Today, many are positing their theories on what caused Detroit’s bankruptcy. What follows is an unscientific and incomplete list of what I believe to be some of the major causes of Detroit’s decline.
LACK OF NATIONAL INDUSTRIAL POLICY/MARKET SHARE DILUTION
The primary competitors for Detroit’s market share are the Germans, Japanese and Koreans. These countries and their manufacturing infrastructure lay in smoldering ruin after World War II and the Korean War. Once the wars ended, our competitors, aided by the Marshall Plan we funded, began picking themselves up out of the rubble of their manufacturing base.
Throughout the 40s, 50s, 60s, 70s and 80s Detroit had a reliable, captive market in the only place on earth still ignorant enough to practice laissez-faire capitalism. Insulated from world strife by the Atlantic and Pacific; we thought ourselves immune to competitive forces. Then our European and Asian competitors came at Detroit with fangs bared. They made good use of their time while lying under radioactive rubble.
In time, Detroit’s aging factories closed and crumbled to foreign competition that observed a more Darwinian approach to economic competition against the only country still deluded enough to think it enjoyed unrivaled economic supremacy. That willingness to ignore reality persists today.
If aspirational products failed to steal Detroit’s market share, then a combination of product dumping, currency manipulation and foreign government collusion did. Detroit no longer needed scores of auto factories idled to lost market share.
LOST UNION JOBS
In 1979, the UAW enjoyed its membership peak with 1.53 million members. Today, the UAW has only 300,000 members remaining, In fact, Detroit’s fortunes faded as union membership decreased. So the contention that union membership killed Detroit is a non-sequitur.
This awkward attempt to hammer square-peg ideology into round-hole reality leaves Detroit’s union haters without credibility. Far from being a cause of Detroit’s decline; the lost union jobs are instead, a symptom of it.
If the union jobs were replaced at all they were replaced by lower-wage jobs paying lower taxes.
The freeway also helped bring about Detroit’s decline. The freeways bore urban denizens out to the country to seek bucolic pastures to live in. Detroit’s suburbs grew and populated. Detroit emptied steadily. The first urban freeway, the Davison Freeway, was built in Detroit. The first traffic light was used on Woodward Avenue too. The invention of the freeway, here and elsewhere allowed people to shun urban living, and ushered in the era of commuting. Property tax revenues diminished and eroded steadily.
A VICTIM OF ITS OWN SUCCESS
Throughout the 60’s, 70’s, 80’s and 90’s Detroit automakers embraced a larger and larger amount of automation in all of its factories. Jobs that used to require 10 people now required none as robots took their place on the line without Union dues, potty breaks, strikes, lunches or other physical vulnerabilities. Auto companies cast off municipal taxpaying employees by the hundreds,….then,….the thousands.
Auto companies radically increased efficiency. Advances in materials and process improvements required far less manpower. Cars now take far fewer people to assemble. Suppliers in Mexico, China, Korea and Japan now make parts that Detroiters used to make. All of those tax-paying jobs were lost to Detroit.
Cars began lasting longer. Admit it. Do you look around for another car after only 100,000 miles like you used to? Me neither. My current 2002 Chrysler has only 182,000 miles on it. I’m not looking at buying another until it reaches about 250K. More revenue lost for the old City.
The model of economic success changed. It used to be that a company prospered by dreaming up a good concept or product, developing it, and getting it to market better and cheaper than anyone else. You innovated, you invented, you improved processes, you profited.
Then along came a series of automotive management trained to offshore work, and make money by trading money, buying other companies and selling them, often destructively. A series of failed business ventures plagued each of the Big 3. Bad business deals were made and the people who absorbed the fallout for it were on the line as corporate cash losses translated to layoffs on the line. Remember Roger Smith?
The orgy of greed reached its climax in the Great Recession. Only a fortunately-timed global recession stopped Detroit’s bankruptcy and plunder. Only government intervention by Presidents G.W. Bush and B.H. Obama stayed Detroit’s execution. More Detroit plants were closed, more money lost to the city.
DETROIT’S SHEER PHYSICAL SIZE
Detroit’s population left for the suburbs and left empty houses behind. Detroit’s city workers were left to maintain an area that could hold the cities of San Francisco, Boston and Manhattan combined. Too much area and not enough tax-paying citizens to fund its upkeep. The strained city resources are incapable of coping. More strain on Detroit’s budgets.
As I say, this is far from a complete list, but I find it a far more realistic one.