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Belmont Club

The Field of Dreams

March 23rd, 2011 - 11:35 am

Detroit — the city that powered America to victory in World War 2 — has experienced what demographer Kurt Metzger called an “incredible” fall in population, plummeting 25% in the last decade. Michigan isn’t doing much better. It lost 800,000 jobs in the same period.

Now the city stands to collect even less money on a smaller base, as Detroit fell below the 750,000 person major city threshold it once invoked to impose higher rates. With the city’s collapse comes a corresponding reduction in political clout. The Detroit Free Press rhetorically wondered whether it still had enough people to support two Congressional districts or whether that would have to fall to one.

The Wall Street Journal says the exodus of residents was primarily driven by the black middle class heading for the suburbs. The momentum is so great that some pundits wondered whether “you put a bottom under it”. But the Detroit is only one of several cities which have seen heavy population losses.  New Orleans has lost nearly 30% of its population, followed by Detroit itself, and Cleveland, Cincinnati and Pittsburgh.

Detroit resident Will Wafer thought back with wonder to the time when people still wanted to live in Motor City. “Will Wafer, 54, a lifelong Detroiter, said the U.S. Census numbers, released Tuesday, are sad but not surprising given what residents of the city deal with, including high auto and home insurance rates and corruption. ‘I remember a time when every house was occupied,’ he said.”

The city’s decline had been in progress for some time. As early as 1961 Time Magazine bannered “Decline in Detroit”, already highlighting the factors which would have been familiar today. “Its problems run so deep that they can be solved only by the effort of labor, management, -’government and citizenry—working in a spirit that once made Detroit the symbol of economic dynamism.”

In 2007 the BBC had a nearly identically titled piece: The Decline of Detroit.  The themes were surprisingly unchanged, except for one new factor.  It followed the disillusionment of Claire McClinton.

Claire’s whole family followed in their footsteps and became “Flintsones,” working for GM – and so did Claire.

They were loyal members of the autoworkers union, the UAW, which won increasing benefits for its members, with average wages of more than $50,000 plus overtime.

“We respected the union then,” she said. “We believed it was the union that had delivered us the American dream.”

What brought things down, some said, was Globalization. Plants went up in Japan, then Korea and then China. But if Globalization were indeed to blame, its baneful effects stopped outside the state line.

But 400 miles south of Flint, another group of car workers are feeling very different.

They work in Toyota’s huge Camry factory in Georgetown, Kentucky, and receive, by their standards, generous pay and benefits.

Toyota is the fastest-growing car company in the United States, and it is building a new factory every year to keep up with demand.

And it is set to overtake GM this year as the world’s largest car company by sales.

For Laura Wilshire, from Ashland, Kentucky , life is good.

“This is the top notch job in the area,” she told the BBC.

When David Frum wrote Detroit’s obituary in 2009 he gave three reasons for its cause of death. The first was the collapse of its auto industry. “Two other factors have to be considered. The first is the especially and maybe uniquely poisonous quality of Detroit’s race relations. … The second factor in Detroit’s decline is the city’s defiant rejection of education and the arts. Pittsburgh has Carnegie-Mellon. Cleveland has Case Western Reserve University. Chicago has the University of Chicago, Northwestern, and a campus of the University of Illinois. Detroit has… Wayne State.”

In other words, it failed to adapt; it believed the good times were a given. You just had to go where the lights were shining and they would continue to shine because that was the nature of things. Claire McClinton may have believed that Detroit was the city that the UAW built. And for those who subscribed to this premise the obvious answer to the problem of expandng prosperity was more of the UAW. This follows Reynold’s Law, named after Glenn Reynolds, the blogger, who originated the argument. Reynolds argued that societies often fail to understand the drivers of success and conflate its accidents with its essence. So when they want more of the essence they invest in more of the accidents.

The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.

This has the tragic effect of luring in victims like ants to a jar of honey. They come for the goods, not the things that created the goods. And they empty the jar. What killed Detroit? Maybe the killers are still at large because the same tendencies are still in play. Mayor Bing thinks the answer to his problems is to bulldoze a quarter of the city straight into the junkpile. Get the city back to the time when the magic was still good and the magic will return.

So his plan is to bulldoze approximately 10,000 houses and empty buildings over the next 3 years and direct new investment into stronger neighborhoods. In the areas that the city plans to bulldoze, the residents would be offered the opportunity to relocate to a better area. For buildings that have already been abandoned, the city could simply use tax foreclosure proceedings to reclaim them. Of course if there were some residents that did not want to move, eminent domain could be used to force them out.

So which areas would be bulldozed and which areas would be left standing?

Nobody knows yet, and those decisions could make a lot of people angry.

There is a great climate for investment in the former Motor City, or so Bing thinks. But the Detroit News says that past efforts to remake the city have done more harm than good. “Mayor Dave Bing wants to save Detroit by persuading residents to leave their homes for better neighborhoods, but the city has struggled to accomplish the smallest of relocation projects — even when they involve cash incentives.”

In one case, the city has spent $19 million buying land for an industrial park on the east side that has attracted one tenant. In another, an effort to build a safety buffer near Coleman A. Young International Airport has cost at least $28 million and lasted 17 years, even though it was supposed to wrap up in 18 months.

Maybe because changing the accidents — just like moving people into new shiny housing — isn’t the answer, but the outcome. Yet hope in government — and in the unions — to fix things still springs green in some resident’s breasts. Bing believes even the population decline can be fixed by challenging it in court. He is determined to find the missing people out there — using city generated building permit applications as a basis — so that the city can apply for state and federal dollars.

For Detroit Mayor Dave Bing, the magic number is 40,000.

The city needs to identify at least 40,000 people who live in Detroit but were not counted in the 2010 census. Speaking at a news conference Tuesday, Bing said the city’s population needs to be at least 750,000 to bring in much-needed dollars from the state and federal governments….

“We are in a fiscal crisis, and we have to fight for every dollar,” Bing said in announcing that the city will seek a recount. “We can’t afford to let these results stand.”

Bing said every resident who is counted by the census will bring in about $10,000 to Detroit over the next decade for schools, roads, hospitals and social service programs such as Medicaid. Bing said the city also is in danger of losing millions of dollars in state revenue sharing if the population numbers stand.

Bing’s approach highlights the war that Frum alluded to but never quite described: the eternal battle between the thing-makers and the dream-merchants. The contrary arguement to the belief that the UAW built Detroit’s prosperity was that Henry Ford built it — built it by faith in the reality of things.  In that view wealth comes from the existence of things like cars, machines, buildings and such, and the intellectual and physical means to make them.  In contrast, the alternative theory is that wealth arises from such things as collective bargaining agreements, laws, aspirations and rights.  In a word,  “if you build it, thy will come”. Mayor Bing’s plan to build developments recalls nothing so much as the South Seas cargo cults who believed all that was necessary to make the skies rain with goodies was to build a dirt airstrip and palm-leaf control tower to attract resupply flights from somewhere. “If you build it, they will come”.

Who “they” is remains unclear. But they are out there.

“Building” in this case doesn’t mean producing the actual product. “Building” means building the dream, constructing the appurtenances of the actual things, not the things. It means creating the “rights”,  specifying the entitlements,  winning the court cases to increase the population so all will be well.  There are some who doubt this will actually work. But there are an equal number who think it will. The war between the thing-makers and the dream-merchants has been going on for a very long time, perhaps since the Tower of Babel and at least through the Cold War.

Some pessimists believe that Detroit is a foretaste of what America could become — or has already become. That the belief in Hope and Change is really the same magical thinking as increasing the population by winning the court case: the last stage of a terminally collapsing system. It is like the lottery ticket on which a jobless man expends the last few remaining dollars in his pocket, the final triumph of the Dream Merchant amidst the ruins of the Kingdom of Things.

My guess is that Bing will fail. The people of Detroit will go elsewhere. Some to opportunity but others to where the things are still good; to the ATM machine and not what is behind the ATM machine. And there they will reapply the magic that once made Detroit a field of dreams. More unions, more entitlements, more free stuff. If you build it, they will come.

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