It looked so easy. Go to work for the city. Get paid above-market wages. Get a pension. Get health care covered. It was Fat City.
It’s Thin City today. The city has officially gone belly-up. It has filed for bankruptcy. The city was in debt to the pensioners for $3 billion. What about health care guarantees? Add another $6 billion.
They trusted the government. They will now get 10 cents on every dollar owed to them.
It was all so easy way back when. It was even easier for the city to walk away.
The Republican governor had this to say before the city defaulted.
Only One Feasible Path Offers a Way Out. The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services. The City’s creditors, as well as its many dedicated public servants, deserve to know what promises the City can and will keep. The only way to do those things is to radically restructure the City and allow it to reinvent itself without the burden of impossible obligations. Despite Mr. Orr’s best efforts, he has been unable to reach a restructuring plan with the City’s creditors. I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection.
This is the thing about impossible obligations. They get abandoned. This confirms economist Herbert Stein’s law: ‘When things can’t go on, they have a tendency to stop.”
A year ago, the experts denied that anything was wrong. Yes, there were “problems,” but nothing that could not be fixed. “Bankruptcy? Are you serious? Of course not. There is no possibility of that. Such talk is inflammatory. Perish the thought.”
That’s what politicians always say . . . right up to the end.
The pensioners will have to go back to work. They will be covered by Medicare only. They believed the politicians. They invested their working years in terms of promises made by politicians.
The city will get away with it. Across the nation, politicians will think, “Well, that was easy.” They will of course assure their employees and pensioners that nothing like this could happen. “Bankruptcy? Are you serious? Of course not. There is no possibility of that. Such talk is inflammatory. Perish the thought.”
When things can’t go on, they have a tendency to stop.