Last week, Detroit became the largest U.S. city to enter Chapter 9 bankruptcy.
Conservatives are blaming unfettered liberalism, and especially "unions" for Detroit's economic woes. This carping is nothing but a prelude to the "cut your way out of bankruptcy" narrative that will surely follow.
Instead, if you want to understand what happened to Detroit, you need to understand the power of the Christmas story as told by Charles Dickens.
In 1843, Charles Dickens created the famous character of Ebenezer Scrooge in his story, A Christmas Carol.
Scrooge represented the 19th century horrors industrialization visited on the poor and working classes. The story is well known: Three ghosts of Christmas visit Scrooge and show him, past, present and future, the true portrait of the society and the relationships he has helped create. Scrooge realizes the error of his ways, repents and changes for the good.
In the 20th century, and into the 21st, Detroit has been Scrooged. Detroit has become the victim of the worst aspects of predatory post-industrial forces of capitalism ranged against this city, and against American workers overall. These are the forces of deindustrialization, globalization, failed government policies, and the legacy of intractable racism.
Perhaps we need to retell A Christmas Carol for today. And we need repentance and change.
The Ghost of Detroit's Christmas Past
Detroit's Ghost of Christmas past would not be a wholly grim figure, but is definitely haunted.
Detroit's past is haunting because, if reformed Scrooge could have imagined how industrialization could have improved the lives of workers overall, Detroit in the heyday of the auto industry might have been that picture. Workers with only a high school education could get good-paying jobs and the economic "American Dream": have a house and a car and send their kids to college.
But, as journalist Scott Martelle shows in his book Detroit: A Biography, even this apparently anti-Scrooge Detroit carried the seeds of its own destruction. Martelle points to Henry Ford's great innovation, the assembly line. "It was the first critical step in the dehumanization of manufacturing work," he writes. "Skilled craftsmen lost out to unskilled laborers who performed a single task, day in and day out."
The very issues of intractable racism that drove the Great Migration of southern African Americans to Detroit to get these good jobs were recreated in a northern version of segregation and social stratification. This became "white flight" when the economics of post-industrialization started to kill the auto industry.
In addition, the labor success in Detroit, according to Martelle, made it a target for the "Big Three automakers which in the 1950s began aggressively spider-webbing operations across the nation to produce cars closer to regional markets, and to reduce labor costs by investing in less labor-friendly places than union-heavy Detroit."
Anti-integration and "slum-clearing" policies of the early 1950's helped create the white exodus from the city that in turn reduced the tax base and led, in part, to today's difficulties.
And as is well known, Detroit car manufacturers were almost criminally slow in recognizing the need to produce fuel-efficient cars even after the oil crisis, both to compete with foreign imports, to say nothing of protecting the planet.
In fact, Detroit's Ghost of Christmas past should be seen as Jacob Marley, Scrooge's dead business partner, haunted by how his unscrupulous business practices have harmed so many. "Humanity was my business," groans Marley, realizing his mistake too late.
The Ghost of Detroit's Christmas Present
The Christmas Ghost of Detroit's present is a jolly Wall Street Banker. At least, that's the conclusion you can draw from a report by Wallace Turbeville, a former investment banker with Goldman Sachs, now at Demos, a think tank.
The Demos report "eviscerates" Wall Street bankers for entering into "a series of highly complex swaps agreements with the city worth $1.4 billion in 2005 and 2006" that, of course, made the same kind of wrong "bet" on the economy that caused the Great Recession.
When you combine the economic sinkhole of credit swaps with declining tax revenues, also due to the Great Recession, and the "deep cuts in state revenue sharing to Detroit" that "accounted for nearly a third of the city's revenue losses since fiscal year 2011," you get a very different picture than that union-negotiated pensions are killing Detroit.
Detroit's Ghost of Christmas present should be seen wearing a $10,000 suit because, as Forbes noted in 2004 , a rich guy really needs that psychological lift: "'I can afford a $10,000 suit,' it makes you think. 'And those other chumps can't.'" Frankly, that's the greedy self-centeredness that produced the Great Recession.
The Ghost of Detroit's Christmas Future
The Ghost of Christmas Future that visits Scrooge is a horrible vision, a spectral creature portending death, a "Phantom... shrouded in a deep black garment, which concealed its head, its face, its form, and left nothing of it visible save one outstretched hand..."
Today, in Detroit, that spectral hand should be seen reaching out to grab the pensions of Detroit's workers.
In his landmark ruling, Federal Judge Steven W. Rhodes put public employee pensions on the chopping block, making it these pensions were not protected in a federal Chapter 9 bankruptcy, even though the Michigan Constitution expressly protects them.
This decision will haunt retirees in Chicago, Los Angeles, Philadelphia and other cities. Those governments will now be tempted to think they can solve their fiscal mismanagement woes by ditching pension obligations. As Dean Baker so well argues, pension theft is the next logical step in class warfare.
In A Christmas Carol, the Ghost of Christmas future haunts a graveyard, the early destination of the suffering workers in the 19th century. Is that the destination we wish on Detroit's retirees if their hard-earned pensions are cut?
The Ghost of Detroit's future should, indeed, be the pinched face of such a worker, being squeezed on one hand by the specter of pension cuts and Social Security "restructuring" on the other.
God Bless Us, Every One
Tiny Tim, helped out by the changed Scrooge, calls out, "God bless us, every one."
"Blessed are they who keep justice," the Psalmist teaches (106:3).
A blessed future for Detroit, and indeed for all Americans, is not a matter of one individual repenting and making a change, but of a system called to account for its structured wage inequality. The prophet Jeremiah declares: Woe to him who builds his house on wrongdoing,his roof-chambers on injustice;Who works his neighbors without pay,and gives them no wages (22:13).
Instead, as Jesus of Nazareth says in announcing his ministry, quoting the prophet Isaiah, we need "to bring glad tidings to the poor." (Luke 4:1)
That's a Christmas story for you. In fact, it is THE Christmas story, complete with angels.