From The Detroit Free Press: ‘Detroit Files For Chapter 9 Bankruptcy Amid Staggering Debts’

Full piece here.

Well, it’s official, as Detroit cannot avoid bankruptcy any longer:

‘The filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.’

As written before: The industry went away, but also, the Model Cities program as part of LBJ’s ‘Great Society‘ helped incentivize the city so that its politics became a system of patronage and its treasury like a cookie jar. It was a slow, increasingly corrupt decline, with many of the people who could leave having left (serious white-flight, some black-flight). The ones who did stay continued to argue over a shrinking pie as the tax revenue dwindled and the lights eventually shut off.

Detroit has been extrodinarily poorly managed…more to come, no doubt.

Addition: Over four years ago, when GM stock was selling at $2 a share and the debt-holders had been wiped out, this blog put up the video below.  Here’s a brief 2:00 min explanation by Bill Ackman of Pershing Square on why the GM bailout was likely a bad idea:


Exactly the kind of civil service, bureaucracy, and vast redistributive apparatus that helped lead to Detroit’s decline is likely being implemented with Obamacare right now.  Eventually you run out of other people’s money, and many of promises made to push the bill through hid costs.

Addition: Michael Barone reviews Charlie LeDuff’s book, and discusses how growing up in Detroit in the 60’s turned him into a conservative (Barone).

Some links on this site: Charlie LeDuff, Detroit’s populist, citizen journalist’s youtube channel here.  At least he’s sticking around.

Hipster hope, artists, collectivists and small business types can’t save it either:  A Short Culture Wars Essay-Two Links On Detroit & ‘Ruin Porn’

GM is not a municipality, but good money got put in, probably after bad and it reeks of politics: From The Detroit News: ‘How The Treasury, GM Stock Deal Got Done’

What about the popular arts and culture?:Update And Repost-From Grist.Org Via The New Republic Via The A & L Daily: ‘Getting Past “Ruin Porn” In Detroit’…A Few Thoughts And A Tuesday Poem By Philip Levine

A garage sale for the city’s art? Virginia Postrel At Bloomberg: ‘Detroit’s Van Gogh Would Be Better Off in L.A.’From The Detroit Free Press: ‘DIA’s Art Collection Could Face Sell-Off To Satisfy Detroit’s Creditors’

Walter Russell Mead takes a look at the blue model (the old progressive model) from the ground up in NYC to argue that it’s simply not working.  Check out his series at The American Interest

From Bloomberg: ‘Detroit Recovery Plan Threatens Muni-Market Underpinnings’

From They City Journal: ‘What I Learned In The Poverty War’

Full piece here.

Our author, Peter Cove, does have a dog in the hunt as founder of America Works, the first for-profit Welfare-to-Work company in America:

‘But the government’s unprecedented expenditures failed to bring about the decline in poverty that Johnson had promised.  Instead, they made things worse.’

A true-believer in helping the poor changes his thinking:

‘My experience with long-term welfare clients has led me to propose a radical solution:  that we abolish all cash welfare, as well as food and housing assistance-expcept for the elderly and the physically and mentally disable-in order to move from a dependency culture to one of work-first.’

Cove traces how his work, and the broader politics and culture have intertwined.

Of course, reasonable people recognize that they have moral obligations to other people, but they’re skeptical of who decides what those obligations are, and who has the moral authority to make such decisions.  Reasonable people recognize that a more open, free economy has downsides, and can lead to greed and excess, winners and losers, and can never cure poverty.   But they also recognize that it is the engine which gives the poor in America one of the highest standards of living in the world.

Just as most wealthy men and politicians seek to maximize their own power and self-interest, so too do bureaucrats.  A belief in one’s ideals does not immunize one from human nature, and in fact, such utopianism is cause for greater skepticism.  Forced transfer payments from people who work to those who don’t, overseen by bureaucrats and politicians no matter how strong their beliefs, is merely a less sustainable economic and social model.  It doesn’t necessarily create more of the behavior such true-believers want to see, it leads to unintended consequences, and sooner or later you run out of other people’s money.

‘In public policy, we should deduce our theory from practice.  Unfortunately, most people in the business of helping the poor turn that principle upside down, proposing theories first and then basing programs on them.’

Here’s a quotation sent in by a reader.  Pournelle’s Iron Law of Bureaucracy:

‘Pournelle’s Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people”:

 First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration.

Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc.

The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization’

Related On This Site:  Virginia Postrel At Bloomberg: ‘How The Elites Built America’s Economic Wall’Virginia Postrel At Bloomberg: ‘Want To Be The Next Apple? Lose The Bafflegab’

Repost-William Stern At The City Journal: ‘How Dagger John Saved New York’s Irish’

The people who promise solutions to poverty and homlessness seem to be engaged in a utopian cost-shifting exercise which favors their interests and overlooks crime, violence and personal responsbility…hardly a way to balance the budget: Repost-Heather MacDonald At The City Journal: ‘The Sidewalks Of San Francisco’

Some concentrated wealth on top, a stalled legislature with members who know how to play the game…and a service sector beneath…that probably can’t go on forever: …From The WSJ: ‘Joel Kotkin: The Great California Exodus’…Walter Russell Mead says the Great Society is over:  A Few Thoughts On Walter Russell Mead At The American Interest: “Why Blue Can’t Save The Inner Cities Part I”

Milton Friedman Via Youtube: ‘Responsibility To The Poor’