Why Detroit Died

As the Michigan primary approaches, candidates from both political parties have been promising to solve the problem of Detroit.

But, Kevin Williamson explains, the problems are far worse than the politicians imagine. We should to curb our enthusiasm for a Detroit renaissance. It’s not going to be happening any time soon.

Regardless of the incentives, Williamson notes, businesses are not going to move to Detroit. The reason: there are not enough skilled workers to do the jobs.

In his words:

Even if you were inclined to open a factory there and create some jobs in the process, you’d have to bring in workers to fill them. The people in Vance, Ala., like the people in Stuttgart, know that putting Mercedes-Benz automobiles together requires a great deal of high-skill work. The people building Toyotas in Texas know the same thing. Nobody is moving to Detroit, because there are no jobs to be had; good jobs aren’t coming to Detroit, because there aren’t enough good workers to be had. The best you’re going to see in Detroit is Shinola workers shoving Swiss-watch movements into Chinese cases and stamping them “Made in Detroit.” Sentimentality is a form of capital, too, when it can be used for marketing purposes.

Either the education system is failing students or the culture at large has made it nearly impossible for children to learn. Perhaps both are to blame:

Detroit is a city in which only one in five black men graduates from high school on time — in a city that is 83 percent African American. You think Google is going to move its headquarters there, or invest in a major facility? Tesla? Apple? Does that sound like a place you would invest in?

It was not always thus. In the past jobs gravitated to Detroit because it had a great deal of human capital, people who were willing and able to do the job:

Contrary to the received version, the automakers did not build Detroit. The city already was a center of manufacturing excellence, with skilled craftsmen and mechanics who had learned their trade in the marine-transit business easily making the transition to the new automotive business. In the early days of the 20th century, dozens and dozens of automobile companies were founded, mostly in the old industrial centers of New England and Ohio. Detroit thrived because of its human capital, and because of the entrepreneurs who made the most of it.

Williamson does not mention it, but we note that in 1967 Detroit saw one of the worst race riots in American history. Whatever the cause or the intention, the city has never really recovered. Rioting rarely induces people or businesses to relocate in a city. At the time and since, America has tended to excuse race riots as expressions of rage against racism. In many cases, however, the communities that rioters burned to the ground have never recovered.  So much for social justice warriors.

Besides, Detroit seems to have joined some other American inner cities in adopting countercultural values. Sex, drugs and rock ‘n roll. That will do it. While many upper class Americans thought that the counterculture was a harmless weekend diversion, Charles Murray pointed out that lower class Americans took the new values to heart. The result was a spike in out-of-wedlock births, in broken homes, in drug and gang violence… all taking place in a culture that was increasingly matriarchal.

If the states are the laboratories for democracy, America’s inner cities, led by Detroit, were the laboratories for cultural revolution.

Detroit politicians thought that the problem was discrimination and the lack of social justice. They did not understand the importance of reinvesting capital. Like socialists they believed that wealth needed to be taxed and distributed. Then it could be doled out by the government. If property is theft, as Proudhon famously said, then enterprising socialists could right the scales of justice by taking the wealth and redistributing it. And yet, wealth that is redistributed is wealth that is not working. Ergo… Detroit died.

Williamson explains:

Just as short-sightedness leaves Arab oil emirates poorly prepared to weather declines in oil prices, civic and corporate myopia left Detroit dependent upon a handful of firms whose production undergirded the entire economic ecosystem of Detroit. A combination of factors deformed the economic foundations of Detroit, from governmental protectionism (which made managements thick and lazy) to union rapacity (which diverted potential investment capital into inflated pay and benefits, creating a lot of multimillionaire union bosses) to our national unwillingness to deal with the fact that Germany and Japan — smoking ruins at the end of World War II — would eventually rejoin the modern industrial economy.

Detroit politicians and union leaders were living in the present. They wanted to get what they could out of it. Rather than think how they could revitalize their city they cannibalized its carcass.

We recall the bitter struggles between the auto makers and the UAW. In the end auto workers were very generously compensated, but not for making better cars. It was more about what could be wrung from the capitalist bosses than how to improve production. More benefits for workers meant less investment for research. The labor/management struggles opened the door to foreign auto workers. Worse yet, American auto manufacturers shut down operations in Detroit and moved operations abroad.

Why is Ford building a mammoth factory in Mexico? The Wall Street Journal explains the decision:

One impetus behind Detroit’s Mexico expansion is the United Auto Workers new collective-bargaining agreement, which raises hourly labor and benefit costs to $60 in 2019—about $10 more than foreign auto makers with plants in the U.S.—from the current $57 for Ford and $55 for GM. The increasing wages make it less economical to produce low-margin cars.

Thus, the problem was the same that bedevils all socialist regimes. Misallocated capital. When politicians and bureaucrats tell businesses and investors where to invest and where not to invest, you find yourself with problems like these:

We see dead capital around us all the time: the suburban black holes of derelict shopping malls, failed big-box stores, block after block of abandoned housing in cities such as Philadelphia and Baltimore. Sometimes those facilities are kept dead by conservatives’ favorite villain: regulation, especially overzealous planning-and-zoning regimes that prevent the rehabilitation of commercial and residential properties.

Cities that are falling apart tend to be run by liberal Democrats. Such politicians do not trust the free markets. They do not trust the judgments of investors. They believe that property is theft and that capitalism rests on the most venal of human impulses. They insist that capital investment be controlled and policed by the government.

In the end, you get cultural anarchy. In many inner cities, families have disintegrated, gangs rule the street, crime rates are at nightmare levels. The leaders of the Democratic Party blame it all on white policemen. No one thinks to hold the local politicians and union leaders responsible. And no one suggests that the people who live there might choose to live their lives differently. Since they are never held responsible, they sit back and await the arrival of the next government program.