Detroit: Myths and truths about bankruptcy

Aug 2012
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North Texas
Some interesting insights. As the article alludes, politically-motivated ideologies muddy the waters on the truth and make attempts to understand the problem(s) in Detroit harder to see and correct.

Detroit: Myths and truths about bankruptcy
DETROIT -- Suddenly, everyone's a Detroit expert, whether he or she has ever been here or not.

Greedy unions. Decades of neglect. Too much government. Not enough government services. Over-dependence on the auto industry. There's probably someone who has blamed the bankruptcy on bad pizza.

Some of this volunteered wisdom is sprinkled with kernels of truth. A good bit of it is just plain wrong, or certainly strange and out of left field — such as the Forbes.com columnist who said Detroit's finances would soon be on the path to prosperity if only the Federal Reserve restored the gold standard. So it's all Richard Nixon's fault?

With the city of Detroit's financial laundry hanging out, the Detroit Free Press has decided to truth-squad the nuggets of facts, pseudo-facts, observations, opinions and insights put forth from the national media and commentators of all stripes.

We'll give you our best interpretation of the accuracy, and we'll expose some ideas as downright canards or gems of insightful thought.

Here are two recurring misconceptions often repeated in the last several weeks: The domestic auto industry and Detroit are synonymous, and rich city pension benefits have pushed the Detroit budget into ruin.

The truth is that the auto industry — now posting strong domestic profits as demand rises — has not been very connected financially to the city proper and its operations for decades.

Meanwhile, Detroit police and fire pension benefits, when compared with those in other major cities such as Kansas City, Mo., and Los Angeles, are modest. Many Detroit public safety retirees — perhaps most — are just getting by.

Many of the sins come from oversimplifications of a complex problem in the making for decades. The national media and other commentators, either as slaves to pith or ideological belief, say simply that "Detroit has failed" or that years of one-party rule are to blame. Like the fall of Rome or the causes of the Civil War, it's not just one thing but a long, multifaceted process at play.

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