Thomas Shevory, Ithaca College

A fair amount of attention has recently been given to Republican Governor Mitch Snyder of Michigan’s move to place a number of Michigan cities under emergency financial management. This possibility has long existed in the state, but it has been strengthened as Public Act 4, under which appointed managers have the authority to void union contracts, dismiss elected officials, and dissolve municipalities entirely.

Four cities, including Flint and Pontiac, have already been subject to the law's provisions, and Detroit, the largest city in Michigan, may be next.  If Detroit were to subjected to a takeover, more than 50% of the African-American population of Michigan would no longer have democratic control over their local governments. 

The equal protection ramifications of this are obvious, and the Justice Department is taking a look at the state's actions.  At the same time, an attempt is under way to have the law repealed under referendum, with nearly all of the necessary signatures having now been collected.  Given this threat, the state legislature is drawing up a new version. The governor's popularity, it is worth noting, has fallen to less than 20%.

Reading about his recently, I was reminded of an excellent film by Liz Miller, that we screened as part of the Finger Lakes Environmental Film Festival a few years ago, about the earlier version of the law as applied in Highland Park, Michigan. 

Henry Ford bought 160 acres in Highland Park in 1907 to construct his first automobile plant, and in 1913 it became home to the world's first conveyor-based assembly line.  The birthplace of mass production has fallen on hard times in the last couple of decades, as jobs left, population declined, the the tax base eroded.  The Waterfront tells the story of the appointment of Emergency Financial Manager Ramona Henderson-Pearson to oversee the city's budget.  

Henderson-Pearson looked around to see what of value the city had to offer and decided to sell the city's public water supply to a private operator.  As with most privatization schemes, the two-fold aim was to raise money and to apply private sector "efficiency" principles to formerly public sector operations. 

The result was a version of Cochabamba on Lake Erie.  Rates were raised, and draconian measures were implemented to collect bills.  In some cases, residents were sent bills as high as $10,000. Given leakages and aging water meters, the accuracy of readings was highly suspect.  If residents didn't pay, they were subject to losing access to water and, in some cases, foreclosure.

The community's citizens rose up, under the leadership of, local-resident-turned-activist, Valery Johnson. And when it was learned that  she was being paid $250,000 a year for her services, Henderson-Pearson was forced to resign. The city regained public control over its water works.  

Under the old statute, city officials kept some oversight, so there was a check on managers, as well as a democratically elected structure that could retake control when the managerial system collapsed.  In the new regime, elected officials may simply be fired.

The Waterfront is a cautionary tale about what occurs when local citizens are deprived of their democratic rights in favor of supposed managerial expertise and efficiency.  The problems of the rust belt are deep and long-running, but they can best be solved by more democracy, not less.

July 25, 2011

This posting is part of  an occasional series, based upon a bicycle tour around the Great Lakes, starting with Lake Huron.

I dropped my car off at the Sarnia train station about 8 am.  The parking lot was virtually empty. I just hope the car's there when I return.  My guess is that a 1994 Volvo 240 Station Wagon is not an attractive target for car thieves.  And this is Canada, after all, which has a lower crime rate than the U.S. Still, you never know.

I spotted a The Bicycle Shop, as I was riding up along the St. Clair River to the Blue Water Bridge to cross over into the U.S. Somehow, I'd forgotten my jersey and figured I'd pick up a new one.  One of the guys at the store commented on my S & S couplers.  I had them installed after I bought the bike, an old Gary Fisher, used.   I discovered them online in my quest to find a decent fold-up. The fold-ups intrigued me, but I was never entirely convinced one would meet my needs.  

I chose the S & S route, where a bike shop will cut your frame in half and install metal couplers that can then be unscrewed to break the bike down, primarily (at least in my case) for airplane travel. I couldn't find a local shop that would do the work, so I shipped it to Belinky Bicycles in Philadelphia.

The procedure cost around 400  dollars, but it was well worth it. Now, in its case, the bicycle meets airline specifications for normal sized luggage. Also, in the process of dismantling it for travel,  you, by necessity, learn a great deal about how everything fits together.  It can be a little time-consuming, although I have gotten better over time. 

When I told the shop owner that I was headed to the U.S. to bicycle around Lake Huron, he said that I wouldn't be able to ride across the bridge.   He suggested that I consider another route, thirty miles south to take the ferry. This didn't strike me as an attractive option.  It involved a detour that would add a day to the trip. But he also said that might be able to hitch a ride across. 

The St. Clair River is only about forty miles long.  It connects Lake Huron with Lake St. Clair, which in turn connects with the Detroit River, which feeds into Lake Erie.  These two rivers together constitute the world's busiest waterway, carrying freight primarily from west to east, including chemicals, coal, and iron ore. 

Situated in what is still one of the most heavily industrialized areas of the U.S., the river bears more than its share of environmental burdens and threats.  These include chemical contamination, sewage, zebra mussel and purple loose strife infestations, and falling water levels. A decrease in winter ice cover, due to climate change, poses future problems as well.

A man behind the desk at the bridge office told me he'd take me across once he finished his bagel. But, while munching away, he remembered a problem with his truck.  He called over across the river and learned that someone from the Michigan Department of Transportation needed to make the trip over and would give me ride on their way back. 

As I sat waiting outside, one of the toll workers noticed the couplers and commented on them. He told me that they brought cyclists over all the time.  There used to be a sidewalk, but, when a major rehab widened the lanes, it was eliminated. The large joints on the roadway were dangerous to cyclists, because they could catch a tire, especially when it was hot.

When the Michigan DOT worker arrived, I was happy for the lift.  Riding a bicycle on the sidewalks of large, high bridges, with heavy traffic, has never been one of my favorite things to do. 

Once over and through customs, I stopped at a gas station to get a map.  On my way out, a guy in a pickup asked me where I was headed.  He said envied me. "I've put 50,000 miles on a bike," he told me.   "But I can't ride them any more since I messed up my shoulder."  It turned out, he injured it severely when he slipped on some ice.  He said he'd been considering a recumbent.  I told him to go for it.
 

Hipness is not an easily measurable concept, but its very intangibility is part of what makes in interesting.  If we imagine a hipness quotient connected to cities, we would include, high on the list, places like Palo Alto, Berkeley, Boulder, San Francisco, even New York. Detroit would probably arrive toward the bottom.  Recently, however, Detroit has been getting attention that may be boosting its credentials. 

Not long ago, the documentary Detroit Wildlife was filmed.  In it, one protagonist asserts that Detroit wasn't much affected by the 2008 blackout. People in the city were are already living off the grid, squatting in abandoned buildings, foraging for food. They didn't have electricity, so why would they notice when it was gone? Detroit is offered as a harbinger of a post-fossil fuel future, where wild animals are returning to a dessicated urban landscape.

But things seem to be changing. Last year's Chrysler advertisement, released during the Superbowl, featuring Detroit denizen Marshall Mathers, aka Eminem, didn't hurt.  The ad featured Detroit as hip in a gritty hard-working kind of way, a place so exotic that its cars were "imported" by other parts of the U.S. 

Other indicators preceded the Eminem spot. One was the appearance of the HBO Series, Hung, which began airing in 2009.  The series features divorced father and public school teacher Ray Decker, who, unable to support his children properly after his uninsured house burns down, becomes a male prostitute.

Created by the brilliant filmmaker Thomas Payne (Election), Hung is hilariously funny as it traverses the borderlines of bad taste.  And while the series does not exactly portray the city of Detroit in a positive light, the mere appearance of an HBO series tends to elevate a hipness quotient significantly.  (Look at what The Wire did for West Baltimore.)

Two weeks ago, The Huffington Post  launched a new section, "Detroit News and Opinion," with a heterogeneous mix of Detroit bloggers, from the worlds of political reporting, sports writing, cultural analysis, and the non-profit sector. The articles provide insightful analysis of Detroit’s continuing economic plight, sprinkled with a strong dose of optimism about the possibilities for the city’s resurrection.  Detroit now finds itself as one of only six local sections in the Huff Post, sharing space with New York, Los Angeles, and San Francisco.

So what’s happened? Why does Detroit seem to be rising on the pop cultural hipness index? The Obama administration's decision to save the auto industry has a great deal to do with it.  If the government had not intervened to save the thousands of jobs that were at stake, Detroit's utter collapse would have been inevitable.  And while the domestic automobile industry is a shadow of its once-proud self, it still employs more people than Google, Facebook, and Apple combined.

Detroit, moreover, is re-writing its books on the meaning of industrial. A new generation of digital engineers is being hired by the automakers to develop the complex software necessary to run the current generation of cars.    While Detroit has not exactly become Silicon Valley-on-the-river, young people are actually moving back and into downtown areas that were being abandoned.

Detroit, in other words, has the potential to create a new kind of hybrid city, where the digital, the industrial, and the green collide in interesting ways.  What could be more hip than that?

Two cities, one in Western New York, one in Western Pennsylvania: One was once a manufacturing town.  One is a football town.  One has been economically damaged by globalization.  One has been more insulated, given that it is home to one of the state's premier public universities.

In the first town, a young black man is charged with spreading the HIV virus to a group of consenting partners, two of whom were  underage.  In this case, the defendant was characterized as a monster.  Posters, with his picture on it, were placed around the area in an attempt to track him down.  He found himself on the cover of national magazines.    Suggestions were made that he should be tortured and given the death penalty. The  state’s governor declared him guilty before he was brought to trial.

He was appointed a public defender. He was held without bail.   He was offered a plea deal of 75 years in prison, an offer that he declined, in spite of the atmosphere of hysteria that surrounded his case.   Eventually he pled guilty to reckless endangerment and statutory rape.  He was placed into protective custody in prison, where he faced harassment by other prisoners and guards, hostile to him because of the publicity that the case generated.  He is still confined to prison, and has served almost two years longer than his maximum sentence.

In the second town, State College, Pennsylvania, a man is accused of abusing his position as a football couch and the leader of a nonprofit organization involved with at risk youth.  He is accused of raping boys, some as young as ten years old. The indictment against him involves forty counts of sex crimes. He has been a respected and established presence in a community where football is valued in almost religious terms. Evidence appears that he was carrying on questionable activities for years.  Calls to investigate his behavior went nowhere, in spite of truly horrifying accusations of his having raped a young boy in a shower.

When charges were finally brought, he is released on $100,000 bail.  Finding the money is apparently not a problem.  He is seen walking through a local shopping mall, wearing a t-shirt for the college where he was once a coach.  

When newscasters discuss the case, they seem very careful to use the term “accused.”  High state officials, such as the governor, have made no statements regarding his innocence or guilt.  In fact, everyone seems to be exceedingly careful to be sure that his constitutional rights to a fair trial are not violated.  After all, he will, no doubt, have good legal representation at his trial. 

He is even offered an opportunity to defend himself on national television, an offer to tell his story to one of the nation’s most highly respected sports analysts . While the wisdom of doing this might be questionable, he gets the opportunity, and questions are asked and answered in a civil, moderate tone.  Attorneys on a national cable news network debate dispassionately whether the prosecution has a valid case, given the amount of time that has passed, and issues regarding the credibility of accusers. 

The two cases in question are Nushawn Williams in the first instance,  and of course Jerry Sandusky in the second.  The two cases are not equivalent.  No two cases ever are. Nushawn Williams was apparently HIV positive when he engaged with sex with young women.  Whether he knew of his status is a matter for debate, but it was never debated in media accounts of his case.  All of his acts were consensual, although, again, you would be unlikely to learn this from various media reports that circulated at the time.

Jerry Sandusky is accused of truly heinous acts of raping very, very young children.  He may have engaged in such behavior for years, raising very troubling questions about the power and irresponsibility of institutional authorities, from the athletic department to the governor's office.

Having been closely involved with following the Williams case for a long time, I try to maintain a reasonable skepticism about the charges that are now being brought against Sandusky.  I know that it is very difficult, if not impossible, to determine what happened in criminal cases from press reports.  But I am also struck by the moderate, almost analytical tone that comes across when discussing Sandusky.  The absence of hyperbole, hysteria, not to mention declarations of outright guilt, offers a stark contrast to the Williams case.

Thomas Shevory, Ithaca College

What can you learn about fracking from seeing the recent film Margin Call?  Quite a bit actually.  In the film, analysts at a New York investment house discover that they are holding large quantities of increasingly worthless mortgage backed securities. The drama involves their attempts to figure out what to do about it.

Serious questions have also been raised about the value of thousands of leases that have been generated over the last few years by the natural gas industry.  Keep in mind that fracking is very capital intensive, much more so than conventional gas drilling. All the trucks that tear up local roads.  All the chemicals. All the pipes. All the drilling rigs.  It costs a lot of money to carry out that level economic and environmental destruction.

While the industry estimates that fracking is profitable when gas sells at 5 dollars per thousand cubic feet, independent analysts put the figure at  7.  Natural gas wellhead prices peaked in 2008 at 7.97 dollars per thousand cubic feet. As result of the recession and mild winters, the price fell to 3.67 dollars per thousand cubic feet in 2009, recovering modestly to 4.16 dollars in 2010. 

In general, we expect business activity to decrease when prices fall, but that hasn't been  the case with natural gas fracking.  This fact is largely attributable a change in SEC rules that allows producers to put undeveloped reserves on their balance sheets. As a result, companies can maintain share value while not actually pumping and selling the gas.

You might argue that it’s just a matter of time before gas prices increase and the drilled wells become profitable, but this is highly doubtful. The gas companies, it turns out, have vastly overestimated the amount of natural gas that can be tapped from shale gas generally, and the Marcellus shale in particular. 

A U.S. Geological Survey Report released last summer cut by 80% the estimate of available gas in Marcellus deposits. And there is considerable other evidence that drilled wells are not producing at near the promised capacity.  A New York Times report on this drew a massive defensive response from the industry. 

This explains why the companies are so determined to expand their reach into New York and Ohio. Quite simply: they have to.  They need to expand operations to keep inflating share price values and to secure loans to continue expansion.  If they stop, and have to maintain profitability by pumping and selling gas, at the same time revealing what their assets are actually worth, they risk collapse.

Morning Star, with regard to Chesapeak Energy Corp, notes that there are  “ongoing questions about the sustainability of the firm's business model, given its propensity to outspend available cash flow.”  Still, it gives the company a “bullish” rating, due its “knack for creatively financing its operations and the relevance (that is, the attractiveness to third-party investors) of its current leasehold positions.”

Translation: "Chesapeak is good at cooking its books, and may be able to unload this crap before investors figure out that it’s a scam.”

If you’ve seen Margin Call, that should sound eerily familiar.

Leases tied to natural gas fracking are essentially like mortgage backed securities.  At some point, they will be proven to have much less value than originally promised.  And when that happens, shareholders, and--more importantly--those of us who live in the Marcellus Shale region, will be left holding the proverbial bag.