This article by Mike Whitney is re-posted from Counter Punch.
Far-right Governor Rick Snyder has ignored Michigan voters and installed Washington DC attorney Kevyn Orr as Detroit’s emergency financial manager (EFM), a position that will give Orr sweeping powers to tear up labor contracts, slash pensions, cut public services, and privatize city-owned assets. From March 28–the date when Public Act 436 kicks in –Orr will make the decisions that would normally be decided by elected officials, primarily the mayor and the city council. In other words, Detroit will become the first city in the US to have its democratically-elected government replaced by a financial dictator.
According to Firedog Lake’s Lindsay Beyerstein, Detroit’s emergency manager will have “virtually unlimited power to reorganize every aspect of city business, including dissolving the city entirely. The emergency manager even has the power to terminate collective bargaining agreements.” (Firedog Lake)
The elites who support this blatant evisceration of the democratic process, are confident that Orr will serve the needs of their primary constituents; businessmen, Wall Street speculators and bondholders. Accordingly, Detroit’s red ink will be shunted onto working people via pay cuts, high unemployment, and reduced social services even though they are in no way responsible for Detroit’s $300 million budget deficits. Here’s an excerpt from an article in the NYT:
“Despite Mr. Orr’s legal background, he said he hoped the city would not ultimately need to file for bankruptcy. Municipal bankruptcies are rare, but it was lost on no one that the state had selected an expert in bankruptcy law for Detroit, as opposed to a financial accountant, former city manager or elected official.
Under Michigan law, a city can file for bankruptcy only under certain conditions, including if an emergency manager has attempted other measures and concluded that such a move is needed.” (“Bankruptcy Lawyer Is Named to Manage an Ailing Detroit”, New York Times)
Orr will avoid bankruptcy at all cost, mainly because bankruptcy would mean losses for banks and bondholders which is a big no-no. Instead, he will balance the budget on the backs of teachers, firefighters and other public employees who will either get their pink slips or see their weekly paychecks shrivel to paupers wages. Elites in the Eurozone followed the same basic script when they installed their “technocrats” in Athens and Rome in the early rounds of the EU debt crisis. These faux prime ministers excuted a well-rehearsed looting operation that thrust the continent into severe recession. Orr will follow the same strategy; crushing the unions, reducing elderly pensioners to destitution, and auctioning off valuable city assets at firesale prices, all under the banner of austerity. According to SEP presidential candidate Jerry White:
“Orr is threatening to carry out a “managed bankruptcy” of Detroit to extract unprecedented concessions from city workers. “I am hopeful to engage in fruitful and productive discussions without the need to resort to bankruptcy,” Orr said last Thursday, adding that, “One thing everybody needs to know, if you go into bankruptcy, Chapter 9 of the bankruptcy code is weighted toward the municipality.”
In other words, if the unions prove unable to force city workers to accept savage wage and benefit cuts, then the bankruptcy court will impose this and much more on workers, retirees and city residents. “I don’t want to pull that cudgel out unless I have to,” Orr said. “I’d prefer to pursue a consensual resolution…Don’t make me go to bankruptcy court. You won’t enjoy it.” (“The managed bankruptcy of GM and Chrysler: A model for the assault on Detroit”, Jerry White, World Socialist Web Site)
Wall Street and the media have been overwhelmingly supportive of Snyder’s move to suspend democracy in the name of fiscal consolidation. S&P credit analyst Jane Hudson Ridley summed it up like this, “The appointment of an EM allows the city to move forward in a more efficient manner.” Indeed, financial elites don’t really care whether the appearance of democracy is maintained or not. What matters is the continued upward distribution of wealth. To that end, Orr’s task is to make sure that the losses are assigned to those who can least afford the cost, working people.
Snyder’s coup d’etat in Detroit is a test-case for a more ambitious plan to install Wall Street’s proconsuls in struggling cities across the country. If Orr is able achieve his objectives in Motor City, then the same strategy will be applied elsewhere.