Firing elected officials and arbitrarily dissolving legal contracts are indicative of systems that suffer from a “democratic deficit.” We often see such cases from China or Russia on the front pages of newspapers, with the implication that such things do not happen in America. Yet last month in Michigan, Governor Rick Snyder signed a law codifying both of these practices under the aegis of safeguarding “fiscal accountability.” This accountability does not extend to the governor’s appointed officials, who are imbued with the ability to strip elected officials of nearly all duties. The first such case has arisen in a poor and predominantly African-American town called Benton Harbor, where the appointed Emergency Financial Manager Joseph Harris has revoked all powers from the elected government except calling, adjourning and rubber-stamping meetings.

Harris was appointed in early 2010 to address “the city of Benton Harbor’s financial emergency.” In late 2010, he boasted of closing the budget gap primarily by “reductions in the Police Department,” but also with cuts to public works, code enforcement and accounting. At this time, city commissioners called a town hall meeting protesting the cuts and their limited options to take back their community. Luckily for Mr. Harris, the Local Government and School District Accountability Act signed last month allows him to legally ignore the wishes of the city commissioners altogether.

At the top of the agenda for the impoverished town is a proposal to take much of the city’s public beachfront park to build an exclusive $500 million community and golf course. USA Today detailed this proposal in May of 2010 (after Mr. Harris was appointed) in an article titled “Benton Harbor, Mich., bets on golf course by Jack Nicklaus.” Judging by the protests against the plan from citizens and (now powerless) elected officials, it doesn’t seem like the people who actually live in Benton Harbor are doing much betting.

Mr. Nicklaus is quoted as saying that the plan shows “how golf is being used as a vehicle for social and economic revitalization.” The idea that this plan will meaningfully revitalize a town with a median income under $15,000 finds its justification in some kind of trickle-down theory. What are the mechanisms by which an exclusive golf community (yearly fee between $4000 and $5000) meaningfully improves the lives of people in need of education, healthcare and security? If the goal is revitalization, defined as helping to improve the lives of people that already live there, we can find more focused and effective ways to do it — especially considering that $500 million could pay off the town’s debt 31 times. If the goal is to drive up the cost of living and to split the community apart, mission accomplished.

This case is stark but well within the bounds of the act. There is no incentive for other EFMs to undertake more moderate changes aimed at actually improving communities. Bloomberg News notes that this law is likely to attract the same people who did “corporate restructurings” during the financial crisis — although this time around restructures can only plan to make “$150 an hour.” Would anyone want their town reorganized according to the principles that were used to restructure financial institutions?

If we take a cursory look at the law itself, there are obvious “loopholes”: A town may be selected for review at “the treasurer’s sole discretion.” If this happens, the governor sends reviewers and there are fifteen ways to be found in violation, with one of them being “any other facts and circumstances indicative of local government financial stress or financial emergency.” The governor himself makes the final determination — if a “financial emergency” is determined, the governor appoints “an emergency manager” with unlimited powers, including the “termination… of contracts.” It is a closed system controlled by the governor’s office with a very limited appeals process.

There is nothing democratic (or even coldly efficient) about this system. The whole operation betrays a bias: We must feverishly pay our bondholders and creditors—a single violation of these “covenants” is sufficient to revoke all democratic processes. And then we must destroy things like union agreements that in theory have the same legal standing. Making smart investments in communities is not an option—instead, austerity is demanded of the poor while incredibly expensive establishments are built for the wealthy in the name of helping the poor. This is backwards not only economically, but also in the disdain it shows for the most elementary tenets of democracy.