Coming to Terms: Applying Contract Theory to the Detroit Water Shutoffs

Abstract

After the City of Detroit underwent financial takeover and filed the largest municipal bankruptcy in American history in 2013, the city’s emergency manager encouraged mass water shutoffs as a way of making the city’s water utility a more attractive asset for sale. The sale never took place, but the water shutoff, too, became the largest ever in American history, with over 141,000 homes subjected to water disconnections over a period of over six years. The governor of the State of Michigan ordered that the shutoffs be temporarily suspended for the duration of the COVID-19 health emergency in March 2020, and that water be restored to homes that had been disconnected from water services. Human and civil rights activists and health officials have long sought the end of the shutoff campaign based on its disproportionate impact upon Black people, its subjection of people to sub-human living conditions and serious health risks, and its ineffectiveness. Pleading violations of civil and human rights laws, however, has proven unavailing; even condemnations from the United Nations have not sufficed to convince the City of Detroit or the State of Michigan to put a permanent end to the water shutoffs, their lack of success and high human cost notwithstanding. This Essay uses contract theory to clarify the relationships between the people of Detroit and the local, state, and federal governmental bodies exercising jurisdiction over them, and to explain why the shutoffs persist. A racial contract exists amongst Michigan’s white body politic which seeks the exploitation of Black people and resources—including Detroit’s water. Performance of the contract requires the dehumanization and exclusion of Black Detroiters in order to establish and maintain a rent-seeking order in which Black people effectively subsidize the delivery of water and sewage services to white suburbanites who view Black governance and Black proprietorship as a breach of the social order for which they bargained. The City of Detroit has been able to rely on anti-Black narratives and beliefs to create the mirage of a contractual relationship with Detroit residents that Detroiters have breached; in reality, however, Black people lack contractual capacity under the terms of the racial contract, and the City of Detroit and the regional water authority treat Black people’s use of water as an externality resolved through taxation.