Althouse: "[T]he riddle to Detroit’s struggles is... easy to solve. This formerly advanced city is still clinging to work that America’s richest cities years ago waved goodbye to."

February 8, 2015

"[T]he riddle to Detroit’s struggles is... easy to solve. This formerly advanced city is still clinging to work that America’s richest cities years ago waved goodbye to."

"Cities like New York thrive precisely because they don’t live in the past, while Detroit continues to implode precisely because it does."

52 comments:

LYNNDH said...: Which means Unions and large unaffordable salaries and pensions.; 2/8/15, 3:59 PM
Sebastian said...: Sorry, no. Fell into the usual single-factor-explanation trap. "Clinging to work," past or present, is not the key to Detroit's riddle. A few other things happened that hurt Detroit, all well documented.; 2/8/15, 4:00 PM
buwaya said...: He's missing quite a lot, in spite of some truths.
- Detroit, in his economic argument, isn't just Detroit, it is also its suburbs and region. The suburbs and region have done far, far better than Detroit the central municipality, in spite of the city proper being, physically, mainly suburban tracts. Detroit's celebrated degradation is very specific to its city limits. Its former industries and their well-paid workers still exist, mostly very nearby. A better argument can be made about any nowheresville in the US without Detroit's specific issues.
- There are few cities like New York (or San Francisco, Boston, LA, Seattle, Washington) because there is very little opportunity to copy their business models. They aren't models at all, they are in the main just happy circumstance. In real terms these cities are hives of intense consumers, they produce very little value, even intellectual value, they mainly live on what an economist would call rents. These are convenient places for the renters to live, and there are only so many rentiers at this level any economy can support. Its sort of like assuming that a city anywhere in the world can be turned into Dubai, without oilfields and supporting facilities and industrial communities everywhere in the region, and the consumers of their products around the world, to support it.; 2/8/15, 4:04 PM
James Pawlak said...: Now, if Detroit's Police Chief became its Mayor....; 2/8/15, 4:06 PM
Rusty said...: Personally I'm going with 40 or 50 years of democrat rent seeking mis- management.; 2/8/15, 4:07 PM
dbp said...: The author's thesis seems to be a kind of creative destruction spin-off. The problem is that, sure, Nabisco leaving NY freed up space for Google, but it is not as if Google couldn't have found or built-out some space in NYC otherwise. Who can possibly think that Detroit has failed to be a high tech mecca because there is not any available space?; 2/8/15, 4:38 PM
David said...: Horse Manure.

New York controls the money. Detroit does not. New York is the main point of entry for the nation. Detroit is the point of entry from Western Ontario. New York has been building its wealth since the late 1600's. Detroit only started about 1890.

He mentions Pittsburgh, where I grew up. Carnegie and Frick made huge fortunes in Pittsburgh. They both moved to New York to spend and donate their money. Many others did likewise. The money flows to New York, which is a big part of the long term success.

There's also a racial aspect, though it's not as simple as some people posit. New York has always attracted large numbers of foreign born immigrants, a predominantly white group. Detroit's immigration came largely from the American south. One of the results of this was that New York's immigrants had an upwardly mobile path not blocked by race. Detroit's did not. Part of the result of that was a permanent, racially distinct underclass, which become both the cause and the victims of Detroit's disfunction. New York's underclass was always there, but it was a shifting group, with many members moving up and out, and others taking their place.

Finally, because New York has always been the financial center, it has been a magnet for top talent from across the nation, in all fields. Only a few cities have ever achieved that status for any lengthily period of time. To a degree it has been done by Boston, Atlanta, Houston, San Francisco, Seattle, for different reasons at various times.

Geography and demography are destiny. New York has been blessed in both categories.; 2/8/15, 4:43 PM
David said...: P.S.

Google now has a huge presence in the old Nabisco factory in the East End of Pittsburgh. This proves mainly how opportunistically smart the people running Google are.; 2/8/15, 4:45 PM
Michael K said...: I don't buy his premise. Auto manufacturing moved to non-union states. The Japanese, as a result of tariffs, moved assembly to the US in the 80s and expected their plants to be unionized. They were surprised when the workers did not want unions.

The last California aerospace plant closed. The LA Times, of course, misses the most important fact in the story.

A union job, good pay and benefits, and a pension. Saldana's will pay him about $2,000 a month before taxes, with no medical, but it won't kick in until he's 55.

Airplane manufacturing is moving to South Carolina. Wonder why ? Don't look in the LA Times.; 2/8/15, 4:49 PM
David said...: I would better say that the constrained semi-permanant racially distinct underclass was part of the cause of Detroit's disfunction. Certainly not all. It's hard to maintain economic and social momentum when you have a large percentage of your population blocked from full opportunity.; 2/8/15, 4:50 PM
Michael K said...: "Detroit only started about 1890."

Detroit also benefited from water access. The steel came in ships built for the purpose. So did Chicago but the unions and the politicians have killed both cities. Chicago still has a pulse for other reasons but, unless this governor can get the trash carried out, Chicago is only 30 years behind Detroit.; 2/8/15, 4:52 PM
David said...: Michael K. is correct. The article looks erudite and sophisticated on the surface, but actually it's a product of a parochial ignorance.; 2/8/15, 4:53 PM
Michael K said...: "when you have a large percentage of your population blocked from full opportunity."

They came there for opportunity. What happened ? Ask LBJ and Coleman Young.; 2/8/15, 4:54 PM
David said...: I think Chicago has a much more solid foundation than Detroit did, Michael K. More diversified, better location. Nowadays it's air, highways and railroads rather than water. Chicago has continued to do a great job of making itself a logistical hub.

Why did Atlanta boom and Birmingham fester? Many reasons, including a more progressive racial climate in Atlanta. But think airports. Atlanta's commitment to its airport has been crucial to its long term success.; 2/8/15, 4:57 PM
David said...: Race is huge.

Why is the South now competitive and taking jobs from other regions? A lot of it has to do with the revolution in racial attitude that has swept the south. There are other regions and groups who have an interest in perpetuating the idea of a virulently racist south, but in fact that time is gone.; 2/8/15, 5:00 PM
sinz52 said...: In my younger days, I used to run the Detroit scenario on the SimCity computer game: Older smokestack industries, poorer population, lower tax revenues, high crime.

I found exactly one way to bring Detroit back to prosperity: Bulldoze away more than half of it, turn that land into parkland and farms, and shrink the city down to a size that can be managed on that shrunken tax base.

Detroit is 142 square miles. It should be no more than half that large--possibly even smaller.; 2/8/15, 5:02 PM
Titus said...: IMOpinion the 4 most fab cities in America are NYC, San Francisco, Seattle and Boston.

A fab city needs to be on the coast.

All those cities have a diverse economy too: finance, education, biotech, healthcare, and technology, natch.

NYC is too expensive for me.
San Fran to gay.
Seattle to wet.

I love snow! And driving to the Cape, Maine, the NH mountains, Vermont, the islands and the Berkshires-no planes for my vacas!

FYI-Boston is the number one Venture Capital city in the East Coast.

DC is a government city-gross.
Chicago is in the midwest-gross.
LA is Hollywood-gross.
Houston is in Texas-gross.

tits.; 2/8/15, 5:03 PM
chuck said...: Finance *is* the past, and it could be argued that it preceded the industrial revolution. Production comes and goes, but money is for ever. And it isn't like manufacturing has ended, it has just moved to places with cheaper labor. China and South Korea are doing well as manufacturers. The NE US tried to stave off the earlier migration of textiles to the south by promoting a minimum wage, but that trick doesn't work so well with China and only makes Americas competitive position weaker.; 2/8/15, 5:04 PM
David said...: They came for opportunity and got opportunity. It was far better than the rural south. But there was a racial lid on opportunity that then translated into the social and political issues that clobbered Detroit. Bad government (LBJ and Young) was a part of it, but for a lot of reasons blacks had trouble moving up and out like the white immigrants of NY did. You can believe that this was the problem of the blacks themselves and bad government, or not believe that. But the effect was the same.; 2/8/15, 5:06 PM
David said...: "IMOpinion the 4 most fab cities in America are NYC, San Francisco, Seattle and Boston."

True, if you have contempt for those who are not fab. It's getting tiresome, Titus.; 2/8/15, 5:07 PM
David said...: "I found exactly one way to bring Detroit back to prosperity: Bulldoze away more than half of it, turn that land into parkland and farms, and shrink the city down to a size that can be managed on that shrunken tax base."

Pretty much what they are doing. It's actually part of the policy discussion now. While the policy makers discuss, the bulldozers have been at work.; 2/8/15, 5:09 PM
sinz52 said...: David:

The biggest reason why the South is so competitive now is: Air conditioning.

You can't work in a modern skyscraper on a hot summer day in Atlanta without air conditioning.

Take a look at the older skyscrapers in New York and Boston from a hundred years ago or so. They still had windows you opened in the summer to get fresh air. And the floor plans were highly inefficient because every office needed to be near at least one window.

The modern and efficient "glass box" style of skyscraper can't exist without climate control, especially given the heat load from modern electronic office equipment.

Once air conditioning became common, the South became a place that one could live and work comfortably even in the peak heat of summer.

The rest of the Sun Belt too. Air conditioning made it possible to have office buildngs in Tucson, where the temperature can hit 114 degrees in the shade.; 2/8/15, 5:16 PM
buwaya said...: Actual innovation doesnt happen in NY, SF, Boston, etc.
And neither are these places where the cutting edge of technology gets started or developed, nor where it gets implemented or operated. New things and new innovators tend to come from elsewhere and show up when they are starting to become successful. Little is home grown, or it isn't now, not after falling into this model.
They all live off rents on technology and intellectual assets, ownership of physical assets and enterprises that make profits elsewhere, bureaucracies controlling operations elsewhere, and masses of servants, courtiers, dependents, suppliers of luxury goods and services, etc. They are rather like very large versions of Versailles.

And I'm speaking as someone who has been in the middle of three tech cycles in the SF Bay Area.; 2/8/15, 5:19 PM
buwaya said...: Titus's people, like the courtiers of Versailles, are parasites. Pretty tapeworms.; 2/8/15, 5:22 PM
Titus said...: The creative economic sectors will never move to the south. Yes, the south may get some finance and manufacturing for cheap uneducated labor, (similar to Bangladesh) but the rest of the more fab industries-never, until they change their christianist views.

There is a reason there is no Google, Facebook office in Alabama-they could never attract the talent-who are fag loving, young libs. They don't want to be surrounded by confederate flags and Boss Hogs.

Boston is the biotech, education, and healthcare hub of the country. These industries do actually creat things like heart transplant, a biotech product for a rare disease, medical devices and tons of patents. Fidelity, another Boston based company, creates wealth. Why do these capitalist decide to locate in Boston....talent, that's why grossie states. These workers have been educated at the best universities in the world...on the North East Coast.

Read Richard Florida.; 2/8/15, 5:48 PM
Drago said...: Titus: "I love snow! And driving to the Cape, Maine, the NH mountains, Vermont, the islands and the Berkshires-no planes for my vacas!"

Do you always take cows on your trips?; 2/8/15, 6:00 PM
Drago said...: Titus: "These industries do actually creat things like heart transplant, a biotech product for a rare disease, medical devices and tons of patents."

Love how the HR guy pretends to be one of those "creative" types who actually create things.; 2/8/15, 6:03 PM
buwaya said...: Richard Florida is an idiot who confuses cause with effect. His original idea is Cargo Cult science in educated trappings.
As for heart transplants, they were invented in South Africa, by a Boer. These people are even more redneck than US Southerners.
As for just about anything in tech, they are born, almost all, in remarkably out of the way places, inadvertently done by people who feel free to do cool stuff. Places like SF are culturally stultified, and actively suppress, in public and private, young people's desires to do cool stuff.
I was more free to invent and tinker in Manila than my kids ever have been in SF.
Google and Facebook are far more about marketing than tech. Which is par for the course for the enterprises that succeed in these places.; 2/8/15, 6:12 PM
Left Bank of the Charles said...: Titus think North Carolina is in the North.; 2/8/15, 6:15 PM
SJ said...: @Buyawa Puti:

I can step out on my front porch and look at 8 Mile. (Of movie fame...but not the section of 8 Mile that was the subject of the movie.)

I live in the burbs. It's not Detroit, it's the suburbs.

The extended Metro Area still boasts a population of nearly 4,000,000. The core city declined to ~700,000, in an area that used to be home to 1,900,000.

Many businesses are in the suburbs.

One odd thing: the reason for Detroit's economic success was the personal automobile.

One significant factor that allows so many people in the Detroit Metro Area live in the extended suburban area?

Personal automobiles.

There are many other factors in the decline of Detroit. But the industry of Detroit was successful, and that helped enable people to move far from the Downtown area.; 2/8/15, 6:27 PM
buwaya said...: My point precisely wrt Detroit.
I used to do a lot of work there on machine tools, several clients in the area (not in Detroit).
Ideally Detroit should have been the center of the region, for entertainment, culture, education, where the rich had their condos. A San Francisco for the SF Bay in effect. It had the leftover architecture, the mansions, etc. It also could have been one of its own suburbs, as San Francisco actually is. But no.; 2/8/15, 6:37 PM
rhhardin said...: White flight and welfare voters.

An effect, not cause, is no new industry.; 2/8/15, 6:57 PM
TreeJoe said...: Was talking to my brother today, who put me as a beneficiary in his teacher's pension plan.

He's incredibly into tracking his finances, budgeting, etc....but he has no idea how much money is in his pension plan attributed to him.

I pointed out to him that in another 15 years they are going to "guarantee" him about $90k a year for the rest of his life - and that's with him retiring in his 50s.

That's the equivalent to him socking away about $1.8-2.0 million into a retirement account over the course of the ages of 22-56.

So my brother, a very financially savvy guy, doesn't realize that he's technically a millionaire in a few years as a teacher in his 40s - and that's after a divorce and split assets.; 2/8/15, 7:09 PM
Jane the Actuary said...: 33 comments and pretty much all chock-full of sensible observations, more so than the Forbes article.

The decline of industry did not somehow make possible the rise of the financial sector in New York City. Had the Big Three collapsed entirely, the city would not have been a magnet for any other major sector. And Detroit has tried to bring in other industries -- they just suck at it, largely because companies locate where they wish, not where governments want them to be.

There is no easy answer to Detroit. Detroit boosters are fond of big projects and lots of money is spent/wasted on these, whether it's casinos or new sports stadiums or "entertainment districts" or the like. Even the bankruptcy is only a partial solution -- sometimes I think that what they really need is to "bankrupt" themselves from their demographic imbalance. Like Japan's old age dependency ratio, Detroit's dependency ratio -- the relative share of its population that is uneducated, without skills, unable to support themselves, let alone serve as a magnet for employers -- is too high. What to do about this, I don't know.

On the other hand, in earlier blogging today, I vented about Jeb Bush's nonsense solution of importing some new crop of "hard working immigrants." The idea that the problem with Detroiters is fundamentally that they don't work hard enough is equally absurd.

http://janetheactuary.blogspot.com/2015/02/ill-go-there-is-jeb-bush-racist.html; 2/8/15, 7:52 PM
William said...: I think Coleman Young fretted far more about police brutality than about rising crime. He was successful about decreasing incidents of police brutality, but the crime rate (just coincidentally?) kept rising. People move away from high crime areas. A low police brutality rate does not make the city a magnet for bright, ambitious people.....I suppose there are lessons to be learned from the decline of Detroit, but the most visible one is not to discuss openly any of the obvious causes of Detroit's decline.; 2/8/15, 8:27 PM
Guildofcannonballs said...: "The problem with the diagnoses offered up is that they don’t measure up to the most basic of logical and observable realities. Particularly the industry explanations for a city’s demise. Indeed, the departure or decline of already established forms of work would far more likely signal an economic renaissance whereby the economy of a city evolves with the times, with abundant wealth the result."

Shit writing. The problem with the writing is the redundant shit not citing facts just declaring shit. Particularly etc...; 2/8/15, 8:45 PM
Guildofcannonballs said...: Joker says every city is far more likely to be full of abundant wealth than not, for to be a city certainly it must have had some ruin. Rubbish.

Over even short periods of time wealth cycles would indicate according to this analysis every city be wealthy, as they most certainly have had different departures and declines of familiar work in industry.

All cities are True Scots.; 2/8/15, 8:51 PM
Guildofcannonballs said...: To start with Detroit, realize life ain't shit.

Matt LaBash had a great article, linked here by moi before, showing firefighters dying in fires by bums in houses that were supposedly destroyed by contractors who took the money and ran. The houses should have been, were paid to have been, bulldozed. Corruption and carelessness by those in power resulted in firefighters dying.

Extrapolate.

We have numerous abyss' around in Detroit: We ain't talking Kansas anymore.; 2/8/15, 8:58 PM
Anonymous said...: Titus wrote;

IMOpinion the 4 most fab cities in America are NYC, San Francisco, Seattle and Boston.

Seattle sucks now. Since we have legalized marijuana smoking, it seems like every bum in the country has moved here and every teenager and young adult now calls Seattle there home.

It used to be that during the winter months, we'd see a drop in the homeless population. Now they are everywhere. It's gross walking around downtown as they defecate in the streets and are always harassing people for handouts.

When I first started working in downtown Seattle, 5 years ago, certain homeless people had rights to certain corners. When we'd do undercover operations and try and pretend we were homeless, they would chase us off. Now it's so crowded with the homeless and teens and whoever else is just hanging around, they don't own the corners anymore.

Seattle is really going to need to do something if it doesn't want to ruin it's reputation.; 2/8/15, 9:03 PM
buwaya said...: San Francisco, in many ways, is not really a city anymore. This change has been happening gradually, but we are at this point now. For most of its present population it is just a temporary habitation, like a college town, as required for some stage in a career. This is true even for homeowners. Once a family is in the picture or work requires a relocation people move out in an instant. This is really a big hotel or college dorm situation.

The actual "permanent" population, with families, is remarkably small, much moreso for the non-Chinese middle class population, the place really does feel like a place where everyone knows everyone. This is a village embedded in a mass of transients.

The other subpopulations are the very wealthy, who form their own village enclaves, and a declining number of retirees.

It may be me being clueless on the subject but the ambience seems much less "gay" than its ever been.; 2/8/15, 9:30 PM
Guildofcannonballs said...: "Oh he went by there."

"Went by there?"

"Yeah he went over by there."

"You mean he stopped in... Or did he keep going after going by?"

"Stopped in?"

"Yeah your (yur) saying he didn't drive by, but actually went over and stopped in and whatnot then."

"Oh yeah he stopped in. then."; 2/8/15, 9:32 PM
Guildofcannonballs said...: "The problem with the diagnoses offered up is that they don’t measure up to the most basic of logical and observable realities. Particularly the industry explanations for a city’s demise. Indeed, the departure or decline of already established forms of work would far more likely signal an economic renaissance whereby the economy of a city evolves with the times, with abundant wealth the result."

Now I am letting y'all in on how thinkin' gets done here: were this art icle from a "base" as opposed to "acid" lobbyist, such a group whose existence I make no claim therof, brilliance would not accurately describe it but neither droll idiocy.; 2/8/15, 9:41 PM
Guildofcannonballs said...: You bubonic-wise shits will, but don't, thnk of microiagressions.

You chunk-of-shit fools just suffered one: so sue me.

No "I" in think is agro-aggression.; 2/8/15, 10:25 PM
Quaestor said...: Titus may think SF is fab, but it's not. San Francisco is coasting on the output from Cupertino, San Jose, and to a lesser extent Berkeley and Livermore.

What made SF was the bay, once touted as the finest deep water port in the world. But now that the Bay Area's output is virtual and not actual, the Bay itself is irrelevant. The modern container ships which bring Asian manufactures to North America typically have their turbines coupled to a single shaft. This makes them fuel efficient, but rather unhandy in the confines of an enclosed harbor like SF Bay. The Navy moved out long ago when the Nimitz-class carriers became the heart of our battle groups. Now commercial traffic is moving away to the easier ports of Long Beach and San Diego.

If and when Apple leaves leaves San Francisco will face a future as bleak as Detroit's is now.; 2/8/15, 11:52 PM
wildswan said...: What I've heard.

Companies in the US used to have great machines that enabled high wages because the machines led to great productivity. Then US companies moved the machines to Mexico and China and there they didn't pay high wages. So then companies that stayed in the US could no longer compete if they only had machines. In the US you now have to be educated enough to add value, above and beyond what operating a machine will do. The better educated areas are getting almost all the jobs, even the factory jobs. And Detroit isn't educating. Hence Detroit's mess.; 2/9/15, 12:02 AM
Jaq said...: It is even an unsaid thing that there is an unsaid thing going on here.; 2/9/15, 6:00 AM
Robert Cook said...: "Indeed, what’s too often forgotten is that investors create all the jobs, and while factory work once brought with it a desirable wage, nowadays factory pay in countries like China pays the daily equivalent of what would buy a Starbucks latte. Investors have deemed factory work unworthy of most Americans’ abilities."

Manufacturing has not left American shores because "investors (deem) factory work unworthy of most Americans' abilities," but because capitalists have discovered they can fatten their profits by paying the near-slave wages available in China and elsewhere, rather than pay American workers a fair and livable wage for producing products on which the fortunes of the manufacturers and their investors depend.

In short, they are stealing the workers' share of the wealth that is produced by the worker's work.

Of course, this article, written by a capitalist tool for a "Capitalist Tool," can only be expected to take the slant it does, and to deem it a net positive when blue collar jobs disappear from NYC to be replaced by million dollar lofts and "Google and other futuristic companies, or when "(f)ormer glass factories are now populated by fancy restaurants meant to serve New York’s well-heeled residents," (where said "well-heeled residents" will be waited upon by people working for tips--and no benefits--who might otherwise be working at decent-paying jobs with benefits...if those jobs hadn't been transplanted to China.)

What a fucking asshole.; 2/9/15, 7:16 AM
furious_a said...: This comment has been removed by the author.; 2/9/15, 8:17 AM
J. Farmer said...: Detroit's myriad problems can primarily, but certainly not exclusively, be explained with a single statistic: it is more than 80% black or African-American.

The definitive explanation for Detroit's collapse was written about 25 years ago by Ze'ev Chafets: "Devil's Night and Other True Tales of Detroit." Readily accessible through Mrs. Althouse's Amazon portal, I'm sure.; 2/9/15, 8:19 AM
furious_a said...: This comment has been removed by the author.; 2/9/15, 8:25 AM
furious_a said...: There is a reason there is no Google, Facebook office in Alabama-they could never attract the talent-who are fag loving, young libs. They don't want to be surrounded by confederate flags and Boss Hogs.

"Hogg", with two "g"s.

There's a reason there are no Mercedes or BMW (SC) assembly plants in Fab City, either. And soon to be Toyota's North American HQ in Plano, TX instead of Torrance, CA.

Tits can tell us why there aren't any jobs, or isn't any place, anymore in Boston or NYC or the Bay Area for the people who used to build, pack and ship the products those Fab creatives design and market. Not everybody can march in the parade, someone has to sit on the curb and clap.

The young creatives are, unfortunately, loving Austin to death.; 2/9/15, 8:31 AM
Peter said...: "And it isn't like manufacturing has ended, it has just moved to places with cheaper labor." \

BUT even if Detroit's car companies still had the market share they had in 1960, and even if they hadn't moved their factories to Mexico, it still doesn't take nearly as many people to assemble a car now as it did then.

Even if manufacturing had not moved to low-wage countries, it still wouldn't employ anywhere near the numbers it did then.

When GM finally went bankrupt, it had six retirees for every active employee, and all of them were drawing substantial pension and medical benefits. How could a company possibly survive carrying the weight of six for each employee still working (or perhaps just "working," as in "working according to union work rules")?; 2/9/15, 9:09 AM