donald_jones_3_copy.jpgImagine  a ship  that is slowly sinking because it has hit an iceberg. As the engine becomes flooded, the ship begins to slow down. Now imagine that,  instead of trying to fix the hole and restart the engine, the captain says, “Were going to throw members of  the crew overboard so that we can pick up speed.”  Temporarily that may help.

With some of the crew gone, it will be lighter and faster – slightly.  But the ship will soon be lost at sea.

That ship is our local economy.  The hole is the housing crisis.  Each foreclosure  lowers the price of  the houses around it. When that happens tens of thousands of times in a single county, hundreds of thousands of times in a state,  property values plummet. They have fallen so badly  that tens of thousands of people have negative equity.  

They owe more than the house is worth.  They are “the new poor.” 

Having lost  all their equity, they are reduced to the status of renters.  Many simply turn in the keys. This leads to a new cycle of foreclosure and falling property values. In the end, the whole economy begins to stall.  It’s very much like dominos.  The dominos are falling all over the state.  

Unless we find a way to stop this chain of disasters, county bankruptcy and, later, even state bankruptcy is possible in the foreseeable future. While there are many factors that go into this, one thing is certain: Public employees — from teachers to firefighters — had nothing to do with it.

It is also true that during the housing boom local government leaders spent like mad, creating departments that were duplicative and expanding government.

In response, Broward County has already given out hundreds of pink slips.  And the new Miami-Dade County mayor, Carlos Gimenez, is determined to cut the budget down to “size.”

Unlike Washington, deficits do matter in local government. Some trimming of departments may be necessary. But the bottom line is this: We must not balance the budget at the expense of public employees.  Throwing off the crew is not going to save the ship.

In the past, discussions about the economy unfolded like a play in three acts. The starting point is the deficit, the climax is a battle that pits the unions against everyone else and the curtain falls with public employees getting the ax. But layoffs do not address this issue. It makes the problem worse.

The problem for Miami-Dade is that the county already has an unemployment rate of more than 13 percent.  This reflects the fact that the economy, like the engine of the ship, has slowed down. The black unemployment rate in Miami-Dade is considerably higher. In the face of astronomically high unemployment, to lay off employees when the economy is already slowing down will further damage the ship and further slow down the engine.

We need a new script, one about how we get the engine started.  One way is to increase revenues. In other cities and counties, research has shown banks often foreclose on property and then play a game by not recording the mortgage for some time to avoid paying taxes.  Potentially millions of dollars in taxes may be available.  The county has an obligation to investigate.  The mayor – or the governor, if he is listening – should move to create a moratorium on foreclosures until we can get a handle on this problem.

But  the ultimate solution is to create jobs. This – and keeping taxpayers in their homes – should be the starting point of  the discussion. Why not an economic summit where the city can talk to employers about job creation?

The problem is not money. We have had a corporate recovery but no jobs. The issue is fear. Employers are afraid to hire because they are afraid that we could still slide back into recession. Dialogue could help.   At the summit, the county could recruit economists and other experts who could show that by companies failing to hire, the economy contracts, not only pushing workers into the new breadlines but also taking away their ability to buy, hence dragging down the employer’s own bottom line.

Unions and public employees are not the enemy. The recession is. In  disaster films, the victims, gripped by panic,  begin to turn on one another.  But the hero calms them and gets them to work together.   We need a hero to do just that.  We are all in this together.

Donald Jones is professor of Law at the University of Miami.  He may be reached at