Lunatic Fringe
This week, David Atkins and Lynn Parramore, writing at Alternet, each told the story
of the downfall of Sears. Once an American institution with over a
century of successfully providing goods and services to the nation,
Sears has fallen into a state of business failure free fall. The company
has been hemorrhaging customers, seeing its profits plummet, and its
reputation nosedive. If there is anyone who deserves credit for the
company’s demise, it is the Ayn-Rand loving, libertarian Eddie Lampert,
recently ranked #2 on the Forbe’s list of America’s worst CEOs. Mr.
Lampert’s decision to embrace the economic philosophy of Friedrich von
Hayek, beloved among libertarian conservatives, means that he scorns
investment in infrastructure, education, or the labor force. Instead,
his concerns are always with austerity, budget reduction, and the bottom
line. He believes in the free-market, corporate largesse, and greedy
self-interest. These beliefs led him to implement an organization of his
company whereby he broke it into over 30 smaller components and then
basically told them that they needed to compete with each other in a
cutthroat atmosphere to earn more profits. The result? Individual units
within the corporation began undermining each other. Parramore notes,
“Units competed for ad space in Sears’ circulars, and since the unit
with the most money got the most ad space, one Mother’s Day circular
ended up being released featuring a mini bike for boys on its cover.”
Yes, that sounds like excellent business acumen; mini-bikes are famously
popular gifts for mothers. Employees became disheartened to the point
where Sears was ranked the 6th worst place to work in America by AOL Jobs.
Meanwhile, this week also brought news that the City of Detroit tried to file for bankruptcy under the direction of its state-appointed, anti-democratic
“emergency manager,” only to be rebuffed by a judge’s ruling. How does
Detroit’s situation relate to Sears’s sad demise? Both are facing the
specter of Randian objectivism, free market fanaticism, dehumanization
of ordinary people, and an abdication of corporate responsibility. As
the workers at Sears have been forced into cutthroat competition, so
too, have Detroit’s residents been asked to compete over insufficient
and scant resources.
There is no question that Detroit has been struggling for decades.
As a rust-belt city dependent on manufacturing, it has faced the same
woes as many other cities in the region as our country’s manufacturing
jobs were shipped overseas. However, the historical dependence of
Detroit on the auto industry has meant that its well-being has been
tethered to the whims and welfare of the American auto corporations. As
the business infrastructure of the city aged, rather than investing in
and developing new factories, these corporations opened up plants in
other parts of Michigan, Ohio, Canada, etc. They left behind massive,
abandoned factories that not only pepper the city with dangerous,
broken-down eyesores, but also left the city with a dramatic loss of
jobs. With little other choice remaining, residents of the city departed
by the millions seeking employment. Many of those who remained were
simply too poor to relocate. The city government was left with an
ever-decreasing tax base to maintain its functioning, falling more and
more into debt. Instead of taxing the remaining corporations and
businesses within the city, Detroit was essentially blackmailed into
giving them colossal tax breaks under threat of seeing the businesses
pick up and move. The State of Michigan has also been withholding funds that it is supposed to give Detroit through revenue-sharing, restricting their access even further to necessary resources.
The
commonalities between what is happening to Sears and what is happening
to Detroit are that both are now being subjected to right wing ideology,
Ayn Rand philosophy, and von Hayek’s austerity economics. The results
for each are similar. People will unnecessarily suffer. Damage will
eventually need to be undone. And people will have to learn the hard way
what a failure these poisonous schools of thought really are.
According
to reports, the emergency manager, Kevyn Orr, and his cohorts, wealthy
businessmen and corporations, have big plans for Detroit. They can’t
wait to implement their conservative fantasies of privatizing and
cutting city services, busting unions, selling off public assets, and
laying off public employees. The citizens of Detroit have already seen
20% of their city’s workforce cut by their Democratic, multi-millionaire
mayor, David Bing. In a place that suffers from a severe lack of jobs
(there is one job for every four residents), more layoffs is just what
the community needs. Among the upcoming plans approved by Orr are
service shut-offs to neighborhoods determined to be too poor or
under-populated for private investment to be profitable. The city’s
unsung assets, including the Detroit Institute of Arts, Belle Isle Park,
and even the animals at the Detroit Zoo, have all been appraised and
are ready for sale to private interests. Public services ranging from
transportation to garbage collection and water treatment will soon be
privatized and in the hands of for-profit corporations.
The
winners in the bankruptcy filing will be Detroit’s creditors on Wall
Street. Orr has already made arrangements to pay Bank of America, UBS,
and Merrill Lynch 75 cents on the dollar, allowing them to take in $340
million. If you are a bank or other financial institution that has done
business with Detroit, this bankruptcy will not nullify Detroit’s
obligation to pay you. Arrangements have been made. The same level of
concern for ordinary citizen creditors who are owed money via their
pensions is non-existent. The bankruptcy is expected to include a
dismissal of obligations to pension holders. Other winners in Detroit’s
bankruptcy include the wealthy investors bribing a limping city for its
last penny. Detroit is actually going to subsidize businesses
that want to build upscale housing and chip in $286 million to the
building of a sports arena for the Little Caesar’s owner, Mike Ilitch,
whose net worth is nearly $3 billion. Meanwhile, there is no demand by
the city to fine corporations for the miles and miles of land soaked in industrial pollution (Detroit’s 48217 zip code is the third most polluted in the country).
Detroit’s
situation is ugly. It has had corrupt leaders in the past. It has dealt
with exorbitantly high unemployment rates. The infrastructure is
crumbling. Any potential tax revenues it might have been able to collect
to fill empty coffers are unavailable, because unconcerned and
exploitative businesses jockey for subsidies rather than being willing
to actually chip in to benefit the city. Wealthy vultures circle the
city’s many assets. And instead of hope,
the city has Governor Rick Snyder, an emergency manager, suspended
democracy, corporate scavengers, widespread unemployment and poverty,
and Wall-Street friendly bankruptcy efforts. Alarmingly, as we noted, Detroit is just a test-case for the right wing to begin spreading this ideology far and wide.
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