OCALA, Fla., August 5, 2013 — On Friday, Detroit’s fledgling municipal government informed a federal bankruptcy judge that it intends to file a restructuring plan by the close of 2013.
Last month, Detroit made history as the largest American city to ever go bankrupt. A local judge initially ruled the bankruptcy unconstitutional under state law, though the federal judiciary later allowed it to move forward.
What led the city which was once dubbed the “Arsenal of Democracy” to become a glaring example of dysfunction and malaise?
Veteran economist and politician Lyndon LaRouche says that the historic financial vitality of Detroit “created the great industrial power of the United States. Even during recent decades, the locations for multiply-capable auto floor-space localities … existed until the actual decision to shut down the essential elements of the U.S. machine-tool design and manufacturing capabilities.” After this happened, “the great power built upon the auto-manufacturing base which had kept the United States economy alive” was sent overseas.
In America, few industries drove twentieth century prosperity more than automobile manufacturing. Over the last few decades, however, free trade agreements and incentives from other countries allowed what were once solidly domestic jobs to become globalized.
“In the midst of the destruction of the automobile and related manufacturing, for a shift to production in Asia (most notably), there appears to have been no regard for the effects of the catastrophic impacts of the consequent collapses of both the incomes and per-capita productivity of the people (in) states such as Michigan,” LaRouche elaborates.
“As a consequence of shifts away from actual production of substantial wealth, to mere services ― increasingly only nominally ‘productive services’ ― a massively deadly condition has struck down many of the communities and their populations, with more pouring in on the hapless.
“It is not possible, even as a matter of simply physical reality, to separate an increase of poverty in one sector from the consequent loss of productivity in other sectors of the same economy. The increase of the impoverished becomes ultimately the poverty of the once-rich.
“The result, is the collapse of the actually net margin of production of wealth of large regions of the United States.”
LaRouche notes “that the physical-economic, as distinct from merely nominal productivity of the U.S. population, per capita, has been plummeting” and “the per-capita net income (accounting for net inflation) continues to plummet, such that entire states are now faced with a combination of accelerating fatality rates, and so on.”
That scenario is all too true in much of Michigan. The state itself is losing population. As many of its manufacturing centers close, Michiganders are left with decreasing, if not scarce, means of support. Detroit is simply the most radical example of this.
Nonetheless, LaRouche does believe that things can get better.
“The obvious remedy,” he says, “is a rapid return to increased per-capita productivity: much less Wall Street, and much more serious production, and also the educational standards to match the required increase in rates of the productivity and the education which such productivity demands.
“Otherwise there is very, very little for the collected assembly of human beings known as the citizens of Michigan.”
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