Ever since the long death spiral began, Detroit has relied on periodic bond sales to keep its bills paid. The thinking was clear: borrow now, pay it back later when the city’s finances recover. Of course, Detroit’s finances never recovered, and now it’s on the hook for much of this borrowing, in addition to the fees that these banks charged.
And these are serious fees. Bloomberg reports that since 2005, Wall Street banks have charged the city a whopping $474 million. As a comparison, that’s about as much as the city’s current entire police and fire budget for this year:
“The banks promise to get you the money and say you can pay later,” said Greg Bowens, spokesman for Stand Up For Democracy, a Lansing group that campaigned last year to repeal the law allowing appointment of a financial manager. “They get their fees off the top, and you trust that they’re doing what’s in your taxpayers’ best interest.”
As Detroit is learning now, in many cases they weren’t. And Detroit is not alone: In city after city, struggling pension funds have turned to exotic Wall Street investments claiming high returns and minimal risks. In some cases this is working out, in many more it isn’t, but either way, Wall Street is collecting its fees and leaving taxpayers and pensioners to pick up the pieces when it falls apart.
Democrats are shocked, shocked by the news that there is gambling going on in America’s blue cities. They do their best to avert their eyes from the close political ties between corrupt urban political machines and exploitative Wall Street banks. In the lame progressive mindset that characterizes these decadent times, Wall Street is bad, and urban politicians are good. There can’t possibly be some sort of symbiotic relationship between them. How could something so good, so honest, so dedicated to serving the poor as the Detroit Democratic machine be engaged in a vicious conspiracy with Wall Street to bleed the poor and suck the city dry?
Some Democrats don’t like this kind of talk because they are cynical and others don’t like it because they are naive. The cynics are either in the game themselves or knowingly agree to look the other way because they value the support of political allies and don’t care how much those allies bleed the poor. The naive ones, and there are lots of starry eyed intellectuals in this country who don’t know a hawk from a handsaw, think that because many of these urban thugs are African-American, and because they advocate for more government programs to help the poor, they must obviously be sincere and be part of a general wave of good progressive people fighting to make this world a better place. Surely nobody is so cynical as to lobby for government programs because they plan to cream off the money?
Others have an uneasy sense that something is amiss, but a combination of historical ignorance and race sensitivity strikes them dumb. They look around America and see a number of urban areas with predominantly African-American populations. They see that many (not all) of these cities are run by incompetent, race-baiting hacks and criminals who use identity politics to bond themselves to the voters they exploit.
Because they don’t understand that corruption and identity politics have been the hallmark of American municipal government since the 1830s and 184os, they think the ghastly spectacle of demagogic corruption ruining our cities today is somehow a racial phenomenon. The racists among us see that picture and want to draw racist conclusions about African-American capacity for self governance; most of the rest of us are made so uncomfortable by the whole topic that we let the subject slide.
But thieves like the despicable Kwame Kilpatrick in Detroit are anything but a racial phenomenon. There were Irish, Jewish, Italian, Polish and Greek Kilpatricks in their day. We can confidently expect a wave of Latino Kilpatricks as Latino voting power pushes African-American machines aside in more urban areas.
And there’s another thing American history teaches: unscrupulous politicians will find unscrupulous bankers who will float them abusive loans in exchange for fat fees.
If our so-called ‘progressives’ today weren’t so intellectually decadent and, well, historically challenged, they would be leading the charge to clean up American cities. Instead they are mostly silent — and sometimes even defend the machines.
Our Founding Fathers understood that power corrupts. History is rife with examples of people winning their freedom by overthrowing a corrupt tyrant and then ceding power to a beneficent and wise leader who is followed eventually by a corrupt tyrant.
If you can’t stop corruption and abuse of power from happening, you try to mitigate the harm they cause. One of the best ways to mitigate corruption and abuse is to limit power. That is exactly what the federal system and separation of powers is intended to do.
Did you ever notice that government regulations don’t regulate government?
I find it amusing that the very people who fear “Big Brother” the most are the same people who want to create him.