patrick.net

This had to happen, right? If that's not a 'writing on the wall' situation, what is?

I don't really know how a city works, but if that many people leave, I'd guess all budgets etc go out the window and serious stress sets in for good.

The worth of California is supposedly -$120 billion.

Both CA and Detroit have been under liberal rule for many decades now. Any correlation here?

Looks that way. Getting harder to squeeze.

Goran_K says

Both CA and Detroit have been under liberal rule for many decades now. Any correlation here?

Well, you already pointed out the correlation. The question is ,"
Does this sample size of two lead to causation?"

I am not qualified to make that determination. Though I'd love to hear theories.

50 years of unions and being a test bed of liberal policies.

Goran_K says

50 years of unions and being a test bed of liberal policies.

Naw, that can't have ANYTHING to do with it, just ask Marcus, Vicente or Edvard2 - to name a few.

Straw Man says

The difference is: in Cali there are still people to squeeze some more blood from, whereas Detroit is pretty much a turnip.

That's true, at least CA still has something that other people want.

Another fine example of unions killing off the host.

Looks like Chicago is next:

http://news.yahoo.com/video/fault-line-financial-trouble-midwest-233231371.html

zzyzzx says

Looks like Chicago is next:

http://news.yahoo.com/video/fault-line-financial-trouble-midwest-233231371.html

lol--there's a big difference between Detroit and Chicago...

mmmarvel says

Goran_K says

50 years of unions and being a test bed of liberal policies.

Naw, that can't have ANYTHING to do with it, just ask Marcus, Vicente or Edvard2 - to name a few.

Marcus lol

One of the worst things about Detroit is its schools. No one wants to live in a city where schools are not performing. So a philanthropist volunteered $200 million dollars to build new charter schools in Detroit. Guess what happened? The Detroit teachers union fought it because the new schools wouldn't have to hire directly from their ranks so the deal never went through.

Unions.

zzyzzx says

Looks like Chicago is next:

http://news.yahoo.com/video/fault-line-financial-trouble-midwest-233231371.html

Chicago still has a semblance of an economy but thy debt is crushing.

I'd agree about public employee unions, since they have no limit on what they can "win" in compensation from the government and thus the taxpayers. They also tend to drive corruption in politics, giving money to just the right bureaucrats to get their agenda through. It's a closed system that taxpayers pour money into that disappears in a cloud of smoke. No amount will ever be enough, because more money just hires more people with more needs. It's what happens when you have the fox guard the chicken coop.

Trade unions on the other hand, are essential for maintaining living wages and supporting the middle class. The intrinsic difference is that these unions are tied closely to the fate of their employers, so if there is a problem, the jobs all disappear. It's a good check on union power, encouraging cooperation for company success.

Public employee unions have no such vulnerability, and are just parasites you can't get rid of without killing the patient.

Hence: bankruptcy.

Quigley says

Public employee unions have no such vulnerability, and are just parasites you can't get rid of without killing the patient.

Nearly 40% of Detroit's budget goes to "legacy liabilities", aka pension funding. It's sick.

You can't maintain streets, maintain parks, or keep the lights on (only about half of Detroit has working street lights), if you're spending all of your money paying for lucrative pensions that helped sink the city in the first place.

The worst part of it is these retired teachers, cops, firemen, public administrators, etc don't even live in Detroit, they refuse to live in such a city. They moved their families into the more wealthy burbs far from Detroit, doing business and spending money there. They're literally sucking the life out of the city, the very definition of a parasite.

Hence the city declares bankruptcy to allow the courts to restructure pension obligations. Why should the city be forced to pay nearly half it's revenue for people to NOT work?

Goran_K says

(only about half of Detroit has working street lights)

But only half of Detroit needs working street lights...

Goran_K says

Both CA and Detroit have been under liberal rule for many decades now. Any correlation here?

California is the 7th-largest economy in the world if it was to be compared to entire other countries. So I'd say we're not anything remotely close to being Detroit.

As far as the generic claim that " Unions did it!", well that is a grossly simplistic claim. Sorry, but there were many reasons Detroit went bankrupt. At one time the city was ranked as having one of the highest standards of living. The companies that operated there not only made healthy profits, but their employees were well-paid. Of course unions had something to do with that as well by setting standards and demanding certain wages which they got. But the fact that even with those higher wages and standards those companies still made healthy profits shows that yes- it is actually plausible to not only pay workers a decent income but still be successful as a business and to this day that continues. But now its in the tech industry. In the 20's-50's the manufacturing industry was the "tech" of that period.

What happened was foreign competition and complacency on part of the manufactures. It doesn't matter whether the workers were union or not,or whether those workers made high or lower wages: When you have a situation as happened starting in the 60's, where Japan started exporting things like stereos, TV sets, cars, and motorcycles at a small fraction of the cost of those same items made in the US due to their ( at the time) very cheap wages as well as their devaluing of the Yen and so on, NO American company could hope to compete with that.

And so began the slow and steady decline, with jobs and entire industries being outsourced or an increasing number of satellite operations for those companies being setup in foreign countries to perform some of the tasks that had been happening in Detroit such as engineering, design, and testing.

But another factor was in terms of the complacency some of the automakers throughout the 70's-90's had. A lot of the cars and trucks from the Big three were simply crap. Total rolling pieces of garbage. They now make pretty good products, but at this stage those products are designed, built, and sold globally and not centrally from Detroit as they once were. Had those companies been more competitive and created more competent cars, perhaps that would have eased the slow decline.

Detroit is an example of a city that at one time had the world on a string. Its downfall was a focus on too few industries that focussed on manufacturing and thus unable to compete as easily once real global competition began to heat up.

I don't for one second buy that any company can't operate successfully if they pay their employees decently. Blaming unions or otherwise workers that have managed to get a decent income as a result is ironically sad because that only means that those who do so have been properly conditioned by the various outside interests who all want them to actually believe that making less money is good for everyone without stopping to realize that its actually a mindset that proves to run against their own self interests.

Kwame Kirkpatrick for President!!

edvard2 says

What happened was foreign competition and complacency on part of the manufactures. It doesn't matter whether the workers were union or not,or whether those workers made high or lower wages: When you have a situation as happened starting in the 60's, where Japan started exporting things like stereos, TV sets, cars, and motorcycles at a small fraction of the cost of those same items made in the US due to their ( at the time) very cheap wages as well as their devaluing of the Yen and so on, NO American company could hope to compete with that.

You don't think unions were a big part of this?

I'm not sure what to say.

Not a big part. I'm not saying they are blameless. They definitely had a part. But as mentioned, its not like there wasn't a prolonged period of time where union workers got decent pay and the companies they worked for did exceptionally well. Remember the old saying that : " What's good for General Motors is good for the country."?

Well- that statement was made at a time when in fact what I described was happening. So if that be the case, how come unions wern't a problem so much?

I guess what bothers me is when people just automatically blame " The unions" on everything when not looking at the entire picture.

edvard2 says

Remember the old saying that : " What's good for General Motors is good for the country."?

Wasn't that before Japan, and the other asian tigers rebuilt their countries after WWII and began to create real manufacturing capability within their own countries?

Things change over time you know, and businesses have to adapt.

The management of GM and the big three were also to blame in a big way. Squandering dominance, refusing to acknowledge the importance of fuel efficiency and reliabilty.

Early in my career, I worked with a former GM exec from the glory and decline days. He thought it was funny at how they used to screw over the customer by jamming uneeded options into one package. Yeah, a real knee slapper.

Yeah just recently, like within the past 15 years have U.S auto manufacturers really began looking at fuel efficiency, better build quality, and value. Really they were forced to just to survive, and even then they couldn't do it by themselves (thank you Uncle Sam).

Goran_K says

Wasn't that before Japan, and the other asian tigers rebuilt their countries after WWII and began to create real manufacturing capability within their own countries?

Things change over time you know, and businesses have to adapt.

Yes, that was an old quote and yes- as mentioned before, some of these companies didn't perhaps foresee the future competition as a means or a need to change.

As far as the Big three today, well they're now all doing very well and ironically there are some signs that some of the best sellers from Toyota like the Camry is sitting on lots longer. Its almost equally ironic that Toyota and Honda are increasingly being scrutinized for their somewhat bland and uninspiring designs for some of their bread and butter vehicles, which is something the Big three held the torch for many years.

Yes I actually mentioned above that U.S build quality is improving and competing in quality and price with foreign imports.

But Detroit still pays out 40% of its budget to legacy liabilities, aka pensions. Not sure how a city can survive when you're paying half your budget for people to sit around and spend money elsewhere.

Goran_K says

But Detroit still pays out 40% of its budget to legacy liabilities, aka pensions. Not sure how a city can survive when you're paying half your budget for people to sit around and spend money elsewhere.

The whole situation just sucks for those people. I cannot even begin to imagine what it would be like if I had spent 40-50 years working at a job where I knew I was going to receive a pension at the end. Naturally anyone with that knowledge would make it a part of their retirement plan. Its not like those workers made any mistake. This wasn't their fault and they deserve something that was promised to them.

So now these people are possibly going to have their pensions reduced or cut. That simply sucks all the way around.

It does. They will literally get pennies on the dollar.

http://money.cnn.com/2013/07/19/news/economy/detroit-bankruptcy-order/index.html?hpt=hp_t2

A Michigan Circuit Court Judge ruled Friday that Detroit's bankruptcy filing is unconstitutional and ordered the case be withdrawn from federal bankruptcy court.

Not sure a state court can block proceedings in a Federal case. Doesn't seem like it.

This judge is an idiot, and so are the lawyers for the retirees. Either bankruptcy and get something or default and get absolutely nothing.

For every 3 workers on retirement there is 1 employed working in Detroit proper. Can't get blood from a stone.

I'm just glad that there won't be Rep/Con/Teas to lose any investments or pension income.lmao

edvard2 says

I guess what bothers me is when people just automatically blame " The unions" on everything when not looking at the entire picture.

I'm sure that corruption also had a big part.

edvard2 says

The whole situation just sucks for those people. I cannot even begin to imagine what it would be like if I had spent 40-50 years working at a job where I knew I was going to receive a pension at the end.

I'm pretty sure that in situations like this, the average retiree "works" less than 40-50 years. Some as little as 5 years. Yes, I did say 5 years. That's how it works in Baltimore.

Detroit needs to use this as their model for restructuring:

I remember the joking ex politician from an episode of the "The Wire" when talking about the current Baltimore mayor.

He said in the "old days" the politicians were crooks, but at least they returned two out of three dollars to the city, whereas the current office holders only returned one out of three of the dollars.

Goran_K says

Both CA and Detroit have been under liberal rule for many decades now. Any correlation here?

Margaret Thacher quoted it best:
Socialism works great until you run out of other people's money.

zzyzzx says

Detroit needs to use this as their model for restructuring:

I am intrigued by the "600 thrift stores" they formerly operated. That would have been where the stale goods went to die? Stinky Twinkie?

i wouldn't be so quick to make fun of blacks people.

filing for bankruptcy soon: the Euro then the U.S.

wonder who's fault that's going to be!

zzyzzx says

Detroit needs to use this as their model for restructuring:

Looks to me like the problems were mostly from inept management. Factories operating at 50% utilization, delivering directly to stores rather than customer warehouses, little to no product development, and poor distribution channels (need more to convenience stores).