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Bankruptcy #4–Solutions

Posted to MichiganNow.org on Thursday, May 15, 2014

INTRO: After years of being forgotten by the outside world, Detroit got attention in 2008. The CEO’s of the big three automakers went to Washington. They testified before Congress. The biggest ever corporate bankruptcy happened in 2009. This led to the biggest ever municipal bankruptcy in 2013. Michigan Now’s Chris McCarus finds that Detroit might show the world how to pick up the pieces. It won’t be from emergency management.

Since the banking and real estate crisis began, 28 American cities have gone into insolvency, receivership or bankruptcy.

“Detroit is not alone. There are many other cities that would have gone into receivership in New York and other states. But their states bailed them out behind the scenes.”

Michelle Wilde Anderson is a law professor at the University of California-Berkeley. Wayne State University invited her to speak last month about what happens to Detroit after bankruptcy.

“This city needs a plan of recovery. Not just a plan of restructuring.”

Dividing the pie differently will not help. The pie needs to grow.

Anderson says Detroit and some California cities have a lot in common. It’s not corruption.

Number 1: Poverty and high unemployment.

Number 2: “severe othering by suburbs” and the suburbanites’ fear of city crime that results.

Number 3: population loss.

Number 4: worn out buildings, roads and infrastructure.

And number 5: poor schools and poor job training.

“Chapter 9 is not a mechanism for addressing poverty or these kinds of structural issues. Any politicians who say that bankruptcy or receivership can fix these issues are either being false or foolish. These problems require investments. Not debt restructuring alone.”

Government has shrunk in all these cities. And that has hurt the economy.

“Your local government is shedding responsibilities, basically boiling down to a core of tax collection, police and fire.”

Anderson says that just a few years ago, the public expected the public sector to do work that no one else can. Things like youth development, indigent nursing care, housing for the elderly and public pre-schools.

Anderson lives near Silicon Valley, birthplace of the ‘new economy.’ It’s where Facebook paid $19 billion for a company with 55 employees. It’s called Whatsapp. Each employee costs $344 million. But she says that money is not spread back into the economy to create jobs for other people.

$350 million is the same amount Lansing is being asked to give to 20,000 Detroit pensioners. Think of that: 1 employee compared to 20,000 for the same amount of money. Anderson says that the Valley is no model for fixing anyone’s economy.

“I admire the people of this city. I admire your determination, your resistance, your resilience and survival. I admire that your culture seems to prize art and music over shopping.”

Anderson suggests that Detroiters could once again create a model for the world.

“What do you want from Detroit’s government after the bankruptcy? What is your vision of Detroit’s city government? What do you want them responsible for? You have probably already lost Belle Isle and you’re probably going to lose the DIA collection. What do you want? Do you want Kresge to be funding public pre-schools in addition to land use planning? What’s the next plan for your government?”

The radical philosopher Grace Lee Boggs writes “we are the solution.” Workers can create their own industries and thrive. Researcher Steve Dubb gave examples of this. He came to the Wayne State symposium too. His non-profit does projects in Cleveland, Ohio.

“So we have employee owned laundry which does about 10 million pounds of laundry. It’s a green laundry, using 1/4 the water. Solar and LED lighting installation company. And we started a greenhouse last year the size of three football fields that can grow 3 million heads of lettuce. All these businesses, at least a portion of their procurement is linked to the needs of the institution. What you’re trying to do is bring back the money that is leaking out of the community and capture it in the community then use an employee ownership mechanism to spread the wealth among the community.”

Jobs alone aren’t the answer. That’s one of the ideas Grace Lee Boggs. Oakland University professor Shea Howell is a founding member of the Boggs Center. It’s a non-profit which promotes the ideas of Grace Lee and her late husband Jimmy Boggs, an auto worker and civil rights activist. Learn about the school that the center opened in September.

“While the corporations were gone we were faced with the realization that economy will not grow but our human capacities could. It was out of that belief that we have created the largest urban gardening movement on the globe. We are redefining the relations of the city and the country. It was out of that belief that we have created some of the most imaginative art and as you have heard, music, on the globe.”

Emergency management might be part of the solution. But not all of it. The measuring stick for it could be: does it improve people’s lives.

2 Responses to “Bankruptcy #4–Solutions”

  1. My wife is considering filing chapter 13 and unfortunately I’m doing all all of the study that I can. Thank you for the information you gave on http://www.michigannow.org. This procedure is so hard to grasp. I presume she would like to declare chapter 13 we are much better off working with a lawyer. Headrick

  2. I wish to file chapter 7 however I do not even understand where to start. I was doing a hunt for chapter 7 bankruptcy and then came across http://www.michigannow.org. Thanks for the information. Wow, I presume I better work with a legal representative. It is all so frustrating. Thank you. Lubinski

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While Cleveland is creating employee owned cooperatives, Detroit's emergency manager is giving the public lighting system to DTE Energy. But the city agreed to spend money on upgrading the system before they give it away to DTE.

While Cleveland is creating employee owned cooperatives, Detroit's emergency manager is giving the public lighting system to DTE Energy. But the city agreed to spend money on upgrading the system before they give it away to DTE.

The Boggs School enrolled students in September 2013. It's a product of the philosophy of Grace Lee and Jimmy Boggs.

The Boggs School enrolled students in September 2013. It's a product of the philosophy of Grace Lee and Jimmy Boggs.

packard grace
Robert Johnson, a former hedge fund manager in New York, originally from Grosse Pointe, and Steve Dubb a researcher at the Democracy Collaborative in Washington, D.C. Photo taken April 8, 2014 at WSU in Detroit.

Robert Johnson, a former hedge fund manager in New York, originally from Grosse Pointe, and Steve Dubb a researcher at the Democracy Collaborative in Washington, D.C. Photo taken April 8, 2014 at WSU in Detroit.

Michelle Wilde Anderson is a law professor and colleague of former Governor Jennifer Granholm at the University of California-Berkeley. Photo taken April 8, 2014 at Wayne State University symposium "Beyond Bankruptcy."

Michelle Wilde Anderson is a law professor and colleague of former Governor Jennifer Granholm at the University of California-Berkeley. Photo taken April 8, 2014 at Wayne State University symposium "Beyond Bankruptcy."

Cleveland has established cooperatives linked to institutions like hospitals. They have the Evergreen Laundry Cooperative, greenhouses that produces millions of lettuce heads and solar arrays to power large buildings.

Cleveland has established cooperatives linked to institutions like hospitals. They have the Evergreen Laundry Cooperative, greenhouses that produces millions of lettuce heads and solar arrays to power large buildings.

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