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Blue Blight Syndrome Hits Scranton PA

As Scranton teetered on the brink of bankruptcy, its mayor Chris Doherty made news earlier this month by paying city workers minimum wage rather than their full salaries, citing empty coffers. Scranton’s police, fire, and public workers unions are now asking a court to hold the mayor in contempt for defying a court order to pay the workers in full.

Yet if Doherty’s claims are correct, the city simply doesn’t have enough money to pay its workers—and may not anytime soon. The Times-Tribune reports:

Mr. Doherty said, “If I had the money, I’d pay them (employees). Again, it’s the council’s budget” that has not provided enough funding to pay all of the city’s bills. . . .

It remains to be seen whether the city would have enough cash on hand to make a full payroll on the next payday of July 20, the mayor said.

As of Monday, the city had $133,000 in cash, but owed $3.4 million in various vendor bills, one of which was health insurance, said city Business Administrator Ryan McGowan.

That was more than either Thursday and Friday, when the city’s bottom lines were $5,000 and $83,000, respectively, he said. The daily amount fluctuates depending on how various tax revenues come in and bills are paid, he said.

Negotiations continue to try to find some way out of the financial crisis, but it appears that workers are headed for, at best, a second round of minimum wage paychecks. Scranton’s problems reflect the combination of long term economic decline, a failure to re-imagine and reform the way government works, the usual failed urban redevelopment boondoggles and shortsighted behavior by municipal employees and politicians who pander to them. In other words, Scranton is a fairly typical if unusually unlucky American city. As time goes by, we can expect more cities to come to this pass with all the human suffering and unfairness that comes out of this kind of crisis.

The only way out is a much more sweeping program of national and local reform than is yet on the table; the longer we wait the harder this will be. In the meantime, read more Via Meadia on municipal bankruptcy and the death of blue.

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  • Denver

    “The only way out is a much more sweeping program of national and local reform than is yet on the table . . .”

    Sir, I fear “national reform” more than I do broke local gob’mint. Tell me, if you would, what “national reform” you suggest (if it were me, I’d pass a constitutional amendment barring the federal government from making direct payments, of any kind, to citizens, and criminalizing federal largess of any kind, but that’s just me).

  • BarryD

    In other news, a Pennsylvania Superior Court has ordered a turnip to produce a pint of blood per day, or be held in contempt.

  • SukieTawdry

    The City of Compton, in Los Angeles County, has until Sep. 1 to decide whether to seek bankruptcy.

    Just a few years ago, Compton’s budget was running a surplus. So, it hired lots of new people, increased salaries and benefits, began costly new civil improvement projects. Now it’s $43 million in the hole, running huge deficits and its bonds have been down-graded to near junk status.

    The independent auditors refused to sign off on the city’s last financial statements and the mayor has filed unspecified charges of “waste, fraud and abuse of public monies” with California officials (is waste and abuse of public monies actionable under the law? oh, if only).

    Blue model all the way.

  • Rich K

    I know what happenned to Scranton. It turns out that all those folks who didnt build all those businesses there left and the city has no one to tax anymore.Funny how your loyalty to a company or business of any size or form fades when your president says you had nothing to do with any of it in the first place.Tsk,Tsk.

  • geTaylor

    I’ve been wondering whether the mayor and the city council persons are receiving their regular salaries or is it just the “usual suspects” who are facing current pay cuts?

  • geek49203

    Michigan’s state-appointed manager law has become a cause du jour for the Left, with lots of Wisconsin-style energy and hysteria when it is considered for places like Detroit. However, at this point, it does seem to be working better than the California model, doesn’t it?

  • crypticguise

    I was born in Scranton, and spent some of my childhood years in the nearby town of Olyphant in the 40s and 50s. I had a wonderful childhood there and still have some friends and relatives who live in the towns around Scranton.

    It almost makes me weep to see how Socialist-Democrat politicians and public employee unions have destroyed the present and future lives of so many.

  • sestamibi

    I know what you mean. Even Dunder-Mifflin Paper Co. moved out of town.

  • Phil in Englewood

    “Scranton is a fairly typical if unusually unlucky American city.”

    Unlucky in the Heinleinian sense:

    “Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
    This is known as “bad luck.”

    – Robert Heinlein, 1973

  • Mike Velthoen

    Unfunded pension liabilities are a huge problem, but is misleading and counterproductive to label them a blue model problem. The most problematic public pensions are frequently public safety employes, who Republicans (and Democrats) frequently court to prove their tough on crime credentials. Many cities face bankruptcy not because of any blue models, but because the local economy is just plain lousy. Stockton is no blue model neither is San Bernardino. By labeling the problem as “blue,” you politicize this very important issue. Your insistence on labeling it blue is frankly a bit showy, as if you are trying to demonstrate your own independent thought. Do better.

    • Walter Russell Mead

      @Mike V.: I’m not sure you quite get what I mean by the blue model. Democrats tend to support it more fervently, and to believe that in principle it’s the best way to do things, but it’s bigger than party politics. And it’s more than ‘big government’; it’s the whole system of political economy that grew up in the US and the western world after World War Two. Defined benefit pensions and lifetime civil service jobs are very much part of the system, but although as I say Dems tend to defend it in principle and think extending it is synonymous with progress and social justice, it’s ultimately not about party.

  • weber6560

    We have got to buld a firewall against bailing these people out. Yes I know that ny town may be next, but every pot has to sit on its own bottom!

  • Hale Adams

    Professor Mead,

    I call Susquehanna County, in the hills north of Scranton, “home” (more or less). My father’s people have lived there for two centuries now, and I fully expect that I’ll be buried up there someday.

    Something that has had me shaking my head for twenty years is how the “experts” and the “authorities” (By whom so designated? By whom so anointed?) decided, in the name of revitalizing downtown Scranton, to tear down a perfectly good row of buildings (albeit a bit run-down) along Lackawanna Avenue and put up a shopping mall (The Mall at Steamtown).

    What kind of #%$@&*$#!! moron:

    1) Builds a glitzy mall in the middle of a downtown that darned few people go to anymore, especially when there are malls far easier to get to on the outskirts of town? (Yeah, yeah, I know: “Build it, and they will come.” Bat puckey.)


    2) In the process of building said mall destroy what was once, and could have been again, a vital bit of railroad infrastructure; to wit, the old Delaware, Lackawanna and Western’s yards and “high line”, part of the DL&W’s “iron highway” between New York City and Buffalo, and points west? Talk about vandalism! (Yeah, so I’m a railfan. Sue me.)

    The story of the Blue Model: Untold billions of public money (money taken by force from you and me) spent on white elephants, and destroying in the process valuable things built with private money.

    The Blue Model’s death can’t come soon enough.

    Hale Adams
    Pikesville, People’s Democratic Republic of Maryland

  • thibaud

    Mike V’s not alone. Mr Mead’s cartoonish re-purposing of the “big gum’mint” critique, along with his sneers at one party, isn’t helping us address some very difficult problems that everyone acknowledges.

    Trying to clarify what he means by this over-politicized, poorly thought-out phrase, “blue model,” Mr Mead writes:

    “it’s the whole system of political economy that grew up in the US and the western world after World War Two”

    Well, that says it all, doesn’t it? The “whole system of political economy.” (Not sure why “political economy” requires the redundant antecedent “system” but, hey never mind). Whatever it is, it’s a _system_, or a _model_, anyway it’s large, it contains multitudes).

    Oddly enough, the welfare state originated in the 19c in Bismarck’s Germany, but never mind. Precision’s for small minds.

    But even if we stay with Mead’s proffered example of “defined benefit systems,” it’s clear that he hasn’t really done even the most basic research on this complex topic. Sweden, the bete noire of anti-gum’mint conservatives, actually DID AWAY WITH DEFINED BENEFIT PENSIONS – years ago.

    Other highly interventionist – what Mead would call “blue” – countries and provincial pension fund systems are rapidly moving toward DC as well.

    Then we have the confusion about other aspects of his “blue model” that surface from time to time. There’s a lot of George Gilder-style, 1999-ish prattle about technology and decentralization and sneers against “bureaucracy.” At a talk at AEI recently, he threw in, for good measure, the references to the family farm and the organization of work.

    Now, I don’t know how many of the decent folk here are defenders of “bureaucracy” – I’m not – but one could point out that the US public education system that Mead loathes is in fact the most decentralized in the advanced world.

    Does Mead want us to have even more school districts? That would mean more, er, bureaucrats, wouldn’t it? Awkward.

    As to the organization of work, well, Mead should spend a bit more time talking to people who’ve actually worked in corporations. There’s a reason that remote working has not taken off. It has something to do with the logic of the organization, combined with the fact that the vast majority of Americans work, and will continue to work long after Mead and most of us have departed this Vale of Tears, in very large organizations where physical presence at the office is absolutely critical to one’s chances at promotion.

    Likewise, Mead knows nothing about the oil industry – and even those who understand that industry are not at all clear about how much tight oil we and other nations actually have, or is recoverable at economically feasible price levels – but that doesn’t stop him from grasping at straws of hope for some alternative to that “system”, er, “model,” or whatever it is – ie that hairy beast whose core attribute the Swedes abandoned a long time ago.

  • Lee Dodson

    The bailouts will cease, or the currency will be devalued by 50% or better. When that happens, the government will be the only source of livelihood. Greed has its long term drawbacks.

    As to the blue model, I totally agree, but in a different way. The blue model cities have the most onerous regulations and ordinances which drag on the economy, thereby limiting commerce through creativity.

  • Johnny

    Here in Northern California the conservative democrats support maintaining pensions for public safety and the liberal democrats support maintaining pensions for the rest of the local gov. workers. So they all get to keep their great pensions….

  • Lorenz Gude

    I couldn’t help but notice that health insurance plays a leading role in Scranton’s …er…difficulties. As I always enjoy pointing most American don’t know that the American health care system costs twice as much as a percentage of GDP than in Blue places like Australia for the same health outcomes. Financially, it’s killing you, and I say this as an American, not some snarky furriner. The health care bill has a provision to limit the increase to the percentage of GDP to .5% over the next several years. Pfui – how about dropping it by 1% every year for about 8 years. In Australia we run both a private and universal public system for 8.5% of GDP. @16%+ both businesses and state and local governments are going to hit the wall that much sooner. I want to add that 2x cost is a structural, not a medical, problem that is peculiar to the US Blue Model. I absolutely agree with WRM that the Blue Model is a systemic problem, not a party political problem. As an American I don’t give a stuff which party solves it. I think, in the end, both parties will contribute because American are problem solvers regardless of party. It is too soon to tell, but I notice that all three Big Blue state governors – Ill, NY, CA – are Democrats and trying to address the problem. Maybe, the more aggressive approach of Scott Walker or Chris Christie will prevail, but they are all on it. It is the national level that doesn’t seem to get it. And they will go on printing money forever if we let them.

  • John Fritz

    Next thing you know Dunder-Mifflin will be up and gone.

  • thibaud

    As Lorenz Gude points out, and as been obvious to people viewing the problem without ideological blinders, our pseudo-market in healthcare is TWICE as inefficient as any of our peer nations’ universal healthcare-based systems.

    In other words, if you’re serious about wanting to alleviate the pressure on US state and federal budgets, then you need to get serious about moving toward a public option, supplemented by private insurance purchasable across state lines.

    If you’re serious, that is – as opposed to dumbing down the discussion with off-target nonsense about “socialism.”

  • teapartydoc

    The Blue Model being so vociferously defended by people who falsely imply that they have no ideological blinders on, is not doing well in Scranton, either.

  • thibaud

    I’m not “defending the blue model” because the BSModel concept itself is so lame, so poorly thought out, that it’s not worth defending or attacking.

    We have a governance problem. It’s not a problem of “socialism” vs “capitalism”.

    We’re badly governed, our tax system desperately needs sweeping reforms, we need universal health insurance and an alignment of revenues and commitments.

    In all of those areas, other countries have shown us how it’s done. We should listen to them instead of to zealots trying to cure the patient by bleeding him to death.

  • Jim.


    – Our litigious culture causes a great deal of the inefficiency you mention. Malpractice reform would cut costs tremendously.

    – Our system will not get any cheaper if you let everyone think it’s free, unless you put in something like “death panels”.

    – A large chunk of the US’s medical expenses comes from R&D. We are the world’s miracle factory. If you shut that down, you’re cutting off most of the progress in human medicine. That’s fine if the meds you rely on have already been invented; not so nice if they haven’t. Also not so nice if the cure for whatever ails you is not found because medical research gets reduced to only what the government pays for.

    – Monopsony is unlikely to serve the medical industry any better than it serves the defense industry.

    You continue to cherrypick successful examples of a system that 9 times out of 10 is a dismal failure. Considering our experience with controlling the expenses of Medicare, there is no reasonable grounds to hope that the US would be one of the handful of cases where Eurosocialist medicine lives up to your expectations.

  • thibaud

    The BSModel’s darn confusing, isn’t it?

    I mean, good and clever folks on this very thread have 180-degree opposing definitions of it. Lorenz #17 says our current healthcare kludge that costs 2x more than any other system is part of the “Blue Model.”

    And then we have Doc #20 attacking those who disparage that same kludge as _defending_ the BSModel.

    It’s all so very confusing.

    Sort of like that Tea Party cri du coeur, “Get the government out of my Medicare!”

  • thibaud

    Jim – we’ve had this discussion before. Universal healthcare isn’t “free”; it’s going to be funded through a reformed, broad-based, progressive tax system, as it is in any advanced nation.

    As I said to you on another thread, Bobby Kennedy pointed the way when he answered an audience of hostile med students’ sneering question of who will pay for it, “You, and you, and I and all of us will.”

    Re malpractice reform, all for it. But we lose much more each year in needless administrative cost due to the for-profit insurer leeches and their armies of mouthbreather employees whose sole deliverable is to deny people a benefit.

    Re big pharma’s pipeline, you’re shifting the playing field now. I’m talking about rationalizing the insurance system, not changing the payment terms for prescription drugs.

    Yes, we need a big, profitable and robust pharma/biotech industry. No, we do not need a massive and extremely powerful for-profit health insurance industry. The former creates huge value; the latter collects rents. The two are not dependent on each other.

    Re “cherrypicking” and your weird, and rather oddly precise “9 out of 10” figure, again, there is not one among the advanced nations of northern Europe, north Asia and the Anglosphere whose people would choose to swap their system for our kludge. Not one.

    A few _individuals_ might choose ours, sure. But as Lorenz G pointed out and as huge majorities in every single advanced democracy would concur, the backbone of any advanced, fair, financially sustainable system is universal health insurance supported by progressive tax revenues.

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