Detroit’s New Bankster Plutocracy

Plutocracy” – the rule or control of society by the wealthy

A great recent Counterpunch article by Professor Michael Brenner of the University of Pittsburgh, “Plutocracy in America,”[1]surveys the many aspects and scary consequences, on the national level, of a United States ruled by the rich.

One of the most important dimensions of today’s US plutocracy is how it harms the “rule of law.”  The now-quaint idea that our lives were at one time largely governed by fairness, fairly administered by neutral and morally upstanding officials, in accordance with policies that were objectively known and understood, thru transparent governance and democratic processes that at least aspired to achieve justice, has been drowned by the Power of Money.  Professor Brenner astutely describes the flip side of the rule of law today as follows:

“When the system of law that is meant to order the workings of society without reference to ascriptive persons is made malleable in the hands of officials to serve the preferred interests of some, it ceases to be a neutral instrument for the common good. In today’s society, it is becoming the instrument of a plutocracy.”

Welcome to Detroit

In March 2013 Michigan Governor Rick Snyder of Michigan pushed the envelope in this process – instrumental manipulation of “law” undermining democracy and justice on the level of local government – regarding the state’s largest city of Detroit.  On March 14 he appointed corporate bankruptcy lawyer Kevyn Orr as Detroit’s “emergency manager.”

Under Michigan’s neoliberal vanguard statute, the “Local Financial Stability and Choice Act,” Orr personally takes the place, and embodies all government powers, of Detroit’s local officials – including both the Mayor and the City Council.  The rationale for this extraordinary new form of local government is of course the claimed need to deal with a local financial emergency in the form of government debt obligations, budget deficits and cash flow crises.

This authoritarian, one-man-rule emergency manager “solution” for the systemic ills of capitalist deindustrialization, poverty, homelessness, regional race conflicts and decades of corporate neoliberal economic “development” was much criticized, and overturned by voters in a referendum, even before Snyder’s extreme application of the policy to Detroit.  Professor Brenner’s piece articulates some of the underlying flawed ideological basis for such “emergency” legislation, which enforces municipal debt payments to Wall Street investors, while empowering non-elected officials like Kevyn Orr to break labor contracts, slash services, sell off public assets, and even disincorporate the city.  These classic “disaster capitalist” schemes are squarely based on:

“… the dominance of conservative ideas about macro-economic strategy (the austerity dogma)… about bailing out the big financial players at the expense of everyone else and the economy’s stability… [which] entails a combination of intellectual deceit, blatant massaging of the numbers, and disregard for the human consequences in a time of growing distress for tens of millions.”

But even the preexisting authoritarian, corporate-centric “emergency manager” dogma was not enuff for Snyder in Detroit.  Only a few days before Orr’s public appointment (and only an hour or so before Orr’s name was leaked publicly), the business-friendly Mayor of Detroit, former NBA Hall of Famer Dave Bing reportedly announced that Orr’s giant, 2,400 lawyer firm of Jones Day – which prides itself on representing more than half the “Fortune 500” – would be hired as the city’s “restructuring council.”[2]

Think of the implications of this virtually simultaneous placement of Jones Day partner Kevyn Orr as Detroit’s “emergency manager,” and of his law firm as the city’s “restructuring council,” in terms of plutocracy.   As Detroit’s restructuring counsel, Jones Day will be the lawyer for its now-former partner Kevyn Orr, and Orr as the one-man embodiment of Detroit’s government is the client of the firm where he was a partner just a few weeks ago (when the discussions that led to him being given this position took place).

The current distress of Detroit and other major American cities is the product of Wall Street’s high-flying casino economy, speculation in derivatives, predatory subprime credit scams and the housing bubble.  Regarding these causes, one of Professor Brenner’s fellow CounterPunchers (Rob Urie of New York) incisively asks “What better system could be conceived to loot and plunder the globe than that where bankers get to create credit and also the [unregulated] financial products representing claims on ‘real’ asserts that can be bought with it?”[3]

In devising this radical new unitary form of government by a single giant law firm for the benefit of its partner/client/government and their other clients to ‘resolve’ the resulting fiscal debacle, Governor Snyder and Emergency Manager Orr may have answered that question.  To call this situation disturbing, where the pretext of Orr’s just-in-time resignation from Jones Day notwithstanding, the same law firm is effectively enjoying every conceivable opportunity for loot and plunder available to one serving simultaneously as attorney, client, and local government, is an understatement.  In the flood of corporate media ‘coverage’ of the largest city ever placed under such a one-man dictatorship, the truly shocking policy, ethical and legal implications of this extraordinary off-the-shelf government by a single corporate law firm have hardly been mentioned.

Jones Day now effectively controls Detroit thru its own retainer as counsel and its recently resigned partner as local dictator, subject only to the statutorily provided unlimited discretion of the Governor and his State Treasurer, with power to realign, restructure, redevelop, and dispose of 139 square miles of under-utilized (i.e., cheap) urban real estate and other assets on the busiest international border crossing in North America, in the middle of the world’s greatest fresh water resources, and not incidentally the home community of about 700,000 People.  The concerns raised by these facts go quite a bit beyond what lawyers usually talk about in terms of “ethics.”  This is a corporate power and money grab of historic dimensions, ably assisted by corporate media’s refusal to print or broadcast the truth, or to even acknowledge any of the plutocratic implications.

Ideas Matter

Professor Brenner’s “Plutocracy” discussion sheds tremendous light on the underlying ideological rationale, as well as the profound real-world consequences, of this new experiment in corporate quasi-fascism.  It is illuminating to consider his points about plutocratic national politics as reflected at the level of local municipal government by these historic recent developments in Detroit.

For example, the role of corporate media “coverage” (cover-up?) in distracting People from the transformational power dynamics taking place right in front of our eyes: “There is another, absolutely crucial dimension to the consolidation of America’s plutocracy. It is controlling the means to shape how the populace understands public matters and, thereby, to channel thought and behavior in the desired direction. Our plutocratic guides, prophets and trainers have been enormously successful in accomplishing this. One object of their efforts has been to render the media into [their] conscious allies…”

Therefore, even when the Detroit News after two weeks finally acknowledged widespread public concerns about the role of Orr’s law firm in the city’s “restructuring,” it asked no hard questions, and even withheld the information that they have an especially crucial conflict of interest: one of Jones Day’s giant corporate clients is Bank of America, parent of Merrill Lynch, a counter party on Detroit interest rate swaps, and therefore one of the City’s key creditors!  No way the People of Detroit should be told about that in their daily newspaper, under the sacred precepts of prevailing plutocracy.

Similarly, consider how little (practically zero) critical attention is focused either by dominant corporate media or prestigious intellectual elites,[4] on the extremely poor track record and policy “fit” between the one-man corporate “emergency” rule policy, and successful community revitalization, economic development and social progress.  In short, while an “emergency manager” like Orr can slash spending and balance the municipal government budget, and may be able to negotiate credit extensions with Jones Day’s Wall Street clients (on favorable terms to creditors), he will then leave behind a community wracked by poverty, racism, crime, and looted infrastructure, with an eviscerated social capital and political leadership as a direct result of the state’s brutal, anti-democratic takeover.  Corporate media are blissfully untroubled by such elementary calculations of cost, benefit and agency.

Professor Brenner notes that such critical analysis is largely prevented because plutocracy renders invisible and incomprehensible “… the logical flaws in the market fundamentalist view of the world that has so deformed perceptions of what works and doesn’t work in macro-economic management…” (Leave aside for the moment the fact that their ‘market fundamentalism’ is sheer cant, spewed for the proles while the plutocrats enjoy every advantage of monopoly, corporate welfare, deregulatory support, and for all practical purposes outright bribery, regardless of ‘market forces.’)  And the chilling effects of plutocracy are by no means limited to corporate media and prominent intellectuals.

Indeed, the Detroit Public Schools has long suffered under two “emergency managers” (and three state takeovers) in the last two decades.  All caused massive school closings, chaotic learning environments and disadvantages for the city’s overwhelmingly African-American children, while otherwise massively fueling the evils of the faux “accountability” regime inaugurated by the No Child Left Behind Act.  This abusive trashing of children and human capital is a central reality of plutocracy that is massively magnified in Detroit’s uniquely extremist form of “emergency manager” government.

Thus, one of the state’s “emergency management” policy goals has been, per Professor Brenner, “to weaken public education. We have witnessed the assault on our public elementary school system in the name of effectiveness, efficiency and innovation. Charter schools are the watchword. Teachers are the heart of the problem. So privatization, highly profitable privatization, is sold as the solution to save America’s youth in the face of ample evidence to the contrary. Cast aside is the historical truth that our public school system is the one institution, above all others, that made American democracy. It also is a bastion of enlightened social thinking.”

Whether thru formal government actions, the corporate media, the class-biased educational system or other available means, Professor Brenner’s insight rings true for Snyder’s “emergency managers:” “The ultimate achievement of a plutocracy is to legitimize itself by fixing in the minds of society the idea that money is the measure of all things.”  This “sacrificing everything to balance the budget” is precisely what Detroit’s great Mayor Frank Murphy (subsequently Governor General of the Philippines, US Attorney General and US Supreme Court Justice), called “fanaticism” in the Great Depression.  In other words, the truth behind Kevyn Orr’s assignment and the state’s key objective in taking over Detroit today.

Professor Brenner aptly notes that it all seems so inevitable and ordinary in a political environment of plutocracy: “Perhaps the most extraordinary achievement of the plutocracy’s financial wing has been to win acceptance from the country’s entire political class that its largely speculative activities are normal. Indeed, they are credited with being the economy’s principal engine of growth. It follows that their well-being is crucial to the well-being of the national economy and, therefore, they should be given privileged treatment.”  Therefore, Kevyn Orr’s primary duty will be to keep public monies flowing to predatory Wall Street investors whose fraudulent derivative bets fueled the city’s crash, regardless of the deadly human and social consequences for Detroit’s impoverished, overwhelmingly People of color population.  That is just ‘how things work’ and an acceptable, expected cost of doing business.  Detroit is, as in so many other ways, merely an extreme example.

Relentless Disaster Capitalism and its Discontents

Michigan Governor Rick Snyder claims ad nauseum to follow a philosophy and practice of what he calls “relentless positive action.” The hypocrisy of this propaganda slogan is thoroughly unpacked, undressed and undone by Professor Brenner as follows: “The American version of plutocracy is noteworthy for its crassness. Subtlety, discretion and restraint are foreign to it. It has a buccaneering quality. That style has roots in the country’s history and culture. Much of the behavior is impulsive, grasping.  Individuals are greedy for vivid displays that they are top dog, of what they can get away with, as well as the riches themselves.”

What happened in Michigan and Detroit last month is incredibly historic; it’s the takeover of a great American city, lock stock and barrel, by a corporate plutocracy acting on the basis of greed directly thru its self-interested legal agents as the community’s government just because they can, and because it may well be fabulously profitable for the “top dog” insiders to do so.  There is virtually no comparable precedent for this.  It recalls history’s most cruel, impulsive and grasping examples of accumulation by dispossession.  It renders Detroit’s People and citizens essentially the serfs of Snyder, Orr and Jones Day for the benefit of their Fortune 500 clients.

Because of notorious racial disparity between white Michigan and black-and brown Detroit, it’s also the 21st century corporate neoliberal economic equivalent of 20th century de jure (by law) racial segregation and discrimination – the notoriously evil ‘Jim Crow’ system of legally mandated race segregation.  In the social context of Michigan it’s legalized discrimination by both race and poverty.  And in Detroit it’s government as what Snyder likes to label ‘client customer service’ by the James Crow (oops, I mean Jones Day!) law firm acting for the benefit of itself and its other clients: Professor Brenner captures something of their arrogance and hubris: “… the American plutocracy is actually a stupid plutocracy. First, it is overreaching. Far better to leave a few goodies on the table for the 99% and even a few crumbs for the 47% than to risk generating resentment and retaliation.”

When he publicly accepted the post of Detroit’s government, Orr was widely quoted calling it the “Olympics of restructuring.”  Given the overreaching aspect of his unique and unprecedented relationship with the city and his law firm, it might be more significant to call it the Olympics of crony capitalism and corruption. 

The essential dynamics of how Kevyn Orr got the job as Detroit’s Emergency Manager Fascist are summarized as follows by Professor Brenner:”Plutocracy in the current American style is having pernicious effects that go beyond the dominant influence of the rich on the nation’s economy and government. It is setting precedents and modeling the unaccountability and irresponsibility that is pervading executive power throughout the society. Two successive presidential administrations and two decades of rogue behavior by corporate elites have set norms now evident in institutions as diverse as universities and think tanks, the military and professional associations. The cumulative result is a widespread degrading of standards in the uses and abuses of power.”

So much so that now Detroit is ruled by Orr and his law firm under a bankster dictatorship. As if there were no good reasons for: accountability to the members of a governed community who are the ones most personally affected by government policy decisions (especially the most vulnerable); for transparent government procedures; for publicly asking and answering the essential questions of who decides, who profits and who pays, because 90% of Detroiters are working class African American and Latino/a who therefore don’t count; as if there were no good reason for democracy itself.  Wow!

Finally, Professor Brenner alludes to the global importance of Detroit today in his pessimistic conclusion: “Does this sort of perverse pride go before the fall? No sign of that happening yet. Plutocracy in America is more likely to be our destiny.”  That is, unless it can somehow be stopped – or at least exposed & sustainably opposed – here in Detroit, of all places.  As Rev. Al Sharpton noted when constitutional litigation was filed on March 28 against Snyder and his “emergency manager” statute, this is a local conflict with immense national significance.  Anyone who understands the evils of plutocracy should support Detroiters’ fight against Jones Day Jim Crow local government.  Let’s get to work.

There’s work to be done

So let’s do it little by little

Rise from your sleep and slumber…

Wake up and live!

– Bob Marley and the Wailers: “Wake Up and Live”[5]

Thomas Stephens is a lawyer in Detroit.


[4] On the role of intellectuals in this and other major social controversies, see Chis Hedges’ recent article, “The Treason of Intellectuals,” at  “The power elite, especially the liberal elite, has always been willing to sacrifice integrity and truth for power, personal advancement, foundation grants, awards, tenured professorships, columns, book contracts, television appearances, generous lecture fees and social status. They know what they need to say. They know which ideology they have to serve. They know what lies must be told—the biggest being that they take moral stances on issues that aren’t safe and anodyne.”

[5] (live in Santa Barbara 1979)