The Bankrupt City

The once thriving metropolis filed for bankruptcy with 18.5 billion in debt. The major creditor, the city’s pension, is owed $2 billion.

Unfortunately, when reality is ignored and greed and power drives promises, it is the people who get hurt. People want to trust their leadership to fulfill promises. But there comes a time when the promises are so costly there is no possible way to make the money tree bloom faster.

Democratic mayors have led Detroit since January of 1962. The fall of the car industry in Detroit hit the city hard, and leaders failed to adjust to the decline in its tax base. Their support of the union system led to wages that were not sustainable.

Kyle Smith has an excellent article at Forbes.com where he details a few of the expenses incurred for Detroit because of unions. The unions were extremely successful in acquiring higher wages and benefits. The unions supported legislators who fought to keep unions viable, but in the end, reality finally began to set in. In March of this year, Michigan became a right-to-work state. The unions continue to fight the legislation. In addition, the only recourse to negotiate union contracts fell under the umbrella of a bankruptcy.

But, the main loser in this scenario is the average worker of Michigan. I don’t fault any union member for believing the politicians and union leaders who promised they were fighting for the people. When you work long hours in a job that is physically challenging, you hope to be rewarded accordingly. The desire to work hard, get a paycheck, and know a comfortable retirement is assured is part of the American dream. But, the reality of how this can be financially sustained long-term is left out of the conversation.

So, the piper has arrived and it is time to pay up. The unions continue to fight and put on the façade they are there to help the people. Don’t get me wrong, there was a day the unions were necessary. But in the modern world, the benefit they bring compared to the costs to run them is becoming less and less.

Only time will tell if Detroit will be able to recover. How the right-to-work status for this state plays a role is also unpredictable. But, hopefully, the ability to work hard and create an outstanding product will return to the Motor City. I look forward to the day of celebrating Detroit’s success, rather than hearing about the stories of demise.

By SB

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