No matter your point of view - whether you're from Michigan, have visited Michigan or have friends in Michigan - Detroit’s “Proposal For Creditors” was humbling.
18.3% unemployment.
Fewer than half of Detroit’s residents over the
age of 16 are working.
Per capita income is $15,261.
Over 36% of the population is below the
poverty line.
For fiscal year-end 2012, the accumulated
general funds deficit was $326.6 million. If not for the recent debt issuance,
this was projected at $700 million for fiscal year-end 2013.
Over $9 billion of unfunded life, health and
retirement plan benefits.
$18.5 billion of debt.
Giving additional context to the data set are
a number of stated, qualitative observations: bad governance, dysfunction,
scandal, suffering, cultural divide and entitlement.
An immense land area that has become
desolate, unwieldy and too big to manage or govern.
Detroit's infrastructure, including facilities,
grids, fixtures, equipment, vehicles and information systems are antiquated,
have not been adequately maintained and continue to deteriorate rapidly.
Given such a construct, bankruptcy is an
appealing option indeed.
But is Detroit’s fate really isolated to
Detroiters? Could it be a harbinger of what’s to come? is Michigan like most other States? Was Detroit just the next
domino to fall in America’s myopic culture?
No matter the source or the exact statistic,
no matter the relevance to other numbers, America’s profile is disconcerting.
The U.S. national debt is almost $17
trillion.1
The U.S. federal deficit is more than $800
billion and is projected to exceed $900 billion by fiscal year-end 2013. In
other words, we will spend $900 billion we don’t have – in this year alone.
2
U.S. total debt is almost $60 trillion.
3
Total personal debt is almost $16 trillion.
3
Total U.S. unfunded benefit liabilities equal
more than an audacious $125 trillion. 3
Really…what’s the point of keeping score
anymore?
In the 1830’s, President Andrew Jackson
called our national debt a “national curse.” At that time, our debt was less than
$40 thousand dollars. Talk about infinitely wise beyond his years…
Over 15% of Americans live in poverty.4
It is estimated over 100 million working age
Americans do not have a job.5
Half of all Americans have less than $10,000
in savings.6
Over 40% of US families spend more than they
earn.6
The average credit card balance per U.S.
adult with a credit card is $5,047.7
The average consumer has 4 credit cards, and
1 in 10 have more than 10 credit cards.8
An estimated 1 in every 100 U.S. households
will claim bankruptcy.6
There were over 1.2 million bankruptcies
(business and personal) filed in America in 2012 alone.9
The American Society of Civil Engineers gave
the U.S. an overall grade of D+ for its infrastructure. They estimate a $3.6 trillion
investment will be necessary by 2020.
Our nation is insolvent.
Well…it would be if not for our Federal
Reserve and their unfettered ability to print money. But at what cost? And does
anyone really believe we can circumvent the inevitable?
Further, it seems every national news program
or piece of content underscores the same cultural fabric suffocating the city
of Detroit: unsustainable benefits, pork-barrel spending, tired infrastructure,
guns, corruption, border security, middle class, jobs, jobs, jobs. The
somber reality is that Detroit - and Michigan - are merely a microcosm of America.
In his recent Op-ed about Detroit’s bankruptcy, Steven Rattner said, “America is
just as much about aiding those less fortunate as it is about personal
responsibility.” Agreed. However, the problem, of course, is that while we
continue to engage in the former, we have brazenly disregarded the latter.
If bankruptcy is debt’s
cleanser, how much cleaning supply do we have? Moreover, who ultimately pays
for it? Granted, these life-saving operations had far-reaching human and
political impact but it begs the more important question facing us today - how long can we aid those who are not
personally responsible?
While I am not
trained in psychology, it seems fairly intuitive that rewarding people for bad
behavior only encourages more bad behavior.
There are many
great ideas and plans for Detroit post bankruptcy - and I'm very optimistic about Detroit and Michigan's future - but perhaps none address the
root causes. As we have learned, this only serves to exacerbate the problem. Undoubtedly, systemic illness requires
treating the body as a whole.
Whether it is
our expectations, metrics, and/or values that require contemplation, the time
has come for legitimate change. No more self-serving campaigns. No more
self-fulfilling prophecies.
It was only a
few short years ago when America was on the
precipice of financial collapse. Irrespective of your position, and there is no
shortage of finger-pointing and blame to go around, one thing should be clear –
we are all culpable – and bankruptcy is not the solution.
It is true Americans buy cars from bankrupt
car companies. We also fly on bankrupt airlines, eat from bankrupt food
producers, safeguard with bankrupt insurers and now live, work and play in
bankrupt cities. Given America’s perspective on success is “how big” and “how
much,” it is no wonder why we are living a life we simply can no longer afford.
Not only has the stigma of bankruptcy faded –
much to President Jackson’s chagrin – but our curse has become our proxy. Ironically,
like many things that come full circle, our destiny may yield a modern day society
closer to 1830 than 2013.
We live in a place
where casino billboards are seemingly being posted in every state, home
ownership is the basic standard by which we measure the American Dream and debt
is requisite for “getting ahead.” We are driven by immediate gratification, and
we seek refuge by pushing our burdens onto someone else. While there are no
good answers, honest insights and tough decisions remain our only viable,
long-term hope.
The path to
healthiness, as with most serious addictions, unfortunately involves enduring
much pain and suffering. However, if America is as resilient and resolve as she
has always been, we will be stronger for it.
As life would have it, the source of our
greatest strengths often becomes the source of our greatest weaknesses.
Detroit, like its American brethren, has fallen victim to its own circumstances.
Detroit has always been the most American of cities – hard working, self-made
and diverse. From industrialization to suburbanization, civil rights to civil
unrest, passion to complacency, aspiration to greed, opportunity to inequality,
prudent leverage to irresponsibility – that which made Detroit famous has also
forged its failure.
But this is America’s story.
No matter where you call home, we should all
hear sirens in the background – a red light flashing in the distance. With a
power source that will eventually die if not cured at the source.
Sources:
1) US
Treasury Office
2) Congressional
Budget Office
3) Federal
Reserve
4) National
Poverty Center
5) Forbes
6) Progressive
Debt Relief
7) Fox
Business
8) FTM Daily
9) USA Today
10) NPR
10) NPR
This is great Michael!
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