Detroit—As Michigan Governor Rick Snyder and his appointed “emergency manager” were steering Detroit into bankruptcy last fall, the public-policy think tank Demos released a groundbreaking report on the city’s financial circumstance—and how to address it.
Demos recognized that deindustrialization, high unemployment and an exodus of residents had left Detroit uniquely vulnerable: “the current bankruptcy filing is the result of a severe decline in revenue, caused by the 2008 financial crisis, and cuts in annual state revenue sharing starting in 2011. Risky Wall Street deals further jeopardized the city’s public finances by threatening immediate payments that the city could not afford.”
Now, as the Detroit Water and Sewage Department is drawing international criticism for shutting off water service for low-income families, activists are asking why the people are being forced to pay while the Wall Street banks live large. On Friday, members of the National Nurses United union and local, state and national groups will march and rally in downtown Detroit to say the priorities are out of whack.
Their message is direct: “Let’s Tax Wall Street, Get Our Money Back, and Turn on the Water!”
As a writer who has covered the debate about Detroit for several years now, I welcome and embrace this recognition that what’s happening in this city has a lot to do with the warped priorities of our current age of austerity.
It really is time to put things in perspective.
While politicians and pundits have tried to blame pensions, public servants and public services for the city’s financial challenges, the Demos report noted that “Detroit’s financial expenses have increased significantly, and that is a direct result of the complex financial deals Wall Street banks urged on the city over the last several years, even though its precarious cash flow position meant these deals posed a great threat to the city.”
The author of the report, Wallace Turbeville, a former Goldman Sachs investment banker, founder of the Kensington Group and well-regarded expert on infrastructure finance and public-private partnerships, was blunt in his assessment of the sources of the city’s challenges and the proper response.
“Misguided and irresponsible decisions by politicians over the years, often at the urging of Wall Street, have funneled wealth out of Detroit’s neighborhoods, and enriched financial institutions and corporations in the process,” said Turbeville, a Demos fellow. “If Detroit wants to come back from this and rebuild a strong economy, it needs to reverse that trend and start prioritizing the people who live here over the interests of Wall Street bankers.”