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Making the World Safe From Democracy, One Charter City at a Time

If you’re a Lib­er­tar­ian bil­lion­aire that was look­ing for­ward to cre­at­ing your own pri­vately man­aged “Free City” from a seri­ously dis­tressed coun­try — a city free from things like democ­racythings may be look­ing up for you:

AP
Hon­duras Once Again Passes ‘Model Cities’ Law

TEGUCIGALPA, Hon­duras Jan­u­ary 24, 2013 (AP)

The Hon­duran con­gress approved once again a “model cities” project that the country’s Supreme Court had pre­vi­ously declared uncon­sti­tu­tional because it would cre­ate spe­cial devel­op­ment zones out­side the juris­dic­tion of ordi­nary Hon­duran law.

Con­gress­man Rodolfo Irias of the rul­ing National Party says the law “includes the nec­es­sary mod­i­fi­ca­tions” to answer con­cerns about unconstitutionality.

The vote was 110 to 13, with 5 abstentions.

The court’s rejec­tion of the plan led Con­gress to fire four of the court’s five jus­tices in Decem­ber.

The plan would cre­ate “spe­cial devel­op­ment regions” with their own inde­pen­dent tax and jus­tice sys­tems, to spur eco­nomic growth in this Cen­tral Amer­i­can coun­try strug­gling with cor­rup­tion and crime.

The project was opposed by civic groups as well as the indige­nous people.

Ooooo...these char­ter cities sound so nice the Hon­duran leg­is­la­ture had to pass the plan twice. Although it sounds there are some Hon­durans that aren’t entirely on board with the idea. Per­haps they just weren’t sold on the idea behind the char­ter cities: that the key to revers­ing decades of poverty and deep, entrenched cor­rup­tion is to hand over gov­er­nance to Lib­er­tar­ian bil­lion­aires? Why can’t they see the light?

The New York Timne
Who Wants to Buy Honduras?

By ADAM DAVIDSON
Pub­lished: May 8, 2012

Shortly after the 2009 coup that over­threw Manuel Zelaya, Honduras’s newly elected pres­i­dent, Por­firio Lobo, asked his aides to think big, really big. How could Hon­duras, the orig­i­nal banana repub­lic, reform a polit­i­cal and eco­nomic sys­tem that kept nearly two-thirds of its peo­ple in grim poverty?

One young aide, Octavio Rubén Sánchez Bar­ri­en­tos, had no idea how to undo the entrenched power net­works. Honduras’s econ­omy is dom­i­nated by a hand­ful of wealthy fam­i­lies; two Amer­i­can con­glom­er­ates, Dole and Chiq­uita, have con­trolled its agri­cul­tural exports; and des­per­ately poor farm­ers barely eke out sub­sis­tence wages. Then a friend showed him a video lec­ture of the econ­o­mist Paul Romer, which got Sánchez think­ing of a ridicu­lously big idea: What if Hon­duras just started all over again?

Romer, in a series of papers in the 1980s, fun­da­men­tally changed the way econ­o­mists think about the role of tech­nol­ogy in eco­nomic growth. Since then, he has stud­ied why some coun­tries stay poor even when they have access to the same tech­nol­ogy as wealth­ier ones. He even­tu­ally real­ized some­thing that seems obvi­ous to any nonaca­d­e­mic, that poor coun­tries are sad­dled with laws and, cru­cially, cus­toms that pre­vent new ideas from tak­ing shape. He con­cluded that if they want to be rich, poor coun­tries need to some­how undo their invid­i­ous sys­tems (cor­rup­tion, oppres­sion of minori­ties, bureau­cracy) and cre­ate an envi­ron­ment more con­ducive to busi­ness. Or they could just start from scratch.

Then he decided to put the the­ory into prac­tice. In 2009, Romer devel­oped the idea of char­ter cities — eco­nomic zones founded on the land of poor coun­tries but gov­erned with the legal and polit­i­cal sys­tem of, often, rich ones. There were a cou­ple of inter­ested par­ties. (The pres­i­dent of Mada­gas­car was intrigued by a pre­lim­i­nary ver­sion of the idea, Romer told me, but he was soon ousted in a coup.) Then, in late 2010, Sánchez met with Romer, and the two hur­riedly per­suaded Pres­i­dent Lobo to make Hon­duras the site of an eco­nomic exper­i­ment. The coun­try quickly passed a con­sti­tu­tional amend­ment that allowed for the cre­ation of a sep­a­rately ruled Spe­cial Devel­op­ment Region.

...

Romer’s char­ter city is try­ing to avoid this dark side of urban­iza­tion by adapt­ing older, more suc­cess­ful mod­els. The United Arab Emi­rates, Hong Kong and Sin­ga­pore were able to build well-designed cities that housed and employed mil­lions, in part by per­suad­ing for­eign­ers to invest heav­ily. Dubai cre­ated a num­ber of micro­cities — one of which, for instance, is gov­erned by a sys­tem resem­bling Eng­lish com­mon law with judges from Britain, Sin­ga­pore and New Zealand.

Each has had well-known flaws, but Romer said the core idea can be repli­cated with­out them. The new Hon­duran char­ter city can work, he said, if its for­eign lead­er­ship can sim­i­larly assure investors that they’ve cre­ated a secure place to do busi­ness — some­where that money is safe from cor­rupt polit­i­cal crony­ism or the occa­sional coup. If a multi­na­tional com­pany com­mits to build­ing new fac­to­ries, real estate devel­op­ers will fol­low and build apart­ments, which then pro­vide the cap­i­tal for elec­tric­ity, sew­ers, tele­com and a police force.

Note that Pres­i­dent Lobo — the pres­i­dent that was “elected” in 2009 fol­low­ing the coup — is a big exam­ple of the kind of deep cor­rup­tion that he’s appar­ently try­ing to fix with char­ter cities.

Also note that each of the “older, more suc­cess­ful mod­els” — The United Arab Emi­rates, Hong Kong and Sin­ga­pore — are all unde­moc­ratc. And keep in mind that Patri Fried­man, Mil­ton Friedman’s grand­son, stepped down as the head of Peter “I no longer believe democ­racy is com­pat­i­ble with free­dom” Thiel’s Seast­eader Insti­tute to lead Future Cities Devel­op­ment, Inc. which is going to have its first project in Hon­duras.

Con­tin­u­ing...

...

Romer hasn’t yet been able to per­suade any nations to take on the role of cus­to­dian (Swe­den and Britain both passed), so Hon­duras has named a board of over­seers until there are enough peo­ple to form a democ­racy. Romer, who is expected to be chair­man, is hop­ing to build a city that can accom­mo­date 10 mil­lion peo­ple, which is 2 mil­lion more than the cur­rent pop­u­la­tion of Hon­duras. His char­ter city will have extremely open immi­gra­tion poli­cies to attract for­eign work­ers from all over. It will also tac­ti­cally dis­suade some from com­ing. Sin­ga­pore, Romer said, pro­vides a good (if some­times overzeal­ous) model. Its strict penal­ties for things like not flush­ing a pub­lic toi­let may make for late-night jokes, but they sig­nal to poten­tial immi­grants that it is a great place if you want to work hard and play by the rules.

There will be many rules in Romer’s char­ter city too. Even though he expects most ini­tial oppor­tu­ni­ties will be fairly low-paying basic indus­trial jobs, the local gov­ern­ment will man­date poli­cies that ensure retire­ment sav­ings, health care and edu­ca­tion. Accord­ing to Romer’s plan, the immi­grants who arrive will not get rich, but their chil­dren will even­tu­ally be ready to climb the economic-development ladder.

...

Hmmm...a planned char­ter city of fairly low-paying basic indus­trial jobs. On the one hand, that means many of those planned jobs will be filled by robots in a decade or two, but on the other hand at least Paul Romer is envi­sion a guar­an­teed health­care and edu­ca­tion man­date. It would be inter­est­ing to see if that health­care man­date includes guar­an­teed health­care even if the low-paid work­ers can’t afford it or if it’s one of those other kinds of “man­dates”. You also have to won­der if there’s going to be the kind of labor law man­dates that ensure work­ers can still afford to live with­out hav­ing to work so many hours that they don’t have enough free time to spend read­ing the his­tory of thier coun­triy. This might include the his­tory of how their oli­garch over­lords first took over and looted the coun­try and then even­tu­ally imple­mented an “anti-corruption” scheme that involves sell­ing off cities to inter­na­tional Lib­er­tar­ian con­sor­tiums that want to build pri­vately run international-oligarch-founded city states with a dis­tinct uber-Libertarian business-first con­sti­tu­tional phi­los­o­phy. There won’t be an man­dates that ensure the work­ers have enough time to learn about all that because, you know, that would be anti-freedom.

Unfor­tu­nately, there isn’t much chance that we’ll find out how Mr. Romer’s envi­sioned man­dates would have played out because while the Char­ter Cities plan is back on the agenda, Romer is no longer part of the project. He had been lead­ing the “Trans­parency Panel” for the project to ensure that the whole endeavor would be nego­ti­ated in a pub­lic, respon­si­ble man­ner that would lay the foun­da­tions for long-term trust between the Hon­duran pub­lic and the inter­na­tional investors that would be finan­cially back­ing the cities. But he decided to quit in protest last Octo­ber after he found out that the Hon­duran gov­ern­ment had already worked out a deal with the first group of investors in secret:

The New York Times
Plan for Char­ter City to Fight Hon­duras Poverty Loses Its Ini­tia­tor
By ELISABETH MALKIN
Pub­lished: Sep­tem­ber 30, 2012

MEXICO CITY — Paul Romer is a respected econ­o­mist with an uncon­ven­tional plan to lift peo­ple out of poverty. And in Hon­duras, he thought he had found a gov­ern­ment eager to put his ideas into practice.

What if you sim­ply sweep aside the cor­rup­tion, the self-interested elites, and the dis­torted eco­nomic rules that sti­fle growth in many poor coun­tries and set up a brand new city with its own law and governance?

The char­ter city, as Mr. Romer calls it, would be admin­is­tered by coun­tries that have devel­oped strong insti­tu­tions and rule of law. If it sounds crazy, think of Hong Kong.

Once Hon­duras signed on and its Con­gress passed a law at the begin­ning of 2011 to start the process, the con­cept moved from big idea to a ten­ta­tive pos­si­bil­ity. Sto­ries fol­lowed in The Econ­o­mist, The Wall Street Jour­nal and The New York Times Magazine.

But now, Mr. Romer, an expert on eco­nomic growth, is out of his own project, tripped up by the sort of opaque deci­sion mak­ing that his plan was sup­posed to change.

...

The tip­ping point came with the announce­ment a few weeks ago that the Hon­duran agency set up to over­see the project had signed a mem­o­ran­dum of under­stand­ing with its first investor group.

The news came as sur­prise to Mr. Romer. He believed that a tem­po­rary trans­parency com­mis­sion he had formed with a group of well-known experts should have been con­sulted. He with­drew from the project.

The law set­ting up Honduras’s exper­i­ment in a char­ter city, a spe­cial devel­op­ment region, or RED in its Span­ish ini­tials, cre­ates flex­i­bil­ity that pro­motes inno­va­tions, but requires strict dis­clo­sure along the way, Mr. Romer said. “The one absolute prin­ci­ple is a com­mit­ment to trans­parency,” he said.
...

The investor group is led by Michael Strong, an activist who has worked in the past with lib­er­tar­i­ans like John Mackey, the founder of Whole Foods. He promises that his investors include Sil­i­con Val­ley entre­pre­neurs and Cen­tral Amer­i­can investors, but when pressed for details, named only one Guatemalan busi­ness­man.

Oppo­nents on the left have been fil­ing chal­lenges with the Hon­duran Supreme Court against the char­ter cities plan. The news of the invest­ment deal brought more.

Accord­ing to Mr. Strong and oth­ers involved in the project, includ­ing Mark Klug­mann, an Amer­i­can con­sul­tant who is work­ing with Mr. Sánchez, the trans­parency board never legally existed. Mr. Sánchez agreed, although he had never dis­puted the exis­tence of the board in the past.

Mr. Romer said that Pres­i­dent Lobo signed the decree in his pres­ence in Decem­ber. But he acknowl­edged that the board was on ten­u­ous legal foot­ing because of the chal­lenges in the Supreme Court. The decree was never published.

...

Mr. Romer is now look­ing elsewhere.

“If it were easy to under­take social reform, it would have hap­pened,” he said. “You just have to keep trying.”

The loss of the ada­demic vision­ary that was pro­vid­ing the intel­lec­tual jus­ti­fi­ca­tions for the project was cer­tainly a blow to the whole affair. Mr. Romer is still look­ing else­where to cre­ate his vision but his leav­ing wasn’t a death­blow to the project. That came a few weeks later:

The Atlantic Cities
Prob­a­ble Death­blow of the Day: Char­ter Cities Struck Down in Honduras

Henry Grabar
Oct 22, 2012

Over the last year, Paul Romer’s ambi­tious and con­tro­ver­sial vision for Char­ter Cities — foreign-run eco­nomic colonies designed to bring wealth and sta­bil­ity to poor coun­tries — has been mov­ing quickly towards real­ity in the Hon­duran jun­gle. But a rapid series of set­backs may have brought the project to a halt.

Last month, the project’s Trans­parency Com­mis­sion, an over­sight com­mit­tee fea­tur­ing Romer and sev­eral other promi­nent econ­o­mists, was excluded from agree­ments between the Hon­duran gov­ern­ment and inter­na­tional devel­op­ment com­pa­nies, prompt­ing fears about cor­rup­tion. (One of those com­pa­nies, the Future Cities Devel­op­ment Cor­po­ra­tion — slo­gan: “Cre­at­ing Humanity’s Future” — was founded by Patri Fried­man, grand­son of Mil­ton, who wrote in 2009 that “democ­racy is not the answer.”)

Later that month, a promi­nent Hon­duras human rights lawyer who had filed one of dozens of legal chal­lenges to the “model cities” decree, was mur­dered, inspir­ing fur­ther speculation.

Last Wednes­day, the Hon­duran Supreme Court ruled that last October’s alter­ations to the Hon­duran con­sti­tu­tion remov­ing national ter­ri­tory from gov­ern­ment con­trol were uncon­sti­tu­tional. A branch of the court had come to that con­clu­sion ear­lier this month, but because the deci­sion (4–1) was not unan­i­mous, the full court con­vened to vote. It struck down the leg­isla­tive decree 13 to 2.

Pres­i­dent Por­firio Lobo, one the project’s biggest sup­port­ers, was upset by the deci­sion, insin­u­at­ing that the court was influ­enced by exter­nal eco­nomic and polit­i­cal inter­ests. He encour­aged Hon­durans to go to the Supreme Court to look for the jobs that the body’s rul­ing had denied them. “I’m sure they’re not think­ing about the harm they’re doing to the Hon­duran peo­ple,” he said.

...

Death­blows like supreme court rul­ings that rule the project uncon­sti­tu­tional are dif­fi­cut hur­dles for any project that requires an aire of legit­i­macy. Death­blows to promi­nent oppo­nents of the project are even worse. But as the first arti­cle indi­cated, where there’s a will, and lots of money, and a cor­rupt gov­ern­ment, there’s a way. Yes, things are look­ing up for Lib­er­tar­ian oli­garchs in Honduras.

Discussion

12 comments for “Making the World Safe From Democracy, One Charter City at a Time”

  1. It is a con­certed effort in the ero­sion of national sovereignty.

    The Hon­duras ‘Model Cities’ is rem­i­nis­cent of Macau & Hong Kong in the 19th century.

    Posted by Vanfield | February 9, 2013, 8:06 pm
  2. Oh, good. Another oppor­tu­nity to call out Adam David­son for the con­temptible toady that he is. He can put a plau­si­ble tint on a win­dow into hell. Well done.

    Posted by GrumpusRex | February 10, 2013, 9:02 pm
  3. Well, it looks like all the folks that have des­per­ately wanted to see pub­lic employ­ees lose their gold-plated pen­sion plans — so that the entire soci­ety can shift back towards the tra­di­tional par­a­digm of just assum­ing and accept­ing mass poverty for peo­ple in their “golden years”might get their wish:

    July 27, 2013, 1:14 p.m. EDT
    Today, Detroit. Tomor­row, Home­town, USA
    How Detroit’s bank­ruptcy fil­ing will have national reper­cus­sions
    By Chuck Jaffe, MarketWatch

    Back when I was a rookie reporter at the Detroit Free Press nearly 30 years ago, the big debate the staff had over lunches was which would go bank­rupt first: the big automak­ers or the city. And which expe­ri­ence would be worse.

    You could make argu­ments for each pos­si­bil­ity, but most of the staffers thought there was no way either event would ever actu­ally hap­pen. They insisted that the early signs of trou­ble were an anom­aly or some­thing that could be reversed before it became a calamity.

    Hav­ing just earned my degree in eco­nom­ics, I thought back then that both were pos­si­ble — many years in the future — and that bank­rupt­cies for the Big Three would be bad for the city, but that a bank­ruptcy for the city would be bad for the entire country.

    Sadly, what was once lit­tle more than a the­ory is now a real­ity, but what’s worse is that so many peo­ple — like my old col­leagues — don’t rec­og­nize what the city’s finan­cial woes mean on a national level.

    Detroit owes roughly $20 bil­lion to over 100,000 cred­i­tors, but the big cred­i­tors peo­ple will be watch­ing are the city’s public-sector labor unions, which fear that a bank­ruptcy judge might let the city reduce or can­cel pen­sions and retiree health benefits.

    Sure, the unions have the law on their side — Michigan’s state con­sti­tu­tion pro­tects work­ers’ pen­sions from being reduced — but they still have rea­son to be wor­ried. After all, Michi­gan law also requires pub­lic pen­sions to be fully funded every year, and yet Detroit appar­ently only man­aged that using account­ing tricks that, by some esti­mates, have left the city as much as $3.5 bil­lion off the mark.

    That’s why the Detroit bank­ruptcy fil­ing serves as a warn­ing bea­con for every­one expect­ing a pen­sion and other ben­e­fits when they retire, a sig­nal that it’s dan­ger­ous to entrust your finan­cial future to oth­ers, assum­ing they are going to keep their promises.

    How much prece­dent Detroit will set for other com­mu­ni­ties remains to be seen, but clearly every­one is watch­ing to see what’ll be allowed. Other com­mu­ni­ties on the brink will see how the Motor City comes through the expe­ri­ence finan­cially and decide if they want to mark a sim­i­lar course on the map, even if it is as a last resort.

    There is plenty of prece­dent for cor­po­ra­tions using bank­ruptcy to cut or elim­i­nate pen­sion oblig­a­tions — Delta Air­lines being the most-recent big-name com­pany to go that route — leav­ing the Pen­sion Ben­e­fit Guar­anty Corp. to step in with smaller pen­sions and the work­ers with a much less secure future.

    The Pew Cen­ter for the States esti­mates that pub­lic pen­sion plans nation­wide were under­funded by $1.4 tril­lion in 2010. While the stock mar­ket has reached record highs — nar­row­ing the gap some­what — since then, the unde­ni­able prob­lem is that most state and local gov­ern­ment pen­sion funds don’t have enough money to live up to the promises they have made.

    If employ­ers can’t live up to their oblig­a­tions, you can bet that the Pen­sion Ben­e­fit Guar­anty Corp. — the nation’s pen­sion back­stop — will fol­low suit and run out of money too.

    Even if the Detroit sit­u­a­tion is resolved with­out set­ting some bench­mark for other trou­bled munic­i­pal­i­ties to use and fol­low, the nation’s pen­sion short­falls aren’t going away; this story is going to play out again and again, and while it will be cor­po­ra­tions, cities and towns in the head­lines, it will be the name­less, face­less indi­vid­u­als who are the real story.

    That’s not a story any­one wants play­ing out in their own home.

    ...

    This is one of those sto­ries that reminds us that the crit­i­cal con­tract that the far-right oli­garchs want destroyed isn’t just the pen­sion con­tracts with employ­ees. It’s the social con­tract that must be destroyed before their far-right par­adise can be achieved. Until soci­ety accepts that we sim­ply must embrace a “you’re on your own” men­tal­ity that oligarch-managed par­adise can’t truly come to fruition. Not that it could any­ways, but you get the idea...

    Posted by Pterrafractyl | July 27, 2013, 6:47 pm
  4. Oh wow, there’s a new Robo­Cop movie com­ing out in 2014. Like the orig­i­nal film, the story take in 2028 Detroit after it’s been taken over by a cor­po­rate entity. Hope­fully this means that the cur­rent “Emer­gency Finan­cial Manager”-led take over and loot­ing of Detroit is actu­ally just part of a really elab­o­rate adver­tise­ment for the upcom­ing film. It’s just really nice to imag­ine that this is all an attempt to cre­ate art as opposed to loot­ing it.

    Posted by Pterrafractyl | September 5, 2013, 10:45 pm
  5. The Detroit von Clause­witz expe­ri­ence: com­ing to a state near you:

    Forbes
    7/19/2013 @ 2:58PM
    Detroit’s Bank­ruptcy Is Just Pol­i­tics By Other Means
    Daniel Fisher, Forbes Staff

    Pruss­ian mil­i­tary the­o­rist Carl von Clause­witz famously declared war is “mere pol­icy by other means.” Detroit’s bank­ruptcy is sim­i­lar. Sad­dled with bil­lions of dol­lars in bond debt and pen­sion oblig­a­tions it can never repay, Michigan’s largest city has resorted to set­tling its deep-rooted fis­cal and polit­i­cal prob­lems in court.

    By fil­ing Chap­ter 9 bank­ruptcy, Detroit has effec­tively handed its fate over to a fed­eral bank­ruptcy judge, along with the dif­fi­cult ques­tions of how to divide its inad­e­quate resources among more than 100,000 cred­i­tors. Among other things, that judge will have to tackle the polit­i­cally charged ques­tion of whether the city’s pub­lic employ­ees can jump ahead of bond­hold­ers and other cred­i­tors to col­lect pen­sion pay­ments that vastly exceed both finan­cial reserves and the city’s likely abil­ity to repay.

    “This was going to be bat­tled out polit­i­cally inside or out­side of bank­ruptcy, and that’s not going to change,” said David A. Skeel, a pro­fes­sor at the Uni­veristy of Penn­syl­va­nia Law School who has writ­ten exten­sively about the polit­i­cal and legal ques­tions swirling around gov­ern­ment insol­vency. “The court is a ref­eree, an umpire, but ulti­mately the par­ties have to make the proposals.”

    ...

    Con­gress first passed a pro­vi­sion of the bank­ruptcy code allow­ing for munic­i­pal bank­rupt­cies back in 1934, which the Supreme Court promptly found uncon­sti­tu­tional for vio­lat­ing both the 10th Amend­ment (pow­ers not explic­itly granted to Con­gress are reserved to the states) and the clause pro­hibit­ing impair­ment of con­tracts. Con­gress slightly amended the law and the Supreme Court — chas­tened by FDR’s 1937 threat to pack it with more coop­er­a­tive jus­tices — approved Chap­ter 9 in 1939.

    Since then there have been rel­a­tively few munic­i­pal bank­rupt­cies, although the num­ber has ticked up in recent years. Much like air­lines, which entered a ser­ial bank­ruptcy phase after the indus­try was dereg­u­lated in order to rework union con­tracts, more cities have turned to fed­eral bank­ruptcy court to solve intractable dis­putes over debt loads and pub­lic pen­sions. The city of Vallejo, Calif. was pro­hib­ited under state law from clos­ing non-essential fire sta­tions or mod­i­fy­ing pen­sions, for exam­ple, but achieved both in bank­ruptcy court.

    When Skeel wrote an influ­en­tial arti­cle propos­ing the equiv­a­lent of Chap­ter 9 for over­lever­aged states, crit­ics said “no real city uses Chap­ter 9,” he said. With Detroit’s fil­ing, that state­ment is no longer accu­rate. “I really think it changes your per­spec­tive on that, and it forces you to think Chap­ter 9 is one of the main tools in the tool kit when a munic­i­pal­ity is in trou­ble.”

    Is that a bad thing? Skeel thinks not. Cities like Detroit — and states like Illi­nois, Cal­i­for­nia and Con­necti­cut — got into fis­cal trou­ble because their polit­i­cal lead­ers spent too much and promised too much to public-sector employ­ees in the form of future pen­sion ben­e­fits. That’s a fun­da­men­tal prob­lem with elec­tive pol­i­tics, of course: It’s eas­ier for today’s politi­cians to make promises they can’t keep than deliver finan­cial real­ity to their con­stituents. In that sense, pen­sion under­fund­ing is one of the main tools politi­cians use to get around state laws requir­ing bal­anced budgets.

    ...

    Michi­gan, like other states, has attempted to pro­tect munic­i­pal pen­sions through its con­sti­tu­tion. But Skeel thinks a fed­eral judge, com­pelled under the law to treat cred­i­tors equally, might limit that pro­tec­tion to the por­tion of the pen­sion backed by actual pen­sion assets. The promise of future pay­ments might fall into the cat­e­gory of an unse­cured debt, although courts haven’t actu­ally decided this pre­cise issue yet.

    Skeel is crit­i­cized by Richard C. Schrag­ger, a pro­fes­sor at the Uni­ver­sity of Vir­ginia School of Law who says it is incor­rect and unfair to blame the prob­lems of cities like Detroit on their elected lead­ers. Detroit, like a lot of north­ern indus­trial cities, is also the vic­tim of state neglect and laws that allowed afflu­ent sub­urbs to shield them­selves from the city’s finan­cial prob­lems. As busi­nesses and rich cit­i­zens moved out­side the city’s bor­ders, Schrag­ger said, Detroit was left with 700,000 mostly poor res­i­dents with the same demand for schools and other gov­ern­ment services.

    “Peo­ple say the decline is attrib­ut­able to bad man­age­ment, but that’s just not the real­ity,” he said. “There are struc­tural imped­i­ments to their well-being, and you can ignore those.”

    Schrag­ger has argued bank­ruptcy unfairly yanks such ques­tions from the polit­i­cal realm, and may give cities cover for push­ing the costs of insol­vency on city employ­ees and the poor, while pro­tect­ing creditors.

    But Skeel says the oppo­site is more likely to occur. Bank­ruptcy judges are specif­i­cally pro­hib­ited from order­ing cities to raise taxes or change spend­ing, he said, and they must treat cred­i­tors in a sim­i­lar man­ner. The main effect of fil­ing Chap­ter 9 is the pos­si­bil­ity of restruc­tur­ing pub­lic pen­sions, he said, which sim­ply can’t be accom­plished out­side of bank­ruptcy. By forc­ing cred­i­tors to take hair­cuts on their bonds as well, he said, a judge might help inject a lit­tle fis­cal dis­ci­pline into the finan­cial sys­tem by rais­ing inter­est rates on prof­li­gate spenders.

    The exam­ples of gov­ern­ments from Greece to Cal­i­for­nia to Argentina argues oth­er­wise, however.

    “Just increas­ing the cost of bor­row­ing doesn’t stop peo­ple from bor­row­ing,” he acknowledged.

    In Clausewitz’s day, that’s when the armies marched to plun­der new ter­ri­to­ries. Detroit and its many cred­i­tors can only slug it out in court.

    Posted by Pterrafractyl | September 12, 2013, 11:26 pm
  6. @Pterrafractyl–
    ical
    MORE than a lit­tle inter­est­ing to see a main­stream, con­ser­v­a­tive busi­ness pub­li­ca­tion such as “Forbes” dis­cussing mat­ters fiscal/economic in terms of Von Clausewitz’s the­o­ret­i­cal formulations!!

    Other than this website/blog and my pro­grams, where, and when, have you EVER seen or heard con­tem­po­rary economic/financial/political mat­ters dis­cussed in terms of Von Clause­witz. (“Ger­many Watch,” whcih feeds along this web­site on the front page being an obvi­ous exception.)

    Best,

    Dave

    Posted by Dave Emory | September 13, 2013, 1:52 pm
  7. @Dave: Let’s hope the report­ing trend con­tin­ues because, if any­thing, the grow­ing num­ber of global free-trade agree­ments is going to make the temp­ta­tion to engage in economic/financial war­fare almost irre­sistible. That’s partly because money and entire indus­tries can be relo­cated across the globe like never before but also because global eco­nomic inte­gra­tion of some sort is kind of inevitable, but it’s a lot eas­ier to do it wrong than do it right (like most things). And as the euro­zone expe­ri­ence is teach­ing us, doing it wrong is the right way to win the war. So we’ll prob­a­bly see a lot more von Clause­witz expe­ri­ence on com­ing years.

    Posted by Pterrafractyl | September 13, 2013, 7:06 pm
  8. So this was hap­pen­ing in the lead up to the Novem­ber 24 elec­tion in Hon­duras:

    Land to be Usurped and Votes to Be Bought: The Pre-Election Hon­duran Land­scape
    Sun­day, 24 Novem­ber 2013 10:19 By Andalu­sia Knoll
    Truthout | News Analysis

    “When was the last time I was threat­ened?” asks Alfredo Lopez, repeat­ing my ques­tion. He laughs and then responds, “Today, yes­ter­day, the day before, every­day. They tell me they want to mess me up.”

    Lopez is the vice pres­i­dent of the Hon­duran Black Fra­ter­nal Orga­ni­za­tion (OFRANEH) and speaks with such a jovial tone that you wouldn’t guess that he’s talk­ing about pre-election vio­lence in Hon­duras. We’re in the Afro-Indigenous Garí­funa town of Tri­unfo de la Cruz in the north­ern coast of Hon­duras. The first true pres­i­den­tial elec­tions, since the 2009 coup that ousted pres­i­dent Mel Zelaya, are just days away.

    Lopez is the host of the Notibimetu show on the Faluma Bimetu (Sweet Coconut) FM radio sta­tion. We accom­pany him to his after­noon pro­gram where he plays tra­di­tional Gar­i­funa music, cou­pled with local and inter­na­tional news focused on land strug­gles of indige­nous com­mu­ni­ties. The sta­tion has been a stal­wart of “La Resistencía,” the resis­tance move­ment birthed in the after­math of the 2009 coup d’etat.

    His phone rings var­i­ous times dur­ing the pro­gram, but he doesn’t answer, cit­ing it as another exam­ple of peo­ple try­ing to dis­rupt his activ­i­ties. Lopez and OFRANEH have been involved in a long bat­tle to pro­tect their fer­tile coastal col­lec­tive land from inter­na­tional investors attempt­ing to turn these pris­tine coasts into a Hon­duran Cancun.

    Repres­sion of their move­ment to defend their land has increased in the pre-election sea­son, but it is hardly some­thing new to their com­mu­nity. Lopez him­self served six years in jail for false drug charges. He was later released, vin­di­cated of all charges and granted a ret­ri­bu­tion pay­ment. In 2009, Faluma Betu was burned down by arson­ists assumed to be linked to the coup gov­ern­ment. The community’s resilience allowed them to recon­struct the sta­tion. A month later, they were back on the air, trans­mit­ting at dou­ble the station’s prior wattage.

    Cur­rent Hon­duran Pres­i­dent Por­firio Lobo Sosa held a con­fer­ence in 2011 titled “Hon­duras, Open For Busi­ness.” The 46 Gar­i­funa com­mu­ni­ties dot­ting the coast have never adver­tised that they are open for invest­ment, but the fact that they haven’t given their con­sent has made lit­tle dif­fer­ence to the pow­er­ful busi­ness­men vying for their chunk of Hon­duran beach­front prop­erty. Accord­ing to Con­ven­tion No. 169, all indige­nous and tribal peo­ples have the right to “decide their own pri­or­i­ties,” espe­cially when it “affects their lives, beliefs, insti­tu­tions and spir­i­tual well-being and the lands they occupy.” The lack of con­sent has formed the basis for three cases that OFRANEH has before the Inter-American Com­mis­sion on Human Rights in Wash­ing­ton, DC, and two cases that have passed on to the Inter-American Court of Human Rights in Costa Rica.

    While these pend­ing cases have helped throt­tle the devel­op­ment, they surely have not been able to stop it. In 2011 the Hon­duran National Con­gress approved the Law for Spe­cial Devel­op­ment Regions (RED) which allows the devel­op­ment of Char­ter Cities, which will oper­ate autonomously from state juris­dic­tion and be allowed to enter into agree­ments with inter­na­tional agencies.

    Tim Russo, a com­mu­nity media activist with the orga­ni­za­tion Pop­u­lar Com­mu­ni­ca­tors for Auton­omy (COMPPA), has worked in Hon­duras over the past decade and tells Truthout that the Char­ter Cities, with “their level of auton­omy and all the spe­cial reg­u­la­tions that apply to the RED zones, are basi­cally a Hon­duran ver­sion of the Green Zone in Iraq. But sup­pos­edly this is not a war zone.”

    Just recently The Los Micos Golf Resort opened up in the nearby Tela Bay, with 750 acres of beach houses and a hotel, despite count­less protests by local Garí­funa orga­ni­za­tions. The project has been financed by Randy Jor­gensen, a Cana­dian busi­ness­man who struck it rich in the porn indus­try and told Kae­lyn Forde of the Real News Net­work that “We want to bring back life to the banana booms,” ref­er­enc­ing the Banana Repub­lic that Cen­tral Amer­ica was once con­sid­ered. Jor­gensen denied usurp­ing com­mu­nal Garí­funa land and stated that which bor­ders delin­eate the com­mu­nity and indi­vid­ual land is “a debate that they need to have amongst themselves.”

    Mem­bers of the Garí­funa com­mu­nity are not opposed to tourism and in fact are in favor of devel­op­ment it as long as guar­an­tees dig­ni­fied work with fair wages for local res­i­dents, cou­pled with the pro­tec­tion of the col­lec­tive land, crops and ocean. One exam­ple of community-led tourism is the Panchy Cabanas, where close to a hun­dred for­eign­ers have stayed in the pre-election sea­son. These vis­i­tors hail­ing from Canada, Ger­many and the United States have not come to catch the waves, but instead to par­tic­i­pate in var­i­ous inter­na­tional del­e­ga­tions that will mon­i­tor the elections.

    The upcom­ing elec­tions are the first that Hon­duras has seen since 2005, because the 2009 elec­tions in which Pepe Lobo was elected were boy­cotted by many in protest of the coup gov­ern­ment. Accord­ing to a recent Gallup poll, Xiomara Zelaya de Cas­tro, wife of ousted pres­i­dent Mel Zelaya, can­di­date with the new polit­i­cal party Libre, holds a few point mar­gin over the rul­ing National Party Can­di­date, Juan Orlando Hernán­dez. Yet jour­nal­ists and elec­tion observers have ques­tioned why the mar­gin is so small, point­ing to National Party-ruled con­gress fund­ing of the poll. Regard­less of Xiomara’s sup­posed lead in the polls, no one in the streets responds with any kind of cer­tainty regard­ing Hon­duras’ next pres­i­dent. In a coun­try where cor­rup­tion and polit­i­cal vio­lence is ram­pant, people’s faith that their vote will be respected is incred­i­bly low.

    The inter­na­tional del­e­ga­tions are meet­ing with Lopez and other mem­bers of OFRANEH at the town pool hall that also serves as a com­mu­nity cen­ter. Out­side, three young Rasta­fari men sit on the curb, kick­ing back as the sun sets on this beach town. They share with Truthout their nick­names Dibu, Capri and Dia­blo and their desire for change.

    Unem­ploy­ment has sky­rock­eted since the coup, and these three have found them­selves with­out work. Capri and Dibu said they worked in con­struc­tion in a nearby port town, but when the com­pany got wind that they were part of the resis­tance, they were laid off. Dia­blo is a crafts­men and says that his cash flow has been low because the increased vio­lence in post-coup Hon­duras has severely reduced the num­ber of tourists com­ing to Tri­umfo and that while fling­ing its arms open to for­eign invest­ment, Hon­duras has also opened the flood­gates to Chi­nese imports, mak­ing hand-crafted goods, which cost more, less desirable.

    When ques­tioned whether they are afraid to vote, all respond with a con­fi­dent “no,” but say this sense of secu­rity is only because they will be vot­ing in their local Garí­funa com­mu­nity. Dibu says that some folks told them “if you go over there to vote, peo­ple will kill you.”

    While they say they don’t fear for their lives in the elec­tions, they do say they have seen a cli­mate of intim­i­da­tion and bribes. Clara Flo­res of OFRANEH con­firmed this in an inter­view with Truthout, say­ing that peo­ple in the com­mu­nity “fear what will hap­pen if the Libre party wins because they think that there might be another coup d’etat or action take against the pres­i­dent.” She also men­tioned that peo­ple con­nected to the National Party offered 10,000 lem­pi­ras, the equiv­a­lent of 500 dol­lars to peo­ple in Tri­unfo in exchange for their vote. “This money was sup­posed to be money from the gov­ern­ment for poor peo­ple, but since Juan Orlando was the head of con­gress, he is using these funds to influ­ence the people’s vote.” In a com­mu­nity with high lev­els of unem­ploy­ment, some were bought off, but Dibu says the major­ity of peo­ple “know what’s up” and with “a strong desire for change, they are not so eas­ily will­ing to sell their votes.”

    ...

    As the work­shop con­tin­ues, par­tic­i­pants speak about the impor­tance of broad­cast­ing, to break the media siege. DJ Antony decides its worth tak­ing the risks to par­tic­i­pate in the coor­di­nated broad­casts with the other indige­nous and Garí­funa sta­tions. In the mid­dle of the work­shop, the WiFi stops func­tion­ing, as the inter­net in Hon­duras is any­thing but reli­able. The com­mu­nity broad­cast­ers say that if their inter­net gets blocked or just stops work­ing, they will take to their cells, inform­ing the peo­ple with phone calls.

    Tomas Gomez Mem­breño from Radio Guara­jam­bala, says every time that they have broad­casted a large event, most recently an anti-militarization mobi­liza­tion, their elec­tric­ity has been cut off.

    Hon­duran media is abysmal, not just because it is con­trolled by monop­o­lies known for their sen­sa­tion­al­ist yel­low jour­nal­ism, but also for ram­pant cen­sor­ship stem­ming from the vio­lence per­pe­trated against jour­nal­ists. Helena Roux is accom­pa­ny­ing a Ger­man observers del­e­ga­tion and works with the press free­dom group Reporters With­out Bor­ders in Paris. She says that Hon­duras ranks as the most dan­ger­ous coun­try in Latin Amer­ica to exer­cise jour­nal­ism, and con­stant threats from state forces, narco-traffickers and com­mu­nity mem­bers aligned with these ele­ments leads to auto-censorship by jour­nal­ists who fear for their lives. Roux com­ments, “With this kind of cli­mate, the jour­nal­ists do not have the right to carry out their work of inform­ing the pop­u­la­tion, and in turn, the pop­u­la­tion does not have the right to be prop­erly informed about what is hap­pen­ing in the elections.”

    Two weeks before the elec­tions, pho­to­jour­nal­ist Manuel Murillo, who was work­ing for LIBRE con­gres­sional can­di­date Rasel Tomé, was killed with three bul­lets to the head. More than 30 jour­nal­ists have been killed since the 2009 coup. A Rights Action Report has doc­u­mented the assas­si­na­tion of 18 mem­bers of the Libre Party in this elec­tion cycle, and aligned jour­nal­ists have not escaped the violence.

    The major media out­lets have launched an all-out cam­paign against pres­i­den­tial can­di­date Xiomara, label­ing her a com­mu­nist and crim­i­nal­iz­ing mem­bers of indige­nous and campesino orga­ni­za­tions such as the Civil Coun­cil of Pop­u­lar and Indige­nous Orga­ni­za­tions of Hon­duras (COPINH.)

    ...

    And then this hap­pened:

    CSMon­i­tor
    Hon­duras recount: Can a free and fair elec­tion also be fraudulent?

    Inter­na­tional observers say Hon­duras pres­i­den­tial elec­tion results are ‘trans­par­ent,’ but pro­test­ers are alleg­ing fraud. A recount may set­tle the dispute.

    By Seth Rob­bins, Cor­re­spon­dent / Decem­ber 9, 2013

    TEGUCIGALPA, Hon­duras

    With clouds of tear gas hang­ing in the air, hun­dreds of stu­dents shel­tered them­selves behind the National University’s gates two days after the hotly con­tested pres­i­den­tial elec­tion here

    The stu­dent groups didn’t come out look­ing for trou­ble, they say, but to reg­is­ter their dis­gust with the country’s elec­tion sys­tem – which had just pro­claimed rul­ing party Con­gress­man Juan Orlando Hernán­dez Hon­duras’ next president.

    Many of these youth were among thou­sands of uni­ver­sity stu­dents who sac­ri­ficed their chance to vote in order to serve as elec­tion cus­to­di­ans, run­ning polling cen­ters in far-flung parts of the coun­try. Though none would give his or her full name, cit­ing fears of reprisal, sev­eral recalled wit­ness­ing signs of fraud, like the buy­ing of votes and polling cre­den­tials; vot­ers pre­sent­ing false IDs; and peo­ple hand­ing out gifts on the eve of the Nov. 24 election.

    “We thought [this elec­tion] was going to be dif­fer­ent, and it was the same as always,” says a 23-year-old IT stu­dent who served as an elec­tion vol­un­teer. “What hap­pened is a mock­ery for us.”

    Per­haps unsur­pris­ingly, the los­ing pres­i­den­tial can­di­dates say the same. Two are demand­ing recounts, alleg­ing fraud, and, in the case of left-wing hope­ful Xiomara Cas­tro de Zelaya, call­ing sup­port­ers into the streets for rowdy, defi­ant marches.

    These alle­ga­tions run con­trary to the find­ings of some 700 inter­na­tional observers who served in Hon­duras last month. In their offi­cial reports, the mis­sions described the elec­tions as largely trouble-free. Experts say such dis­agree­ment is typ­i­cal, as mon­i­tor­ing mis­sions – which are often com­posed of pro­fes­sors, lawyers, human rights activists, and col­lege stu­dents – are inclined to look more at the gen­eral qual­ity of the elec­tion process than fer­ret out every tiny irregularity.

    “Almost all elec­tions have some prob­lems,” says Susan Hyde, an expert on inter­na­tional elec­tion obser­va­tion mis­sions at Yale Uni­ver­sity. “It’s a dif­fi­cult judg­ment to make.”

    But the dis­putes between the elec­tion author­ity and detrac­tors could exac­er­bate exist­ing polar­iza­tion here, build­ing on polemic issues of poor secu­rity and eco­nomic oppor­tu­nity. The elec­tion author­ity agreed to hold a recount, but has yet to do so.

    Fraud ... or sore losers?

    Can­di­dates can be loath to accept observers’ find­ings, espe­cially in coun­tries where pol­i­tics are polar­ized and demo­c­ra­tic insti­tu­tions are weak, experts say. Elec­tions in war-torn Afghanistan have repeat­edly thrust elec­tion observers into the spot­light. Venezuela’s oppo­si­tion can­di­date still con­tests last April’s pres­i­den­tial elec­tion results, despite observers hav­ing char­ac­ter­ized them as fair. And after Mexico’s 2006 elec­tions, also deemed fair, los­ing can­di­date Andrés Manuel López Obrador went so far as to set up a par­al­lel government.

    The Euro­pean Union mission’s report on the Hon­duran elec­tions, issued within days of the offi­cial results, praised both the “the trans­parency of vot­ing” and “respect of the will of the vot­ers dur­ing the count­ing process,” despite some irreg­u­lar­i­ties. The Orga­ni­za­tion of Amer­i­can States’ report sim­i­larly con­grat­u­lated Hon­duras for an orga­nized elec­tion and high voter turnout.

    Hon­duran pres­i­den­tial can­di­date and tele­vi­sion per­son­al­ity Sal­vador Nas­ralla says he has no faith in the inter­na­tional elec­tion monitors.“There are com­plaints from a ton of peo­ple sig­ni­fy­ing that the process was not trans­par­ent,” he says.

    Mr. Nas­ralla, whose Anti-Corruption Party, or PAC, fin­ished with 14 per­cent of the vote, has for­mally demanded a full recount, claim­ing that “unof­fi­cial modems” were used to trans­mit elec­tion results. He also says he has evi­dence of incon­sis­ten­cies between tally sheets and votes recorded, and of masked men mark­ing paper bal­lots to accord with offi­cial tal­lies. The real results, he con­tends, would show him winning.

    Mean­while, Ms. Cas­tro, of the newly formed left-wing Libre party, has refused to con­cede the pres­i­dency to Mr. Hernán­dez. The elec­toral authority’s offi­cial results give Hernán­dez 37 per­cent of the votes, and Cas­tro 29 percent.

    In her first appear­ance since the elec­tions, Cas­tro – whose hus­band is deposed for­mer Pres­i­dent Manuel Zelaya – held a press con­fer­ence to declare the elec­tions a “dis­gust­ing mon­stros­ity.” Within days thou­sands of Libre sup­port­ers poured into the streets, with Cas­tro and Mr. Zelaya march­ing along­side the cof­fin of a Libre activist who they alleged was killed for polit­i­cal rea­sons just after the elec­tion. Police could not con­firm that the killing was political.

    Cas­tro also demanded a recount, and elec­tion offi­cials con­sented to review results from more than 16,000 vot­ing sta­tions with Libre party rep­re­sen­ta­tives present. The recount has stalled over dis­agree­ments between Libre and elec­tions offi­cials, and on Fri­day Cas­tro and Zelaya filed a for­mal com­plaint demand­ing the out­right annul­ment of the elec­tion results.

    Honduras’s elec­toral author­ity is “doing the right thing” by help­ing the par­ties set­tle dis­crep­an­cies in the vote, says Jen­nifer McCoy, direc­tor of the Amer­i­cas Pro­gram at the Carter Cen­ter, which sent a small del­e­ga­tion last month in sup­port of the larger EU and OAS missions.

    “The impor­tant part that often gets short shrift is the dis­pute process,” Ms. McCoy says.

    ...

    ‘More voices’

    The elec­tion mon­i­tor­ing agen­cies did cite irreg­u­lar­i­ties in their assess­ments. The EU’s report spoke not only of the trade in cre­den­tials, but crit­i­cized Hon­duras’ elec­tion sys­tem for its lack of trans­parency in cam­paign financ­ing, its unre­li­able voter reg­istry, and for mak­ing it dif­fi­cult for vot­ers to sub­mit com­plaints on elec­tion day.

    Still, the report’s men­tion of irreg­u­lar­i­ties didn’t go far enough for one EU observer, Leo Gabriel of Aus­tria, who broke pro­to­col and in an inter­view with a Brazil­ian web­site Opera Mundi denounced the mission’s gen­er­ally pos­i­tive report. Mr. Gabriel said there was heated debate between observers and EU mis­sion lead­ers before the report was issued.

    The United States and its ambas­sador may not have helped the sit­u­a­tion, says Rose­mary Joyce, a Hon­duras expert at Uni­ver­sity of Cal­i­for­nia, Berke­ley. The US State Depart­ment con­grat­u­lated Hon­duras on “gen­er­ally trans­par­ent” elec­tions when votes were still being tallied.

    “We had more pres­sure to put [on Hon­duras] than any­body else,” Ms. Joyce says. “We didn’t use it.”

    Yet Joyce says that, pro­vided a trans­par­ent recount is done, Hon­duras will likely come out of this elec­tion stronger. The con­gres­sional gains made by upstart par­ties like LIBRE and PAC sig­nify a his­toric shift in polit­i­cal power, as the two tra­di­tion­ally pow­er­ful par­ties, National and Lib­eral, won’t con­trol con­gress any­more. “You will have more voices,” she says.

    Note that this also hap­pened:

    Panampost.com
    Anony­mous Hacks Honduras’s Elec­tions Web­site
    Hack­tivist Group Protests Alleged Wrong­do­ing in Lat­est Pres­i­den­tial Race
    By Sofía Ramírez Fionda on Mon­day, Decem­ber 2, 2013

    As of the evening of Decem­ber 2, the inter­na­tional net­work of hack­tivists, Anony­mous, has suc­cess­fully hacked the web­site of Honduras’s Supreme Elec­toral Tri­bunal (TSE). This came just a few hours after the tri­bunal announced its will­ing­ness to recount the votes and review the offi­cial elec­toral records of the recent pres­i­den­tial elec­tions, held on Novem­ber 24.

    In the web­site, Anony­mous Hon­duras declares “we com­mit the sin of giv­ing you the ben­e­fit of the doubt, even when we are cer­tain that your insti­tu­tions are use­less, and don’t serve any­one but the one that has the money and the power in this coun­try. We can no longer tol­er­ate this and the help of your bribed media, who want the peo­ple to stay quiet and con­sume the process no mat­ter what.”

    In their mes­sage, they inform of a por­tal where they have allegedly col­lected evi­dence of elec­toral fraud. They also call for peace­ful protests as a way to demand free­dom. They ask peo­ple to “remem­ber they have the weapons and money, we only have our voice, indig­na­tion and our desire for free­dom. If you’re abroad, protest in front of embassies. If we don’t wake up now that we can, there won’t be another pos­si­ble moment.”

    ...

    So the right-wing forces in favor of sell­ing off Hon­duras to bil­lion­aires just had a big win.

    Also, this just hap­pened:

    Hon­duras TV jour­nal­ist found shot to death, inter­na­tional press groups demand investigation

    By The Asso­ci­ated Press Decem­ber 9, 2013

    MEXICO CITY — Two inter­na­tional press groups are call­ing for a full inves­ti­ga­tion into the death of Hon­duran jour­nal­ist Juan Car­los Arge­nal Med­ina, who was found shot to death at his home in the south­east­ern city of Danli.

    The Com­mit­tee to Pro­tect Jour­nal­ists and Jour­nal­ists With­out Bor­ders say Arge­nal was a cor­re­spon­dent for Radio y TV Globo, which has come under attack for its oppo­si­tion to the 2009 coup that deposed Pres­i­dent Manuel Zelaya.

    Zelaya’s wife, Xiomara Cas­tro, lost the Nov. 24 pres­i­den­tial elec­tion and is con­test­ing the results.

    The groups say Argenal’s body was found Saturday.

    Arge­nal was also owner of Vida Tele­vi­sion. He was the third TV jour­nal­ist killed this year in Honduras.

    Posted by Pterrafractyl | December 10, 2013, 11:17 am
  9. Sad, scary ques­tions of the day: The Dark Enlight­en­ment: Is it scar­ily sad or sadly scary?

    The Tele­graph
    The ‘neo-fascist’ Dark Enlight­en­ment is more sad than scary
    By Tim Stan­ley US pol­i­tics Last updated: Jan­u­ary 22nd, 2014

    If you’re going to take time out of your busy day to think, think big. And so it’s quite excit­ing to dis­cover that some online con­ser­v­a­tives say the best way to deal with the world’s prob­lems is to abol­ish the demo­c­ra­tic state and replace it with a Jaco­bite monar­chy. Let’s not waste time on reform­ing the NHS. Let’s just ban pub­lic health­care and go back to the leeches.

    I joke, but accord­ing to the Telegraph’s Jamie Bartlett, a group of inter­net philoso­phers clas­si­fy­ing them­selves as “the Dark Enlight­en­ment” reckon that everything’s been down­hill since the Enlight­en­ment and that we need to start all over again. The project is:

    …a loose col­lec­tion of neo-reactionary ideas, mean­ing a rejec­tion of most mod­ern think­ing: democ­racy, lib­erty, and equal­ity. Par­tic­u­lar con­tempt is reserved for democ­racy, which [writer Nick Land] believes “sys­tem­at­i­cally consolidate[s] and exacerbate[es] pri­vate vices, resent­ments, and defi­cien­cies until they reach the level of col­lec­tive crim­i­nal­ity and com­pre­hen­sive social corruption.“

    Jamie reports that there is a “neo-fascist” ele­ment to this because they “obsess over IQ test­ing and pseu­do­science that they claim proves racial dif­fer­ences”. Pre­sum­ably, this is because they are anti-egalitarian and would argue that nature makes us unequal, which is one more rea­son why democ­racy is a sham. The weak and idi­otic ally together to form a major­ity and rip off the intel­li­gent minor­ity. Now, can any­one remem­ber who John Galt is…?

    That these “neo-reactionaries” admire monar­chies is what makes they seem way-out and new. But, actu­ally, their phi­los­o­phy is the log­i­cal exten­sion of where an ele­ment of the Right has been head­ing for some time. The Tea Party has been say­ing since 2009 that Amer­ica was intended to be a repub­lic, not a democ­racy. In a repub­lic, the power of the major­ity is lim­ited by its con­sti­tu­tion; in a democ­racy, the major­ity can use the state to impose their will on every­one else. So for the Right, the re-election of Obama, the mas­sive increase in food stamps, Oba­macare and even the NSA over­reach are all evi­dence of the US evolv­ing from a con­sti­tu­tional frame­work that pro­tects indi­vid­ual lib­erty to one that enables col­lec­tivism. Tech­ni­cally, they are not wrong – and as the Supreme Court con­tin­ues to try to reflect pop­u­lar opin­ion rather than the law as strictly defined by the Con­sti­tu­tion, some con­ser­v­a­tives are retreat­ing into states rights, or even seces­sion, to escape the Leviathan.

    And some lib­er­tar­i­ans are tak­ing refuge in the past. The imag­ined ben­e­fit of pre-modern monar­chies was that they didn’t tam­per too much with civil soci­ety for fear of pro­vok­ing rebel­lion (con­sider how many British medieval revolts were to do with tax). Matt Lewis thinks there is a “logic (if tor­tured)” to the latter-day con­ser­v­a­tive dream­ing of a restora­tion of the crown:

    “Under monar­chy,” Hans-Hermann Hoppe, author of Democ­racy: The God That Failed, explained, “the dis­tinc­tion between rulers and ruled is clear. I know, for instance, that I will never become king, and because of that I will tend to resist the king’s attempts to raise taxes. Under democ­racy, the dis­tinc­tion between rulers and ruled becomes blurred. The illu­sion can arise ‘that we all rule our­selves,’ and the resis­tance against increased tax­a­tion is accord­ingly dimin­ished. I might end up on the receiv­ing end: as a tax recip­i­ent rather than a tax­payer, and thus view tax­a­tion more favor­ably.“

    Now, I’m not say­ing that the neo-reactionaries are either right or wrong, sim­ply that these views are not plucked from the ether or are an over-elaborate exper­i­ment in trolling. On the con­trary, the idea of “shop­ping” for an ideal gov­ern­ment is quite attrac­tive. Think Britain is tax­ing you too much? Switch your cit­i­zen­ship to http://www.Austro-Hungarian-Empire.com. You won’t get health­care or a police force – but you also won’t be con­scripted or asked to put out your cigarette.

    ...

    Jamie inter­prets the rise of the Dark Enlight­en­ment in terms of a resur­gence of his­tor­i­cal fas­cism. He maybe right. But I also think it’s an insight into how des­per­ate ele­ments of the Right have become. They believe they’ve lost the bat­tle for con­trol of the West and would now like to with­draw from democ­racy alto­gether. Some are dri­ven into the arms of Putin, some into the Far, Far Right and some up trees with guns. As such, the Dark Enlight­en­ment is prob­a­bly more tragic than it is scary. Or, at least, let’s hope it stays that way.

    Note that the idea of “shop­ping” for your ideal gov­ern­ment — where you can just “switch your cit­i­zen­ship to http://www.Austro-Hungarian-Empire.com” (but can’t vote) — has been gain­ing in pop­u­lar­ity from another recent trend that sounds awfully sim­i­lar to some old, bad ideas:

    Paul Romer is a bril­liant econ­o­mist – but his idea for char­ter cities is bad
    His wheeze that poor coun­tries swap sov­er­eignty for pros­per­ity smacks of colonialism

    Aditya Chakrabortty
    The Guardian, Mon­day 26 July 2010

    Some pro­fes­sors hold on to their careers for dear tenure, eking out thread­bare research mate­r­ial and des­per­ately plac­ing arti­cles in whichever jour­nal will take them. When retire­ment comes, the waters of acad­e­mia swal­low them up so that they become barely a foot­note on a con­fer­ence paper. And then there are men like Paul Romer.

    Romer is bulge-bracket acad­e­mia, a departure-lounge econ­o­mist: the kind of intel­lec­tual as likely to be found turn­ing left on a plane as in sem­i­nar rooms. For­ever men­tioned as a future Nobel prizewin­ner, this Cal­i­forn­ian is a world expert on how and why economies grow. When Gor­don Brown made that infa­mous speech about post-neoclassical endoge­nous growth the­ory, it wasn’t Balls – as Hes­el­tine jibed – but Romer he was quoting.

    He’s one of Time’s “25 most influ­en­tial Amer­i­cans” (true, Time was the mag­a­zine that ran a joint pro­file of Cyndi Lau­per and Madonna in 1985, and firmly declared that Cyndi was the big­ger star, but that nei­ther came “within a mile of Tina Turner’s splen­did album of racked soul, Pri­vate Dancer”, but acco­lades such as these are still to be taken with due grav­ity of expres­sion) . And then there are the ador­ing jour­nal­is­tic pro­files, one of which began with the reporter turn­ing up cap in hand to meet the aca­d­e­mic loung­ing “pool­side at his house, which over­looks a huge expanse of rolling ranch­land”. That, it per­haps won’t sur­prise you to learn, was the hardest-hitting moment.

    So Romer is a bril­liant econ­o­mist, and he has a new and big idea. And because he is The Great Romer, he gets to present this wheeze to national lead­ers, high-profile con­fer­ences and invitation-only gath­er­ings of policy-makers. And because he has some spare cash (views over rolling ranch­land don’t come cheap, you know), Romer can afford to jack in his for­mal posi­tion at Stan­ford and start up his own think tank to make his case.

    Trou­ble is, the idea stinks. With lit­tle track record in deal­ing with poor coun­tries, Romer has come up a grand scheme for lift­ing Africa and Asia out of poverty. What they need to do, he argues, is give up a big chunk of their land to a rich coun­try. Pol­icy experts from Wash­ing­ton can take over a patch of Rwanda, and invite along GM and Microsoft and Gap to come and set up fac­to­ries. Poor coun­tries give up their sov­er­eignty in return for the promise of greater prosperity.

    His big exam­ple is Hong Kong. At the end of the first opium war in 1842, the Chi­nese were marched on board a British war­ship anchored off Nan­jing and forced to sign Hong Kong away to Queen Vic­to­ria. Over the next 150 years, the lit­tle island turned into Asia’s num­ber one cap­i­tal­ist suc­cess story. It was an exam­ple that Deng Xiaop­ing ended up copy­ing on the main­land, in coastal provinces such as Guang­dong – to explo­sive eco­nomic effect.

    China’s loss of Hong Kong should not be seen as a national humil­i­a­tion or great inter­na­tional injus­tice, Romer has writ­ten, but “an inter­ven­tion” which has “done more to reduce world poverty than all the world’s offi­cial aid pro­grammes of the 20th cen­tury com­bined — and at a frac­tion of the cost”. What the world needs, the econ­o­mist argues, is not one but 100 Hong Kongs.

    You think this is colo­nial­ism? For Romer, that “kind of emo­tion . . . can get in the way” (see what he did there? You have emo­tions; the elite econ­o­mist has evi­dence). Sure, the poor peo­ple liv­ing and work­ing in these new char­ter cities wouldn’t nec­es­sar­ily have any demo­c­ra­tic priv­i­leges such as the right to vote, but they could vote with their feet. And in the mean­time, the Africans or the Asians would get the undoubted ben­e­fit of all this huge west­ern expertise.

    ...

    One result of the great eco­nomic cri­sis is that aca­d­e­mic prac­ti­tion­ers are finally acknowl­edg­ing that eco­nomic pol­icy is not just a series of equa­tions applied to the real world, but ques­tions that ulti­mately have a polit­i­cal answer. Yet the old pseudo– sci­en­tific blank slate-ism still sur­vives, as Paul Romer’s lat­est project demonstrates.

    Posted by Pterrafractyl | January 31, 2014, 8:11 am
  10. If art imi­tates life, what kind of art is going to be inspired by Detroit’s new “kick ‘em when their down and take the art”-social con­tract get­ting estab­lished in Detroit’s loom­ing bank­ruptcy:

    Detroit emer­gency man­ager pleads for state funds
    Kath­leen Gray, Nathan Bomey and Mark Stryker, Detroit Free Press 10:35 p.m. EDT May 13, 2014

    DETROIT — Detroit’s emer­gency man­ager on Tues­day pleaded with state law­mak­ers to kick in $195 mil­lion in upfront cash as part of a grand bar­gain to help resolve the city’s his­toric Chap­ter 9 bank­ruptcy — while some of city’s largest cred­i­tors devised strate­gies to block the fund meant to shore up pen­sions and pro­tect the city’s art museum from hav­ing to sell its trea­sures to pay off debt.

    “We have what we think is a rea­son­able plan, but to put it bluntly, we need your money,” emer­gency man­ager Kevyn Orr tes­ti­fied before the newly cre­ated state House Com­mit­tee on Detroit’s Recov­ery and Michigan’s Future. “If we don’t get the state set­tle­ment, our cred­i­tors likely would not approve the plan.”

    Orr wants the state to con­tribute the lump sum as part of an $816 mil­lion grand bar­gain fund that is the cen­ter­piece of his restruc­tur­ing plan because it lim­its cuts to pen­sion­ers and pro­tects art by inject­ing new money into the situation.

    A group of local and national foun­da­tions would con­tribute more than $366 mil­lion to the fund, but only if a sweep­ing set­tle­ment is reached and pen­sion­ers and oth­ers agree not to sue. The Detroit Insti­tute of Arts, for its part, has agreed to raise $100 million.

    The fund has drawn sup­port from the city’s major retiree groups. But finan­cial cred­i­tors, includ­ing bond insur­ers and banks owed hun­dreds of mil­lions of dol­lars are try­ing to kill the deal, argu­ing in court fil­ings that the city should con­sider sell­ing the art mas­ter­pieces. They say the cur­rent plan unfairly favors pen­sion­ers over city debt hold­ers and investors.

    The legal fight has emerged as one of the most impor­tant hur­dles to a quick res­o­lu­tion of Detroit’s bank­ruptcy. The con­flict will cul­mi­nate in a mas­sive trial start­ing in July when U.S. Bank­ruptcy Judge Steven Rhodes will decide the fate of the largest munic­i­pal bank­ruptcy in U.S. history.

    ...

    Pen­sions at risk

    The House committee’s first hear­ing Tues­day began the process of con­sid­er­ing an 11-bill pack­age that will gov­ern the state’s poten­tial con­tri­bu­tion to the settlement.

    The bills would attach some con­tro­ver­sial con­di­tions to the fund­ing, includ­ing the cre­ation of an over­sight com­mis­sion that would retain author­ity over the city’s spend­ing, bor­row­ing and con­tracts for 20 years and the require­ment that new Detroit employ­ees receive 401(k)-style retire­ment plans instead of tra­di­tional defined-benefit pensions.

    As part of the grand bar­gain fund­ing from law­mak­ers and pledges from foun­da­tions, Detroit retirees would have to relin­quish their right to sue the state over pen­sion cuts in exchange for bet­ter treat­ment in the city’s restruc­tur­ing plan.

    Civil­ian retirees would get 4.5% pen­sion cuts and no more annual cost-of-living adjust­ment increases if they vote “yes” on the city’s restruc­tur­ing plan and Lans­ing law­mak­ers also approve the state’s con­tri­bu­tion. Police and fire retirees would get no monthly pen­sion cuts and would accept a decrease in COLA from 2.25% to about 1%.

    If the state fails to con­tribute $195 mil­lion upfront — the sta­tis­ti­cal equiv­a­lent of $350 mil­lion spread out over 20 years — Detroit would lose the $366 mil­lion pledged by char­i­ta­ble foun­da­tions and the $100 mil­lion in dona­tions the DIA is work­ing to raise.

    With­out the grand bar­gain cash, some civil­ian pen­sion­ers could endure cuts of up to 40% when includ­ing the impact of the city’s plan to claw back exces­sive annu­ity pay­ments over the last 10 years.

    “With­out this set­tle­ment, we’re going to have to go back to the draw­ing board,” Orr tes­ti­fied. “And for some peo­ple, it would be catastrophic.”

    A typ­i­cal retiree with a $20,000 a year pen­sion would drop to $12,000 a year with­out the state’s par­tic­i­pa­tion. Retired police and fire­fight­ers, who don’t get Social Secu­rity to sup­ple­ment their retire­ment, would drop from $35,000 to about $20,000 a year, Orr said.

    ...

    Let’s see...so the pro­posed Grand Bar­gain includes:
    – Cut­ting exist­ing pen­sion by 4.5% and elim­i­nat­ing cost of liv­ing increases which is going to guar­an­tee poverty for these retirees as the years tick by (and it’s poten­tially closer to a 20% cut when claw backs are fac­tored in).
    – Tran­si­tion all new employ­ees to the bad joke that is 401k sys­tem.
    – Detroit gets an “over­sight com­mis­sion” that would retain author­ity over the city’s spend­ing, bor­row­ing and con­tracts for 20 years.
    – Local and national foun­da­tions would con­tribute more than $366 mil­lion to the fund, but only if a sweep­ing set­tle­ment is reached and pen­sion­ers and oth­ers agree not to sue.
    – The Detroit Insti­tute of Arts would raise $100 million.

    And this is the deal the cred­i­tors are say­ing is too gen­er­ous to the pen­sion­ers. Instead, the cred­i­tors want the art. Bad. And they’re even argu­ing that they should be allowed to remove the art in order to have their own apprais­ers inspect the pieces. While it’s quite under­stand­able that there would be a strong desire to put people’s pen­sions over art works, keep in mind that this is largely a false choice because the groups oppos­ing this plan and advo­cat­ing a sell­off of the art don’t want the addi­tional pro­ceeds to go towards pen­sion­ers. The pro­ceeds are intended to for the cred­i­tors:

    Detroit bank­ruptcy judge nixes art access request
    May 15th 2014 6:36PM

    By Ed White

    DETROIT (AP) — A judge in Detroit’s bank­ruptcy refused to grant hands-on access to a valu­able trove of art Thurs­day, telling cred­i­tors who face steep losses in the case that they can visit a city museum and browse the walls like any other patron.

    Bond insur­ers have pointed to the art as a pos­si­ble billion-dollar source of cash in the bank­ruptcy. But the city is firmly opposed to any sale and instead is bank­ing on a sep­a­rate, unique deal that would pro­tect the art for­ever and soften pen­sion cuts for thou­sands of retirees.

    Attor­neys for Syn­cora Guar­an­tee and Finan­cial Guar­anty Insur­ance said poten­tial buy­ers should be allowed to look at cer­tain pieces at the Detroit Insti­tute of Arts, even remove them from the walls and exam­ine the backs.

    “The record fails to jus­tify this extra­or­di­nary relief,” Judge Steven Rhodes said after hear­ing argu­ments for more than an hour.

    He said cred­i­tors don’t deserve spe­cial treat­ment and instead can go to the museum and look at the art “like every­one else.”

    Art has been a hot issue in the bank­ruptcy because many cred­i­tors believe pieces could be sold to pay debts. City-owned art has been val­ued at $450 mil­lion to $870 mil­lion, but some Wall Street cred­i­tors say that’s way too low.

    A so-called grand bar­gain favored by Detroit, wrap­ping in illus­tri­ous art and city retiree pen­sions, involves $816 mil­lion from foun­da­tions, phil­an­thropists, the museum and the state of Michi­gan. The state’s part, a $194.8 mil­lion lump sum, remains unset­tled in the Capitol.

    The money would be exclu­sively ear­marked for pensions.

    “To us, the grand bar­gain is not grand. It’s more grandiose than grand,” said Marc Kiesel­stein, an attor­ney for New York-based Syn­cora, which could lose hun­dreds of mil­lions of dol­lars in the bankruptcy.

    He acknowl­edged the art is a “glit­ter­ing link to the glory days of Detroit.”

    “But in bank­ruptcy, some of those rar­i­fied things, those edi­fy­ing things, have to yield to things more base. Per­haps peo­ple would say more grubby” — such as cred­i­tor losses, Kiesel­stein said.

    The cred­i­tors said they’ve found buy­ers will­ing to pay more than $1 bil­lion for parts or all of the col­lec­tion; one wants all Chi­nese art.

    But under Detroit’s bank­ruptcy exit plan, the museum would take con­trol of thou­sands of pieces of city-owned art already there. The DIA, as it is known, has promised to raise $100 mil­lion of the $816 mil­lion pledged to ease cuts for retirees whose pen­sions are being reduced.

    Rhodes, who will approve or reject the city’s entire bank­ruptcy strat­egy later this year, has repeat­edly sig­naled that one-time asset sales prob­a­bly are not a good idea. He said the art would not have been avail­able to cred­i­tors if Detroit had cho­sen to skip bills and fix its finances out­side of bankruptcy.

    In a state­ment, Finan­cial Guar­anty sug­gested the fight over art isn’t over.

    “We main­tain that the dras­ti­cally under­val­ued DIA set­tle­ment under the ‘grand bar­gain’ places pol­i­tics over the finan­cial and legal real­i­ties of the sit­u­a­tion and will almost cer­tainly result in drawn-out lit­i­ga­tion that no one wants,” the com­pany said.

    Also note that it isn’t just bond insur­ers like Syn­cora Guar­an­tee and Finan­cial Guar­anty Insur­ance that have been hold­ing out for more. Euro­pean banks that were amongst the largest recip­i­ents of the back­door Fed bailout, Dexia and Depfa, have also been big investors in Detroit’s bonds. Yes, Dexia and Depfa. Where they stand on the recent ‘grand bar­gain’ pro­posal isn’t clear from reports, but as of last Octo­ber these banks weren’t exactly inter­ested in set­tling soon either:

    The Wall Street Jour­nal
    Euro­pean Banks Hold Out on Detroit
    Lenders Hire Lawyers to Pro­tect Stake Rather Than Sell

    By Matt Wirz and Emily Glazer
    Oct. 2, 2013 6:55 p.m. ET

    Banks in Ger­many, Bel­gium and Lux­em­bourg that own about $1 bil­lion of bank­rupt Detroit’s bonds are tak­ing a page out of the hedge-fund play­book to carve out their share of the city’s mea­ger cash pile.

    Depfa Bank PLC, Dexia SA and a unit of Com­merzbank AG have hired lawyers to pro­tect their stake rather than imme­di­ately sell­ing the debt—pri­mar­ily bonds issued to help fund the city’s pen­sions. The move is unusual for banks, which typ­i­cally don’t want to be mired in long bankruptcy-court fights, and it has frus­trated a num­ber of hedge funds that want to buy some of Detroit’s most bat­tered bonds from the banks at deeply dis­counted prices.

    By hold­ing out and fight­ing in Michi­gan bank­ruptcy court, the banks could boost their pay­outs from the record-setting bank­ruptcy com­pared with what they might get from sell­ing quickly to dis­tressed investors. Even if the banks ulti­mately decide to sell before the process is com­pleted, as some are con­tem­plat­ing, their pub­lic argu­ments before medi­a­tors could help drive up the prices of their bonds, said peo­ple famil­iar with the situation.

    The banks and the invest­ment firms inter­ested in the debt—including Brigade Cap­i­tal Man­age­ment, Claren Road Asset Man­age­ment LLC, Fun­da­men­tal Advi­sors LP and Monarch Alter­na­tive Cap­i­tal LP—thus far remain apart on their val­ues for the Detroit debt. Small amounts of the bonds recently traded at 44 cents on the dol­lar, accord­ing to the Munic­i­pal Secu­ri­ties Rule­mak­ing Board, but dis­tressed buy­ers want to pay prices around 40 cents on the dol­lar, or less for larger trades, said peo­ple famil­iar with the matter.

    The appetite for Detroit’s bonds shows how the municipal-bond mar­ket is evolv­ing into a play­ground for dis­tressed invest­ing. Hedge funds, which typ­i­cally focus on buy­ing the debt of trou­bled cor­po­ra­tions, have been hom­ing in on the debt of cities, states and other munic­i­pal­i­ties as the num­ber of those bank­rupt­cies has risen while defaults by cor­po­ra­tions are declin­ing. Most of the funds inter­ested in Detroit also are own­ers of debt sold by Jef­fer­son County, Ala., home of the country’s second-largest munic­i­pal bank­ruptcy.

    ...

    Hedge-fund man­agers thought the banks—including Franco-Belgian lender Dexia and a Ger­man state agency that took over bad assets from Depfa Bank—would write down the Detroit pen­sion bonds they hold and sell them. Instead, the Euro­pean lenders are mark­ing down the bonds, but most aren’t sell­ing yet. Dexia has pro­vi­sioned for a roughly 50% loss, and hired the lawyer rep­re­sent­ing hedge funds in Jef­fer­son County’s bank­ruptcy, to advise it. They also are talk­ing to restruc­tur­ing bankers for advice, peo­ple famil­iar with the mat­ter said.

    The Euro­pean bank cred­i­tors are play­ing an unusu­ally activist role, in part because many of them were nation­al­ized dur­ing the Euro­pean finan­cial cri­sis and now are seek­ing to make a profit for tax­pay­ers by unload­ing assets at the high­est prices they can get. They have been sell­ing some loans and bonds and in other cases, includ­ing Detroit, they are nego­ti­at­ing with bor­row­ers to recover the max­i­mum amount possible.

    ...

    So we’ll have to wait and see if the Euro­pean banks hold­ing these bonds joined the bond insur­ers in hold­ing our for more art sales to cover their losses. As the above arti­cle indi­cates, that these banks were hold­ing back in the first place was some­what sur­pris­ing but there’s another group oppos­ing the plan that’s per­haps even more sur­pris­ing con­sid­er­ing that it strips Detroit of self rule for the next two decades: The far right Mack­inac Cen­ter, the archi­tects of Michigan’s “emer­gency finan­cial man­ager” scheme, is also opposed to the deal.

    All this oppo­si­tion to a deal that basi­cally sends Detroit to democ­racy prison for two decades, ends pub­lic pen­sions, and guar­an­tees old age poverty for the cur­rent employ­ees that won’t receive cost of liv­ing increases and the future employ­ees are basi­cally hand­ing their retire­ment sav­ings to Wall Street. Why the oppo­si­tion when this seems like a far right dream come true? Because there’s so much more that could be done to undo the social con­tract. So much more:

    The Amer­i­can Spec­ta­tor
    Don’t Save Detroit — Sell It

    Belle Isle alone could fetch $1 billion.

    By John H. Fund – From the Sep­tem­ber 2013 issue

    IN THE 1983 movie Dr. Detroit, the flam­boy­ant lead char­ac­ter goes on a ram­page warn­ing of trou­ble to come. “I am talk­ing about scorched earth, no sur­vival, whole­sale destruction…body-bags and fire!” he yells. That’s pretty much what has hap­pened to Detroit over the last three decades.

    Its pop­u­la­tion has shrunk by half to below 700,000. The wait for police response is five times the national aver­age, and only 8 per­cent of crimes are solved. Roughly a third of the city’s 140 square miles is either unoc­cu­pied or dilap­i­dated. About 40 per­cent of its tax rev­enue is directed to retire­ment or debt, and the city hasn’t been in the black since 2004. Bank­ruptcy should have been declared years ago. The best experts say there is no way the city can ever crawl out of its predica­ment using con­ven­tional means.

    In the short term, Detroit could sell assets. Kevyn Orr, the city’s emer­gency man­ager, says all assets must be poten­tially on the table. Experts con­sulted by the Detroit Free Press say the col­lec­tions of the Detroit Insti­tute of Arts—works by every­one from Van Gogh to Matisse to the orig­i­nal Howdy Doody children’s TV doll—would fetch some $2.5 bil­lion. But that’s only one-eighth of the city’s pro­jected long-term debt of $20 bil­lion. Art experts say any sales from the museum would have to be spaced out over a long period.

    “There are only so many bil­lion­aires that could absorb all of that mate­r­ial,” art appraiser Betty Kru­lik told reporters.

    With a fed­eral or state bailout effec­tively off the table because of the bad prece­dent it would set for other near-bankrupt cities, it’s time for truly cre­ative thinking.

    ...

    One of the most intrigu­ing parts of Detroit is Belle Isle, a 1.5 square-mile park with real mar­ket value that sits in the Detroit River between the two cities. Designed by Fred­er­ick Law Olm­sted, one of the cre­ators of New York’s Cen­tral Park, it was once an urban jewel but has been left decrepit by years of neglect. One pro­posal is to revi­tal­ize Belle Isle by hav­ing the city sell it for $1 bil­lion to investors inter­ested in set­ting up a self-governing “free enter­prise zone.” While it would func­tion as a mini-Hong Kong, some strings could be attached (no fac­to­ries, for exam­ple). The idea has been endorsed by no less than for­mer Chrysler pres­i­dent Hal Sper­lich, who says the island could bring eco­nomic dynamism back to the area and cre­ate a “Mid­west tiger.”

    Other com­men­ta­tors point to other prop­er­ties that could be sold to Canada or pri­vate investors. The city’s water depart­ment begs for new man­age­ment. There are prime water­front sites owned by the city such as the Joe Louis Arena and Hart Plaza. The Detroit Zoo sits on 125 acres of prime land. Its ani­mals are much in demand, too; the Free Press reported that a breed­ing female giraffe can fetch $80,000.

    The Cana­dian media out­let Global News went fur­ther with a poll ask­ing “Should Canada buy Detroit?” It pointed out that Canada’s sports cred would instantly be enhanced by adding the Detroit Red Wings, Detroit Pis­tons, and Detroit Lions. Its music sta­tus would rise, too, as it could lay claim to local artists Ste­vie Won­der, Eminem, and Iggy Pop. As of press time, the win­ning answer was “yes”: 36 per­cent of respon­dents agreed with buy­ing Detroit. Close behind, with 29 per­cent, were those who agreed it was a good idea, but “only if we’re able to get rid of the guns.”

    AT THIS POINT, sell­ing assets to Canada or even pri­vate investors is polit­i­cally unten­able. But wait a few months, until the crush­ing bur­den of Detroit’s debt makes it clear that rad­i­cal solu­tions are in order. Bold ideas are often ridiculed or scorned in the begin­ning. In 1985, for­mer British Prime Min­is­ter Harold Macmil­lan upbraided Mar­garet Thatcher for her pro­gram to pri­va­tize state-owned enter­prises. He shouted that his suc­ces­sor was “sell­ing off the fam­ily sil­ver.” Thatcher ignored such crit­i­cism and stuck to her guns.

    Detroit needs a Mar­garet Thatcher fig­ure, some­one who can ignore the screams of out­rage that inevitably accom­pany the imple­men­ta­tion of any bold pro­gram. All over the world, once-devastated cities have revi­tal­ized them­selves after their indus­trial bases decayed: Belfast, North­ern Ire­land, after ship­build­ing went else­where; Turin, Italy, after Fiat dras­ti­cally down­sized; Pitts­burgh, Penn­syl­va­nia, after steel fac­to­ries folded. Detroit can ulti­mately do the same if it sets no limit on who it will do busi­ness with—whether they be pri­vate investors or even Canadians.

    “AT THIS POINT, sell­ing assets to Canada or even pri­vate investors is polit­i­cally unten­able. But wait a few months, until the crush­ing bur­den of Detroit’s debt makes it clear that rad­i­cal solu­tions are in order”. That was John Fund’s pre­dic­tion back in Sep­tem­ber, and here we are, 8 months later with a “grand bar­gain” on the table that should make the far right giddy, and there’s still oppo­si­tion to the plan from not just the cred­i­tors, but also ide­o­log­i­cal cham­pi­ons of shred­ding the social con­tract like the Mack­inac Center.

    On top of that, the House Speaker Jase Bol­ger, of the GOP, is demand­ing that Detroit’s unions also throw some money into the bailout fund (pre­sum­ably the pen­sion cuts weren’t enough). And until that hap­pens he won’t back the ‘bar­gain’. And keep in mind that the pro­posal to sell off Belle Island and turn it into self-governed Hong Kong was pro­posed by the Mack­inac Cen­ter specif­i­cally to address Detroit’s pen­sion cri­sis. So we could be look­ing at not only an extended period of court bat­tles but also extended polit­i­cal oppo­si­tion to any deal that doesn’t utterly crush Detroit’s pub­lic sec­tor and sell parts of it off. If folks like John Fund get their way, Canada might need to start look­ing into the value of that art too since it’ll pre­sum­ably come with the pack­age deal.

    Posted by Pterrafractyl | May 17, 2014, 6:46 pm
  11. Will Michigan’s Repub­li­cans kiss the ring? A cer­tain pair of oli­garchs can’t wait to find out:

    Koch Broth­ers Group Fight­ing Detroit Bank­ruptcy Deal
    DAVID EGGERT – May 20, 2014, 6:17 AM EDT

    LANSING, Mich. (AP) — Amer­i­cans for Pros­per­ity, the con­ser­v­a­tive advo­cacy group sup­ported by the Koch broth­ers, has launched an effort to tor­pedo a pro­posed set­tle­ment in the Detroit bank­ruptcy case, poten­tially com­pli­cat­ing chances for com­plet­ing the deal just as its prospects seemed to be improving.

    The orga­ni­za­tion, formed to fight big gov­ern­ment and spend­ing, is con­tact­ing 90,000 con­ser­v­a­tives in Michi­gan and encour­ag­ing them to rally against a plan to pro­vide $195 mil­lion in state money to help set­tle Detroit pen­sion hold­ers’ claims in the case, a key ele­ment of the deal.

    The group has threat­ened to run ads against mem­bers of the Republican-controlled Leg­is­la­ture who vote in favor of the appro­pri­a­tion before the state’s August pri­mary. An ini­tial leg­isla­tive vote may come this week.

    Using pub­lic money for Detroit’s case “is very toxic, espe­cially to out-state and Repub­li­can, conservative-leaning indi­vid­u­als,” said Scott Hager­strom, direc­tor of the Amer­i­cans for Prosperity’s chap­ter in the state. “Even out-state Democ­rats, why send any more money to Detroit? Cer­tainly other areas of the state have needs.

    The group’s move is a blow to Repub­li­can Gov. Rick Sny­der, who pro­posed the state cash as a final ingre­di­ent to bring the 10-month-long bank­ruptcy case to a con­clu­sion. Some cred­i­tors are fight­ing the “grand bar­gain,” but it recently drew sup­port from major retiree groups and unions. The bank­ruptcy court trial on the city’s case will be held this summer.

    “This is a set­tle­ment. This not a bailout,” Sny­der said. “And I want to be very, very clear about that.”

    Ten-year-old Amer­i­cans for Pros­per­ity, which plans to spend at least $125 mil­lion nation­ally help­ing con­ser­v­a­tives in the midterm elec­tions, is becom­ing more active in state pol­i­tics. Its will­ing­ness to spend mil­lions for adver­tis­ing has made it a pow­er­ful player in polit­i­cal contests.

    Dave Doyle, a polit­i­cal strate­gist and for­mer chair­man of the Michi­gan Repub­li­can Party, said the organization’s oppo­si­tion could make a dif­fer­ence even though polling shows con­sid­er­able pub­lic sup­port for a settlement.

    “What does have an impact is if they start spend­ing a lot of money on TV and radio and doing mail­ings into people’s dis­tricts. The threat of that would get some peo­ple to pay atten­tion,” he said.

    Sny­der, who took the lead in resolv­ing Detroit’s fis­cal cri­sis by appoint­ing an emer­gency man­ager for the city’s oper­a­tions, pro­posed the $195 mil­lion to match com­mit­ments from pri­vate foun­da­tions. The money would limit pen­sion cuts for the approx­i­mately 30,000 retirees and city work­ers to no more than 4.5 per­cent and avert the need to liq­ui­date the Detroit Insti­tute of Art’s col­lec­tion to raise money. Sny­der and city lead­ers say the museum is impor­tant to rebuild­ing Detroit as a world-class city.
    ...

    Keep in mind that in addi­tion to the 4.5% pen­sion cut there’s also the loss of any cost of liv­ing adjust­ments and a “claw­back” of the last decade of pen­sion con­tri­bu­tions that sub­stan­tially raises the cuts.

    Skip­ping down...

    ...

    Repub­li­can House Speaker Jase Bol­ger has warned that the bills may not advance unless the city work­ers’ unions agree to kick in some cash toward the set­tle­ment. Sny­der must also per­suade Democ­rats despite their unhap­pi­ness with his use of his exec­u­tive pow­ers to take over con­trol of Detroit’s finances.

    Amer­i­cans for Pros­per­ity intends to turn up the heat on the Repub­li­cans, who hold 26 of the 38 seats in the Sen­ate and 59 of 110 House districts.

    “Tell Lans­ing politi­cians that Detroit has got­ten enough of our tax dol­lars,” the group says on a web­site cre­ated to oppose the aid. “More money can’t fixDetroit.”

    Notice how there’s no actual plan from the Kochs beyond let­ting Detroit die and danc­ing on its grave (and then rean­i­mat­ing the body as part of hor­ri­ble exper­i­ment). Con­sider this a pre­view.

    Posted by Pterrafractyl | May 20, 2014, 7:44 am
  12. Here’s another pre­view of what life will be like once the oli­garchs are fin­ished pri­va­tiz­ing the com­mons: Don’t have enough money for water? Oh well. You can dig a well or go to hell. Your oli­garchs don’t really care either way. They only care if you can pay:

    The Guardian
    True North
    Detroit’s Water War: a tap shut-off that could impact 300,000 people

    A right-wing state and cor­po­rate push to cut off water is eco­nomic shock ther­apy at its most ruth­less and racist, but resis­tance is grow­ing
    by Mar­tin Lukacs
    June 25, 2014

    It was six in the morn­ing when city con­trac­tors showed up unan­nounced at Char­ity Hicks’ house.

    Since spring, up to 3000 Detroit house­holds per week have been get­ting their water shut-off – for owing as lit­tle as $150 or two months in bills. Now it was the turn of Charity’s block – and the con­trac­tor wouldn’t stand to wait an hour for her preg­nant neigh­bour to fill up some jugs.

    “Where’s your water ter­mi­na­tion notice?” Char­ity demanded, after stag­ger­ing to the contractor’s truck. A widely-respected African-American com­mu­nity leader, she has been at the fore­front of cam­paigns to ensure Detroi­ters’ right to pub­lic, acces­si­ble water.

    The contractor’s answer was to drive away, knock­ing Char­ity over and injur­ing her leg. Two white police­men soon arrived – not to take her report, but to arrest her. Mock­ing Char­ity for ques­tion­ing the water shut-offs, they brought her to jail, where she spent two days before being released with­out charge.

    Wel­come to Detroit’s water war – in which upward of 150,000 cus­tomers, late on bills that have increased 119 per­cent in the last decade, are now threat­ened with shut-offs. Local activists esti­mate this could impact nearly half of Detroit’s mostly poor and black pop­u­la­tion – between 200,000 and 300,000 people.

    “There are peo­ple who can’t cook, can’t clean, peo­ple com­ing off surgery who can’t wash. This is an affront to human dig­nity,” Char­ity said in an inter­view with Kate Levy. To make mat­ters worse, chil­dren risk being taken by wel­fare author­i­ties from any home with­out run­ning water.

    Deny­ing water to thou­sands, as a swel­ter­ing sum­mer approaches, might be bad enough in itself. But these shut-offs are no mere exer­cise in cost-recovery.

    The offi­cial ratio­nale for the water shut-downs – the Detroit Water Department’s need to recoup mil­lions – col­lapses on inspec­tion. Detroit’s high-end golf club, the Red Wing’s hockey arena, the Ford foot­ball sta­dium, and more than half of the city’s com­mer­cial and indus­trial users are also owing – a sum totalling $30 mil­lion. But no con­trac­tors have showed up on their doorstep.

    The tar­get­ting of Detroit fam­i­lies is about some­thing else. It is a ruth­less case of the shock doc­trine – the exploita­tion of nat­ural or unnat­ural shocks of cri­sis to push through pro-corporate poli­cies that couldn’t hap­pen in any other circumstance.

    The first shock was the slow dis­as­ter that struck Detroit over the last four decades: the flight of cor­po­ra­tions toward cheaper, over­seas labour; the move­ment of white, wealth­ier Detroi­ters to the sub­urbs, drain­ing the city’s tax base; a Wall Street-driven finan­cial cri­sis that left many home­less or job­less; and the delib­er­ate starv­ing of the city of funds owed them by the Repub­li­can state legislature.

    On its heels has come a round of eco­nomic shock ther­apy: tak­ing advan­tage of the severe decline in rev­enue from Detroit’s first shock, the media, cor­po­ra­tions and right-wing politi­cians drummed up a cri­sis of fear about finan­cial debt. This has become the pre­text for a rapid-fire assault on Detroit’s pub­lic resources: an attempt to dis­man­tle its schools, to slash its pen­sions, and to trans­fer its parks and art and land into the hands of pri­vate corporations.

    The pub­lic water sys­tem, a prized resource worth bil­lions and sit­ting on the Great Lakes, is now the lat­est tar­get – and the water shut-offs are a way to make the balance-sheet more attrac­tive in the lead up to its privatization.

    As Detroi­ters like Char­ity Hicks have taken a stand, they have been met by a third shock: lit­eral blows of police force and vio­lence, intended to dampen any resistance.

    Tak­ing full advan­tage of Detroit’s plight required the removal of another obsta­cle: democ­racy. No Detroit politi­cian, sub­ject to the pres­sures of an elec­torate, could imag­ine going after the city’s water. But in 2013, using Detroit’s debt as his excuse, Michigan’s Repub­li­can gov­er­nor Rick Syn­der imposed an “emer­gency manger” – a trustee to gov­ern Detroit uni­lat­er­ally. When Detroi­ters over­whelm­ingly voted in a ref­er­en­dum against the “emer­gency man­ager” law, Syn­der passed a new one overnight – with a pro­vi­sion ren­der­ing ref­er­en­dums meaningless.

    Hav­ing made his reign democracy-proof, Detroit’s emer­gency man­ager has pro­ceeded to drive the city toward bank­ruptcy. With the bank­ruptcy dom­i­nat­ing media head­lines across the coun­try, the real nature of Detroit’s cri­sis has been obscured and ignored. It has left the banks and cor­po­ra­tions free to pur­sue a liq­ui­da­tion of the city’s assets. And noth­ing is off the table.

    ...

    The US banks and cor­po­ra­tions who now have Detroit on the hook want these ugly truths to stay sub­merged. They haven’t flinched while the water has been shut-off. Nor did they flinch when Detroi­ters’ heat was cut – in 2013, before the worst win­ter on record, 169,407 house­holds were dis­con­nected. But they loudly protested when orga­ni­za­tions pro­posed a tour of the city for the US judge who will rule on Detroit’s bank­ruptcy – that, they insisted, would be too “dangerous.”

    The view the judge would see is in rad­i­cal con­trast to Detroit’s pre­vail­ing image: a city with a flow­er­ing net­work of com­mu­nity gar­dens, more than any in the United States, feed­ing res­i­dents and nur­tur­ing sol­i­dar­ity; a rich artis­tic and musi­cal cul­ture; and neigh­bour­hoods orga­niz­ing for mean­ing­ful edu­ca­tion and to restore local democ­racy. No one denies Detroit is racked by crime, poverty and unem­ploy­ment – but it is also hard to miss its vibrant renewal.

    It is from this incred­i­ble web that a chal­lenge to the water shut-offs is emerg­ing. Com­mu­nity orga­ni­za­tions have filed a human rights com­plaint to the United Nations, demand­ing Michi­gan state impose a mora­to­rium on the shut-offs. UN experts have already responded crit­i­cally. There are daily acts of civil dis­obe­di­ence: cars being parked over water valves to pre­vent shut-offs; neigh­bours teach­ing each other to turn the water back on. A new ini­tia­tive called the Detroit Water Brigade – an Occupy Sandy-style response to dis­as­ter zones cre­ated by the depri­va­tion of water instead of its excess – is accept­ing sup­plies from around the coun­try, open­ing local ser­vice hubs, and coor­di­nat­ing calls to action.

    And the Detroit People’s Water Board, a broad coali­tion co-founded by Char­ity Hicks, con­tin­ues its work of rais­ing con­scious­ness about water jus­tice and con­ser­va­tion, set­ting out a vision for water as a pub­lic trust, not a com­mod­ity – a source of life, not of pri­vate enrichment.

    “This is a test being looked at by cities across the US — even the world,” Char­ity says. “We will not let water be used as a weapon to remake the city in a cor­po­rate image. We will re-establish what it is to live in a democ­racy, with a water sys­tem that is part of the com­mons, that affirms human dig­nity and that ensures everyone’s access.”

    “This is a test being looked at by cities across the US — even the world.” Yes indeed.

    Posted by Pterrafractyl | June 26, 2014, 8:29 pm

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