On April 4, the City of Detroit and the Michigan state government reached an agreement to keep the city under the control of the mayor and City Council in exchange for state-directed financial restructuring. Mayor Dave Bing is now required to renegotiate Detroit’s contracts with union workers, cut social services and receive the stamp of approval from an unelected project manager and chief financial officer appointed by the state.
Detroit was forced into this situation by decades of economic decay caused by the decline of the U.S. auto industry and the capitalist class’s relocation of manufacturing to non-unionized parts of the country and overseas. In the latest capitalist crisis, Michigan’s manufacturing economy, already severely damaged, was hit with a knockout blow.
In the last two years, Gov. Rich Snyder has appointed “emergency managers” for several Michigan cities that used to be economic powerhouses, and which are disproportionately African American. Skipping over the locally elected officials and legislature, these managers, representing the big banks, can unilaterally eliminate programs, lay off workers and void contracts, including those made with labor unions. It is a bankers’ coup against local city government. Their only objective is to cut social spending to restore the “confidence” of financial investors.
Had the City of Detroit not accepted the deal, it too faced the possibility of an “emergency manager,” since the city reportedly faces a $200 million budget deficit. Working people in Detroit were understandably outraged about this flagrant violation of democracy. But the mayor and City Council, eager to cut any deal to retain control, agreed to carry out the same cuts on their own. No matter who is formally in control of the city, the bankers are clearly calling the shots.
New tactics in the war on workers
The unions, which had already signed concessionary contracts, are likely to see their legally binding contracts ripped up right before their eyes, and they will be told to give up more. Contract changes include drastic changes in work rules, the elimination of defined benefit pensions for new hires and an open door for the city to outsource work.
Emergency managers have been a pet project of Gov. Snyder since he took office, an aggressive tactic in the ongoing war on workers. Snyder has learned from Wisconsin Gov. Scott Walker, whose attempt to end collective bargaining for unionized state workers led to the epic resistance of workers, students and their supporters that culminated in the occupation of the state capitol building.
Instead of adjusting labor law, forcing a showdown with public-sector employees on a statewide basis, Snyder modified the emergency management law. That way, democratic control of government can be bypassed, and unions can be busted on a local level and picked off one by one.
There is another way
Under modern capitalism, the banks leverage their financial clout to hold public spending hostage, and the economy more generally. They tell governments, from the municipal to the federal level, that they must cut social spending, lower corporate taxes and make timely payments on all their debts if they wish to remain “credit-worthy” and “business-friendly.”
The capitalist class sees every gain made by working people as something to be abolished; if those gains cannot be eliminated “democratically,” the capitalists will turn to outright dictatorship.
Some unions have opposed Bing’s consent agreement with state leaders, but have confined themselves to legal strategies to fight it. The fact that Detroit, once the center of union power, could unilaterally break its labor contracts without a major social explosion shows the need for an innovative and fighting strategy to take on the banks.
Across the country, the Party for Socialism and Liberation is demanding that instead of cutbacks, labor obligations be met before bank debt. The message of the PSL’s Lindsay/Osorio Presidential Campaign is that the money is out there. To the extent budget deficits are real, it is because the vast wealth that workers generate is controlled by a tiny capitalist class. If that wealth were heavily taxed or seized, the deficits would disappear. And if companies threaten to move production, the workers should take the factories. None of this can be accomplished easily, but the alternative is a non-stop race to the bottom.
The Party for Socialism and Liberation and the Lindsay/Osorio presidential campaign have raised the demand that the banks—the entities that created the financial crisis, only to profit obscenely when the federal government gave them trillions of dollars—be seized, and their ill-gained assets used to fund a massive jobs program, end all foreclosures and evictions and guarantee free education for all.
