I view Detroit and its bankruptcy as a harbinger of things to come. The blue state social model of ever higher taxes, ever expanding benefits for members of public employee unions and one party rule by the Democrat party is coming to an end. The ending will be painful for people luckless enough to live in blue states, as I do, but this parasitical form of government ultimately destroys the private economy host it feeds on. Walter Mead at Via Meadia has been prescient in seeing this:
It looks like Detroit may yet have competition for the distinction of America’s most poorly run city. The unprecedented triple-drop in Chicago’s bond rating and the city’s shiny new long-term debt figure—$29 billion—should have pols quaking in their boots. The Chicago Sun-Times has published some distressing numbers from Chicago’s recent audits:
- The number of “physical arrests” by Chicago Police officers declined again — from 152,740 in 2011 to 145,390 in 2012. That continues a six-year trend that coincides with the hiring slowdown that caused a dramatic decline in the number of police officers. Police made 227,576 arrests in 2006. The number of arrests has been dropping like a rock ever since….
- Emergency responses continued their steady rise — to 472,752. That’s up from 300,971 in 2006.…
- The 55 percent subsidy to retiree health care that Emanuel wants to phase out and retirees are suing to maintain cost the city $97.5 million in 2012.
- The condition of Chicago’s four city employee pension funds is growing ever more precarious. The firefighters pension fund has assets to cover just 25 percent of liabilities, followed by: Police (31 percent); Municipal Employees (38 percent) and Laborers (56 percent).
In addition to the pension, law enforcement, and emergency response concerns that remind us of a certain bankrupt city across the lake, the report notes that three of Chicago’s four largest private employers (JP Morgan, Accenture LLP, and Northern Trust) are in finance. It seems like blue cities have a codependent relationship with the one percenters progressives claim to hate.
It hasn’t all hit the fan quite yet, but Chicago seems perilously close to real trouble. The city is all out of money, and with an imploding public education system and harrowing levels of violence, it is losing residents fast. Illinois, which itself lost more than 800,000 people to out-migration in the past two decades, is essentially Chicago on a larger scale, with hundreds of billions in unfunded pension liabilities and complete political sclerosis. The state cannot bail out Chicago, and judging by the feds’ reluctance to even lift a finger for Detroit, Chicago shouldn’t expect much more.