Remember the classic American dream of owning a home in the suburbs? Actually, it doesn’t take much to remember it, since millions of Americans – a good chunk of them Baby Boomers – are living a version of that dream right now.
That is in part because many of them bought into the government sales pitch decades ago that after working all your life to pay off your mortgage, your home can function as part of a retirement piggy bank. Either you sell it and sock a few hundred thousand into the bank as you downsize to an apartment, or you tap the equity with something like a reverse mortgage.
But if you are in that demographic and that is your plan, it might be a good idea to execute it sooner than later. Because changes, both cultural and political, may combine to turn the dream into a nightmare – a piggy bank worth less and more expensive to keep.
Start with the recent announcement that made official what most people in and around Detroit have known for years – the city is bankrupt.
Most sober, semi-objective analysts have had little trouble explaining it. The city is hopelessly corrupt, and it made promises to its unionized workforce that were lavish and unsustainable. As its dysfunction became more blatant and its lack of accountability more expensive – union and civil service rules made it practically impossible to fire anyone (as is the case in most cities controlled by municipal unions) – those who could get out did so, in droves.
The city’s population sank from 1.8 million to about 700,000, leading to a precipitous decline in property tax revenue. The city can’t provide basic municipal services and, according to most estimates, has an effective unemployment rate of 18 percent and about 80,000 derelict and abandoned buildings.
So, how do we solve a problem like Detroit? Former Clinton labor secretary and current professor, author and left-wing columnist Robert Reich has just the answer: Forget about reform, forget about reigning in unsustainable salaries and benefits. Just tap into the suburbs, where the money went. Force the people who left Detroit to become taxpayers for “greater Detroit.” Never mind that the bulk of their state taxes already go to support Detroit and low-income residents throughout the state.