[Vision2020] What Really Ails Detroit

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>

------------------------------
August 15, 2013
What Really Ails Detroit By STEPHAN RICHTER

IS Detroit’s collapse the story of one American city gone awry? Or is it
indicative of a more profound nationwide problem? The facts point to the
latter.

Though Detroit’s bankruptcy is exceptional in many ways — notably, its size
and its disproportionate impact on African-Americans — the overall decline
of America’s manufacturing centers is evident in the deterioration of many
smaller cities and towns throughout the Midwest and Northeast.

What accounts for this sad turn of events?

The traditional narrative holds that globalization, outsourcing and, after
2007, the recession have been responsible for devastating American
manufacturing by moving jobs out of the country in enormous numbers. But at
best, that is a convenient half-truth.

American manufacturing has been in trouble even since its heyday, in the
1950s and 1960s, when the United States was the global economic powerhouse
and American assembly-line workers earned very decent middle-class wages.

That era of prosperity was not, as is so often claimed, the manifestation
of the American dream. Rather, it was, or should have been, a warning sign
that America was riding a fleeting wave of progress. Almost nobody was
looking hard enough to the future and asking what it would take to sustain
success.

The reason so many manufacturing-sector workers in the United States
received such high pay at that time was not that they had exceptional
skills or had received superior training; it was that the corporations for
which they worked were unsurpassed in their dominance and generated huge
revenues.

But that dominance was, to a considerable degree, a momentary quirk of
history: the absence, in the wake of World War II, of any real competition
from other nations. Once foreign competition was re-established, in Europe
and Asia, only the superior skills of a nation’s workers and a focus on
long-term workers’ training would allow a country to stay ahead.

For the United States, the day of reckoning came as other nations recovered
from the war. In the 1970s, for example, American car manufacturers began
facing competition on their home soil for the first time. Belittling the
Japanese and their funny little cars was not an effective competitive
response, though not for want of trying.

In that moment, American companies, communities and employees should have
started taking the competition seriously. That did not happen. Companies
like General Motors continued to shower blue-collar workers with handsome
pay and benefits.

Who was to blame for this? Not the unions. They did what they were supposed
to do: ask for higher pay and more benefits. No, the fault lay with the top
corporate managers: it was their job, as capitalists, to deny such
increases if they were not justified by productivity trends.

But with a fatal arrogance, executives at American manufacturing companies
did allow those increases, in part to maintain a society of contented,
trouble-free workers, though executives would also use those increases as
cover for their own rapidly swelling compensation. In the 1960s, the
average compensation of an American C.E.O. was about 25 times the average
compensation of a production worker. That ratio rose to about 70 times by
the end of the 1980s, and to around 250 times these days.

It is tragic to hear voices from Detroit declaring themselves ready for a
resuscitation of the city. Revival is a question not just of will but also
of the available skills base, which unfortunately has deteriorated as a
result of a failure to invest in training.

That skills deteriorated is, to a considerable extent, the fault of the
unions. Unfortunately, they shared the management class’s shortsighted
focus on extracting the maximum amount of compensation from companies, even
in the face of the underlying businesses’ failing strength.

Developing the necessary skills base is not a short-term project. It
requires decades of concerted effort on many fronts, by many national,
regional and local actors, including collaboration among companies,
government, trade associations, schools, colleges and universities.

This kind of common purpose, however, is not something that American
society, with its ethos of individualism and personal independence, seems
capable of undertaking. Doing the right thing for the long haul is
typically put off for a later time, if it ever happens.

That such a “strategy” is self-defeating ought to be obvious. Sadly, it is
not — not in an instant-gratification world.

Globalization, in many ways, serves as an early warning system for the
changes required in a domestic society. No society should have been better
prepared to utilize this tool than the United States, given its traditional
— but at least for now largely lost — proclivity to embrace change. That it
didn’t work out that way is a tragedy of the nation’s own making.

Stephan Richter<http://www.theglobalist.com/AuthorBiography.aspx?AuthorId=1>is
publisher of The Globalist, an online magazine.




-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/vision2020/attachments/20130816/54dbc17f/attachment-0001.html>