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What the Media Isn’t Telling You About Detroit’s Bankruptcy

Gov. Rick Snyder. (Photo: Detroit Regional Chamber / Flickr)

By now you’ve probably heard the news: Michigan Governor Rick Snyder is now free to rob Detroit workers of their hard-earned pensions.

On Tuesday morning, Judge Steven Rhodes ruled that because federal law trumps state law, Michigan’s constitutional protections for public employee pensions don’t apply in federal court.

It’s pretty much official now: Detroit is going bankrupt.

The death of a great American city is one of the biggest – if not the biggest – news story of the week. But the mainstream media has yet to tell the real story behind the Motor City’s decline.

Bankruptcy law is a complicated topic, so it’d be one thing if the major networks avoided all the nitty-gritty details of the past few months’ legal battles. But they haven’t. In fact, that’s all the mainstream media has focused on. They’ve made it seem like Detroit’s troubles magically began back in July when the city’s Emergency Manager Kevyn Orr first filed bankruptcy papers.

And while those legal battles are interesting in their own right, they’re really only part of a much bigger story: the destruction of Detroit by America’s bankster-billionaire class.

The media isn’t telling that story. And it needs to be heard.

At one point in time, Detroit was ground-zero for the American dream. The Motor City really was the Motor City. It was the fifth biggest metropolitan area in the country and its economy was booming as a result of the success of the big three automakers: Ford, General Motors, and Chrysler.

The car industry’s unionized workforce took home good middle-class salaries, in turn bolstering the city’s tax revenues.

But over the past 30-plus years Detroit has been hit hard by the three-headed monster of the new American fire economy: free trade, union-busting, and bankster-run Ponzi schemes.

From the Washington administration to the Reagan Revolution of the 1980s, our trade system was based around a system of protectionist tariffs that encouraged doing business in American and discouraged doing business abroad.

But towards the end of the 20th century, both Republican and Democratic lawmakers began to embrace a new form of free-market extremism: free trade. Free trade opened up the economy to foreign competition and outsourced jobs once done by American workers to workers overseas.

Detroit was hit especially hard as foreign car companies like Toyota took advantage of lax trade policies to sell their products to American consumers. This decimated Detroit’s industrial core. The Motor City’s manufacturing workforce stood at 200,000 in 1950. Today, it’s 20,000.

But any possibility that those foreign companies would help provide new jobs to Detroit’s now unemployed autoworkers was stopped dead in its tracks by right-to-work-for-less states in the South using their anti-worker laws to attract foreign manufacturers like Volkswagen and Toyota.

And with its jobs gone and poverty rampant, Detroit, like so many other deindustrializing cities across America, then became the target for banksters looking to make a quick buck with rip-off mortgage schemes. As a result, the financial crisis hit the Motor City especially hard.

But to make matters worse, after evicting thousands of Detroiters from their homes, the big banks didn’t bother going through with the normal foreclosure process. Instead, they left the houses abandoned in an attempt to avoid paying taxes on them. Their scheme worked: Detroit’s army of abandoned houses costs the city millions every year in unpaid taxes.

The Motor City, once ground zero for the American dream, is now ground zero for the worst policies of the post-Reagan economy. Its industrial heart has been shredded in the name of free trade. Its workforce has been decimated by glorified union-busting schemes. And in the final insult to injury, its impoverished population has been ripped off by predator banksters.

Of course, you can’t expect the media to focus on that, right?

With so much money to be made, it’s far easier to focus on the short term and blame greedy retirees, who, by the way, have been doing their part to fund pension plans while the state government has avoided living up to its end of the bargain.

But if we really want to save the rest of the country from devastation, we need to take a good hard look at the lesson of Detroit.

Because if we continue on the path we’ve been on for the past 30 years, Detroit’s decline won’t be just a sad story, it will be America’s story.

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