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Joshua Akers and John Patrick Leary: Detroit on $1 Million a Day

July 28, 2014

A response to Ben Austen's 'Detroit Through Rose-Colored Glasses.'

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Image from Flickr via rickharris

By Joshua Akers and John Patrick Leary

As people who have lived in Detroit and studied its history, we were not surprised to see this city invoked once again as a benevolent mogul’s grateful creation in Ben Austen’s New York Times Magazine feature, “The Post-Post Apocalyptic Detroit” (titled “Detroit Through Rose-Colored Glasses” on the print edition’s cover, in what seems like a bit of editorial trolling). Detroit has spawned so many of these corporate heroes, from Henry Ford to the pizza-and-sports tycoon Mike Ilitch and finally the Quicken Loans CEO Dan Gilbert, that one starts to wonder if there’s something in the Great Lakes water that encourages the growth of corporate mythologies.

Gilbert, to his credit, has political tact and personal charm that those predecessors lacked, and this partly explains his appeal. Less ruthless than the authoritarian Ford and less creepy than the reclusive cryogenic specimen Ilitch, Gilbert sunnily promotes the city without the racial condescension or outright bigotry still common even among public figures in metro Detroit’s white elite (see, for example, the suburban political boss Brooks Patterson). Gilbert also has a great sense of timing. He saw an opening in Detroit’s historic downtown after the 2008 financial crisis and exploited it. Even before 2008, a generation of shuttered factories and cynical real-estate speculation helped produce the very conditions—low prices, high vacancy, and, since many banks still won’t extend mortgages in Detroit, accessibility for those who can pay in cash—that now lure investors to town.

What is predatory subprime lending, after all, but an innovation?

Gilbert also benefits from an acute ear for the feel-good capitalist bromides of our era: his maxim, he tells Austen, is “do well by doing good.” But embracing the feel-good fog of confidence in “innovation” and “entrepreneurship” leaves two fallacies dangerously unexamined: 1) that private-sector innovation is basically benevolent and 2) that it can revive a city of 700,000, with Depression-like levels of unemployment, picked over by other generations’ innovations. (What is predatory subprime lending, after all, but an innovation?) One of Gilbert’s PR triumphs—putting aside his basketball missteps in Cleveland—is how he has managed to earn a reputation for civic-mindedness mostly by attempting to lure tenants to his properties. Tycoons of an earlier era had to pursue something besides their main hustle to earn the laurels being heaped on Gilbert. Henry and Edsel Ford founded hospitals, endowed schools, built museums. The charitable giving Gilbert makes, however, isn’t an especially big part of his image. He is portrayed as a Detroit benefactor simply for doing what he does: run mortgage and real-estate companies.

Given Detroit’s recent history, it strains credibility to assume that successful real-estate speculation will lead to economic development and broadly shared prosperity.

Austen’s is a glowing portrait of the man himself: no effete executive or calculating bean-counter, Gilbert is “a fist of a man, small and compact, with a cubed jaw, narrow eyes and lips, his hair raked back in a mold.” And he “believes in Detroit, not just as a partisan local booster but in his bones as a businessman.” Bone structure aside, Gilbert’s principal advantage is his abiding belief, Austen explains, that “he could enrich a city and himself at the same time.” 2 for 1! He is a good businessman.

An evangelical mission to save Detroit may make for good public relations, but given Detroit’s recent history, it strains credibility to assume that successful real-estate speculation will lead to economic development and broadly shared prosperity. Blight, a “cancer” Gilbert has pledged to wipe out in Detroit, is not some passive product, but an active process, largely driven by speculators and billionaires excavating profit from disinvestment. The rock-bottom prices that have made it possible for the mortgage king to turn downtown Detroit into a contemporary version of the company store were generated by decades of speculative investment and hundreds of millions in state and city-subsidized economic development downtown. A bewildering passage in Austen’s story describes Gilbert’s funding of a sophisticated network of surveillance cameras downtown:

Gilbert and other capitalists—large and small—are trying to rebuild the city, even stepping in and picking up some duties that were once handled by the public sector. Shop owners around the city are cleaning up the blighted storefronts and public spaces around them. Only 35,000 of Detroit’s 88,000 streetlights actually work, so some owners are buying and installing their own. In Gilbert’s downtown, a Rock Ventures security force patrols the city center 24 hours a day, monitoring 300 surveillance cameras from a control center.

In other words, a coterie of private business owners finance their own streetlights and police protection while the rest of the city makes do on a shrinking public sector.

Might the need to fund one’s own security and street lighting be an insurmountable barrier to all but the most wealthy and well connected?

Here, an example of Detroit’s atomization is inexplicably reframed as a commentary on its revitalization. And while many city residents in the (gentrifying) downtown area surely benefit from Gilbert’s infrastructure investments, can anyone plausibly argue that this is a solution for the city as a whole? Aside from the moral and political questions all this raises, there is an economic problem here, too, even for confirmed capitalists: might the need to fund one’s own security and street lighting be an insurmountable barrier to all but the most wealthy and well connected?

For over a generation, Detroit has seen factories shuttered, with little consideration for the neighborhoods and workers left behind; it has seen neighborhoods decimated by redlining and subprime lenders. Austen acknowledges that this is still going on, when he recounts a trip outside downtown with a pair of African American landlords in Northwest Detroit, examples of what Wayne County Assistant Executive Heaster Wheeler calls “black Dan Gilberts.”

Some speculators have sat on the inexpensive homes, leaving them vacant as they await a recovery. Wheeler was talking about other buyers who have repaired the houses and rented them out, creating an income stream while adding a layer of stability to tottering sections of the city.

Elsewhere, Austen makes the outlandish claim “that property costs have dropped to the point that barriers to ownership—to a sort of mogulhood, even—are absurdly low.” This depends on what “sort” of mogulhood you mean. Even Detroit’s most notorious speculators frame their activity as investment, so differentiating the “some” who speculate from the “others” who invest is difficult. However, the annual tax foreclosure auction offers an effective proxy. The auction accounts for the largest volume of property sales in Detroit. From its inception in 2002, only 24 buyers accounted for one-third of all property purchases most for the low price of $500 and half of all the property sold over the decade went to 84 people, each buying 20 or more properties. A condition of the sale requires buyers pay property taxes. This year, Wayne County announced it would take back properties sold at auction that were tax delinquent, which accounted for 80 percent of the properties sold. And he includes a telling detail about another landlord’s rental tenant, a Quicken Loans employee who cannot buy a house in Detroit, since banks are still unwilling to extend loans in the city limits. “It’s funny,” the landlord told Austen. “She works as a mortgage processor at Quicken, and she can’t get a mortgage.” Austen ends there, though, without asking why. It’s a telling detail that threatens to derail the article’s premise: that the success of large-scale investors extends to everyday people seeking to make a home in Detroit, or to keep the one they already have.

Such Detroiters are bystanders to some free-market experiment in which the only consequences, apparently, are whether or not speculative investments result in profit.

So why should anyone hope, as Austen suggests we should, that “private individuals will keep the greater good in mind”? About that abundant fresh water: under an aggressive new shut-off program by the city’s Water Department that began in March, thousands of city residents have had their water shut off for late payment. Meanwhile, as a local TV news investigation reported, large-scale customers like city golf courses, Ford Field, where the Detroit Lions play football, and Joe Louis Arena, where the Red Wings play hockey, amassed huge unpaid water bills. Might culling impoverished customers from the Detroit Water and Sewerage Department’s rolls makes the DWSD—a candidate for privatization in Detroit’s bankruptcy—more attractive to investors? So much for the greater good.

***

Henry Ford cultivated an enduring myth as the inventor of both the internal-combustion engine and the middle-class wage. But he was nothing without the workers that built those engines and fought for their union. The same is true today, even if the new “entrepreneurial” economy has created, so far, a relative trickle of low-paying jobs. The new Detroit—the one surveyed by what Austen calls the “new prospector class”—resides in a few neighborhoods around downtown and Wayne State University. Perhaps it also lives in the fantasies of tech entrepreneurs whose most substantial decision thus far has likely been choosing what
color bean bag chairs to put in their offices. It is built, though, on the backs of mostly black workers cleaning offices, staffing cafeterias, washing dishes, cleaning casino floors, and occasionally finding their way to the front of the house in new downtown bars and restaurants. Such Detroiters are nowhere to be seen in Austen’s account of male entrepreneurial heroes. They are bystanders to some free-market experiment in which the only consequences, apparently, are whether or not speculative investments result in profit.

Austen does effectively capture two of the hallmarks of austerity urbanism: the reconstitution of private financial crisis as a public state crisis and the subsequent downloading of risk and responsibility to increasingly finite levels of government, until it is dumped onto residents in the form of program cuts. In many ways, Detroit has been operating under austerity for quite some time, a Greece on the Great Lakes. This condition became particularly acute over the past decade as the state of Michigan carried out its own structural adjustments, withholding nearly three-quarters of a billion dollars in transfer payments to the city’s general fund. Public wealth went to corporate tax cuts and various incentives for business, such as half-billion dollar state-backed loan to Ilitch for a new hockey arena in Detroit only days after the city declared bankruptcy, and over $200 million to convince Gilbert to move Quicken downtown from the suburbs.

Detroit as petri dish for free-market experimentation may seem new or counter-intuitive to the casual observer or those, like Austen, steeped in “apocalyptic” news accounts of a ruined city betrayed by business, labor, or government. Yet over the past six decades, Detroit has bent repeatedly to the whims and perceived powers of markets, from industrial incentives to land auctions, from GM Poletown Plants to Motor City Casinos. This acquiescence to markets has helped produce much of the abandonment we see all over the city. The derelict train station looming over Corktown, in whose picturesque shadow Austen meets “an organic farmer who was eating couscous from a bowl as he read The New Yorker,” has a billionaire owner, trucking magnate Manuel “Matty” Moroun. Moroun uses the property to secure international trade routes and protect his transportation business. Or take Ilitch, who for years accumulated a collection of crumbling apartments, empty businesses and vacant lots before asking the city and state to build him an arena on the blighted land. Detroit may well be a model for a mobile urban policy for other distressed cities, as Austen suggests. Here he is correct. In the age of austerity it is the policy model that travels. Unfortunately, the results stay in place.

Should those not in a position to “buy low” expect any influence over the process?

Austen, it must be said, ends his article on a note of uncertainty nowhere to be found in most of the confident entrepreneurs he profiles. One of the more execrable figures in the piece is Rufus Bartell, a businessman and aspiring mover-and-shaker who spouts platitudes and bullies the only dissenting–and the only female–voice in the article, Tenay Hankins. Hankins runs a non-profit that helps small businesses find grants and services, and is thus the sort of person who might comment with some authority on the business climate for non-Gilberts. Hankins objects to one of Bartell’s points at a public meeting, Austen reports.

‘Of course you do. Socialist,’ Bartell muttered.

The woman, Tenay Hankins, runs Biz to Biz Match, a service assisting small businesses with grants, contracts and partnerships. She and a couple of other women reminded those gathered that the city had a terrible track record of looking out for its residents, and that Detroiters, particularly blacks, had been ill served by state and local government, redlining lenders and high-rolling private investors. Just recently, blind faith in capitalism buried their neighborhoods under foreclosures and contributed heavily to the city’s bankruptcy. ‘Detroiters are not respected as far as the value and dollars they bring, the obstacles they’ve overcome to still be here. It’s always looked at as if we’re not instrumental,’ Hankins said.

‘The question is, what do you do after your skepticism,’ Bartell responded, trying to get his meeting back on track. ‘Every city on the globe, there are things that government hasn’t done correctly. You got to have a plan. Detroit is being rebuilt with or without everybody at this table.’

Austen, to his credit, includes this woman’s skepticism in the article, but Bartell gets the last word. It is exactly this final claim—that Detroit is being “rebuilt” with or without its citizen’s participation—that should worry us. Should those not in a position to “buy low” expect any influence over the process? The celebration of the private provision of services misses their reason for being: the usurping of public authority by private individuals, the loss of democratic representation, and the proliferation of surveillance. It is not an example of the success of markets, but rather their failure to provide our fellow citizens with meaningful labor and public infrastructure.

Those that are weary seek solace and rest, but there are many fighting for Detroit who would prefer a city in which it’s the act of living rather than the act of owning that makes one a citizen.

Joshua Akers is an Assistant Professor of Geography and Urban and Regional Studies at the University of Michigan-Dearborn. His work is focused on the market-based production of decline and the crisis dependency of neoliberalism. Recent work has focused on responses to crisis in Detroit, Buffalo, and New Orleans. You can find him on Twitter at @akersjm.

John Patrick Leary is Assistant Professor of English at Wayne State University in Detroit. His work focuses on representations of poverty and inequality in U.S. culture. He has written about ruin photography and film for Guernica and is the author of the forthcoming book A Cultural History of Underdevelopment: Latin America in the U.S. Imagination. His blog, Keywords for the Age of Austerity, can be found at jpleary.tumblr.com. You can find him on Twitter at @johnpatleary.

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One comment for Joshua Akers and John Patrick Leary: Detroit on $1 Million a Day

  1. Comment by Mary on July 29, 2014 at 9:26 am

    Great critique of the NYT article. All of this is true.

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