If Samuel Johnson could sarcastically call second marriages the triumph of hope over experience, Americans should view news of Detroit’s bankruptcy as the triumph of experience over hope.
The city has been in a tailspin for decades. Bond issuance, state aid, emergency managers, occasional pushes from the political class for union concessions, halfhearted suggestions of selling art assets, a last-minute plea to the White House — every little flight of hope was grounded in Thursday’s bankruptcy filing.
Ultimately, Detroit’s crushing long-term debt and vast unfunded pension obligations stretched beyond the city’s revenue and borrowing ability.
This is not merely a stall for the Motor City — it is more like a breakdown of its transmission, whose repair will be extensive and costly. The city’s 700,000 residents will likely see a further erosion in its already decrepit city services — its broken street lights and shuttered fire stations. And its creditors, including city pensioners, will see just pennies on the dollar.
The often dour critics of Blue State spending excess will probably say, “I told you so.”
It is true that government at all levels including the federal government have spent recklessly.
And the list of cities with debt and pension problems like Detroit’s is a long one. (Buried under all the Detroit news on the same day as its Chapter 9 filing, Moody’s cut Chicago’s credit standing three steps to A3, citing pension fund liabilities and crime-fighting costs.)
One can rail against the injustice of cops and firemen retiring in their early 50s with pension deals that private-sector stiffs can’t obtain, about teachers who can’t be fired despite their students’ poor academic achievements.
But gnashing teeth about America’s Greek future has had little impact on public policy; Detroit’s bankruptcy — the canary in the progressive coalmine — is likely to have some impact.
Whatever frustrated fiscal conservatives think they might obtain from their morality lessons, austerity proposals or privatization pushes is dwarfed by the fear inspired by the actual severance of union contracts that bankruptcy will bring about.
The corrupt political alliances that traded union votes for sweet pay and pension deals is now undermined by the inability to deliver on the promises.
For too long, policy critics have acted as if all their opponents needed was an economics course. Not knowing how budgets work was never the problem; not caring was. And now, because of Detroit’s bankruptcy, officials in similarly situated cities will care more than they used to.
While the fiscally reckless are learning a painful lesson, it is important that those who cling to hoary principles such as living within one’s means learn some lessons too.
First, there is such a thing as a zeitgeist, an esprit du temps — we really need a pithy English-language equivalent to this. The spirit of our times is not one that would cheer Calvin Coolidge, and fiscal conservatives who yearn for a new Reagan Revolution must accept that that does not fit contemporary American priorities.