Several thousand people marched from Cobo Hall to Detroit’s Hart Plaza on July 18, decrying the destruction of democracy in Detroit. The rally, organized in part by the Moratorium Now! Coalition to Stop Foreclosures, Evictions and Utility Shutoffs, took place after a week of actions against the disconnection of water service to households unable to pay their bills. People previously blockaded to keep Homrich, a private contractor employed by the city, from shutting off people’s water on July 10. Another blockade took place the day of the rally, lasting six hours before police arrested a pastor, a veteran journalist in her 70s, welfare rights organizers and others.
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The water disconnections constitute a human rights violation if the people affected are genuinely unable to pay, said Catarina de Albuquerque, the UN special rapporteur on safe drinking water and sanitation, in a press release.
Several days after the downtown demonstration, the city suspended the mass shutoffs for 15 days after more than 15,000 households had been disconnected. The Detroit Water Brigade, an advocacy-oriented volunteer-led alliance focused on emergency relief and mutual aid, wrote in an email to their listserv following the announcement “that thousands of families are still without reliable access to water or on the brink of losing it,” and added that people are invited to meet at 1514 Washington Boulevard downtown at 11 am every day – except Friday – starting July 22, to help distribute gallons of water, coolers, rain collection barrels and information to affected Detroit families.
The Michigan Welfare Rights Organization (MWRO), a union of public assistance and low-income workers, denounced the Detroit Water and Sewage Department’s handling of the situation up to the July 18 demonstration, and appealed to the UN for relief in response to what activists see as initial steps in the takeover of the city’s water system by for-profit private interests. Citizens also filed a lawsuit against the city, prompting the halt to the service disconnections declared days after the downtown rally, insisting the shutoffs violate human rights.
Sylvia Orduño, a Detroit resident and activist who has been with the MWRO for 17 years, marched from Cobo Hall to Hart Plaza during the July 18 rally carrying one end of a banner reading, “Stop the War Against the Poor!”
Orduño said the situation is fast becoming a “public health crisis for everybody” and “Detroit is ground zero for a lot of the battles” over the public trust, in response to the DWSD actions and against subservience to Wall Street.
The Role of Wall Street in Creating Crisis
Between the “banks got bailed out, we got sold out” chants from hundreds of people marching down Larned Street and the banners chastising the $537 million given to the banks by the DWSD, which shuts off water for the poor, people’s disgust at Wall Street’s contribution to the crisis became palpable.
A report from the Office of the Comptroller of the Currency overseeing nationally chartered banks found Detroit had a higher rate of foreclosures for subprime mortgages than any other city in the build-up to the housing bubble that burst and led to the global economic crash in 2008.
Some 100,000 homes had been foreclosed by 2012. The population of Detroit decreased from almost 2 million in 1950 when the city was regarded as a major industrial powerhouse to an estimated 688,701 in 2013. The population declined 3.5 percent from 2010 to 2013 in a continued exodus attributable to foreclosures, defunding public services as a result of financial straits and the related job losses and pension cuts for city workers.
Over the past decade, predatory lending by banks with overwhelming numbers of subprime mortgages and mass foreclosures has resulted in a reduction in the tax rolls which compelled the city to borrow from Wall Street in the form of municipal bonds. Financial instruments, like interest rate swaps, compounded the debt crisis, leading to an even greater reduction in city services, causing more people to move as the tax base eroded further and fictitious capital became increasingly abstracted and volatile.
Sen. Carl Levin (D-Michigan), in contrast to his role in the clandestine drafting of the National Defense Authorization Act permitting indefinite detention of citizens without trial, introduced legislation to stop billions of dollars being kept in “secret” offshore tax haven accounts, and issued a concomitant statement in September 2013 critical of US banks’ engagement in interest rate and foreign currency swaps. As a result, we witnessed “cities like Detroit incur major losses from entering into complex interest rate swaps that went sour,” amidst the $560 trillion global swap market malfeasance facilitated by US tax regulations that permit swap payments to be treated as non-taxable income, Levin said.
Just as the industry concentration ratio for manufacturing – a former economic mainstay for Detroit – has decreased since the 1980s, the financial sector has become increasingly concentrated and big banks rank among the corporate leaders in stock market capitalization.
Wall Street’s role in the oft-cited “deindustrialization” of Detroit – referring to the mass layoffs, factory closures and plant shutdowns in the city – continues because of the effects of those financial schemes, but banks like Goldman Sachs – among the top 50 companies in terms of stock market value in 2013 – now control key aspects of industry in the city and beyond.
In 2010, Goldman bought Metro International Trade Services, a company based in Detroit that runs a network of warehouses that ship metals like zinc, steel and aluminum essential to industry. The New York Times reported last year that some 27 warehouses owned by a Goldman subsidiary ship aluminum back and forth to lengthen storage time and inflate market price.
Among other banks, Goldman started manipulating other commodity markets more seriously after the Commodity Futures Trading Commission freed up futures markets for implementation of the Goldman Sachs Commodity Index, allowing assiduous buying strategies associated with a new form of speculation to cause the price of commodities – including food – to soar and aggravate world hunger.
The transformation of basic necessities like food and water into commodities whose allocation is increasingly determined by privately controlled for-profit firms turned many from Detroit, including MWRO’s Orduño, out into the streets on July 18.
“Unless we do something to stop this privatization and now this attempt to take over anything that belongs to the public trust, we’re going to be in big trouble here in the next few years,” Orduño said, adding that her organization receives calls every day from people having their water turned off.
De-Democratization of Detroit
Detroit became the largest municipality to file for bankruptcy on July 18, 2013. It did so under the direction of Kevyn Orr, the city’s appointed – in other words, unelected – emergency manager.
Prior to his appointment as EM, Orr served as a partner for Jones Day, a law firm that represented Detroit in the bankruptcy hearings, and he helped craft the company’s “Business Restructuring and Reorganization Practice” – a model for the city’s restructuring he has championed since.
Michigan Gov. Rick Snyder, less than one year after signing into law legislation modeled on American Legislative Exchange Council language that allowed workers to opt out of paying the costs for the unions fighting for their protections and benefits, declared a state of financial emergency on March 1, 2013.
Under Michigan Public Act 72, a law passed by the state legislature in 1990 permitting the state to intervene in municipalities by selecting an emergency manager, Snyder appointed Orr on March 14. Several days later, PA 72 was repealed and PA 4 was enacted, enhancing the state’s intervention powers by enabling unilateral modification of worker contracts. Voters previously rejected PA 4 in November 2012, prompting the court to consider PA 72 still in effect until the legislature repealed and replaced it with PA 436, immunizing the law from referendum and from abrogation by the citizenry.
The law cemented the EM’s power to hire and terminate municipal employees at will. Per PA 436, the EM, “shall act for and in the place and stead of” the mayor, city council and the constituency, and is thus endowed with “broad powers in receivership to rectify the financial emergency and to assure the fiscal accountability of the [City] and the [City’s] capacity to provide or cause to provide necessary governmental services essential to the public health, safety, and welfare.”
For residents whose access to water has been cut off, the meaning of the law now appears inverted in practice.
Lawsuits like Phillips v. Snyder and the NAACP v. Snyder challenged the legality of PA 436, arguing that the replacement of elected officials with appointed managers with power to legislate and govern over those without a say in decisions being made is a violation of the Thirteenth and Fourteenth Amendment of the US Constitution and an affront on the Voting Rights Act of 1965.
The Phillips v. Snyder case was argued in district court in April. The court took it under advisement and will issue a written opinion before the case moves to summary judgment, John Philo of the Sugar Law Center told Truthout. The NAACP v. Snyder case was closed for administrative purposes and stayed in August 2013 by a district court, which said the case could be reopened if the bankruptcy stay were to be removed.
Thus far, Orr remains the EM. In 2013, he put forth a proposal to creditors, which included a call to restructure the DWSD. Although the court did not order its implementation, a “Plan of Action” drafted by a committee of DWSD and city officials to determine the reasons for the service dysfunction, called for structural adjustments, “including, but not limited to, the imposition of changes on DWSD employees otherwise forbidden by applicable CBAs [Collective Bargaining Agreements],” according to Orr’s proposal.
The proposal also noted actions taken to address financial challenges, including 2,700 “headcount reductions” since 2011, and implementation of “City of Employment Terms” providing for substantial reductions in worker wages, pensions and health care.
Rev. Bill Wylie-Kellermann, a pastor at St. Peter’s Episcopal Church in Detroit who was not at the rally and march on July 18 because he was involved in the direct action at Homrich before being arrested in the blockade, said that Orr-style restructuring has been rampant.
Much of the money for revitalizing the city has been “siphoned off just in payments to the banks,” said Wylie-Kellermann, 65, who was arrested in the July 10 blockade. “The same kind of financial extraction that’s going on with the city as a whole through the credit swaps, that bears on the financial situation of the water department as well.”
The “Detroit Future City” plan, based on a 340-page document, includes an array of maps identifying for the administration of Mayor Mike Duggan and Orr those neighborhoods that should receive resources and subsidies and others that get the plug pulled from them, he said.
Wylie-Kellermann, a native Detroiter who lives in the Corktown area, criticized the project for explicitly eliding issues of race and class, but implicitly outlining a plan of attack that disproportionately affects people of color and the poor. He cited foreclosures, evictions and water shutoffs as instruments in the restructuring and related gentrification in the city, forcing out the poor, largely black population as wealthier – usually white – suburbanites, corporate employees and investors are invited in.
Cecily McLellan, a union leader with the Association of Professional and Technical Employees who is also involved with Moratorium Now! and active with the Detroit Concerned Citizens and Retirees, said Detroit was “selected for a reason” regarding the gentrification and restructuring.
As a former “bastion” of unionism, she said it makes sense for powerful interests to systematically attack Detroit and eliminate organizations, like unions, that protect working people and stand as a barrier to both greater profits and unaccountable decision-making with civic consequence. The poor black population in Detroit also makes for a disposable target in the view of concentrated power, she said after the rally.
The targeting becomes cyclical because, as Wylie-Kellermann noted, the contractors for DWSD prioritize neighborhoods with a higher concentration of impending shutoffs where they can disconnect service more quickly. Those tend to be impoverished and black communities. Because contractors like Homrich are paid on “a per-shutoff basis,” like many privatization arrangements, he said, the targeting gets even more aggressive.
“I believe if you had democracy, this would not have happened,” said McLellan, who was forced into retirement when her department was closed. Prior to that, she had helped implement the Detroit Water and Assistance program, which has since been discontinued.
“So it’s no wonder you have the crisis that you have right now,” she added.
Recreating Democracy Out of Crisis
When a home-owning resident, part of a neighborhood patrol, beat a homeless man from the same Corktown area with a baseball bat a while back, Wylie-Kellermann said he saw it “as sort of the blunt end of the gentrification process.”
In response, he and the community created a restorative justice circle to articulate together who has been harmed by the violence, which was most everyone in the neighborhood – albeit in different ways – and then reflect on and do “what needs to be done to make things right to live as human beings,” he said.
Wylie-Kellerman, who said he thinks “of the church more as a movement than as institution,” couples restorative justice with non-violent direct action now because pressure from the various levers of power make it “at a very human level, urgent to intervene in,” but also “to see the bigger picture.”
Similar commitment and apprehension of the interrelated sources of violence from a person of faith could be seen in Daniel Berrigan, 93, a Jesuit priest, who was wanted by the FBI during the Vietnam War era for burning several hundred draft files.
“Well Dan is one of my teachers,” said Wylie-Kellermann, who met Berrigan in New York. The former was attending seminary and the latter had just been released from prison when they crossed paths.
“He kind of knocked me off my horse, and my own conversion to gospel nonviolence is directly connected to his life and ministry,” he said about Berrigan, who while in his 90s stood with Occupy Wall Street activists in Zuccotti Park to implore Trinity Church to drop charges against OWS participants for occupying the church’s empty lot in December 2011.
Situating himself in the biblical tradition “set in opposition and resistance to empire,” to advance “the alternative to the imperial way of being in the world,” Wylie-Kellermann said this “moment represents an opportunity not to sell off assets and not to privatize resources” – as can and is being done “with the stroke of the pen” by Orr, but also “to rebuild this city, reorganize the city from the ground-up,” in a “democratically accountable” way, “accountable to one another and neighbors.”
Speakers at the July 18 rally emphasized recuperation of democracy. Many meant they wanted representative politics to be fair and for decisions to be made by elected officials in the interest of people, rather than dictated by an unelected EM at the behest of banks and corporations.
But others have emphasized direct actions that do not appeal to powers above to make decisions affecting them, especially those decisions that most affect their lives, like the decisions regarding termination of residential water services.
“There’s been pressure on the elected officials, and they’ve done nothing,” save for a few of the progressive ones who have shown solidarity, McLellan said after speaking to the crowd in Hart Plaza.
In addition to physically preventing contractors from terminating people’s water access, she said people are also organizing and turning water services back on without asking authorities.
Similar to the inversion of meaning used to justify the EM appointment, a section of the Michigan constitution intended to protect citizens “from the imposition of undue or excessive rates or charges for the supply of water,” has been used to argue against the “Water Affordability Program,” an alternative to the status quo supported by the MWRO.
Designed by civic economics specialist Roger Colton to subsidize lower-income residents, the program would require richer residents to pay higher rates – a potentially discriminatory practice in a narrow, inverted interpretation of law, as explained in Matthew Clark’s water affordability analysis.
When the plan was first developed in 2005, it was estimated 43 percent of DWSD customers would qualify for the low-income rate subsidies. The median household income in Detroit was $26,955 between 2008 and 2012, according to the Census Bureau, compared to $48,471 for Michigan as a whole and $53,046 for the United States. Poverty affected 38 percent of the people in Detroit during that time, compared with the 14.9 percent of all US citizens.
Cleveland, Ohio, a former industrial city which has similar levels of poverty and a comparable below-average median income to Detroit, witnessed revitalization in its Greater University Circle area as a result of worker-owned firms buoyed by the purchasing power of anchor-institutions like Cleveland Hospital and Case Western Reserve University.
Wylie-Kellermann suggests efforts like those in Cleveland, to democratize wealth and promote worker-community ownership, could be tried in Detroit.
“Detroit is in the mix of being physically reorganized,” he said, “so that resources and the infrastructure, support for businesses, even subsiding of homes – rental and buying – [are] not for poor people,” but for profits.
Last year, Goldman Sachs rolled out their “10,000 Small Businesses,” in Detroit, with CEO Lloyd Blankfein and billionaire Warren Buffet in town to promote the start of the program’s educational initiative, which includes lessons on “Being Bankable” and adjusting enterprises to better accumulate capital and obtain profits for growth.
The profit-driven program and associated commodification are at odds with activists in the Detroit Water Brigade, like Sarah Coffey, who said thinking about water as part of the commons and not as a commodity entreats people to think about the kind of future they want.
During the July 18 march, Orduño intimated motions to put Detroit water in a public trust, and McLellan later commented on the renewed but fledgling importance of public land trusts in the city that push against and beyond market-exchange and the profit-oriented paradigm toward alternatives.
She said that both acts of resistance and the creation of forward-looking alternatives are in their embryonic stages, and the various forms both take have implications for what democracy will mean in Detroit and elsewhere in the future.
“So we have to restore democracy in order for us to be in a position where we can really control our own destiny,” she said.