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Shock Doctrine: 'Emergency Finance Managers' and the Right-Wing's Power Grab

Emergency financial managers are being put in place by democratically elected governors throughout the country.
 
 
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The onslaught of radical policies from the wave of Tea Party-supported right-wing state politicians swept in in the 2010 elections has been nearly overwhelming. Nearly every state that saw a Republican takeover of the statehouse or legislature has faced attacks on collective bargaining, immigration, reproductive freedoms, or health care. New power grabs have popped up constantly, and copycat bills have sprung up in their wake as if an official playbook has been passed around the country.

But one of the nastiest moves has been the institution, by Michigan governor Rick Snyder, of an “emergency manager” over several cities in his state, as well as the Detroit public school system. This manager has the unilateral authority to fire officials, close schools, void union contracts, and assume total control over areas declared to be in a financial state of emergency by the state.

And it looks like the idea is spreading.

 

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In March, the Michigan legislature passed an update to state law that gave emergency financial managers expanded powers over cities and school districts facing financial distress. The provision drew protests immediately, with thousands converging on the capitol on March 16, the day the law was signed. Unions and community organizations recognized the law as a threat, not just in the cities where emergency financial managers were imposed, but around the state, where unions would be pressured to make concessions in order to keep a financial manager from being imposed on them. Since financial managers have the power to wipe away a union contract with a pen stroke, the unions are left with an impossible choice—concede great chunks of hard-won benefits and wages, or risk losing it all.

Ed Brayton at the Michigan Messenger wrote:

“While opponents of the law were organizing their efforts, the Emergency Managers already in place wasted no time in putting their newly gained powers to use. Robert Bobb, who was at the time the Emergency Manager for the Detroit Public Schools, announced on April 15 that he would use his authority to void union contracts and his office immediately sent layoff notices to all 5,466 members of the teachers union. The very same day Joseph Harris, the emergency manager in charge of the city of Benton Harborissued an order stripping all authority from elected boards in that city, including the city council. That order would provoke massive opposition and bring the attention of the national media to the realities of the new law.”

Benton Harbor is 92 percent African American and 42 percent of its population lives below the poverty line. Helping those people doesn't seem to be in the job description of the financial manager, who has cut off support for an innovative local gardening program that helped the city's food-insecure residents sustain themselves. Apparently food isn't one of the “core services” that Snyder's spokeswoman told the Lansing State Journal were being preserved by the emergency managers.

As for the schools, the claim is that “failing” schools will be fixed by allowing for-profit charter companies to take them over. But that claim doesn't hold up under scrutiny. Recently, the Rachel Maddow show highlighted one Detroit school that was far from failing. Young mothers were not only graduating, but graduating with honors and going on to college from the Catherine Ferguson Academy, yet the emergency manager targeted the school for closure anyway. News that it would remain open as a charter school was bittersweet at best, since the for-profit company taking over the school specializes in "strict discipline academies" for students with legal problems. Teachers have already been informed that their wages will be cut.

Innovative public education programs like the Ferguson Academy aren't profitable, but they are an example of the good that public education can do. And the local food program, which promoted community self-sufficiency and entrepreneurship, was far less costly than tax breaks for big business. That these programs help people do exactly what conservatives want them to do—pull themselves up by their bootstraps and make a better life for themselves and their families—is further evidence that the ideals of "success” and “efficiency” touted by the new radical right are actually just cover for their real agenda: consolidating their own power. 

A lawsuit filed Wednesday, June 22 challenges the emergency manager law. Again, from the Michigan Messenger:

“This is an infringement on basic democracy,” said plaintiffs attorney John Philo of the Sugar Law Center for Economic and Social Justice. “It really is an experiment in a new form of government — one person rule.”

The complaint alleges that the law, “violates the rights of local voters by attempting to delegate law-making power and the power to adopt local acts to unelected emergency mangers, by suspending the rights of local electors to establish charters and to elect local officials, and by imposing substantial new costs and expenses upon local municipalities without providing new revenue.”

The law is so extreme, the plaintiffs say, that it “establishes a new form of local government, previously unknown within the United States or the State of Michigan, where the people within local municipalities may be governed by an unelected official who establishes local law by decree.”

Even if the people did vote on an official, it should be noted, there's a difference between voting for a mayor, say, and an official with near-unlimited powers. Even Snyder's office realized that it would be unseemly to make Detroit Mayor Steve Bing the emergency manager of his city or even its school system. That might be too much power for one individual.

One Michigan blogger grimly joked:

“I see in Michigan’s future: EFMs declaring war on other EFMs. And the citizenry of one city being told to fight the citizenry of other cities. to protect the turf and honor of our noble EFMs.”

 

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Pennsylvania has been a quieter front in the war on working people, overshadowed by Wisconsin, Ohio, Michigan, and even its neighbor New Jersey. But it has its own bill working its way through the legislature that would update existing legislation and consolidate state control over a city, in this case the capital city of Harrisburg.

Act 47, the Financially Distressed Municipalities Act, has been on the books for a while in the state, and was developed to help Pennsylvania's cities recover from financial stress. But the plan put forth under the act for Harrisburg is quite different from earlier plans for other cities in the state (including Pittsburgh, Scranton, Reading and Johnstown).

Michael Wood, of the Pennsylvania Budget and Policy Center, explained that the plan for Harrisburg would dictate the sale of particular city assets and eliminate much of the separation of powers between elected leadership, requiring staff to be shared between city council, mayor, controller and treasurer. This is a change from the usual recommendations, which Wood said include taxing commuters as well as making changes to union contracts and city services.

But on top of the existing powers under Act 47, a group of state senators have put forward bill 1151, which would allow the state to appoint a three-person board to run Harrisburg if the plan isn't enacted, stripping power from the elected city council. The bill also gives the state the power to renegotiate union contracts for the city's public employees, including police and firefighters. Wood wrote in an email:

A 'doomsday' proposal like the one put forth by Senator Piccola, where the state takes over management of the city if the Act 47 plan is not adopted, has not been considered before -- and reflects a distinct departure from previous state policy regarding helping out distressed communities. The plan seems likely to be restricted to only the City of Harrisburg, due to some of the specifics in the bill."

Piccola is the senator who represents Harrisburg, and, Wood noted, is a main supporter of school voucher programs. Pennsylvania's public education is already suffering budget cuts of roughly $1 billion—around $8 million in Harrisburg alone.

Wood, who grew up not far from Benton Harbor, Michigan, noted that the push for emergency control over Harrisburg looks much like what's happening there, particularly in demographics. “The cuts of state aid for schools is felt most directly by the state's poor urban and some rural schools,” he said, “State aid is based on district wealth (or lack of wealth), so the poorest schools get the most state aid. When the cuts are handed down, these same districts take the biggest share.”

As in Michigan, it's notable as well that the budget cuts handed down by the governor actually increase the likelihood that Harrisburg, and other cities around the state, will require further financial help, thus pushing them further into dependence on the state government and whatever requirements it—and the conservatives at the helm—dish out. 

 

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A story about right-wing power grabs just wouldn't be complete without an appearance by Wisconsin governor Scott Walker. Walker's become the poster boy for conservative overreach, and rumors have been swirling that he's planning his own emergency financial manager plan.

Walker denied it, but Rick Ungar at Forbes wrote in April that Wisconsin progressive activists were reporting a plan to be introduced in the legislature that would give the governor the ability to appoint a financial manager if a municipality failed a financial stress test. The bill, they said, would be very similar to Snyder's in Michigan.

Ungar wrote:

“Walker’s plans give further credence to the notion that the efforts of the GOP governors with Republican majorities in their state legislative bodies are part of a coordinated plan to enforce a right-wing agenda designed to not only destroy state, county and municipal employee unions, but to take control of local governments by replacing elected officials with appointees, both corporate and individual, of the state’s highest executive officer.”

 

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Naomi Klein, in her book The Shock Doctrine, explained the way radical right-wing economists have used the shock created by an emergency, natural disaster, or coup d'etat to impose their preferred policies of privatization, deregulation, and slashing social services on countries around the world. Those economists, of course, came from right here in the USA—starting with the University of Chicago's Milton Friedman.

She opens the book with New Orleans after Hurricane Katrina, where a natural disaster somehow became an excuse to privatize the schools and bulldoze public housing.

The hurricane that's hit Michigan, Wisconsin, Pennsylvania and Florida is the same hurricane that's hit the world—financial crisis, ongoing recession, debt and a lack of tax revenue. The response, of course, has differed in different places, but Klein's point is that the Friedmanites were ideologues in search of a crisis they could exploit to put in their preferred policies—and if that required working with dictators, so be it.

We shouldn't be surprised, then, to see those policies being imposed here at home in the name of financial emergency. Klein notes that it's not always war or natural disaster that creates crisis:

"...if an economic crisis hits and is severe enough--a currency meltdown, a market crash, a major recession--it blows everything else out of the water, and leaders are liberated to do whatever is necessary (or said to be necessary) in the name of responding to a national emergency.”

Klein made the link between that radical economic policy and dictatorships, usually violent ones, where a single person or small group used power consolidated by that same shock technique to control the population. Obviously, the same type of violence is not being used in the states that are considering emergency manager legislation, but there's no question that the “shock” of the ongoing recession is being used to push through policies that were quite different from the campaign-trail promises of the Republicans in power.

While the emergency financial managers are being put in place by democratically elected governors with the blessing of democratically elected legislatures, they represent a consolidation of power that may be unprecedented in this country and is certainly undemocratic.

Local groups are organizing against these measures on the ground, particularly in Michigan, but the real problem is figuring out just where the next copycat bill will arise. 

 

Sarah Jaffe is an AlterNet editor and a freelance writer.
 
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