The End of Technocracy and Zero Government

Off the keyboard of Steve from Virginia

Published on Economic Undertow on February 26, 2013

Detroit Tax Map 1

Figure 1: Detroit city tax map from WDWOT (click on for interactive big), (HT Atlantic Cities): Detroit is a good model for the rest of the United States as the country sinks into post-petroleum depression. One symptom is the inability of the city to provide basic services for its citizens because of shrinking revenue. Owners in the city are unable or unwilling to pay property taxes.

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The map illustrates properties which are current, properties in arrears and those in states of foreclosure. Only a handful of neighborhoods within the city are home to owners current on their property taxes. You can adjust the map to determine the degree to which property in the city is impaired, for instance half the city looks to be in tax arrears and under threat of tax auction.

Here’s Atlantic Cities:


Detroit’s Property Tax Black Hole, in Map Form John MetcalfeTo get a handle on how bad of a tax mess Detroit is sitting in right now, look no further than (above) depressing map showing every property in the city suffering “tax distress.”What looks like a big hunk of moldy cheese is in fact the property-tax status of 384,861* properties, as logged by Wayne County’s online tax portal. The lighter yellow boxes represent more than 59,000 distressed buildings where the owners haven’t paid their taxes. Squished among them are a honeycomb of orange boxes, indicating that these properties have such a large backlog of delinquent taxes that they’re now subject to foreclosure. (Count those up and you arrive at about 74,000 doomed properties.) The plots shown in red, meanwhile, are the 18,246 properties that have already been foreclosed.

On the bright side, gray areas mean those places don’t have tax issues. Lucky!


The gray areas are highways and city streets, parkland, commercial structures that earn enough in rent to pay expenses and non-taxable city property.

Detroit does not currently have a purely technocratic city administration but one looms over the horizon. Perhaps the establishment in Michigan can rethink the process as technocracy is an endgame, it will fail in Detroit as it has in Greece and Italy.

What is technocracy? It’s an establishment- installed ‘non-political’ manager with powers to restructure a jurisdiction to protect big business interests regardless of social or political consequences. Jurisdictions that have lost the ability to borrow and thence roll-over debts and pay interest are candidates for the technocratic ‘fix’. Meanwhile, the same inability to borrow strands the technocrats who have no tools to work with.

Technocracy tends to be the last step before default/repudiation of non-payable debts. After technocracy comes ‘zero-government’; the capitulation of the establishment, its dissolution into factions and chaos. This is part of the transition to a post-petroleum economy and breakdown of the status quo. Arguably, Detroit has endured ineffective, paternalistic ‘pro-business’ leadership since World War Two: the non-government is a necessary precondition to technocracy which surrenders shortly afterward to zero-government.

Hat meet rabbit: an emergency managers cannot magically deliver the means to repay tax arrears or interest on loans. To do so requires the creation of thousands of new jobs which is never within managers’ scope of employment. Their duty is to cut jobs. Technocrats lack imagination, they are repo-men They provide administrative smokescreens behind which the creditor interests pick over and privatize remaining marketable assets that have previously been too costly to pillage. The problem is … when governments reach the technocratic inflection point assets aren’t worth anything.

Here is the current Emergency Manager of the Detroit Public School System:


Roy S. Roberts was appointed by Gov. Rick Snyder in May 2011 to serve as Detroit Public Schools Emergency Manager under the Local Government and School District Fiscal Accountability Act. Mr. Roberts, who was most recently Managing director at Reliant Equity Investors, has decades of managerial, financial and organizational experience, having served as the highest-ranking African-American executive in the U.S. automobile industry as Group Vice President for North American Vehicle Sales, Service and Marketing of General Motors Corporation from July 1999 to April 2000. Prior to that, Mr. Roberts also served as Vice President and Group Executive, North American Vehicle Sales, Service and Marketing of General Motors Corporation from October 1998 to July 1999. He was Vice President and General Manager in charge of Field Sales, Service and Parts for the Vehicle Sales, Service and Marketing Group of General Motors Corporation from August 1998 to October 1998. He served as General Manager of the Pontiac-GMC Division from February 1996 to October 1998, presiding over the merger of Pontiac-GMC …


Do you laugh or cry? Roberts offers management expertise to a bankrupt school system gained from within the bankrupt General Motors as a glorified car salesman! Roberts is not expected to improve learning in Detroit, but to facilitate the flow of public funds toward the private sector … this is what technocrats do.


3.1 Salary The Emergency Manager’s salary for services rendered under this Contract shall be $250,000.00 per year, paid by the District.


He is additionally compensated for personal expenses. Unsurprisingly, the citizens refuse to pay taxes. Tax evasion/declining government revenue is a characteristic of technocracies: why throw good money after bad? Here’s Mike ‘Mish’ Shedlock:


Half of Detroit Properties Have Not Paid Taxes; Update on Detroit Bankruptcy The hollowing out of Detroit is nearly complete. All that’s left is a bankrupt shell of a city with no services and scattered citizens that do not pay taxes.The Detroit News reports Half of Detroit Property Owners Don’t Pay Taxes.“Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis, according to a Detroit News analysis of government records.

The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city’s taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.

Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year, The News found. Many of those who don’t pay question why they should in a city that struggles to light its streets or keep police on them.

“Why pay taxes?” asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. “Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.”


Shedlock’s ‘solution’ is technocratic: to quash the unions and fire workers. It would be far better to fire the automobiles instead. Raising taxes in a depression is a failure, blaming the city workers is blaming the victims.

In Detroit, homeowners are broke and unable to pay, others are in dispute with the city over the amount of tax due: real estate worth has plummeted over the past 20 years and assessments are ‘uncertain’. There are questions about durable title particularly on foreclosed properties. The large banks and mortgage servicers own multiple properties they look to shift the burdens each property represents onto the taxpayers.

Many thousands of houses in Detroit are burn-outs or dilapidated and require demolition. By not paying taxes, the banks force the city to take over properties and demolish buildings at city’s- rather the banks’ expense. In Detroit, the cost of demolition is not much less than the average cost of a house.

Occasionally the government runs amok: houses in Detroit are demolished after people buy them … to save them from demolition. Why pay taxes and support ineptitude or criminals?

It is likely to be difficult for Michigan’s governor to find another car salesman willing to become Detroit’s Next Great Technocrat! Pre-failure failure in Detroit, (Huffington):


Asked during a short, one-on-one session with The Associated Press if any potential candidates for such a job (emergency manager) had already declined it, Snyder responded: “Oh yeah. There were quite a few people who were in that camp. Because if you think about it, and this is not to imply we’re going to do one, but it would be an extremely challenging position.” Challenging may be an understatement.Mayor Dave Bing has placed the city’s current budget deficit at about $327 million. The report given to Snyder Tuesday by the state-appointed review team said the accumulated deficit as of June 30, 2012, would have topped $900 million if Detroit leaders in recent years had not issued bonds to pay some of its bills.Long-term liabilities, including underfunded pensions, is more than $14 billion, and in recent months the city has relied on bond money from an escrow account to meet its dwindling cash flow needs and to pay city workers.

The review team also said that because of its cash deficit the city would have to either increase revenues or decrease expenditures, or both, by about $15 million per month between January and March to “remain financially viable.”


The ‘Blame the Victim’ Game in Detroit


In areas where technocracy has been installed such as Greece, both the initial conditions and the failure of the process is blamed on the inhabitants. Greeks are ‘corrupt tax-cheats and lazy’. Detroiters are ‘stupid, drug-crazed Negro savages bent on murder and destruction’, French are ‘near-communists and cowards’, Irish are ‘ugly … drunken child molesters’. The purpose of the blame game is distraction while retirement savings are stolen by the establishment. The elderly ‘deserve what they (don’t) get! The blame game hits the target by appearing to miss it.

In Detroit, the citizens didn’t chase retail stores away, they didn’t over-invest in the auto industry, they didn’t ghettoize the city with ill-conceived developments and a web of freeways, they didn’t pollute the city with lead, zinc, chromium, mercury, toxic petroleum-based chemicals, they didn’t sell the city out to billionaire developers.

The citizens didn’t pave the city over with parking lots or built thousands of monstrously ugly concrete box- buildings. Detroiters are being shot by criminals, being driven out by block busting and urban decay, losing what little property wealth they had, having already lost hundreds of thousands of jobs. Detroiters have been abandoned by their country not the other way around.

The US spends hundreds of billions of dollars in Afghanistan, why not Detroit?

Detroit’s notorious crime problem appears to be the result of lead pollution from fuel additives and manufacturing residues in the soil along with fumes from burning lead paint spewed into the air from the thousands of building fires taking place every year in the city … rather than skin color.

The black establishment in Detroit has never been able to stand up to the white establishment which owns everything important, which controls the city’s budget, which anoints various city administrations, which constantly looks for opportunities to blame blacks for everything gone wrong.

Since 1920 the auto industry has run Detroit like a coal mining ‘company town’. Most of the housing stock in Detroit was sub-standard as built: cheap frame houses thrown up as rapidly as possible on an unrelenting grid. Detroiters are learning the hard way: land use and urban design matter. The citizens did not design the buildings or lay out the streets. What charm the city once possessed has been swept away for parking lots and cheap commercial and institutional ‘facilities’. The citizens did not do this, it was business interests seeking the quick buck for themselves at the expense of everyone else.

Following the Great Wave of European master craftsmen to the city in the 19th century, most of the emigres in decades following have been unskilled, uneducated agricultural workers seeking assembly-line jobs. They added little to the community other than modest paychecks and a burning desire to relocate themselves to the suburbs as soon as possible. Even in the 1950s, when the auto workers union gained touted increases in pay and benefits, the companies they worked for were shrinking, first by way of automation then by ruinous competition and business failure.

The unraveling of the US car industry has been the decline and fall of Detroit: the population has shrunk from 1.8 million to less than 700,000. Who is to live in the abandoned houses? Even without the fires and the blight, half of the ‘original city’ would be empty. Where are the jobs?

Meanwhile, the Detroiters are on the hook for tens billions of dollars of debt taken on to run the ossified city government, pay pensions, build football and baseball stadiums … arenas, improvements for casinos and retail ‘big-box’ stores. The reason Michigan keeps Detroit at arm’s length is because the state is as bankrupt as the city. If it does nothing, the city’s finance burdens will crush the state, if it tries to ‘fix’ the city the effort will crush the state just as well.

The establishment has created this mess, not the Detroiters. Meanwhile, technocracy marches over the edge of the cliff around the world:

– Japan’s ‘democracy’ has been a facade that masks control by business cartels, in this way all recent governments in Japan are technocratic. Japanese citizens are confronted with the doubling of consumption taxes by 2014: these are taxes levied to meet the spiraling cost of servicing Japan’s monumental debt. Enter the new ‘Shinzo Abe 2.0′ government promising to borrow more, faster … presuming Japan’s total debt burden can be added to without causing a crash. Increasing numbers of Japan’s citizens are elderly, they do not consume, they are unwilling to pay more taxes. Meanwhile, Japan’s overseas customers are broke. They cannot buy Japanese products and by doing so lend to the Japanese.

The outcome is a currency market panic … that is not likely to end well.

– The Greeks are bankrupt, the European Union has bailed out (some of) Greece’s lenders while burdening Greeks with higher taxes that the Greeks refuse to pay. The technocratic government installed by the IMF, European Central Bank and the EU has collapsed, the country now has post-technocratic ‘zero government’.

– Italians have been confronted with higher technocrat-imposed taxes: they evade them or refuse to pay. Voters have just now jettisoned the current IMF-supported technocrat regime. The outcome is post-technocratic zero-government in Italy.

– The French unraveling is well underway the current government is the precursor to a technocracy. The Socialists are incoherent, they appear to have no set strategy or clear understanding of their dilemma which is the consequence of extinguished capital. When the French cannot borrow cheaply, they will be given the ‘Italian Choice’: to install a technocratic regime or be frozen out of credit markets.

– Sequester in the US is technocracy-by-the-numbers, the theft of retirements under the guise of ‘responsible government’ for the benefit of lenders. After technocracy fails comes zero-government.

Moderns look to waste resources but the outcome is to become Detroit in every sense. Japan and Greece have passed their respective points of no-return. Their ability to waste resources is collapsing because their external debt subsidies have been curtailed, they cannot borrow to repay their debts so they cannot borrow to obtain fuel. Meanwhile, working out of debt is beyond what can be done with human labor or what modest remaining capital can leverage.

The wild card in Italian politics: by John Hooper and Lizzy Davies (Guardian UK):


Italy on Monday night risked pitching into political turmoil as projections of the result of its general election pointed to a hung parliament and confirmed that the anti-establishment Five Star Movement (M5S), led by an ex-comedian, Beppe Grillo, had exploded onto the national stage. So far, Grillo has ruled out supporting either side in his drive to sweep away Italy’s existing political parties and the cronyistic culture they support.


Ambrose Evans-Pritchard (Telegraph UK):


In an earthquake result, the Five Star protest movement of comedian Beppe Grillo looked likely to emerge as the biggest single party in the lower house. The scourge of bankers and corrupt elites, Mr Grillo has campaigned for a return to the lira and a restructuring of Italy’s €1.9 trillion (£1.64 trillion) public debt. The conservative bloc of ex-premier Silvio Berlusconi looked poised to win the senate, coming back from the political grave with vows to rip up the EU’s austerity plans and push through tax cuts to pull Italy out of deep slump.“The majority of Italians have clearly voted against the Brussels consensus. That is a damning indictment,” said Mats Persson from Open Europe.A euphoric rally on European bond and stock markets early on Monday gave way to abrupt selling as it became clear that Italy would be left with a hung parliament and no consensus over fundamental policies, leaving the country almost ungovernable.


There is little chance of escape for Italy from zero-government, just like Detroit. The innovation of the Five Star Movement is that it spurns TV and the need for officials to sell themselves to business interests in order to raise advertising money. Five Star candidates offer their platforms on Facebook and Twitter. None of this addresses our evaporating capital problem. Italy and the rest need new ideas about how to wisely use what capital remains: to husband it for the future rather than burning it up faster and faster.

Our current economy uses the destruction of capital as collateral for ‘infinite’ loans. This process must be voluntarily ended or it will be ended for us with zero-government as a component of the process.

Europe and the rest of the world is being de-carred: this is because cars are unaffordable luxuries. For some reason, this is too complex and difficult a problem for economists and policy makers to grasp! What is ‘growth’? Always more and more cars. Why isn’t there any growth? Because adding more cars amplifies the car-cost problem, which is the increasingly efficient destruction of capital. The solution to our capital destruction problem isn’t baling out lenders … presumably so they might lend again … but to end cars and their monstrous claims against capital!

The world’s fuel supply is shrinking along with credit availability. Without a constant supply of new fuel there are shortfalls. Economic activity is curtailed as a result. Without that constant supply of new credit, nobody can retire old loans or service them, nobody can obtain fuel. Credit is constrained further in a vicious cycle … there is no way out.

The establishment insists that the problems in Detroit and elsewhere is the social safety net/excess savings. Lenders complain about the safety net, insisting savings impinges debt repayment. Yet gutting it represents only a temporary reprieve, the debts cannot be repaid because the collateral for the debt is waste and the instrument of waste is cars. In a way, Detroit is a victim of its own success.

The cars’ days are numbered: the car and tire manufacturers, the fuel industry, the highway construction industry, the tract house industry, the big-box retailer industry, the truck-transport industry, the gigantic 80-story concrete penis in the middle of town industry, the military industrial complexes, the finance and insurance industries … all of the automobile dependencies are bankrupt, a gigantic, worldwide dinosaur that has cut its own head cut off by way of its pointless success … too stupid to lay down and die.

Die it will and very soon, children, very soon … not before threshing everything in the world to bits, first.

Knarf plays the Doomer Blues

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