By Kevin D. Williamson
Sunday, March 06, 2016
‘What will you do to bring manufacturing jobs back to
Detroit?” the Fox News moderator asked the Republican presidential field. In a
very, very stupid night, it was the stupidest question.
Sorry, Chris.
In 1950, Detroit’s population was 1.8 million. Since
then, all the people to the left of that decimal point — and a goodly chunk to
the right of it — did the rational thing and exercised their right of exit,
leaving Detroit behind. They are gone, they are better off for having left, and
they are not coming back.
Detroit is a big city, or at least the ruins of a big
city, but it is economically in much the same situation as the poorest parts of
Appalachia: 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.
But we’re going to have to do better than that.
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?
You can call it a chicken-and-egg problem — given its
current economic straits, Detroit isn’t going to be doing much to produce
world-class workers, or world-class anything — but the fact is that the chicken
has been dead for decades, a series of corrupt mayors and officials stole most
of the eggs, and the ones that are left are rotten. And despite the best
efforts of the city’s spasmodic reformers, the city is ruled by the same party,
the same people, and the same poisonous politics that created the mess it is in
in the first place.
Capital matters — and capital owners matter, too.
Once upon a time, Detroit was home to a tremendous amount
of capital. 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.
Like wicked old Samuel Ratchett on the Orient Express, Detroit had a dozen
murderers. And an important one — important in that there is in it a lesson for
us today — was a defective relationship between capital and politics. 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. Rather
than finding its way to its best uses through Schumpeterian creative
destruction, capital was locked up in poorly performing enterprises such as
Chrysler (executive hipster Lee Iacocca was into bailouts before bailouts were
cool) and in malinvestments such as unsustainable pension funds.
Because most of us lack sufficient imagination, we do not
understand what the price of that was. The price isn’t just bailouts and
layoffs and factory closings, as painful and convulsive as those have been in
Detroit and throughout the industrial communities that inflicted similar
problems upon themselves. No, the real cost — the literally incalculable cost —
is the lost value that would have been created had all that capital been
liberated and put to its best use. We have forgone generations’ worth of
compounded returns on investments that we should have made but did not. Another
way of putting that: It is far easier to solve the problems of 2016 starting in
1950 than starting in 2016.
It matters who owns capital. Go back to 1988 and give
young Kevin D. Williamson $10 million, and the only results you’d have seen
would be a good year for a Ferrari dealership somewhere in Texas and, a few
days later, a nice commission for a Manhattan realtor willing to do business
with a 16-year-old. Go back and invest that $10 million with Marc Andreessen
and you might have had the great Internet-driven business revolution of the
turn of the century a decade earlier, with economic consequences that would
have been literally beyond calculation. Go back to the 1970s and invest that
money with Julio Palmaz and the history of cardiac care would probably look a
good deal different. Imagine what Henry Ford could have done with the money
we’ve pissed away on the incompetents at General Motors.
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. Sometimes, we have
government outright propping up firms (General Motors, bailed-out banks) or
industries (Senator Rubio’s beloved sugar teat) without ever taking account of
what the real cost of doing so is: lost investment. Not the ledger cost, but
the opportunity cost.
Detroit is a dramatic example, but every time you write a
too-large check to a terrible utility monopoly, the same dynamic is at work.
All those people standing in line at the DMV or seeing potentially productive
days wasted because our airport authorities are so completely incompetent, all
those millions of man-hours wasted during any given work week by the traffic in
Houston or Los Angeles — every one of these represents a theft from the future.
Every instance of overregulation and political favoritism that keeps capital in
the hands of less-able users and away from its best use makes us all — all of
us — poorer, even if it is in ways that are not always plainly visible to us.
What’s the plan for Detroit? Politicians and their plans
did this to Detroit — and they’ll do it to the rest of us, too, if we let them.
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