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Issue #1603      July 24, 2013

The Detroit bankruptcy

The bankruptcy of Detroit, the former auto capital of the world, is a milestone in the historical decay of American capitalism. It is as well a new point of departure in the social counterrevolution being carried out by the ruling class to make working people pay for the failure of its system.

After being abandoned for over 40 years, the roof of the Packard plant finally collapses. (Photo: Dave Jordano)

Kevyn Orr, the unelected financial tsar, Republican Governor Rick Snyder, Democratic Mayor David Bing and the establishment media all point to the horrific conditions in Detroit – 78,000 abandoned buildings, non-functioning streetlights, antiquated and understaffed fire protection – not to indict the politicians and corporate powers who are responsible, but to justify the destruction of the living standards and essential public services of workers who bear no responsibility for the disastrous situation.

By going into court, Wall Street bankruptcy lawyer Orr intends to secure repayment of the city’s debt obligations to the big banks and bondholders by shredding union contracts; slashing pensions and health benefits of both active and retired city workers; gutting public services; privatising public lighting, transit and sanitation; and selling off assets such as the water treatment plant, Belle Isle Park, Detroit Zoo animals, and the Detroit Institute of Arts’ world famous collection.

As a consequence, hundreds of thousands of Detroiters will be thrown into conditions of social dispossession. Thousands of small businesses will be wiped out. At the same time, the city is handing over hundreds of millions of dollars in public funds to enable billionaire Detroit Red Wings owner Mike Ilitch to build a new arena and to subsidise real estate mogul Dan Gilbert’s plans to gentrify a section of downtown Detroit.

In carrying out this agenda, Orr has the support of both big business parties and the Obama administration, which has ruled out any federal aid to Detroit.

By throwing Detroit into bankruptcy, the ruling class has exposed the reality of class rule and the dictatorship of capital that lurk behind the trappings of democracy. The domination of the banks and corporations is embodied in the role of their agent, Orr, who operates outside of any democratic control.

All of the explanations that are being given for Detroit’s descent into bankruptcy – inevitably centring on the supposedly exorbitant cost of city workers’ pensions and health benefits – are false. Detroit has been bled dry as a result of a deliberate policy pursued by the auto companies, the banks and the ruling class as a whole over a period of nearly four decades.

The city has been decimated through a process of deindustrialisation that began in the late 1970s. This was the response of the American corporate-financial elite to falling profit rates in basic industry and the increasing global integration of production, which made it easier for companies to shift production to low-wage regions.

The dismantling of American industry went hand-in-hand with a shift to the most parasitic forms of financial speculation and the rise a financial aristocracy. It was accompanied by an attack on social programs, tax cuts for corporations and the rich, and a wave of union-busting, strike-breaking and wage-cutting in the 1980s.

The assault on workers’ living standards continued unabated through Democratic as well as Republican administrations in Washington, and under Democratic and Republican politicians alike at the state and local level.

The bankruptcy filing has national and international implications. Detroit will serve as a precedent for other cities across the country that have been financially crippled by the economic crisis. The use of the bankruptcy court to rip up pensions and health benefits will open the floodgates for similar attacks on millions of teachers, transit workers, sanitation workers and other municipal employees.

Just as Greece became the model for attacks on workers throughout Europe and beyond, the 0 bankruptcy – which goes beyond even the brutal measures carried out in Greece – will set the pattern for the next stage in the attack on the working class in the US and internationally. At stake is every gain won by the working class through immense and often bloody struggle and sacrifice in the course of more than a century.

The working class in Detroit must implacably oppose the bankruptcy. Workers should reject all demands for concessions and sacrifices to protect the wealth of the financial aristocracy.

globalresearch.ca  

Next article – The CIA link to Al-Qaeda in Syria

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