I’m going to put aside my daily ranting about the stock market and the economy today to bring what I believe is an important story to the attention of my readers.
There is no doubt you’ve heard about how poorly the city of Detroit, Michigan is faring now that the automotive sector has all but closed up there.
Yesterday, news came that the city has started cutting off water to about 150,000 people. About half of the city’s 324,000 water customers are delinquent on paying their water bill, so the city is turning off their taps. (Source: Financial Post, June 24, 2014.)
In protest, residents are appealing to the United Nations High Commissioner for Human Rights, saying their human right to water has been denied. (Unfortunately, the right of access to water is not in our Constitution or our Charter of Rights.)
I think what’s happening in Detroit, while it’s not getting much publicity, is very important. It should be a warning to us all.
At the very core, it tells me that if a government is not taking in enough money to pay its bills, it will increase the financial burden on its citizens…and if you can’t pay, you’re cut off.
In the case of Detroit, last week, city council approved a nine-percent hike in what it charges for water. (And the government tells us inflation is below two percent!) This lesson teaches us that if you can’t pay the increased costs the government levies on you, it will cut you off.
Secondly, today’s citizens are responsible for the past actions (or should I say lack of actions) of politicians. You elect politicians to office to run a city, state, or government. They make mistakes, like increasing government debt or choosing to go to war with another country, and it’s the citizens who are ultimately left dealing with the consequences of those decisions.
And that brings me to the current financial situation in America.
Somewhere along the line, the powers that be decided that the best way to get the U.S. out of its 2008/2009 financial crisis was to print trillions of dollars in new paper money with nothing backing it.
Looking at this today, it seems to me that this exercise has made the rich a lot richer (because the rich own assets that have gone up in value), while the poor have gotten poorer because their incomes are not rising and they cannot keep up with inflation. Detroit is a perfect of example of this.
The question is at what point do the poor say enough is enough and rebel against the rich?
We now have 92 million people in the U.S. who are able to work who are not working. The labor participation rate in this country is at a 35-year low!
If I had to look deep into my crystal ball to the future, unfortunately, I see an America that looks a lot more like Detroit than anything else. This is what America has come to.