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Facing Bankruptcy

bankruptcyThe City of Detroit has declared bankruptcy. It is the largest city in the United States ever to do so, and the punditry—what the late Molly Ivins called “the chattering classes”—are pointing fingers at those whose particular ideologies they suggest are to blame. It’s “white flight” or de-industrialization or lack of economic diversification or corrupt government or a combination of these and more.

What is not up for debate is the current, sorry state of affairs in the city. Detroit’s murder rate is now at a 40-year high, unemployment has tripled since 2000, many street lights and ambulances are inoperative and citizens wait an average of 58 minutes for the police to respond to a call.

Filing for bankruptcy offers hard choices, not easy answers. Unfunded pensions are at risk. Precious city assets may be sold off to satisfy creditors. The city that emerges from these proceedings will inevitably be a smaller, very different place than the Detroit of automobile manufacturing supremacy and Motown. Those of us who follow governance and policy can only hope to learn the right lessons from the spectacle.

We might also consider the broader nature of bankruptcy–forms of impoverishment other than those leading to the relatively orderly court proceedings provided for under federal law.

There is an argument to be made that America is in the grip of widespread moral bankruptcy.

The House of Representatives has just taken its fortieth vote to repeal the Affordable Care Act. Those participating in that vote are well aware that it is mere theater; what is more reprehensible than the colossal waste of time these votes represents, however, is the utter mean-spiritedness of the assault. The Republicans in the House have offered no alternative policy, no substitute proposal. The message is clear: leave fifty million Americans without access to healthcare.

That message is part and parcel of attitudes we haven’t seen since the heyday of social Darwinism. The much-touted budget offered by Paul Ryan achieves cost savings by punishing people for being poor. The ax of the sequester fell heavily on programs benefitting poor women and children—programs like Head Start. Punitive state laws seem written expressly to harass poor people: in Arkansas, you can be jailed if you’re late with your rent; in Houston, you can get arrested for scrounging for discarded food; in presumably liberal San Francisco, laws banning panhandling are enforced so strictly that one homeless man was arrested for falling asleep while sitting on a discarded milk crate.

Self-righteous legislators are falling over each other to pass measures designed to degrade people who are already down and out. We’ve seen multiple efforts to drug test welfare recipients, despite the fact that poor people are no more likely to use drugs than, say, the state legislators demanding the tests.

As The New York Times recently reported:

“From July through October in Florida — the four months when testing took place before Judge Scriven’s order — 2.6 percent of the state’s cash assistance applicants failed the drug test, or 108 of 4,086, according to the figures from the state obtained by the group. The most common reason was marijuana use. An additional 40 people canceled the tests without taking them.

Because the Florida law requires that applicants who pass the test be reimbursed for the cost, an average of $30, the cost to the state was $118,140. This is more than would have been paid out in benefits to the people who failed the test, Mr. Newton said.

As a result, the testing cost the government an extra $45,780, he said.”

There are innumerable other examples of policies that either ignore the needs of poor and middle-class Americans or actively make their situations worse.

Mitt Romney’s infamous “47%” remarks were no anomaly. The privileged increasingly sneer at those less fortunate. Partisan political debates used to focus on differences in how government should help Americans. In today’s toxic political environment, the debate has become whether we should care.

Social Darwinism reflects a crude form of Calvinism: people are poor because they are morally defective, and thus undeserving. More privileged folks owe them nothing—to the contrary, a social safety net (unlike corporate welfare) simply rewards bad behavior. It does no good to point out that policies reflecting these attitudes hurt the economy and are ultimately bad for everyone.

Detroit isn’t the only polity that is bankrupt.


Author: Sheila Suess Kennedy is a Professor of Law and Public Policy at the School of Public and Environmental Affairs at IUPUI.


Image courtesy of http://mbblegal.net/blog/bankruptcy/.

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