Capitalism is good, and it works so long as there are people who can make it happen. And, then there are the people who benefit from it.
The very same week that Governor Rick Snyder, the Tea Party governor of Michigan accepted Detroit’s declaration of bankruptcy, he gave the go-ahead for a new $650 million arena to house the Detroit Red Wings.
We have seen the pictures of a city with a crumbling infrastructure, heard and read reports on how long the response time is for police and fire, have heard and read the crime rate, and have also heard and read about what services have to be cut as the city collapses. Trash disposal is threatened. The art museum is selling off its collections piece by piece, and after years of working for the city and planning for their retirement, municipal workers will have their $19,000 annual pensions cut drastically.
So the idea that about half of this $650 million price tag ($283 million) will be picked up with public funds seems a little odd. Where will this money come from, and is it really the best way to spend it especially as the owner of the Red Wings is Mike Ilitch, the founder of Little Caesars, who is worth $2.7 billion?
He could pay for the whole thing and still have more than $2 billion left. And, once the arena is built, he will continue to make more money on pizza and any income from the Red Wings, perhaps even a concession or two for his pizza in the arena.
Yet public retirees are going to have their pensions cut?
How does it make sense to cut the pensions of people who worked for the city while subsidizing an individual’s sports investment?
Governor Snyder claimed, “This is part of investing in Detroit’s future. That’s the message we need to get across. As we stabilize the city government’s finances, as we address those issues and improve services, Detroit moves from a place where people might have had a negative impression…to being a place that will be recognized across the world as a place of great value and a place to invest".
This sounds good until you remember that Detroit has already had two other arenas, Tigers’ Comerica Stadium and the Lions’ Ford Field, whose construction was supposed to do what the governor now claims the Red Wing arena will do, and look at Detroit.
Third time’s the charm?
But arenas do not increase population. They do not bring in the tax base that a growing population does, a tax base that helps with municipal infrastructure, decent public wages for public employees, and well funded schools. An arena may increase employment at the arena itself, but that is often low wage and seasonal, and, certainly, cannot supply employment to a whole city population.
The suburban sports fans will come to town, spend a little money, and then go home to where their taxes keep their suburb nice and comfortable. They will not have to deal with the failing infrastructure and weak services. They will only have to see those things when they want to as they do not have to live with them.
Neal DeMause, who runs the website Field of Schemes, has stated: “There’s absolutely no reason on earth that the state of Michigan couldn’t say to Mike Ilitch, ‘Sorry, Detroit has more important things to do with its money.’ Instead, though, the governor seems content to let Ilitch cut to the front of the line for public funds, on the grounds that ‘who doesn’t get fired up’ about hockey. Even if you limited it to economic development projects, putting money into fixing city schools or restoring streetlights would do far more for Detroit’s business prospects than a hockey arena. This just goes to show the problem with carving out shares of tax revenue to go to development authorities—they end up basically serving as slush funds for developers, even when the city treasury is otherwise empty."
There is that narrative that “race riots” and unions destroyed that city. But, historically, it was the unions in the auto industry that built Detroit, and it was the minorities who worked in the factories and started Motown which brought money to the city. Some are so intent on putting all blame on the race riots of 1967 they have placed the blame for this onto the mayor who was not in office until six years later.
Detroit activist Grace Lee Boggs explained that a conservative agenda has “been strip mining cities by privatizing almost all services, attacking public workers and their unions, while at the same time providing billion-dollar tax cuts for large businesses and cutting revenue sharing to the cities".
What destroyed Detroit was free trade deals and corporate welfare, not the people who worked there.
People all over the country of every political bent are watching what happens in Detroit. It is like the lab experiment from which other cites could learn if they find themselves in a similar situation.
Smaller places might be in a position to be thinking about the all eggs in one basket approach when they feel saving a town is needed. They might be over eager to have something big come to town that makes a multitude of promises, but in their enthusiasm don’t notice the finer points that perhaps, while pledging to pay a one-time fee in the event something goes wrong, are careful not to leave the offer open ended so that they will not be held responsible for fixing any mistake that exceeds that amount and may come at a later time.
Big companies welcome a town’s offer for tax breaks and other forms of corporate welfare to open a store or a stadium, but make sure they can pull out if things go wrong if business does not turn out to be what was projected, or they can make more money elsewhere.
The Seattle Sonics was the pride of their hometown, but because Oklahoma City promised to build a new arena at taxpayer expense, they moved there. Loyalty is not to a city, but to the money to be made regardless in which city it is made.
Considering the unattractive state of Detroit, if a better offer comes along might the Red Wings take it, and in the meantime leave behind a ruined city with public retirees who have been reduced to poverty in an attempt to allow a multi-billionaire to make more money?
Promises are made and initially kept until the bottom line says to move to potentially greener pastures.
There are lessons to be learned.