Developments in Detroit and Beyond

By James Anderson


If we get beyond rhetoric and the all-too-often spurious explanations of political-economic issues in the major news media, there are important lessons to be learned.

For starters, let’s examine recent circumstances in Detroit.

The city became the largest municipality in U.S. history to file for bankruptcy in early July. Thousands of public employees engaged in a protracted struggle to retain the pensions they paid into throughout their working lives so as to ensure a decent standard of living after a career of service.

Historically speaking, the situation points to a larger systemic trend. Since the 1970s the economy has been in a prolonged period of stagnation. This dovetails with deindustrialization spurred by the rise of multinational corporations capable of shifting work overseas where labor is cheap and working conditions are abysmal.

The process has to do with increased international competition – but not in the sense that is commonly understood. There is increased competition among workers internationally because big companies can pit workers against each other by off-shoring production often to subsidiaries, affiliates or contracted suppliers. Yet it is only a handful of firms that monopolize markets, exploit international wage hierarchies and control prices.

Intensification of this process contributed to serious centralization of capital furthered by greater speculative finance.

As a result, Detroit automakers suffered, and so have workers the world over.

To wit, we have witnessed extreme polarization of wages, wealth and poverty. Two percent of the global population now owns more than half the world’s wealth.

Analysts routinely demonstrate the realities of widening inequality in the United States as well, concurrent with a steep decline in union membership over the last couple of decades. Legislation and policies have been less than favorable to unions, and too little has been done with regard to the country’s growing wealth gap – now a stark reality.

Economist Edward Wolff found that one percent of the population controls about 43 percent of the nation’s non-housing wealth.  A report from the Economic Policy Institute found that CEO compensation increased about 875 percent from 1978 to 2012 – an amount appreciably greater than the 5.4 percent growth in the average worker’s compensation over the same period. Unlike largely unaffected CEOs, workers’ small gains in income are largely offset by an array of contemporary policies and higher costs of living that fall disproportionately on labor.

Again, Michigan serves as case in point. To compensate for a failed financial system and poor policy, employee pensions and medical benefits became fodder for the fiscal chopping block.

We can note here how the impact of macroeconomic system changes shed light on the situation in Michigan. As auto industry analyst Zoe Lipman wrote regarding the precarious conditions in Detroit, “National policies and trends—that neglected manufacturing and encouraged investment in financial products and short term returns at the expense of long term investment in communities, infrastructure, and the middle class—didn’t help.”

Similar to the situation across the country, even amidst stagnation, the productivity growth in the U.S. has outpaced non-supervisory worker wage growth since the mid-1970s, as illustrated by Michigan University Law School graduate and former U.S. House of Representatives legislative director Ross Eisenbery.

Likewise, we should recognize the continuation of legislative trajectories across the country.

Following in the footsteps of Wisconsin Gov. Scott Walker who passed anti-union legislation in his state back in 2011, Michigan Gov. Rick Snyder signed a bill into law that made Michigan the 24th right-to-work state.

Snyder did this in spite of a 12,000-strong popular protest in the state Capitol. He did this despite Section 24 of Michigan’s constitution that says earned pensions benefits “shall be a contractual obligation thereof which shall not be diminished or impaired thereby.”

And Snyder passed the legislation despite a statement he made earlier last year, when he said, “right to work is an issue that may have its time and place, but I don’t believe it’s appropriate in Michigan during 2012.”

In addition to the opposition Snyder faced from thousands in Lansing – and from his self circa several months prior – the chair of SEIU’s National Republican Member Advisory Committee, Andy Potter, also disapproved of the legislation – an indication of support for collective bargaining on both sides of the partisan aisle.

Perhaps, Potter read the report from labor education professor Gordon Lafer, who showed that right-to-work laws that prevent unions from getting fair share contributions from those they bargain on behalf of are not nearly the economic boon many suggest. Lafer showed that there is no relationship between right-to-work and unemployment rates and that both union and non-union workers see an average $1,500 decrease in wages when those laws are passed. His analysis suggests right-to-work legislation also fails to attract employers to a state.

And the city of Detroit has fallen victim to the folly of other ill-advised policy.

In the wake of the 2007-08 financial crisis, the titans of the auto industry in Detroit (i.e., CEOs, shareholders, owners) who made decisions that negatively impacted their business, got bailouts for their companies. General Motors and Chrysler received public subsidy, but it was those atop the socioeconomic pyramid that benefited from the bailouts, not the workers.

Broader contextualization helps clarify Detroit’s predicament further.

The turn toward speculative debt-leveraged finance that started several decades ago, coupled with so-called “free trade” initiatives that opened up borders for large corporations while circumscribing the workforce, further accelerated and exacerbated problems for Detroit’s auto industry.

The merging of commercial and investment banks in the 1990s, so-called “securitization” (that fails to secure the overall economy or most people’s finances), predatory subprime loan lending and the latest government bailout for big private banks after the housing bubble burst put undue pressure on the entire economic system. Already in peril, Detroit’s problems mounted.

The enactment of emergency finance manager laws strip the public of decision-making power. The laws put that power in the hands of Kevyn Orr, an un-elected city manager.

However, the real injustice lies in how costs have been socialized while profits have been privatized.

What moral – or even economically sound – justification can be given for bailing out banks and big corporations but not the municipality and pensioners? It is the workers whose pensions are threatened that suffer doubly due to the still precarious recessionary conditions engendered by oligopolistic entities and the ramifications (e.g., denial of accrued pensions the public employees paid for).

And lest we forget, these disturbing trends course through the sphere of public education.

The Detroit Public Schools Emergency Financial Manager, Robert Bobb, pushed for mass closure of public schools and privatization of the school system in 2010.

The model of education reform implemented in New   Orleans that involved shuttering lots of public schools, firing unionized teachers and opening up privately-run charters served as a sort of blueprint.

The business-model restructuring of education relegates students and parents to the role of consumers. In effect, they are prevented from meaningfully participating in the decisions that impact their lives in the present and the future. This is especially true considering the far-reaching affects education can have for the entirety of an individual’s life.

And lack of public funds – owing to anti-democratic trends outlined above – are used as the rationale for further cuts to public services and evisceration of education essential to the common good.

It is imperative we realize that deleterious social consequences are not limited to Detroit.

Youngstown and Cleveland, Ohio, have suffered mightily through these past decades of stagnation aggravated by policies designed – explicitly or tacitly – to discipline the workforce and redistribute wealth upwards.

The Philadelphia school district announced the closing of 23 public schools and the firing of 1,200 employees in June so as to, the story goes, close a multi-million dollar funding gap. Similarly, dozens of public schools have been shuttered in Chicago.

However, there are inspiring signs of change in the other direction all the time.

The public pension attack it Detroit brought out a slew of protestors. Faced with the possibility of being denied their pensions, firefighters in the city organized working groups to collaborate on alternative answers. And around the same time as the bankruptcy filing, fast food and other service workers in Detroit and Flint, Mich. – as well as St. Louis, Kansas City, Chicago and New York – participated in non-traditional demonstrations as part of a “living wage campaign” to pressure employers to pay enough for full-time workers to live on.

There is other promising action as well.

In some of his most recent work, political economist Gar Alperovitz discussed how the United Steelworkers Union recently announced a “union co-op” strategy to develop worker-owned companies across the country. The development is especially noteworthy considering that the union was initially opposed to steelworkers taking control of the Youngstown Sheet and Tube mill when 5,000 workers lost their jobs back in 1977.

Workers support for similar initiatives came to fruition in Cleveland when Evergreen Cooperatives opened in 2008, creating living-wage jobs in low-income communities while democratizing the workplace and empowering the workers.

These projects illustrate the innovative impulse of unions and labor today, even amidst disconcerting trends.

Regarding education, there is a refusal to accept hollowing out of the public good and forceful rejection of the attack on educators’ rights.

The Chicago Teachers Union (CTU) went on strike in September 2012, epitomizing what University of Illinois Chicago professors Eric (Rico) Gutstein and Pauline Lipman called “social movement unionism,” by garnering unprecedented rank-and-file participation and widespread grassroots community support in the face of profit-motivated school closings.

As Amy Goodman reported, there was a sit-in at one of the 49 schools in Chicago slated for closing this last June, and a hunger strike launched by two Philadelphia public school parents and two workers in response to the lay-offs and closures in their city.

To be sure, the thousands that flooded into Lansing, Mich., to inveigh against policies detrimental to unions (and society) reminiscent of the huge outpouring of pro-union support in Madison, Wisc., in 2011, show sentiments of solidarity and support for working people remains strong.

As activism and union organizing steps up against socially injurious agendas in Detroit, across the Midwest and beyond, we too should show solidarity. There are many ways to do that. Perhaps one of the easiest – yet not inconsequential – ways to is by collectively working for fair treatment of graduate assistants and students at our own university. Perhaps by promoting equity where we have the most influence we can set a precedent for improving conditions in education and beyond.

James Anderson is a Ph.D. student and the GAU Steward for the College of Mass Communication and Media Arts. His interests include social movements, alternative media, critical theory, prefigurative politics, horizontalidad, political economy and praxis.