30.7.13

TWO SYSTEMS OF BELIEF

The Detroit municipal bankruptcy has enough complications that people can find whatever villain they want.  The city government is either a beast to be starved or the logical outcome of ward-heeler politics.
Melissa Harris-Perry -- the same TV commentator who said Americans need to stop raising kids as if they belong to individual families -- had an extraordinary explanation for why the city of Detroit sought to declare bankruptcy last week: not enough government.

"This is what it looks like when government is small enough to drown in your bathtub, and it is not a pretty picture." She says budget-cutting Republicans threaten to transform all of the U.S. into Detroit.

What? Detroit has been a "model city" for big-government! All Detroit's mayors since 1962 were Democrats who were eager to micromanage. And spend. Detroit has the only utility tax in Michigan, and its income tax is the third-highest of any big city in America (only Philadelphia and Louisville take more, and they aren't doing great, either).
To John Stossel, Detroit is the quintessence of gimmick projects that failed.
Andrew Rodney, a documentary filmmaker from Detroit, says many bad, big-government ideas that have plagued the U.S. were tried out first in Detroit. "It's the first city to experience a lot of the planning that went into a lot of cities."

Home loan subsidies, public housing, stadium subsidies, a $350 million project called "Renaissance Center" (the city ended up selling it for just $50 million), an automated People Mover system that not many people feel moved to use (it moves people in only one direction), endless favors to unions -- if a government idea has failed anywhere in America, there's a good chance it failed in Detroit first.
In seeking to pin some of the responsibility on pro-business, tax-cutting, free-trading Republicans, David Sirota also identifies failures of corporate welfare.
For a good sense of some of the most expensive, absurd and utterly wasteful boondoggles in the Detroit area over the last few decades, read this piece from Crain’s Detroit or see this 2011 article entitled “Detroit’s Corporate Welfare Binge” by Detroit News columnist Bill Johnson. Alternately, recall this is in the heart of a region whose governments infamously spent $55 million of taxpayer money in 1975 (or a whopping $180 million in inflation-adjusted dollars) on one professional football stadium, then spent another $300 million on yet another football stadium, then sold off the original stadium for just $583,000. Or, just note that Detroit is the largest city in a state that, according to the New York Times, spends more per capita on corporate subsidies — $672 or $6.6 billion a year — than most other states.

By focusing the blame for Detroit’s bankruptcy solely on workers’ pensions, rather than having a more comprehensive discussion that includes both pension benefits and corporate giveaways, the right can engineer the political environment for the truly immoral reality mentioned at the beginning of this article — the one highlighted this week by the Associated Press story headlined “Arena Likely Still On Track, Business As Usual For Sports Teams Despite Bankruptcy Filing.” Yes, that’s correct: at the same time government officials are talking about slashing the meager $19,000-a-year pensions of workers who don’t get Social Security, those officials are promising that they will still go forward with a plan to spend a whopping $283 million of taxpayer money on a new stadium for the Red Wings.
In some ways, being a sports economist is probably more frustrating than being a climate scientist. If there is a consensus in sports economics, it is that stadium subsidies have a benefit-cost ratio ranging from minimal to negative, and yet public officials, including in cash-strapped big cities, continue to throw money at stadiums and arenas.

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