State Emergency Managers Usher in IMF-style Austerity and Soviet-style Governance

Brandon Turbeville

Activist Post

January 29, 2012

In what can easily be described as a Soviet-style law, Michigan’s Emergency Financial Management Law which was passed in March, 2011, essentially gives the Governor the authority to take over local governments and municipalities and appoint his own directors in place of elected leaders. 

Yet, although individuals who have researched the controlling factors which determine the policies of Federal, State, and Local governments will not be surprised at all, those who naively believe in political parties and carefully crafted political philosophies might be surprised to discover that this Communist-style bill was passed under reactionary Republican Governor Rick Snyder, not a liberal Democrat.

In reality, this only further proves the fact that there is no difference between the two major political parties in the United States, or anywhere else for that matter. Many Republicans, no doubt, supported this trend toward authoritarianism out of loyalty to party and out of hatred for the liberals whom they view as having caused the budgetary issues of Michigan and its cities. Obviously, had the legislation been signed by a Democratic governor, the reaction would have been exactly the same on the part of the Democrats, with only the names of the players and parties in need of changing.

Indeed, the concept of an “Emergency Manager” is not new. Michigan has had a form of the Emergency Manager in place since around 1988 by virtue of a law which was passed and signed by then Governor James Blanchard, a Democrat. Emergency Managers have since been utilized by both Democrat and Republican administrations.

“Emergency Managers” are those individuals who are appointed by the Governor when the Governor judges a city or other municipality’s budget deficit to be in default, bankrupt, or otherwise irreparable. The Emergency Manager, as William Copeland of Dominion of New York writes, “has the absolute power to disincorporate the city, sell its assets, remove its elected leaders, privatize or eliminate services, and break union contracts, among other measures.”

The vast majority of Copeland’s claims are not only proven accurate by the history of the Emergency Manager system, they are admitted by the Michigan State Government itself. The only disagreement held by the State Government with criticism such as Copeland’s is the manner in which the Soviet method of Government is presented to the public.

One of the reasons why the term “Soviet” is appropriate here is the method of application. The EM (Emergency Manager) program is obviously a form of top-down control. It is administered and directed by those at least as high as the State government, although it is obviously controlled by interests at even higher levels still. In this regard, the Emergency Managers act as the modern versions of Satraps, circumventing the elected governments of the cities and local municipalities. Elections are held, but are largely irrelevant in terms of finance and economics because the real authority is held by the Emergency Manager. The elected officials are mere formalities. With only a few minor aesthetic differences, this is the same system of “governance” that was used by the Soviets.

Although the Snyder administration (and most of the Michigan State government) denies that the Emergency Manager has been granted the unconstitutional authority of removing elected leaders from their posts, history shows these denials to be inaccurate.

During the period of 1999-2005, when Detroit’s deficit was once again an issue, the public school system was taken over by an Emergency Manager and the elected school board was subsequently disbanded.

This type of post-democratic behavior has even been the subject of a lawsuit filed in the Ingham County Circuit Court. Several groups are involved in representing the plaintiffs in the lawsuit, two of them being the Center for Constitutional Rights and the Sugar Law Center. John Philo, the legal director for the latter, stated in regards to the Emergency Manager Law, that “What you’re saying is that an emergency manager now controls all, including the right to enact or repeal local ordinances. What you’re saying is that one individual now without any sort of legislative process gets to enact a law.”

Another individual involved in the suit, Edith Lee-Payne, states, “We have the right to elect people and hold them accountable. We don’t have that right with an emergency manager.”

Obviously, something must be done about city budget deficits, debt, crumbling financial structure, corruption, and the like.

However, the Emergency Manager options being exercised by the Michigan State Government must be recognized for what it is – asset stripping, union busting, and repeated fleecing of the taxpayer.

Essentially, what happens in the Emergency Management process is, after the budget deficit balloons out of control and Emergency Managers are sent in, the elected officials (whether responsible for the deficits or not) are reduced to mere formalities for the policies being dictated to them by their Emergency Manager who is, in turn, merely an agent for those in higher places.

When this occurs, elected officials may remain in order to placate and fool the public, but in other cases, such as with the School Board, elected officials may be removed altogether along with any pretense of representative government.

It is here that the asset stripping begins. In a fashion which is almost identical to the methods used by the IMF over debt-laden countries, austerity measures are ordered for the paralyzed city/municipality. Drastic spending cuts are imposed on essential services while taxes are raised on the already strapped citizenry. Privatization runs rampant, allowing services and infrastructure that were once developed, maintained, and paid for by taxpayer money to be turned over to private companies whose only goal is to make a profit. After fees are raised and the infrastructure is abused and destroyed, these services are usually turned back in to the taxpayer in order to use public funding to build them back up until it is time to privatize them yet again. Other times, the services just disappear altogether.

Of course, city workers and teachers become victims of the fleecing as well. Any union contracts (where they still exist) are immediately cut off, lowering wages and the general standard of living, while teachers are undercut by outside workers and government subsidized scabs, unwitting and well-meaning as they may be.

When living standards are sufficiently lowered and books are fixed and warped to appear to have reduced the city deficit to a manageable level, the Emergency Manager leaves. However, as history shows us, cutting and gutting, particularly in difficult economic times, only produces a bigger deficit the next year. So, essentially, the Emergency Manager only leaves temporarily because he actually left the city with yet another load of debt to be collected at a future date. When the time comes for the piper to be paid, the Emergency Manager will return for yet more cutting and gutting, starting the process all over again.

Bear in mind, the Emergency Management Law also allows for the Governor to declare the need for an Emergency Manager for a variety of new reasons. No longer is the issue merely financial. As The Michigan Citizen writes, the State seized control of the DPS (Detroit Public School System) mainly because of a gap between State test score averages and DPS scores.

It should also be mentioned that, according to the Michigan Citizen, after the State returned control of the DPS to the elected School Board, the bond money had been spent and the district was looking at a projected deficit of $198.7 million.

One need only look to the three cities who were forced to take on an Emergency Manager to see the pattern. Highland Park, Hamtramck, and Flint were all subjected to the austerity programs under their Emergency Managers at some point between 2000-2007. In 2012, all three are broke and are once again being considered for an Emergency Manager.

All of this austerity and grandstanding on behalf of the State government and the Snyder administration, of course, is nothing more than an exercise in boundless hypocrisy. As Detroit City Councilwoman Joann Watson stated, “It is outrageous that a state which has its own deficit, in a country that has its own deficit, has the nerve to point fingers at our city.”   

Clearly, the Emergency Manager option is not a legitimate solution to the economic issues that plague Detroit, Michigan, or the United States. The Emergency Financial Management Law is an exercise in IMF-style austerity, privatization that benefits a select group of pet businesses, union busting, lowering the standard of living, and Soviet-style “governance.”

As the Michigan-based Electablog expertly states:

Emergency Managers do not solve the systemic problems that bring cities and school districts to the crisis point. They are simply a band-aid on a gaping wound, temporarily staunching the flow while private businesses reap profits and anti-union forces play out a long-awaited plan to rid the state of public employee unions. Given the history of the Emergency Manager/Emergency Financial Manager system in Michigan, there is no reason to believe that they will provide the meaningful solutions that our cities and school districts so desperately need.