprise!...O’Rourke wants Detroit to just give up, com­plete the race to the bot­tom, ditch the US safe­ty-net, and turn itself into Hong Kong:

    The Wall Street Jour­nal
    How to Save Detroit
    The Motor City needs help. Why not turn it into Hong Kong?

    By P. J. O’Rourke
    Jan. 9, 2014 1:12 p.m. ET

    Detroit is beautiful—though you prob­a­bly have to be a child of the indus­tri­al Mid­west, like me, to see it. As you may have heard, the city is in trou­ble. At the end of the 2013 fis­cal year, Detroit had a bal­ance sheet with lia­bil­i­ties of $9.05 bil­lion. The city’s emer­gency man­ag­er, Kevyn Orr, esti­mates long-term debt at $18 bil­lion.

    But I know how to fix Detroit, because it reminds me of anoth­er favorite place, Hong Kong—two things so oppo­site that they evoke each oth­er the way any Kar­dashi­an is a reminder that you love home and moth­er.

    Hong Kong’s per capi­ta GDP is among the high­est in the world. But it was once a worse mess than Detroit. Dev­as­tat­ed by Japan­ese occu­pa­tion, the British colony’s pop­u­la­tion had declined from 1.6 mil­lion in 1941 to 600,000 by 1945. Then, after the 1949 com­mu­nist vic­to­ry on the main­land, a mil­lion refugees arrived. Most of them were pen­ni­less. Britain’s Labor gov­ern­ment was pen­ni­less, too. Maybe Hong Kong could have gone into Chap­ter 9. But who would have been the bank­rupt­cy judge? Chair­man Mao?

    Instead Hong Kong had the good for­tune to get John (lat­er Sir John) Cow­perth­waite, a young offi­cial sent out to push the colony’s econ­o­my toward recov­ery. “I did very lit­tle,” he once said. “All I did was to try to pre­vent some of the things that might undo it.”

    Such as tax­es. Even now, Hong Kong has no sales tax; no VAT; no tax­es on cap­i­tal gains, inter­est income or earn­ings out­side Hong Kong; no import or export duties; and a top per­son­al income-tax rate of 15%.

    Cow­perth­waite was finan­cial sec­re­tary from 1961 to 1971, Hong Kong’s peri­od of fastest eco­nom­ic growth. Sir John, how­ev­er, would­n’t allow col­lec­tion of eco­nom­ic sta­tis­tics for fear they’d lead to polit­i­cal med­dling. Some sta­tis­tics nonethe­less: Dur­ing Cow­perth­wait­e’s tenure, Hong Kong’s exports grew by an aver­age of 13.8% a year, indus­tri­al wages dou­bled and the num­ber of house­holds in extreme pover­ty shrank from half to 16%.

    With that in mind, I was talk­ing to a friend in Michi­gan. We dis­cussed Detroit’s pover­ty, crime, depop­u­la­tion and insol­ven­cy.

    “Make it into Hong Kong,” I said, “with polite Cana­di­ans next door instead of a scary Polit­buro.”

    “Some­one’s way ahead of you,” he told me.

    Real-estate devel­op­er Rod Lock­wood wants investors to buy Detroit’s derelict 982-acre Belle Isle Park and per­suade the U.S. to allow Belle Isle a ter­ri­to­r­i­al sta­tus like Guam and all the tax ben­e­fits of Hong Kong—with eas­i­er access to Red Wings games.

    Belle Isle has room for only about 50,000 peo­ple and just one bridge to the city. It might seem more of a gat­ed com­mu­ni­ty than an over­seas pos­ses­sion. So Mr. Lock­wood has expand­ed his pro­pos­al to include 15 square miles of Detroit’s dis­tressed east side. I think Mr. Lock­wood should try for the city’s entire 143 square miles.

    Could it real­ly work? Mr. Lock­wood took me on a city tour with Lar­ry Mon­go, own­er of Café D’Mon­go’s Speakeasy, a pop­u­lar hang­out for Detroit’s hip­sters. (Hip­ster scenes tend to spring up any­where cheap real estate abuts young peo­ple, and just up Wood­ward Avenue, at Wayne State, there are 31,000 of them.)

    Detroit’s indus­tri­al ruins are pic­turesque, like crum­bling Rome in an 18th-cen­tu­ry etch­ing. The tragedy is the desert of blue-col­lar neigh­bor­hoods. Almost every home is burned, a crack house, a cel­lar hole or stripped of all that’s sal­vage­able.

    Hong Kong eco­nom­ics would mean cur­tail­ing U.S. wel­fare and ben­e­fit pro­grams, but Detroi­ters seem to have found the holes in the social safe­ty net already. Forty-four per­cent are liv­ing below pover­ty lev­el. They could, how­ev­er, ben­e­fit from the jobs and com­merce in a vibrant, tax-free Hong Kong econ­o­my.

    ...

    Plus intro­duc­ing Hong Kong’s sharp-clawed wolver­ine species of cap­i­tal­ism into the Wolver­ine State would require a bold stroke from Wash­ing­ton. It’s hard to imag­ine any­thing bold from this Con­gress of head-butting pro-wrestler wannabes.

    But some­thing needs to be done. Sen. Rand Paul weighed in with a Dec. 6 speech at the Detroit Eco­nom­ic Club. (The econ­o­my may be gone, but we Mid­west­ern­ers are “join­ers,” so there’s still a club.) He said he’d intro­duce leg­is­la­tion cre­at­ing “Eco­nom­ic Free­dom Zones” with per­son­al and busi­ness tax rates of 5%.

    Any­way, Detroit is broke. And so was Hong Kong. In 1949 the colony had just one asset. Hong Kong owned Hong Kong—all the land except what was under the Angli­can cathe­dral. Hong Kong sold lease­holds, first for a lit­tle, then for a lot.

    ...

    Hong Kong on the Great Lakes! Sounds enchant­i­ng.

    But it’s worth not­ing that Hong Kong start­ed its first “pover­ty bench­mark” last year and found a 20% pover­ty rate. And that pover­ty line may be a bit low, because based on Hong Kong’s “mis­ery index” last year 7 out 10 Hong Kong res­i­dents are mis­er­able:

    South Chi­na Morn­ing Post

    The mis­ery of Hong Kong’s wealth gap
    PUBLISHED : Sat­ur­day, 30 March, 2013, 12:00am
    UPDATED : Sat­ur­day, 30 March, 2013, 3:30am

    SCMP Edi­to­r­i­al

    Hong Kong peo­ple are a mis­er­able lot. Accord­ing to the mis­ery index con­struct­ed by Shue Yan Uni­ver­si­ty’s Eco­nom­ic and Well­be­ing Project, sev­en in 10 Hongkongers say they are liv­ing in mis­ery.

    It appears the poor­er you are, the unhap­pi­er you become. House­holds with month­ly income of HK$10,000 to HK$20,000 have the high­est mis­ery index of 2.93 out of 4, with 4 being the most mis­er­able. Those on HK$15,000 to HK$19,999 scored 2.90. The hap­pi­est, at 2.79, are house­holds with a month­ly income of HK$50,000 or more. So, while it’s true that mon­ey can’t buy hap­pi­ness, the lack of it does bring mis­ery.

    But this tells only part of the sto­ry. It isn’t that we are poor as a whole. A new sur­vey by Citibank finds that one in nine of the city’s adults — or at 601,000 peo­ple — are Hong Kong-dol­lar mil­lion­aires, a 14 per cent jump from the pre­vi­ous year. The sur­vey only counts liq­uid assets such as cash, stocks and bonds, and excludes prop­er­ty. One in three makes his or her mon­ey from prop­er­ty, and one in four from invest­ments such as the stock and bond mar­kets.

    A wide­ly report­ed glob­al study in Novem­ber by invest­ment firm Roy­al Skan­dia found that the aver­age Hongkonger thinks he or she needs to earn HK$1.5 mil­lion a year — or HK$125,000 a month — to be hap­py. No won­der we are mis­er­able. Accord­ing to gov­ern­ment cen­sus, only 4.2 per cent of the work­ing pop­u­la­tion earns more than HK$60,000 a month. On aver­age, we earn just HK$12,800 per month.

    Gov­ern­ment fig­ures also show our poor are slight­ly less poor than a decade ago, but the rich are a lot rich­er. So while our col­lec­tive wealth is improv­ing, the ever-widen­ing wealth gap has become a source of social ten­sions. It may also have raised expec­ta­tions that are dif­fi­cult to meet and so con­tributed to a sense of mis­ery and malaise.

    ...

    Just remem­ber: When the gov­ern­ment steps in to act as the employ­er of last resort and rebuild a viable econ­o­my it’s an act of weak-kneed social­ism that only a soci­ety of wuss­es would con­sid­er. But it’s bold, rugged indi­vid­u­al­ism when a com­mu­ni­ty tries to lure in out­side invest­ments by sub­mit­ting to dehu­man­iz­ing wages, unsafe work­ing con­di­tions, and mas­sive tax-breaks for the wealthy.

    Posted by Pterrafractyl | January 10, 2014, 1:49 pm

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