Hail, the Conquering Hero Comes! 4

Too much, or too little, government destroys modern societies.

This series of articles has pointed out that modern sensibilities and squeamishness have made successful nations reluctant to invade failing states and kill off enough of the inhabitants to put things right for the rest.  This is because at some level, most governments realize that they have only so many resources, only so much money.

Anything spent on politicians getting re-elected is money not spent on the army.  Any money spent on welfare is money not spent maintaining roads.  There comes a point where governments can't borrow any more money and have to make choices.

The fact that the nation of Greece has been spending beyond its means to the point that it has had to be bailed out by the rest of Europe means that the Greek government failed in its responsibility to maintain enough of an organization to repel invaders.  In times past, the Ottoman Turks would have invaded, reorganized the Greek government, and exacted enough taxes from the citizens to pay for the invasion with a bit more for profit.

The modern Turkish government realizes that invading Greece wouldn't pay.  The Turkish government is having organizational issues of its own and has to distract its people from governmental failures by stirring up trouble with Israel.  Starting a war was the traditional method of diverting citizen's minds from government incompetence, but that now costs too much.

This article discusses some signs of hope that Somalia and Detroit, and by extension other failed cities and states, may be able to put themselves to rights without suffering an invasion.

Whither Detroit?

Many attempts to resurrect Detroit have failed.  Henry Ford II, the grandson of the founder, invested hundreds of millions in the Renaissance Center, an office complex in downtown Detroit that was supposed to bring well-paying jobs into the city.  Some years later, General Motors bought the office complex for about $90 million, far less than construction had cost, and moved their headquarters staff into what had become known as Ren-Cen.

Early in the GM bankruptcy, President Obama telephoned the mayor of Detroit to reassure him that GM wasn't planning to move its headquarters out of the dying city.  The source of this announcement showed pretty clearly who was now running GM and demonstrated that future decisions regarding GM would not necessarily be made in the best interest of stockholders or customers.

Most parts of Detroit which haven't been burned out have expensive private security forces which other residents can't afford.  Ms. Barham, whose misadventures were written up in the Wall Street Journal, gave up on Detroit after 10 burglaries in 7 years.  Unlike the well-armed Somalis, she wasn't permitted to own a gun with which to defend herself.  She had no alternative except flight when the city government lost its ability to keep order.

What Detroit needs.

Governments should be able protect their citizens from violence, either internal or external.  Given that situations occasionally arise when a government can't protect its citizens, the US Supreme Court recently ruled that "life, liberty, and pursuit of happiness" included the individual right to bear arms to protect oneself.

When the New Orleans government couldn't protect its citizens after hurricane Katrina, a great deal of looting and wanton destruction ensued.  When Nashville Tennessee was flooded a few months ago, there was virtually no looting because citizens stepped into the gap and protected themselves.  Self-protection saved the city a great deal of damage, to the extent that their disaster has been all but forgotten by the nation if it was even noticed in the first place.

Making it easier for Detroit citizens to defend themselves would have a positive effect, but the local unions would rather people die or leave than sacrifice any of their prerogatives such as their monopoly on the business of attempting to deter crime.

Cleaning House

Detroit's last mayor was put in jail for perjury; the city has to cut big-city corruption in addition to getting labor costs under control.  Neither task will be easy.  The unions resist any attempts to make the city work more efficiently or to reduce labor costs and corrupt politicians prefer to let the good times roll regardless of the cost to society.

The jailing of the former mayor may represent an opportunity.  The new mayor, Dave Bing, is an extremely successful businessman whose empire is on track to get to a billion dollars in annual sales.  He knows how to lead a business and may be able to lead efforts to help Detroit save itself.

He's intimately familiar with the entitlement mentality that infuses the Detroit work force.  In August and December of 1999, two separate arson incidents destroyed $2 million worth of inventory and did $3 million in damage to his auto parts plants.  Some commentators have reported that the fires were set by workers whom he'd fired for not working hard enough.  These incidents give us an idea how easy it will be to persuade the unionized city workers to give up perks to save the city.

It remains to be seen whether this hard-charging, type-A businessman can reform the entitlement mentality among the city's unionized employees.  The New York Times reports that New York's Mayor Michael Bloomberg saved 4,000 jobs by freezing teachers' pay.  He's able to do this because the city's union contract has expired and he can make offers on a "take it or leave it" basis.

The Times approved of this maneuver, saying, "Mayor Michael R. Bloomberg made the sensible choice when he opted to freeze teacher salaries instead of laying off teachers."  If Mayor Bing is able to freeze cop's salaries instead of laying off cops he can't pay full rates for, he may be able to protect his remaining taxpaying citizens well enough that they won't flee.

There are some signs of hope in Detroit.  With so many vacant lots, a few brave souls are moving back to the city to take advantage of the free land and existing infrastructure.  The Urban Farming movement has put together a 2-acre farm on abandoned land near the Ford Hospital much as early settlers carved farms out of the wilderness.

The shorthanded police don't pay much attention to anything less than murder, so these pioneers have to rely on themselves, much as the earliest settlers who took Detroit from the Indians who were there first.  The major difference is that the original pioneers were able to arm themselves so that they could defend their homes, whereas Detroiters are kept in a state of unarmed victimhood by the city's gun control laws.

We've noted that successful colonization efforts require that the existing people be removed.  If the new settlers in the Detroit wilderness are to succeed, the current population of arsonists, burglars, and ne'er-do-wells have to go, but how?  Given that the new settlers are forbidden to use the traditional solutions of the Old West or of the new Somalia, how can they achieve security?

Green Shoots in Somalia

Like Detroit, Somalia lacks a government which can enforce the peace and protect citizens from lawless behavior but the citizens are able to protect themselves against casual crime.  In the most disrupted parts of Somalia, as in the newly-tilled farmlands of Detroit, there are small signs of hope.  The Wall Street Journal reports:

MOGADISHU, Somalia - Banks barely existed in this war-torn African nation a decade ago. Now, Somali residents can bank over their mobile phones.

The rapid evolution of technology in Somalia-and people's access to it-comes as several telecommunications companies here jockey for customers amid the absence of any government-regulated phone or Internet access. The competition to supply phone service has stoked the nascent revival of Somalia's shattered economy, and it shows that some complex businesses can thrive even in one of Africa's least developed markets. [emphasis added]

The many wars that have swept across Somalia since the last government dissolved in 1991 destroyed every phone line in the country.  Somalis communicated via military radio or not at all.

Even though 70% of the population lives on less than $2 per day, there is enough demand for cell phone service to support cell towers whose generators also provide electricity to nearby customers.  Cell phone banking revived commerce in a country where people are afraid to carry cash because of the danger of being robbed.

Making it easier to do business has increased economic activity, just as any sensible person would expect.  The largest cell phone company has revenue of around $17 million per year.

Somalia cannot supply its own cell phones or other equipment, of course; everything has to be brought in from outside using foreign exchange supplied by the pirates.  The cell phone companies have found that gang lords like to communicate and will help protect cell towers as long as they get a cut of the profits as "taxes."  These payments give them an incentive to discourage damage to the towers, so a bit of order sprouts from the chaos based on good 'ol mutual interest, greed, and entrepreneurial spirits.  The "invisible hand" strikes again!

The important point is that Somalis are gaining access to modern telecommunications services and banking by cell phone without any government regulations, laws, or protection whatsoever.  This shows that entrepreneurs can keep certain essential services running even if a national government breaks down.  The disappearance of government means that many businesses will simply cease to exist, but an end to regulations will leave a few operators far better off.

The question is, exactly which pieces of modern technology can operate this way - basically, via a communications link and nothing more?  Clearly, education can, and banking; a fair bit of mercantile trading might be able to also, at least on the payment side.  Equally clearly, no form of heavy manufacturing or high-tech can operate in this environment, so the Somalians will be stranded forever at the very bottom of the value chain, their only possible opportunity besides piracy being internet-based education followed by a plane ticket elsewhere.  It remains to be seen whether Somali expats will send as much money to the folks back home as Mexican illegals do; thus far, the return traffic seems to contain entirely too many suicide bombers.

The Lessons of Somalia

American citizens seem to have been paying attention to the lessons of Somalia or perhaps Detroit or New Orleans.  With the breakdown in law and order, having guns and ammunition for self-protection became even more important than having cell phones or even electricity.  Cell networks and other cross-gang functions came into being only after enough people were well enough armed that the situation more or less stabilized as local warlords revived the practice of feudalism.

When Mr. Obama won the recent Presidential election, sales of arms and ammunition took off, leading to severe shortages.  Our friend Preacher M., who wrote about his fervent gratitude that he had a gun when his family was threatened with violence, informs us that ammo supplies are creeping back to normal levels although prices are still quite a bit higher than they were.  "Last year," he said, "whenever I saw any ammo, I'd buy it even though the prices nearly made me cry.  It's more available now."  At least Mr. Obama created jobs at arms manufacturers.

Thomas Jefferson said, "That government is best which governs least."  In that sense, the Somali system is ideally Jeffersonian in that there really is no central government at all.  The cell phone companies provide a degree of centralized financial services and they forge agreements with warlords to protect the cell towers and generators in the various territories, but they aren't a government, at least not yet.

A Test of Subsidiarity

Somalia is also an experiment in the limits of subsidiarity which argues that all governmental functions should be carried out on the lowest possible level.  Proponents of subsidiarity argue that the local people know best what bridges, hospitals, and schools they need.  Since they're going to be paying for these facilities, the theory goes, the locals should have the strongest voice in what's done on their turf.

This is particularly true with respect to law enforcement.  In the United States, police departments obtain a significant portion of their budget by confiscating the fruits of crime.  They seize money, cars, and other assets from drug dealers, for example, and sell them.  The proceeds of "civil forfeiture" actions are split between the state, county, and local governments.

When your property is seized by federal agents, there's really very little you can do except sue and wait for years to get your property back if ever, but local actions offer more opportunities for redress of grievances.

I have a friend who lives in New Hampshire, a state where gun owners are so thick on the ground that Massachusetts burglars advise each other not to visit and police officers who value their hides knock politely instead of kicking in the door before entering a home.

My friend was trying out his brand-new Harley motorcycle.  A local cop known for throwing his weight around pulled up beside him and asked if he could sit on the bike.  My friend agreed.

After twiddling the throttle a few times, the cop asked, in an offhand sort of way, "What's to prevent me from seizing this bike?" "Nothing," my friend said, "but I know where you live."  The cop was well aware that my friend did indeed know precisely where he lived.  He sighed, climbed off the bike, and drove off.

The advantage of subsidiarity is that having local official control of local affairs puts some slack in the system - a really abusive official can be dealt with locally in an effective if extrajudicial manner, particularly if the citizens are well-armed.  This brings a whole new meaning to the American tradition of "balance of powers."

In Somalia, all government functions must be provided at the local level because there are no other levels of government.  For transactions involving residents of differing warlordships, the cell phone companies provide escrow service to ensure a properly-completed transaction: they hold the money on behalf of the seller until the buyer certifies that he's received the goods.  Cell phone cameras also help document transactions.

Disputes are settled according to the cell company's policies, so the companies have attained quasi-judicial status with respect to finance and trade rather like medieval trade guilds; lacking lawyers, their dispute resolution system is a lot more efficient than our court system.  It will be interesting to see if the cell phone companies morph over time into quasi-governmental powers.

The Detroit government hasn't lost control as badly as the Somali government which fell apart in 1991, but it's on its way down.  Detroit's Mayor Bing has the skills and the abilities to claim the role of conquering hero and put the city back on track, but there are difficulties ahead.

Just as the cell phone company needs cooperation from each local ganglord to keep the cell towers functioning, Mayor Bing needs a great deal of cooperation from each of the many unions whose exactions have helped so much to bring the city down.  Given the manner in which public sector unions all over American and Europe are circling the wagons instead of working to be part of the solution, the prospects for Detroit don't look particularly good.

Our Rough Road Ahead

As our government becomes more intrusive, more destructive, and more incompetent all at the same time, is there another American revolution in the offing?  It's hard to see how a real civil war could take place; an AK-47 is no match for an M1 Abrams tank or an F-16.

Then again, our well-armed and well-trained army is barely a match for hordes of determined Afghan tribesmen.  How would our military fare against the thousands of licensed hunters in the Midwest and South, even supposing they'd be willing to try?

We see signs that we may be heading towards another civil war, but that would involve organized governments on both sides who provide their own hardware and combatants who care enough about a particular issue to risk their lives.

We believe that the vast majority of the Americans who rushed to buy guns have no intention of starting an insurrection.  Instead, these new gun owners have looked at Detroit, Newark, Watts, and other inner city riot sites and suspect that our national government is losing its ability to keep order.

The government can't keep bombs off airplanes, it can't create jobs, and its attempts to regulate coal mining and oil drilling have become sick jokes.  With such utter incompetence visible on every hand, it'll be no surprise to the new gun owners if the government can't maintain order and they have to protect themselves.

When a national government loses its grip, some technology can survive provided that essential elements can be imported from elsewhere.  Fortunately, a great many of our factories have already been exported to China where the Chinese military can protect them; unfortunately, the Chinese expect something in return for container-loads of goods.

Thus far, they've loaned us the money to buy as much of their merchandise as we want, but can this continue forever?  The example of Greece strongly suggests that it cannot.

Our debt levels are super-Grecian in scope; if history is any guide, we're heading for our very own Greek tragedy.  Alas, no matter how loud the chorus sings, our "hero" seems oblivious to the doom that's fast approaching.

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name.  Read other Scragged.com articles by Will Offensicht or other articles on Economics.
Reader Comments
I pity the fool that thinks he can live for free in my city!
June 23, 2010 4:42 PM

Sir, if your city is anything like my city, there are hordes of welfare recipients who live for free and breed more like themselves to keep the social workers busy. Where is your city?
June 24, 2010 4:28 PM

On Nov 8, 2010, Forbes wrote Detroit Must Shrink to Grow. They note that Detroit has lost 60% of its population since 1950. GM lost about that much of its market share. He's trying something new, it might work.


When General Motors went into bankruptcy, it had too many brands, too many factories and too many dealers. So GM did what most companies with too much capacity do--it cut to the core, saving only what was viable. Today GM is a smaller but much healthier company.

Can a city follow the same path? That's essentially the controversial plan of Detroit Mayor Dave Bing, a basketball Hall of Famer who ran his own automotive supply company for three decades before his election in May 2009. He wants to strengthen Detroit's viable neighborhoods and raze or recycle the rest of the city--some 40 square miles in all, or 30% of its land--for new industries, sprawling residential lots, public parks and urban farms. But that means trying to entice the remaining residents of the failed neighborhoods to relocate. The carrot? He's fixing up some of the 50,000 foreclosed homes owned by the city in more stable areas--and offering each for a nominal sum to those willing to relocate there.

The mayor vows that people will not be forced from their homes as the city is reshaped. But he's counting on the lure of safer streets, convenient shopping and modern services to convince residents in dying areas to move. By concentrating limited resources in areas with the highest population density, he's hopeful Detroit can be saved. Still, this is no easy task. "I am not naive," says the soft-spoken 66-year-old Bing. "We are asking people who have lived here for generations to change. But if we don't change we'll fail, and I don't want to be part of that failure."

Geographically Detroit is a huge city; the urban footprints of Manhattan, San Francisco and Boston could fit inside its limits. But m any neighborhoods are virtual ghost towns. The city has lost 60% of its population since 1950, when it was home to 1.85 million people.

On the 13300 block of Flanders Street, for instance, there's an eerie emptiness to the neighborhood. Three elderly women live alone on the block in tidy wood-frame houses, with neatly trimmed lawns and colorful gardens surrounded by chain-link fences. The rest of the houses on Flanders are boarded up, burned out or otherwise abandoned.

"If there are only 50 houses in a neighborhood where there used to be 2,000, is that really viable?" asks Karla Henderson, who oversees Bing's Detroit Works Project. Of the city's 54 neighborhoods only 15 have been deemed healthy by city officials. "Even our stronger neighborhoods are tipping," she says. Over the next four years Bing will use a threefold increase in federal neighborhood stabilization money to tear down 10,000 dangerous structures in all-but-abandoned neighborhoods.

Bing's strategy departs radically from past Detroit redevelopment efforts, which focused mostly on high-profile downtown projects--fancy sports stadiums, casinos and new headquarters for companies like GM, Little Caesars Pizza and Compuware. These helped but weren't enough to stop Detroit's decline. "They didn't touch the people who live here," Bing says. His plan clearly touches people. Now they need to accept the fact that, as he puts it, Detroit is "not going to grow again--we need to stabilize."

November 6, 2010 3:47 PM

NYT says they're trying hard. Will the unions blink?

Mayor Urges Detroit to Accept Drastic Action to Fix Finances
Mayor Dave Bing said without major concessions from unions, the privatizing of some city services and layoffs, Detroit would run out of money by early next year.

DETROIT — In an address broadcast live on television stations across this city, Mayor Dave Bing told Detroit on Wednesday evening that its finances were in dismal shape and that without major concessions from unions, the privatizing of some city services and layoffs, Detroit would run out of money by early next year.

“Simply put, our city is in a financial crisis and city government is broken,” Mr. Bing said, adding later: “The reality we’re facing is simple. If we continue down the same path, we will lose the ability to control our own destiny.”

He asked for big pay cuts from city workers, a rise in the corporate tax rate and a lowering of payouts from the pension system.

Mr. Bing’s remarks were rare for a mayor, even in long-troubled Detroit, both because of the depth of the problem he outlined and because of the audience he chose to share it with: not just other top officials, financial consultants or union leaders, but an entire city.

In an address at times as sober as a spreadsheet and as pleading as a sermon, Mr. Bing appeared to be hoping to sway public opinion in favor of the deep, painful cuts he proposed.

“Tonight I am asking every Detroiter and all who care about this city to stand with us and work with us to keep Detroit our city,” he said. “I want you to know the challenges we are facing. I want you to know what we’re doing to address them. I want you to know that I love this city just like you do, and we need your help like we’ve never needed it before.”

At another point, Mr. Bing said: “The apathy that has paralyzed Detroit for decades ends tonight.”

One challenge that he faces is convincing people here that this really is an emergency, the financial end of the line. Some Detroiters are inured to urgent warnings, having heard plenty of gloomy news about the city’s finances, its miserable population losses (down by 25 percent last decade to about 713,000 residents), and its sometimes dubious political leadership. Mr. Bing, a former professional basketball star and a businessman, arrived at City Hall in 2009 in the firestorm that followed Mayor Kwame M. Kilpatrick, who pleaded guilty to obstruction of justice and still faces federal criminal charges.

Mr. Bing proposed hiring private companies to manage Detroit’s streetlight operation, which has been widely criticized for leaving portions of the city dark and dangerous, and the bus system, which has been plagued by delays, a shortage of equipment and repair problems.

He also called for sweeping cuts for city employees, proposals that immediately drew criticism from union leaders here but that he said could save the city $40 million by June, the end of the city’s budget year. Otherwise, he said, the city would run out of cash by April and face a $45 million shortfall by June. Mr. Bing suggested an end to furlough days but a 10 percent pay cut for workers, including police officers and firefighters; a 10 percent increase in employee contributions to health care coverage; a lowering of payouts from the pension system; and “additional strategic layoffs.”

“This is not an attack on labor or our dedicated employees,” Mr. Bing insisted. “The private sector, including the auto industry, was forced to accept tough cuts to survive. The terms we are asking for are no different than what most Detroiters receive at their places of employment.”

November 17, 2011 8:01 PM
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