Detroit’s bankruptcy left lives of ordinary residents untouched, author says

John Gallagher, Detroit Free PressPublished 8:00 a.m. ET Dec. 5, 2019 | Updated 4:56 p.m. ET Dec. 5, 2019

It’s been five years since the City of Detroit emerged from a municipal bankruptcy deemed by many to be a near-miraculous success.

Bankruptcy wiped off billions of dollars in debt from the city’s books. It gave Mayor Mike Duggan and his administration fiscal running room to expand programs like city planning. And it allowed the city to modernize its woefully inadequate city services.

But as author Jodie Adams Kirshner points out in her new book “Broke: Hardship and Resilience in a City of Broken Promises” fromSt. Martin’s Press, bankruptcy left important parts of Detroit untouched — the ordinary residents mired in poverty and joblessness. 

Kirshner speaks Thursday evening at 7 p.m. at Wayne State Law School’s Spencer M. Partrich Auditorium. The event is free and open to the public. It is hosted by Pages Bookshop, which will have copies of the book on sale.

Kirshner’s book is a needed corrective to the notion that a municipal bankruptcy can solve all the problems of cities facing unfunded pension liabilities and other fiscal woes. It shows, through the everyday lives of seven Detroiters she profiles, how little the city’s bankruptcy changed things for them.ADVERTISING

“Bankruptcy could not provide new remedies against financial problems,” Kirshner writes in the book. “It could not directly reverse the population loss, employment loss, or property value loss that contributed to the shrinking tax base, nor could bankruptcy bring back lost federal and state support to offset pressures on public welfare.”

That last point about the loss of federal and state aid is key to the puzzle. As Kirshner writes, assistance to cities peaked in 1978. Since then, Detroit and other cities have lost out on untold billions in dollars that were once promised but never delivered.

The cover of the new book "Broke" by Jodie Adams Kirshner. The book about Detroit's bankruptcy was published Nov. 19, 2019.

The cover of the new book “Broke” by Jodie Adams Kirshner. The book about Detroit’s bankruptcy was published Nov. 19, 2019. (Photo: St. Martin’s Press)

The State of Michigan has at the same time demanded the city get its books in order, even as it shortchanged the city by hundreds of millions of dollars in state aid Detroit had expected to get.

And that has left cities vulnerable.

“We have overestimated the ability of cities and their residents to combat powerful forces like automation, suburbanization, the recent financial crisis and deindustrialization,” Kirshner writes.

“We have underestimated the resources and tools necessary to change the trajectory of cities and the importance of sustainable cities. We have neglected our fellow citizens, who have been forced to endure reduced services, high taxes, and insufficient human investment.”

One irony is that a majority of American now live in cities, or at least in metropolitan regions. “The country cannot prosper if its cities are decaying,” Kirshner writes.

Defenders of Detroit like to point out that all cities suffer many of the same ills, including crime, poverty and joblessness. “But Detroit is in the extreme,” Kirshner told me in an interview Tuesday. Whatever the issue, Detroit seems to hang at the far dismal end of the spectrum.

Jodie Adams Kirshner, author of the book "Broke" in an undated photograph.

Jodie Adams Kirshner, author of the book “Broke” in an undated photograph. (Photo: St. Martin’s Press)

Among much else, she cites the problem of “zombie foreclosures,” in which a lender doesn’t finalize a foreclosure. The house is stuck in limbo and cannot get back on the market or the tax rolls. A common practice during the Great Recession years, it led to ever greater blight and abandonment. Most cities had some of that, but Detroit, Kirshner told me, seems to have suffered more than its share.

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Krishner doesn’t downplay the importance of Detroit’s spin through bankruptcy. Indeed, she agrees it did a lot to clean up the municipal balance sheet. But her point is that even that success did little to touch the lives of so many Detroit residents.

And that’s a lesson for any other cities thinking that an easy trip through bankruptcy will shed their pension and other debt obligations and solve their problems.

“The lives that ‘Broke’chronicles show us what bankruptcy cannot accomplish,” she concludes in a downbeat coda to her book. “They show us the hard work of combating individual poverty must take precedence over facile, short-term urban fixes.”

That’s a lesson of special relevance for Detroit.

As Miles, one of the people Kirshner profiles, tells her in the book, “Detroit’s a good thing when it’s going good.” But no city can succeed if it’s at its best only when the going is good.

Contact John Gallagher at 313-222-5173 or him on Twitter @jgallagherfreep. Read more on business and sign up for our business newsletter.