Roubino: Why So Many Cities Are Paralyzed

Authored by John Rubino via DollarCollapse.com,

Sympathy for America’s big-city mayors and their allies is evaporating – generally for good reason. Portland and Seattle, for instance, seemed willing to give rioters a free hand before belatedly stepping in. And of course there’s the amazing quote from Chris Cuomo, the brother of New York’s Governor : 

“Please, show me where it says protesters are supposed to be polite and peaceful.”

The worst-run cities will pay a huge price for this indecision when rioters finally leave but shoppers and merchants don’t come back.

But like most things in this increasingly messy world, the big-city mayor story is way more complicated (and maybe more sympathetic) than it seems at first glance.

Let’s take it in stages.

Many US cities were already headed for bankruptcy

It’s easy to forget that less than a year ago – when the national economy seemed pretty strong and people were borrowing and spending with abandon – the unfunded liabilities of Chicago, Los Angeles, New York and a long list of other venerable cities were already out of control and threatening those governments’ solvency.

In the next recession and/or equities bear market, big pension plans like California’s CalPers and Chicago’s Teachers Pension Fund, were going to topple into some form of default, taking local bond ratings into junk territory and forcing draconian cuts in public services. On DollarCollapse.com there’s a 30-part series called Welcome To The Third World that chronicles the deterioration of public finance and how it will leave many US cities looking more like Caracas than Zurich.

Today’s big-city mayors are just the latest in a long line of leaders who bought labor peace and public sector votes by paying teachers, police, and firefighters way more than was mathematically possible in the long run. But the way can-kicking works is that the people who start the game get out with their reps and fortunes intact while the people in charge at the end get all the blame. In other words, today’s mayors were in deep trouble even in a normal business cycle.

Then came the pandemic

Depending on who’s pontificating, covid-19 is either a deadly health threat or a catastrophic overreaction by ignorant and panicked governments.

Either way, it produced much higher-than-expected health care costs and vastly lower tax revenues, ripping city budgets to shreds. So the inevitable end-of-cycle recession has been replaced by its bigger, meaner, butt-ugly brother, and cities that were teetering on the edge of insolvency are now demonstrably, undeniably broke.

Public workers, in short, were going to be fired in droves and services curtailed on a scale that even the biggest critics of municipal finances didn’t see coming this soon.

Then came the riots

The past few weeks’ civil unrest exploded seemingly out of nowhere — but was actually the inevitable result of an aristocracy systemically impoverishing regular people, combined with a multi-month lockdown that prevented millions from paying for health care or housing, and in many cases food.

Overwhelming burden

Add it all up and the result is an overwhelming financial and political burden for a typical mayor. But the nature of this civil unrest presents a completely different kind of challenge – which takes us to the part that you may not like because it calls for a bit of empathy.

Consider:

Most big-city mayors are liberals, which isn’t surprising given the voting patterns of urban populations. And not just any old liberals, but hard-core, all-in civil-rights-obsessed liberals who remember (or grew up on tales of) the civil rights movement of the 1960s and have modeled their political lives accordingly.

Most of them fantasize about being this generation’s Marin Luther King, leading a massive march on Washington that forces historic changes in how the least among us are treated.

They thought they’d finally gotten their chance when the current protests erupted, and gleefully tried to get in front of the crowd, no doubt hoping to not just encourage it but lead it.

That’s an admirable goal. But this is not Martin Luther King’s movement.

When, for instance, the mayor of Portland showed up expecting to be welcomed with open arms – he was one of them after all – the reaction was just slightly different.

Now Portland and Seattle look like the set of a Mad Max film, and their mayors, along with many others across the country, are confronting not just riots, but a repudiation of their life’s work. If they’re not civil rights leaders, what are they?

That – not their supposed hard-core Marxism — explains the mayors’ indecision: They know they’re required to protect their small businesses and peaceful citizens. But to do that they have to cross their people, who, until just a couple of weeks ago, defined the mayors’ political careers. They’d sooner arrest their own children.

Put another way, big-city Democrat mayors have gone from being – in their own minds – exactly the right people for this historical moment to being exactly the wrong people. They have no idea how to reconcile their self-image and life’s work with this baffling new world, and they’re paralyzed.

And their cities – already headed for catastrophe – might never be the same.