Wednesday, June 24, 2009



A representative of something called the Kauffman Foundation appeared this morning on CNBC to expound on plans the Foundation has for reviving Detroit (the city, not the industry). Those plans involved plenty of futuristic endeavors dripping with that esoteric, politically correct fragrance that often emanates from plans derived by people with a big sense of purpose but little of their own skin in the game; the representative talked about biotech, wind turbines, and such, arguing, for example, that the manufacture of wind turbines is not all that different from the manufacture of certain automobile components. There was very little talk of what could be done right now, in a concrete way, to help a city in desperate need of help. What the woman from the Kauffman Foundation had to say resonated with me on a number of levels.

I lived in the Detroit area in 1982-83, a time in which the Big 3 were faced with an unprecedented, at that time, crisis. Just as is the case today, foundations, public officials, and other self-styled omniscient do-gooders were developing grandiose plans to diversify the Detroit economy, and those plans involved things like, mirabile dictu, health care, wind and solar energy, etc., industries that were in the even more distant future than they are today. One got the distinct impression that all this was a sort of charade, and one can understand why. Even though times were hard in the early ‘80s, there was a chance that things would blow over and the auto industry would return to its halcyon days. If that were the case, why would anyone want to diversify away from the car business? Detroit, a city and an area that has long been one of my favorites, full of kind, considerate, fun-loving people who appreciate hard work, a good time, family, faith, and tradition, had and has gotten used to hosting one of the most lucrative industries in the world. The auto industry, when it works, or worked, has a number of features that make it very attractive, the greatest of which is its ability to generate enormous amounts of spondulicks and to spread that wealth to everyone involved, from auto execs to entrepreneurial suppliers to the local financial community to the guy without a college education working on the line. When the industry is, or was, good, it is very, very good. That was why, back when I lived there, Detroit led the country in percentage of owner occupied housing. That, combined with being situated in a breathtakingly beautiful geographic region teeming with venues for water and other outdoor sports, everyone seemed to own a boat in Detroit, and many people had a “place up north.” The auto industry’s ability to make people from all walks of life well off attracted people from all over the world seeking their piece of the American Dream and thus led to one of the most diverse and interesting populations in the country. A trip up and down the radio dial provided audible evidence of the attractiveness of the industry, featuring everything from classical music to jazz to (of course) Motown to country to polka to an enormous concentration of holy-roller preacher types. As a one time boxing fan, I was always amazed at the number of big fights have historically taken place in Detroit in either the old Cobo Hall or Briggs Stadium. Once I realized and saw the enormous power the car industry had to put blue collar people in a position in which they had money to spend on things like title fights, I suddenly understood why, say, Jake LaMotta and Joe Louis spent so much time plying their trade in Detroit. So when things got bad, diversification might have looked like a good idea, and people talked about it, but, in reality, they were just waiting for the automotive good times to roll again. And they always did…until now.

We are seeing the consequences of this inability to act today, but who can blame the people of Detroit for wanting to hold onto a very good thing, especially when the alternatives look, and looked, more appropriate for a Jetsons episode than for the real world the consequences of which its residents are suffering? Pretending at solutions while hoping answers to one’s problems will arise spontaneously is a very human tendency. How many people spend their time beating themselves up over the past or making grandiose plans for a future that will unfold only when certain all but impossible conditions arise? Why do we (and, boy, do I mean that “we” literally!) do this? Because torturing ourselves over stupid, thoughtless, or even despicable things we did a long time ago and making plans that have very little chance of ever having to be put into place is a LOT easier than actually doing something to address our current problems or right rightable wrongs. Even though dwelling on the past or fantasizing about a never to be future are very human proclivities, they are worse than a waste of time; they are counterproductive because they take time and effort away from the hard work and thought necessary to do one’s part in alleviating life’s current obstacles and problems.

It is understandable that Detroit has remain stuck on the auto industry, especially when that industry has been so good to the former fort at the chokepoint on the passage to the upper Great Lakes and the alternatives presented for diversification come from people who are clearly more familiar with navel gazing on other people’s dimes than with actually solving problems and generating wealth. We’d all rather hope that wonderful things with which we have grown comfortable will return, that the good times will roll again. But overcoming this tendency to glance lovingly at the closed door rather than to look for a realistic open door is part of human growth and development and is essential to our survival, not only as going human concerns but also as geographic regions.


Anonymous said...

Hey Prof Mark, recent former student Ken (Elmhurst Tuesday A)here. After reading this thread and seeing the article (GM bailout triggers calls for boycott
at I thought about you. As our learning process has continued I find people like Hugh Hewitt somewhat ridiculous. Now I don't know if you know Hewitt or even if you side with his thought process but in order to get the auto industry back on their feet again and make Detroit the area/city it once was don't you think a boycott is the wrong thing to do regardless of whether the government owns 60%? What if the new GM thrives and begins to buyback the government ownership at a price greater than what was invested wouldn't that do at least two things: 1-obviously begin to reduce the government percent of ownership therefore slowly making GM a more independent company as well as 2-allow the government to enjoy a gain on their (our) investment? Now I know that this will require GM to be profitable but wouldn't you think that instead of a boycott Hewitt would be endorsing the new GM? It almost seems he (Hewitt) doesn't want America to buy American? I look forward to your reply.


The Pontificator said...


Thanks for reading, Ken. Hewitt is known for a lot of things, but being a deep thinker isn’t one of them. The idea of boycotting GM is an example of slavish, and thoughtless, adherence to ideology…or cutting off one’s nose to spite one’s face. While a lot of people, including yours truly, are unhappy about the de facto nationalization of GM, boycotting the company would simply put us further into the hole and thus heighten government involvement, as you point out. The company’s been nationalized, the damage has been done. No sense making it worse. But words like “no sense” and “Hugh Hewitt” seem to fit together very nicely, don’t you think?

People ought to conduct themselves as free marketeers when they buy their cars, as they should do in all aspects of their lives; i.e., buy the best product at the best price, or, simply, pursue the best value. In many cases, that will be a GM car. In other cases, it will be a Honda, Hyundai, Ford, or something else. Value should be the sole criteria in choosing a car. (With perhaps domestic content being an additional consideration, which would be consistent with pursuing the best value if we expand the economic concept of utility, but runs the risk of putting us on a slippery slope. I mention it, though, because I try to buy cars with a decent percentage of U.S. content regardless of nameplate; hence my Honda Accord. I suppose if I did operate as a pure free marketeer, domestic content would not be a consideration. I don’t want to be accused of having a “Do as I say, not as I do” mentality, but I don’t think the slope being mindful of U.S. jobs puts us on is all that slippery!) If we buy cars according to these criteria, the new GM should do just fine, and GM stands a good chance of becoming reprivatized, if you will. Probably not the new Chrysler, but the new GM.

Thanks again, Ken.

Aka “The Pontificator”