OVER the next few days it will up to one man, Steven Rhodes, a federal bankruptcy judge, to decide the fate of Detroit. In July the city filed for the largest municipal bankruptcy in American history. This was challenged by unions, retirees and creditors. Last week the trial wrapped up on whether the city was eligible to declare Chapter 9. Now it is up to Mr Rhodes to decide.
Failure to win such protection would be a disaster for Detroit, which has some $18 billion worth of debt and liabilities. Creditors would undoubtedly sue. City services would continue to decline. Of course, bankruptcy, too, has its drawbacks. It is likely to result in cuts to pensions and health-care benefits, and the sale of city assets (possibly even its fine art). Cuts to retiree benefits have the public-employees unions up in arms.
The unions and retirees claim the bankruptcy is an attempt to get around a ban on pension cuts in the state constitution. During the trial their representatives argued that the state did not negotiate in good faith prior to declaring bankruptcy, as is required by law.
The city disagrees. It says it tried to negotiate, but met with a lack of cooperation from debtholders. Rick Snyder, Michigan's governor who approved the bankruptcy filing, described the move as a "very last resort" when he took the stand last month. But he avoided questions about the impact bankruptcy might have on pensioners.
How might the judge be leaning? It helps to look at his questions. Mr Rhodes has pressed lawyers opposing the bankruptcy to explain why municipal pensions in Michigan are sacrosanct, and whether this means the state must guarantee payment. “Is there any other constitutional right, state or federal that is that absolute?” asked the judge. “Even freedom of the press isn’t that absolute, is it?”
Mr Rhodes also wondered what he should do "if bondholders come back and say the constitution protects them?" He asked how the state can make a financial guarantee when it cannot print money. "If you demonstrate there is a constitutional right there," said Mr Rhodes, "what’s it worth if the entity that has the obligation doesn’t have the means?”
It wasn't all one-sided. When addressing Kevyn Orr, Detroit’s powerful emergency manager, Mr Rhodes pointedly questioned his past assurances to pensioners. The judge also said he found it "factually impossible" for Mr Orr's attorneys to claim the city negotiated in good faith whilst also saying the negotiations were "impracticable".
But Mr Rhodes seems unlikely to rule against the city. And if Detroit can restructure its debts, it could have a bright future. The city may be broke, but there are signs of revival in some parts. Outside institutions have stepped in where the local government has failed.
For decades Detroit's white suburbs thrived while the black inner city rotted, and nobody seemed to care. Today it is the most segregated metropolitan region in the country, and its population of 700,000 is a fraction of its post-war peak. But there is a growing realisation that Detroit's problems can no longer be walled off and ignored. Detroit's misery is more than a visual blight on the state—it is a missed opportunity.
American cities are wealth-creation engines. Millennials are also urbanites, and if Michigan is to prevent talented graduates from continuing to flee to Chicago or the coasts, Detroit must become an attractive and active city. It should be a group effort. A thriving city offers benefits to those around it who wish to enjoy some culture now and then. This was very much apparent, for example, when the Cobo convention centre was rebuilt with money from the state, city and three surrounding counties.
Divided, the city has fallen. United, it might stand tall once again.
