Finance

Detroit Bankruptcy-What’s Really Behind it?

August 7, 2013
By Steve Weiner

In recent years, there have been huge attempts by corporate America and some state governments to blame the country’s economic woes on what they deceitfully describe as the “outrageous” demands by workers—especially public employees—for decent wages, health insurance, and pensions.

The latest effort is in Detroit, a city that has suffered greatly in recent decades.  There is a conscious purpose to have people believe that the painful state of the once prosperous “Motor City”’s finances is chiefly due to the "greediness" of its municipal employees, including having to pay its retirees the pensions they earned by a lifetime of work.
These are two facts that are not generally reported:

•     1) There are about 21,000 retirees, whose average annual payment is about $19,000 (approximately $30,000 for retired police officers and firefighters, who do not get Social Security benefits).

•    2) Detroit’s pension shortfall accounts for only 15% of its $18 billion debt.

These retired employees of the city went to work every day making hospital beds, teaching school children, repairing streets, and putting out fires. They rightly feel that the effort to make significant cuts to their pensions is a betrayal of their years of faithful service.

In an interview with a local radio station, retired Detroit firefighter Dave Parnell expressed his outrage:
“When is enough enough? I’ve given 34 years. I’ve given you two ankles, a shoulder and a back.  I’m not even sure about my lungs.  What else do you need?”

I worked for the City of New York for over thirty years, and  retired with a fair pension, thanks to my union, District Council 37 AFSCME.  In my position as a Computer Specialist, I wrote programs that substantially increased the revenues for my agency.  If I were told that my hard-earned pension was going to be cut, perhaps by as much as 50%, I’d be furious.

Michigan’s Constitution states that civil service pensions are a contractual obligation that “shall not be diminished or impaired.”  Yet City Emergency Manager Kevin D. Orr, appointed by the governor, decided to file for bankruptcy, claiming he could not reach agreement with the unions.  However, AFSCME President Lee Saunders revealed that despite repeated requests, Orr’s legal representatives refused to meet with AFSCME.  In my opinion, the state government engineered this bankruptcy proceeding, which was what it wanted all along.

The case will be decided in the Federal US Bankruptcy Court, where it is expected that the judge will be generous in reimbursing the city’s bondholders.  However retirees, dependent on their pensions to pay their bills, likely will have to endure substantial cuts.

Photo by Bill Pugliano/Getty
I’m grateful for what I’ve learned from Aesthetic Realism: that America’s economy—and the economies of most of the world—is based on the contemptuous use of the work of many people to make profit for a few.  I’ve also learned that if all working people are paid fairly, profit economics cannot go on.  Labor unions, historically and today more than ever, represent that life-giving economic fairness.  That is why there are these relentless efforts to destroy unions, including those in the public sector.

Our state and city governments are not profit-driven.  However, more and more of the work they do is being outsourced to private companies, which take our tax dollars and use their employees to make profit for themselves.  These jobs, which used to be performed by civil service workers, are now being done for lower wages and with far fewer benefits.
In the periodical The Right Of Aesthetic Realism to Be Known, Ellen Reiss, Chairman of Education, describes what is behind not only the Detroit bankruptcy, but also what is going on in countries all over the world:

“These “sacrifices” and “austerity measures” principally involve the cutting of pensions and welfare benefits to millions of people, the lowering of wages—the impoverishing of most of the population.  They are presented as the only means to stop the nations concerned from going bankrupt. What they really are is the one means of having the profit system there grind on a bit longer.

The dire warnings about the need for “sacrifice”—both in Europe and here—are part of an effort to make the profit system seem inevitable: to make it seem that economics based on anything other than using earth and humanity for some individuals’ private aggrandizement is unthinkable. And therefore, senior citizens, robbed of pensions, must go hungry to save the profit system.  Children must go without medical care and with insufficient clothing and food to save it.  Yet people feel increasingly that another basis for an economy is not unthinkable.  And such a basis is not Marxism, etc. The needed basis is ethics.”

So far in history there has been a shameful lack of ethics in the way economics has been conducted, and that, as I have learned, is the chief cause of vast suffering by so many people in the world today.  It is time to try something new as described by Aesthetic Realism: We need an economy based on ethics, beginning with the honest answering of this kind, urgent question first asked by Eli Siegel: “What does a person deserve by being a person?”

August 7, 2013

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