Detroit Needs Bankruptcy And Reorganization

SEARCH BLOG: DETROIT

General Motors has gotten all of the negative headlines recently, but in Michigan there is another entity that is chronically the most corrupt and mismanaged: Detroit.

• The city, like General Motors, has been losing "market share" for decades.
  
• The city, like General Motors, has had a series of dubious "leaders."
  
• The city, like General Motors, neglected its "product."
  
• The city, like General Motors, has needed government "bailouts."
  
• The city, like General Motors, needs a bankruptcy proceeding and massive reorganization.

Over four years ago, during a relatively good economic time, I laid out the issues and what needed to be addressed:

What's the answer... the solution? The answer is that Detroit has been in decline for 1/2 a century and any turnaround must either be based on a total change in government... or a turnaround will take at least 1/2 century given current government processes. The solutions are myriad... and painful.

• confiscation of vacant and abandoned property
• rezoning from residential to public and forced buyouts - creation of green zones
  
• closing of 20% of schools, renovation of the rest, and a takeover by the state
  
• reduction by 30% of government employees and state supervised restructuring of departments and processes
• creation of tax-free "enterprise parks"
• establishing a tax structure that is "competitive" with suburbs

Of course, no such action was contemplated or taken and the situation continued to deteriorate. Detroiters continued to elect a mayor and council full of corruption and nepotism. Hey, what's the big deal? Everyone does it!

Last year I wrote:

It is time for change...

• change at the state level to fiscal responsibility and pro-business policies
• change at the city level to addressing problems rather than cultivating racial power
• change at the personal level to realizing that "stupidity has its own rewards" and not being so damn stupid

What's the likelihood of such change? Somewhere between zero and zilch.

That makes it even more likely that ultimately the city will have to be split up into new, manageable pieces. As I also wrote in 2005:

Another radical approach would be to reduce Detroit to a 5 mile radius from the foot of Woodward Ave and then create several new cities along the outer ring or let existing cities annex adjacent areas. This would create a more manageable central area that could focus on high-end businesses and more affluent residents. The outer areas would be more traditional smaller cities that could focus on small business and the needs of its residents.

What do economists call that... creative destruction?

What has happened since then?

Crowd gasps at deficit

Financial manager shares plan for cuts By CHASTITY PRATT DAWSEY FREE PRESS EDUCATION WRITER Surprise, disgust and un­comfortable confrontation marked the meeting Thursday night when the state-appoint­ed emergency financial man­ger for Detroit Public Schools discussed a historic $305.8­million deficit and stood up to board members who want more power than the law al­lows under a state takeover. Occasional gasps broke the silence in a crowd of more than 100 people as Robert Bobb de­scribed how Detroit Public Schools racked up the deficit. “Could that number change next week?” Bobb asked. “Ve­ry well could. We’re still work­ing.” Bobb outlined his plan to close up to 50 schools and lay off thousands of workers over the next two years in his first public presentation since he took over the $1.1-billion bud­get last month. He said he will present the school closure plan next week. DPS has shuttered more than 65 schools since 2005, and cur­rently has nearly 200 schools open with about 95,000 stu­dents. Demographers project the school system could drop down to 65,000 students with­in five years.

Unemployment in Michigan was at 12% in January, 2009, and rising. Unemployment in Detroit was at 22% and rising. Nothing is improving; everything is deteriorating. Yet Detroit plods on in its old way.

Conyers’ son and niece got jobs, too
Brother’s hiring causes a storm

By M.L. ELRICK and JOE SWICKARD FREE PRESS STAFF WRITERS Three relatives of Detroit City Council President Monica Conyers — including a son and her brother — received city jobs after Conyers took office. Conyers hred her teenage son, John Co­nyers III, as a legislative assistant under a 1-year contract, at a rate of $15 an hour, city records show. It’s unclear whether he served the full year. The contract ended last June. Her niece, Ellen Conyers, a lawyer, was hired around 2007 in the Mayor’s Office of Neighborhood Commercial Development. Her salary was $63,000 in 2008. But it was the hiring of Monica Conyers’ brother, Reginald Esters, that ignited the latest controversy enveloping the City Council president. Amru Meah, director of the city’s build­ing department, said Conyers lobbied him to hire Esters, a convicted felon. Conyers denies trying to influence her brother’s hire. Esters was fired for what building offi­cials characterized as chronic absentee­ism. He has a court hearing April 17 on four felony weapon charges.

The residents of this city apparently don't give a damn. It is time that Detroit, like General Motors, gets taken by its collective nose and marched into bankruptcy and reorganization... into a much smaller city.

If not, the only answer will be liquidation.

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