Detroit's Crony Capitalism Problem

Bankrupt Motown gives $450 million gift to the Red Wings owner

(Page 2 of 2)

Hilfinger points out that Ilitch has also pledged $200 million toward the “ancillary development” that’s part of the entertainment complex — and some unspecified amount of (currently worthless) downtown property he’s been sitting on. When everything is added, Ilitch’s contribution will add up to 56 percent and taxpayer contribution 44 percent, Hilfinger says.

But there are at least two big problems with this claim.

One: This “ancillary development” won’t begin for several years. Should the downtown show few signs of revival after the arena goes up, it is hard to see how authorities could insist that Ilitch and other investors continue to sink money into it, even though Hilfinger says they’ll be contractually required to do so.

The bigger problem is that whatever Ilitch “contributes” — parking structures, retail, office space — he’ll own and exclusively profit from. It is a verbal gimmick to dub this a “contribution” — as if it were an act of charity. The deal, in other words, forces taxpayers to assume all the risk even as Ilitch gains monopoly rights to virtually all of the revenues.

Detroit is in bankruptcy because special interests — whether Big Labor or Big Business — have diverted its resources to service their — not general resident — needs. The new Red Wings arena suggests that bankruptcy has changed nothing.

A version of the column originally appeared in the Washington Examiner.

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  • Pro Libertate||

    Something to keep in mind about crony capitalism is the fact that Smith and other Enlightenment thinkers who talked about economics were about as opposed as could be to government manipulation of business.

    What we need is a constitutional amendment establishing the separation of business and state.

  • Libertymike||

    Where is FoE?

    I guess you can't be first all of the time.

  • anon||

    What we need is a constitutional amendment establishing the separation of business and state.



    I'll ride my unicorn off into the sunset on that day.

  • RandomJackass||

    Rent-seeking is a bug, not a feature.

  • Libertymike||

    This case illustrates why those who shout "freedom of association" or "those are the rules" or "its part of the CBA" are so way off the mark in criticizing the proposition that ballplayers who use PEDs or college athletes who secure remuneration for their appearances or autographs should be applauded by libertarians as the individual right to do what they do trumps the crony capitalist's right to insist upon you and I financing the enforcement of their regimes.

  • Invisible Finger||

    Try again when the crank wears off.

  • Libertymike||

    Okay socialist.

  • Almanian!||

    In reality, it is a body slam hip check for Motown and a hat trick for Red Wings owner, billionaire Mike Ilitch.

    Fixed that for you, Ms. Dahlmia. Obviously not much of a hockey fan, eh? :)

  • Duke||

    OT, sorry. I saw this at WaPo and just HAD to post it:

    11:31 AM CDT

    Cruz, like all the other tea party darlings, is a wholly owned subsidiary of Charles and David Koch Industries.

    Stupid working class idiots who vote for these guys are voting against their own economic self interest. They're voting to see their wages, Social Security and Medicare benefits reduced so that the Kochs can get another massive tax cut. They're voting for less regulation of the Wall Street banksters and for a return to the bad old days of Health Insurance company ripoffs."

  • Almanian!||


    Yes, this is exactly what happens. Medicare and SS benefits get reduced, and the money is instead deposited DIRECTLY to the bank(ster) accounts of teh EVUL Koch Brothers®.

    And it would have WORKED, too, if it hadn't been for those meddling Proglodytes...channeling money DIRECTLY to George Soros' bank(ster) account, instead...

  • Duke||

    Ok, I confess I have been stirring the chamber pot a bit that is the WaPo comment board. It’s truly amazing how they will deride “tea party bush conspiracy theorists” and yet, they believe in a conspiracy so vast, and so sinister, that it couldn’t possibly be true.

  • Almanian!||

    What amazes me still (but probably shouldn't) is the rote, talking-points bullshit. Including from some of my longtime friends (whom I may need to cut loose if teh stoopid continues).

    No reasoning, no change of position in light of new information - talking points, talking points TEATHUGLICANBUSHLTLER KOCHTOPUSSARAHPALIN!!111one1!

  • Duke||

    I know. The progs, libs or whatever they call themselves are the least introspective people I’ve ever encountered. They simply cannot or refuse to take a step back, and examine their rhetoric. Hey, I admit I like Bush at first -- I was in my 20s and he seemed better than Clinton. But when I saw what he did, and who he surrounded himself with, I turned on him. The Left doesn’t ever do that. I don’t know why, but they don’t ever lose faith in their guy or their cause, even when both are demonstrably proven wrong.

  • PH2050||

    You guys keep talking about fake scandals when we really need to be focused on corporashuns!

  • Almanian!||

    Newspaper headline for Ilitch's robbery...."He Shoots He SCOOOOOOOOOOOOORES!"

  • Killazontherun||

    Given, you know in a heart beat if it ever came down to honoring private debt holderss versus letting public employee unions have their way who would get the ass fucking. So, qho in the world of capitalism of the voluntary kind would be willing to take the risks when capitalism of the crony kind is all Detroit has left going for it.

    Wenzel just wrote this up moments ago:

    Detroit-Linked Michigan Interest Rates Go Crazy


    Michigan’s Finance Authority is offering an interest rate 14 times higher than that on top-rated bonds to sell $92 million of one-year notes for Detroit’s public schools, reports Bloomberg.

    Today’s offering is the first tied to the city since it sought bankruptcy protection July 18. The bonds are backed by state aid payments.

    The securities maturing in August 2014 are being offered with a preliminary yield of 4.5 percent, according to three people familiar with the sale who requested anonymity because the pricing wasn’t final. says Bloomberg. That compares with a 0.32 percent interest rate on benchmark AAA munis due in one year.

    Note well this event. When financial problems spread to other cities and states, and when interest rates overall are much higher, some cities will be forced to pay rates in the double digits. I they can raise money at all. You heard it here first.

  • Killazontherun||

    Hit submit when I was aiming for the edit button. Sorries. BTW, noted only six grammatical and spelling errors. Quite a bit under my par!

  • OldMexican||

    The arena is being sold as a win-win that'll position the city for a post bankruptcy comeback.

    That Broken Windows Fallacy thingy - how does it go, again?

  • PH2050||

    It's different this time, duh! We have the right Top. Men. in place now!

  • Free Society||

    Detroit, again. It's a great example of cronyist-interventionist government in action, but when will it just die? We've been reading about it's well-documented dying breath for decades.

  • MappRapp||

    The whole thing sounds kinda crazy to me dude.

  • laurenrhoades||

    like Albert responded I am amazed that a single mom able to profit $8568 in 1 month on the internet. have you read this web page... & my classmate's sister-in-law makes $73 every hour on the laptop. She has been out of work for 7 months but last month her check was $17103 just working on the laptop for a few hours.

  • The Late P Brooks||

    You don't become a billionaire by spending your own money.

  • ||

    You do want more Stanley Cups, don't you? Or are you anti-Detroitian or something? I mean, it's not like the Lions are gonna bring you a Super Bowl anytime soon, right? And the Pistons are sputtering. That leaves the Tigers who can maybe snag one. But all hopes rest on the Red Wings!

  • LTMG||

    The Renaissance Center in Detroit opened in phases from 1977 to 1981. It's purpose, loudly trumpeted in the media 30+ years ago, was to revitalize the economy of Detroit. It didn't. A new Red Wings stadium will likewise fail to meet its grandiose purpose.

  • gaoxiaen||

    But just think about all the hot dog, T-shirt, and ticket scalping revenues.

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