Bailing on Detroit

Jamie Peck, Department of Geograpy, UBC and Honorary Professor at SEED, University of Manchester, continues his analysis of the on-going restructuring of Detroit and its wider significance for the future of US cities.

Detroit is about to enter a new phase, in its protracted state of financial emergency.  The city’s Emergency Manager, Kevyn Orr—who was appointed by Michigan’s Republican Governor in March 2013, following the breakdown of a so-called “consent agreement” with the state, en route to a long-anticipated declaration of municipal bankruptcy—will soon publish his “plan of adjustment.”  This will spell out the details of what will be tantamount to a court-administered structural adjustment of Detroit, implemented by an unelected financial technocrat whose far-reaching powers trump practically all of those of the city’s elected officials, including the Mayor.  It will set the Motor City on a new path, doubtless based on some inventive (but at the same time familiar) combination of lean administration, triaged public services, privatization, and restructured debt and pension obligations.

There is (literally) no need to recount the litany of metropolitan woes that are associated with this unprecedented situation.  Detroit has its very own history of urban crises, and crisis narratives, which for decades now have been married with aspirational visions for the city’s rebirth.  This was the place where Henry Ford II famously declared, on the occasion of the opening of the Renaissance Center, a glitzy downtown corporate complex, that “Detroit has reached the bottom and is on its way back up.”  That was 1977.  And Detroit has hit the bottom in several different ways since.  There may be no better précis of the current situation than that offered by the city’s preeminent historian, Thomas J. Sugrue:  “Good news: a few hipsters are rediscovering Detroit.  Bad news: everything else.”[1]

In the years since the Wall Street crash of 2008, Detroit’s crisis has become its own kind of urban spectacle.  The city’s long, overdetermined slide into bankruptcy has been accompanied, in the wake of the crash and the state and local government fiscal collapse that followed, by a pervasive and consequential neoliberal narrative:  what began as a banking crisis was translated first into a state crisis and then into an urban crisis.[2]  How could we have not seen it?  The underlying cause of the crash, and the Great Recession that followed, really had nothing to do with the reckless acts of unsupervised financial elites, or the paradigm of speculative, unequal growth; all along, the roots of the problem were the pension entitlements of firefighters and schoolteachers!

Conservative and mainstream narrations of the crisis, in as far as they have sustained and rationalized this kind of austere, anti-urban and anti-public sector commonsense, have consequently been far from innocent.  These are stories that effectively repoliticize the crisis, serving the ends of spatial containment and social targeting.  (Every failure, the script goes, is homemade, typically at the hands of bad actors like corrupt local politicians, superannuated bureaucrats, belligerent public-sector unions, and the feckless underclass.)  These are stories that discursively (re)distribute the costs and burdens of “adjustment,” for the most part regressively.  And they are stories that endogenize and localize the both the supposedly underlying causes of the crisis and the scope for politically acceptable remedies.

Language matters here, especially when it is language fashioned to travel along with, legitimate, and enable the panoply of neoliberal restructuring strategies—legal, fiscal, and administrative—that is being put to work in what is taking shape as a  new mode of (urban) crisis management.  Amongst the most important of the currently circulating discursive keyword is this:  bailout.[3]  This term is now being liberally applied—or rather, neoliberally applied—as a means of undermining, delegitimating, and besmirching each and every form of fiscal transfer or financial redistribution, along with every invocation of extralocal causality or responsibility.  Detroit is on its own, as indeed are other American cities.  Any form of financial assistance from outside, be this in the shape of federal redevelopment grants for Detroit or backfilling of the city’s pension fund by the state, is met with cries of “bailout!”

In places like Detroit, these words really bite.  Here, the arch-conservative narrative is dependably delivered by Michigan’s leading free-market think tank, the Mackinac Center, which repeatedly proclaims that a “bailout” of Detroit is a “terrible idea.”  Their Tieboutesque argument, as articulated by director of fiscal policy, Michael D. LaFaive, goes like this: “People in Ishpeming, Bad Axe and Traverse City who already are paying to support their own local governments shouldn’t also have to support Detroit’s bad policy choices, mismanagement and corruption … The bottom line is that Detroit has fouled its own nest and should be responsible for cleaning it up.”[4]  As a city that allegedly “emblematizes un-entrepreneurial America,” Ed Glaeser has written in the Manhattan Institute’s City Journal, Detroit apparently has only itself to blame for its fiscal crisis.[5]  A “victim of its own political vices” is how the Wall Street Journal portrays Motown, the poster child for a new generation of “deadbeat cities,” which must now be saved from itself.[6]  Tea-party solutions are perhaps the most brutal:  “Dissolve Detroit,” and replace it with a tax-free opportunity zone, the City of New Detroit.[7]

These arguments are perfectly consistent with the conservative legal doctrine of fiscal federalism, where not only “each level of government,” but in effect each unit of government, must “internalize both the costs and the benefits of its activities.”[8]  This is the antithesis, effectively, of Keynesian redistribution, with its compensatory fiscal transfers and anti-cyclical stabilizers.  In contrast, the neoliberal version of fiscal federalism holds that cities, suburbs, and local-government entities must always be free to opt out, as in the logic of small-government suburbanism,[9] but they must never, in any circumstances, be “bailed out.”  This disaggregated, go-it-alone world is a world ruled by fiscal discipline, imposed across different tiers of government and between neighbors; (in)solvency duly becomes, rightfully, a local matter.  The new fiscal landscape can be crudely divided between free-riding, low-tax suburbs on the one hand, and indebted (or even bankrupt) cities on the other.  In the morality plays of austerity urbanism,[10] “irresponsibility” is perversely conferred on the latter, not the former.

Detroit’s curse—and in the circumstances that may not be too strong a word—is to have become practically synonymous with bankruptcy, not just as a passing legal status but as an entrenched urban condition.  The cold, hard logic of fiscal federalism dictates that the accompanying pain must be regressively redistributed; it must be localized, compressed, and tagged to endogenous causes—hence the singular intensity of Detroit’s impending structural adjustment.  Building alternatives to fiscal federalism and urban scapegoating, it should go without saying, must be more than a local matter.  But given the dysfunctions of federal politics in the United States at the moment, it would seem that the long-haul task of constructing a new kind of social compact around cities, fiscal justice, and metropolitan policy will have to begin from below, not above.

 

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[1] Sugrue T J (2013) Notown. Democracy 28: 116-123.

[2] Peck J (2014) Pushing austerity: state failure, municipal bankruptcy and the crises of fiscal federalism in the USA. Cambridge Journal of Regions, Economy and Society 7, available at http://cjres.oxfordjournals.org/content/early/2013/07/29/cjres.rst018.short?rss=1.

[3] “Bailout” joins the lexicon of conservative keywords that perform the work of political framing, along with welfare “dependency,” devolved “responsibility,” and the transmutation of citizens into “taxpayers” and corporations into “job creators.”

[4] LaFaive M D (2014) Don’t bail out Detroit with state tax dollars. Capitol Confidential, January 15, available at http://www.mackinac.org/19559.

[5] Glaeser E L (2011) Unleash the entrepreneurs. City Journal 21(4): 34-41.

[6] Wall Street Journal (2013) Saving Detroit from itself. Wall Street Journal July 27: A14.

[7] Phillips J (2013) Defeat socialism and save Detroit, all in one move. Washington Times, July 28, accessed at http://communities.washingtontimes.com/neighborhood/judson-phillips-cold-hard-truth/2013/jul/28/defeat-socialism-and-save-detroit-all-one-move/.

[8] Gillette C P (2012) Fiscal federalism, political will, and strategic use of municipal bankruptcy. University of Chicago Law Review 79(1): 281–330.

[9] Peck J (2011) Neoliberal suburbanism: frontier space. Urban Geography 32(6): 884-919.

[10] Blyth M (2013) Austerity. New York: Oxford University Press; Peck J (2013) Austere reason, and the eschatology of neoliberalism’s End Times. Comparative European Politics 11(6): 713-721.