Golden Arches and Broken Dreams: American Cities Drown in Debt

Published on Spiegel Online International, by Marc Hujer, January 3, 2013 (Photo-Gallery): San Bernardino, California, has gone from being the birthplace of McDonald’s, one of the world’s most successful companies, to a mound of unpaid debts. It’s a sad example of what a lack of infrastructure investment and an almost religious aversion to higher taxes have done to cities across the United States … //

… Trying to Save the City from Abandonment:  

  • The financial crisis has significantly reduced the city’s sources of income. This includes sales tax, but more crucially property tax on houses and real estate, which are now nearly worthless.
  • The number of house foreclosures here is three and a half times the national average, and the rate of decline is accelerating every day. Detroit sprays the front yards of abandoned houses with green paint so that it at least looks as if lawns still grew there. But San Bernardino doesn’t even have the money for paint.
  • Beena Khakhria is a real estate agent in San Bernardino. She works for Neighborhood Housing Services of the Inland Empire (NHSIE), a nonprofit organization that tries to save abandoned structures. She bids on foreclosed houses, and if she wins the bid, she has the worst of the damages repaired, replacing rotten window frames and infested floors. Then she looks for buyers, who must prove they plan to live in the city.
  • It’s an attempt to save something that is already beyond salvation. Take, for example, the house on Rose Street, directly across from Interstate 210. The highway is a behemoth of rock and concrete, loud and eight lanes wide. Khakhria would like to buy this three-bedroom, two-bath house. At $56,000, it costs a tenth the price of an apartment in the better areas of Los Angeles. But will anyone want to live in a house facing the highway?
  • However, Khakhria doesn’t have the same worries that real estate agents in better cities do. “The location is perfect,” she says. “For my clients, it’s an advantage that the highway is so close. It makes them feel safer if the neighborhood doesn’t seem completely dead.”

The “Me” Culture:

  • The US government’s investment in its economy has declined steadily since the 1970s. Publicly held assets accounted for 72 percent of the country’s gross domestic product in 1975; today, that amount is under 55 percent. The mayors of individual American cities have certainly initiated construction projects, such as stadiums or community centers, sometimes using borrowed funds, but there is no overarching plan. The federal government no longer undertakes large-scale projects as it did with the Hoover Dam in the 1930s or the interstate highway system in the 1950s.
  • Meanwhile, in many places, mayors, government employees and police officers have simply helped themselves to city funds, giving themselves higher and higher salaries and creating new privileges for themselves. San Bernardino has firefighters who earn $100,000 a year. At the same time, the city’s retirement fund contributions have risen. Now they are three times what they were a decade ago, devouring 15 percent of the city’s budget and leaving the city government with its hands tied.
  • But instead of addressing such problems, public debate has tended to focus on one thing: lower taxes. Property tax in San Bernardino is just 1 percent. It used to be much higher, but was reduced by a referendum, a decision that is now taking its toll. For example, the city lacks a modern transportation system that would connect its residents to the nearby metropolis of Los Angeles without requiring them to navigate the overburdened freeways.
  • This reliance on public infrastructure is surely what President Barack Obama meant when he declared during his election campaign that entrepreneurial success is not possible without a strong government, telling business owners: “You didn’t build that.”
  • Obama’s comment was directed at the mistaken belief that each individual is completely and solely responsible for his or her own success or failure. Republican politicians stubbornly block most attempts to increase taxes in the US. Indeed, America is in crisis precisely because it has held this belief in an individual’s complete and sole responsibility for far too long.

Dreams and Reality:

  • Albert Okura, the man who owns the museum at the site of the original McDonald’s restaurant, founded Juan Pollo, his own fast-food chain specializing in grilled chicken, in 1984. Okura says his success is based on the same principle as the one behind the McDonald’s serving machine in his museum: He grills each chicken the same way, down to the second.
  • Juan Pollo now has 32 locations, making Okura one of San Bernardino’s few modern-day success stories. He would like to open a restaurant in Los Angeles, but doesn’t have the necessary funds — a restaurant in Los Angeles would cost much more than all his restaurants in this city where no one wants to live.
  • Okura calls himself the “Chicken Man” and says his life goal is to sell more chicken legs than anyone else in the world. He’s also trying to get his name in the newspaper to help advertise his company. For example, for a festival celebrating the anniversary of the founding of the first McDonald’s, Okura rented a sports car and parked it in the museum’s parking lot.
  • He was trying to appear like a successful businessman, but the car was unfortunately stolen from the museum parking lot. The next morning, Okura’s name was indeed in the newspaper — under a headline reading “Car Stolen.”

(full text).

More Spiegel Online International’s Photo-Galleries:  

Comments are closed.