Is the Rest of America Destined to be Like Detroit?

[Silk_Hope]

<a href="http://www.youtube.com/v/1hhJ_49leBw&amp;rel=0" target="_blank">http://www.youtube.com/v/1hhJ_49leBw&amp;rel=0</a>

[oneinsanecane]

That was definitely eye opening. Sad.

[srvfan]

40 years, from one of the wealthiest cities to the poorest

[bluetick67]

"Is the Rest of America Destined to be Like Detroit?"

No. There is only one Detroit, and a handful of small nieces and nephews.

[sofa king]

       A fast growing government, out of control liberals, wealth and success envy run amok, a community organizing president......Detroit may be the model of things to come. At least we will all be equally miserable....the goal of big government.

[Beel]

The evolution of Detroit since 1980 reflects a government operated mostly by Republicans and Bill Clinton, who in many ways was pretty much an Arkansas Nelson Rockefeller.  At the economic helm for most of that era (we might call it the Reagan Era) was Alan Greenspan, an extreme "free marketeer" who began his career under the sway of Ayn Rand, and only after the financial collapse of fall, 2008, admitted that his general theory of economics had been proven wrong.  During this period of time, automakers in Japan and elsewhere began producing passengers cars that were, simply, better than the ones produced by the US automakers.  During this period, industrial production in the US, generally, was shipped overseas, where a global labor market allowed vastly cheaper production than was possible in the US.  At the same time, in sectors of US industrial production not amenable to being moved overseas, vast numbers of foreign workers were allowed by the US government to come to the jobs available here--some legally, millions illegally--in a rough and ready acceptance of the globalization of the labor force which Ms. Rand explicitly championed in her gibberings.  (Note that the very first act of significance in the Clinton administration was the signing of NAFTA--a Republican measure which before the Clinton administration was fought tooth and nail by the Democrats in Congress).

At the moment, the Randians (together with big business generally) are hard at work and succeeding in the job of castrating a Democratic administration which at least had some hopes of moving the country in a different direction.  It ain't gonna happen.

The result will be--yes, the rest of America is destined to be "like" Detroit.  Enjoy the baseball. 

[srvfan]

If it's Reagan, Clinton, Greenspan, the Bush's, Rush, Hannity, Gingrich, and all the other R's & R's masquerading as D's fault then why aren't there more Detroits?

Why are there so many successful Toyota, Kia, Mercedes, BMW plants located in non-union south?

I guess all those socialist progressive leaders of Detroit and all those union bosses were devotees of Rand and that's why Detroit failed miserably.

[snowcamper]

The Republican's fault?

NAFTA, in theory, should have saved Detroit, because it allowed them to lower their cost of production.

But moving production to Mexico for cheap labor didn't work.

Meanwhile, the Japanese were moving production here.

So it wasn't the location of the production facilities, it must have been differences between the companies.

So let's look at them:
Japanese:
Non-Union
Highly Automated
Few Models
Technological advances usually standard
Built to last
Seemingly (in my experience) a lower-pressure sales environment
Stayed out of politics
Make what will sell

American:
Heavy on the Unions, which also insisted on less automation
Many, Many models (did Chevy and GMC really need their own models of the same basic trucks?)
Technological advances trickled down the line over a long period of time
Planned Obsolescence
High pressure, Good-olde-boy dealership network
Front and center as far as politics
Try to sell what they make.

[bluetick67]

Far more than politics influenced the economic downslide of Detroit.  "White Flight" of the '50's and '60's to the new suburbs, the riots of 1967, corruption at all levels of government and unions - from the 1930's on.  The manufacturing highs were reached as Detroit was the backbone of producing for world War II. Detroit's most grand moments were from the mid 1800's through the early 1900's.

There is a lot of history here. Politics are but one contributing factor, and the slide began 60 years ago.

[Beel]

I'm not sure your list exactly disagrees with mine, Snowcamper.  I do agree that unions cannot simply create an economic circumstance by fiat--a lot of what happened re the Japanese auto ascendancy has to do with technical innovations (taking the term "technical" to include changes in the system of production) which the US Automakers Union resisted shortsightedly.  US carmakers also suffered from lazy management, without a doubt.  I'd say one of the really great issues in historical economics is just how much the globalization of economy can be shaped, resisted, mitigated, or even directly resisted--and in fact, the prevailing economic view of the US Government from at least Reagan to the present (and most definitely this includes the Obama administration--just look at his cabinet and who's in the Fed) was that our only choice was to ride the wave of globalism.  Perhaps that choice was one of the defining characteristics of "Reaganism"? 

It does seem to me that deciding to "ride the wave" is an easy choice when one is already on the board--of a corporation, or of government.  As I've said before on this board, I wish we'd all taken Tom Harkin's path, in '92.  He ran on a platform of resistance, and expressed a concern for working Americans.  We got Clinton, and then in short order, Gingrich.

[snowcamper]

If globalization is the enemy, then how are the Japanese not only surviving, but excelling?  Especially when they make their cars here...

How is it that InBev can buy/run Budweiser better than we can?

How can Lenovo make money while IBM couldn't?

The difference is not that foreigners are better than Americans at running companies within the borders of the US...

An awful lot of it has to do with out government's policies ex-Nafta and other free-trade agreements.

Do you realize that we are the only industrialized country that taxes overseas earnings?

What does that mean?  It means that when Honda/Toyota/Kia makes a profit in this country, they take that wealth home for free.
It means that a portion of the can of every Budweiser goes home to Germany and stays there.
It means that those foreign governments have tax policies that encourage wealth creation and retention, rather than "spreading it around".

Does our government encourage wealth creation and expansion... or do they demonize and try to reduce wealth?

Why, when you look around, are formerly communist/socialist countries adopting the policies of the "old" US because they work... and we're adopting the failed policies of those former countries?

Why are free markets a good thing in China, but a bad thing over here?  Why does China export low-quality goods but import hard currency and successful businesses (think Lenovo, Hummer, etc.?)

Why are we not developing policies to import and keep wealth?

[RJLeeb]

Why, when you look around, are formerly communist/socialist countries adopting the policies of the "old" US because they work... and we're adopting the failed policies of those former countries?

Why are free markets a good thing in China, but a bad thing over here?  Why does China export low-quality goods but import hard currency and successful businesses (think Lenovo, Hummer, etc.?)

Why are we not developing policies to import and keep wealth?

Those are three incredibly important questions.  I really hope some of the usual (progressive) suspects will attempt a thoughtful response.

[djkelly]

I was watching a video today that discussed the effect of Sarbanes-Oxley legislation on the formation of new companies.  Sarbanes-Oxley was passed by an overwhelming bipartisan majority in response to the Enron/Worldcom scandals. 

Instead of just going after the crooks behind those schemes with existing laws, Congress had to pass reforms that essentially made all businessmen guilty until proven innocent by imposing massive accounting regulations. The costs of these regulations disproportionately affect small businesses which are traditionally the largest job creators.

It's also had an affect on stock exchange listings.  Relatively few new IPOs have been listed on the NY Stock Exchange since this law was passed, especially small foreign firms.  Many have actually delisted and moved to London.  Why set up in the US and face millions in extra accounting costs when you can register in London?

This is just another example of anti-business policy in this country.

[bobsyouruncle]

Why are free markets a good thing in China, but a bad thing over here?  Why does China export low-quality goods but import hard currency and successful businesses (think Lenovo, Hummer, etc.?)

We've always known how they did it, and were it not for unions and the labor movement, that's how industry in the US would still look and pay.  But apparently some US companies are still making the money off of worker abuse as long as they don't have to look at it up close.  And if workers in China don't like it... well, read up on the subject and see.

In Chinese Factories, Lost Fingers and Low Pay
http://www.nytimes.com/2008/01/05/business/worldbusiness/05sweatshop.html?fta=y

'Prison-like' conditions for workers making IBM, Dell, HP, Microsoft and Lenovo products
Rebecca Thomson
Tuesday 17 February 2009 01:00

Chinese factory workers are working in prison-like conditions for 41 cents an hour to make computer parts for IBM, Microsoft, Hewlett-Packard, Lenovo and Dell, areport claims.

US organisation the National Labour Committee (NLC) found 2,000 workers at the Meitai factory work an average of 74 hours a week, for a base wage of 64 cents an hour. This drops to 41 cents an hour after room and board is removed.

The workers, mostly young women aged from 18 to their mid-20s, are not allowed to talk, listen to music, look around them, put their hands in their pockets, or go to the toilet unless it is an official break.

Workers are encouraged to monitor each other and are fined if they break rules. These include being one minute late for a shift or putting personal items on a work desk.

On the assembly line, a keyboard passes each worker every 7.2 seconds. The worker has to snap six or seven keys into place in that time.

The NLC visited the factory between June and September 2008 and in January this year. One worker said, "I feel like I am serving a prison sentence. We are really livestock and should not be called workers."

The Meitai Plastics and Electronics factory in Dongguan City, Guangdong Province, China, makes keyboards and other equipment for Dell, HP, IBM, Microsoft, and Lenovo.

The companies said they would investigate conditions at the factory but none said they would cancel contracts linked to the factory...

http://www.computerweekly.com/Articles/2009/02/17/234866/prison-like-conditions-for-workers-making-ibm-dell-hp-microsoft-and-lenovo.htm   

China Drafts Law to Boost Unions and End Abuse
By DAVID BARBOZA
Published: October 13, 2006

SHANGHAI, Oct. 12 — China is planning to adopt a new law that seeks to crack down on sweatshops and protect workers’ rights by giving labor unions real power for the first time since it introduced market forces in the 1980’s.

The move, which underscores the government’s growing concern about the widening income gap and threats of social unrest, is setting off a battle with American and other foreign corporations that have lobbied against it by hinting that they may build fewer factories here...

“This is really two steps backward after three steps forward,” said Kenneth Tung, Asia-Pacific director of legal affairs at the Goodyear Tire and Rubber Company in Hong Kong and a legal adviser to the American Chamber of Commerce here.

The proposed law is being debated after Wal-Mart Stores, the world’s biggest retailer, was forced to accept unions in its Chinese outlets.

State-controlled unions here have not wielded much power in the past, but after years of reports of worker abuse, the government seems determined to give its union new powers to negotiate worker contracts, safety protection and workplace ground rules.

Hoping to head off some of the rules, representatives of some American companies are waging an intense lobbying campaign to persuade the Chinese government to revise or abandon the proposed law.

The skirmish has pitted the American Chamber of Commerce — which represents corporations including Dell, Ford, General Electric, Microsoft and Nike — against labor activists and the All-China Federation of Trade Unions, the Communist Party’s official union organization.

The workers’ advocates say that the proposed labor rules — and more important, enforcement powers — are long overdue, and they accuse the American businesses of favoring a system that has led to widespread labor abuse.

On Friday, Global Labor Strategies, a group that supports labor rights policies, is expected to release a report in New York and Boston denouncing American corporations for opposing legislation that would give Chinese workers stronger rights.

“You have big corporations opposing basically modest reforms,” said Tim Costello, an official of the group and a longtime labor union advocate. “This flies in the face of the idea that globalization and corporations will raise standards around the world...”

The proposed rules are being considered after the Chinese Communist Party endorsed a new doctrine that will put greater emphasis on tackling the severe side effects of the country’s remarkable growth...

http://www.nytimes.com/2006/10/13/business/worldbusiness/13sweat.html?fta=y


China Announces Subsidies for Health Care
By EDWARD WONG
Published: January 21, 2009

BEIJING — China announced Wednesday that it intended to spend $123 billion by 2011 to establish universal health care for the country’s 1.3 billion people.

The plan was passed Wednesday at a session of the State Council, the Chinese cabinet. Prime Minister Wen Jiabao presided.

Xinhua, the state news agency, said the authorities would “take measures within three years to provide basic medical security to all Chinese in urban and rural areas, improve the quality of medical services and make medical services more accessible and affordable for ordinary people.”

Providing universal health care is seen by some economists as a way to stimulate domestic spending during the current economic downturn. The Chinese have a high savings rate, and one of the reasons usually cited is their worry about possible medical expenses because China lacks a social safety net, including affordable health care...

...“Growing public criticism of soaring medical fees, a lack of access to affordable medical services, poor doctor-patient relationship and low medical insurance coverage compelled the government to launch the new round of reforms,” Xinhua reported.

http://www.nytimes.com/2009/01/22/world/asia/22beijing.html

Wages Up in China as Young Workers Grow Scarce

By KEITH BRADSHER
Published: August 29, 2007

...Chinese officials are quick to say that there is no overall shortage of labor — rather, there is a shortage of young workers willing to accept the low wages that prevailed in the 1990s. Factories in cities like Guangzhou advertise heavily for young workers, even while employment offices consider it a success if someone over 40 can find any job in less than a year.

“Now they’re taking workers into their early 30s,” said Jonathan Unger, director of the Contemporary China Center at Australian National University in Canberra, “but anything older than that and they think they can’t take the conditions, the 11-hour days,” as well as work on weekends, and a tedious life in factory-owned dormitories...

... This lack of laborers of desirable age is hardly making China a worker’s paradise. Factory wages remain extremely low by Western standards: roughly $1 an hour for better-paid workers near the coast, compared with as little as 50 cents early this decade.

The pay looks especially low in dollar terms, partly because China has intervened in the currency markets to hold down the value of the yuan and keep exports competitive. The cost of living is low in dollar terms for the same reason; entrees at an air-conditioned restaurant three blocks from the bicycle factory here start at 50 cents for a large plate of fried rice.

Moreover, labor regulation is weak in China, as shown most vividly this year by the discovery that brick kilns in the north of the country had kidnapped and enslaved hundreds of children and mentally disadvantaged adults, working them under brutal conditions with little or no pay.

http://www.nytimes.com/2007/08/29/business/worldbusiness/29labor.html

You can find a whole list of articles on the newsroom page of the National Labor Committee.

http://www.nlcnet.org/news_room.php

[bobsyouruncle]

  Why does China export low-quality goods but import hard currency and successful businesses (think Lenovo, Hummer, etc.?)

So did that answer your question?

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