Friday, July 26, 2013

Can Detroit be saved?

You wanna hear something hysterical?  Ed Schultz and the rest of the talking heads over at BSNBC are blaming Republicans for the bankruptcy of Detroit.  Here’s their rationale.  Republicans out-sourced jobs, cut public services and attacked the unions.  Actually, Ed, it was the unions that caused the out-sourcing with their unreasonable demands which led to Detroit’s population dropping in half since 1950 which led to fewer taxpayers thus less government services.

The problems plaguing Detroit are obvious.  They killed the proverbial goose that laid the golden egg.  Let’s face it.  Detroit automakers made some stupid mistakes over the years.  They scoffed at the Japanese and European imports in the ‘70s thinking they were invincible.  Bad design coupled with horribly-built cars led to a steep decline in American-made automobiles.  The unions convinced their membership that the car companies existed to provide them a job.  In fact, they came to believe that it was their job, not the company’s.

In the meantime, the Democrat machine took over Detroit politics.  The last Republican mayor was in the late ‘50s.  Since 1970 there’s been just one Republican on the city council.  For the last 50 years Detroit has been a one-party town.  Guess what?  The party’s over.

In typical fashion, the liberals who have run Detroit for the last half-century demonized the rich and exploited the poor.  Inflated wages and unreasonable pensions drove industry south or completely out of the country.  The city instituted a wage tax – on top of the state and federal income taxes – in 1962.  Detroit also tacks on an extra corporate tax.  You couldn’t ask for a less hospitable place for business.  Couple the high taxes with artificially-inflated union wages and it’s a wonder Detroit lasted this long without going broke.

I was reading a newspaper report that said nearly $6 billion of Detroit’s $20 billion debt is due to health insurance obligations to retired city employees.  The article lamented that Detroit may push those people off on the Obamacare exchanges.  Now, understand that these ex-employees are eligible for Medicare at age 65.  That means that $6 billion is for people who are retired but not yet at retirement age.  Here’s a thought.  Go back to work!

That’s symptomatic of the problem.  Too many sweetheart union deals were negotiated.  The companies that made that mistake either closed down or moved but the city was stuck.  At this point all bets should be off.  I hate it for those folks who thought they could retire at 45 and live off the taxpayers but the bulk of the taxpayers are gone.

Which leads to the next point.  It never occurred to these liberals when they were waging class warfare that once they ran the rich people off there would be no money left to pay for city services.  They may still have 700,000 residents but those who stayed behind are disproportionately poor and disproportionately unemployed.  If Detroit is ever going to come back they’re going to have to eliminate the city wage and corporate taxes.  They’re going to have to welcome rich folks back with open arms instead of demonizing them.

Now that Michigan is a right-to-work state there’s hope.  The unions that ran industry away in the first place need to be dissolved and good, old-fashioned capitalism needs to be reintroduced to Detroit.  The moochers and looters have run the city into the ground.  The producers are what built it and they can rebuild it but in order for that to happen those running the city have to stop listening to the likes of Ed Schultz.  Or all hope is lost.

Phil Valentine is the host of the award-winning, nationally syndicated talk radio show, The Phil Valentine Show.

1 comment:

  1. It's out of the pages of Atlas Shrugged.