John Buell

The Agony of the Motor City

While Baltimore has been headline news lately, another city is equally representative of the travails of urban America. Detroit’s woes seem endless. A declaration of bankruptcy followed by mandated reductions in city pensions, which averaged a mere $19,000 a year. These have followed a rash of bank foreclosures on homeowners unable to pay their mortgages. Finally to cap this tragic drama, the city government is now in the process of repossessing and auctioning off the homes of those unable to pay their city property taxes. Freelance journalist Laura Gottesdiener —, writing in Naked Capitalism, puts the number of those who will be evicted at 100,000. Americans need not look to Greece to find examples of the harm wrought by the current version of free market capitalism. Detroit’s homeless population is sure to grow. And many others, its younger, more skilled are leaving or have already left, further depressing prospects for those who remain.

How Detroit has come to this cruel state? Its situation is especially striking when we consider its past. Gottesdiener reminds us: “Detroit was once famous for creating the largest, most spectacular versions of whatever its residents set their minds to, be they assembly lines, record labels, or revolutionary workers’ associations. The city is often credited with inventing and mass-producing the twentieth century, while its workers simultaneously took the lead in revolting against the injustices of the era. Its factories put the world on wheels and labor laws on the books. Its workers and thinkers sparked and fanned a number of this country’s most influential resistance movements.”

Nonetheless in some ways Detroit’s successes were accompanied by or helped induce a hubris that became the source of future grief. Detroit the arsenal of democracy emerged from WWII as the engine of the world’s unchallenged industrial economy. And unlike the current political economy, industrial gains were at least more widely shared than throughout most of the history of modern capitalism. Yet, as Barry Bluestone, author of the Deindustrialization of America, points out: “My father, when he was vice president of the United Auto Workers, did something quite extraordinary … after the untimely death of Walter Reuther in an airplane crash, my father had a poster produced which said ‘Quality Is Our Concern, Too,’ with a big UAW logo behind it. He ordered that that poster be put up on the union’s bulletin boards in every GM plant in the country where the UAW had representation. He was telling his members but also management that for the good of the workers, the union and its members had to be just as concerned about quality as the industry itself. But as soon as those posters went up in GM plants, the General Motors vice president for human resources called my father and told him, ‘Irv, you have no right to put that poster up — “Quality Is Our Concern, Too” — that’s management’s prerogative, not yours.’ And he ordered my dad to have the posters removed. My father responded, ‘No way. You touch one of those posters on the UAW bulletin board in a GM plant and we’re on strike.’ Unfortunately, there was too little attempt by the UAW generally to follow what my father tried to do. There was too little concern about the quality of the product from management and from labor.

“During the days in which there was little international competition in the auto industry — in the 1940s, ’50s, ’60s, and right up until the early ’70s — neither the industry nor the union had much to worry about…. Under those circumstances, it was possible for the company to do almost anything and build almost any product, and it was possible for the UAW to ask for major advances in pay and benefits without having any impact on the fortunes of the company. The company could sell pretty much anything they produced and both stockholders and workers did very well.”

These circumstances could not last forever. US post WWII economic planning had intended to create an industrial base in Europe and Asia that could sustain purchases from the US. But that base also would eventually provide major competition for the domestic auto industry. But that domestic industry was very late coming to the table with qualitative initiatives. Instead the industry tried to maximize profits by undermining UAW wage gains, first by moving plants to suburbs and then out of country through NAFTA and similar trade deals.

The politics of race played an equally significant role in Detroit’s decline. Bluestone remarks that the expansion of the auto industry provided unprecedented economic opportunities for African Americans. He’s correct on this point, but these were not equal opportunities. Though the UAW was progressive on national racial issues, few African Americans enjoyed the best factory jobs. In addition, GI Bill housing subsidies helped encourage suburban flight, an option not open to minorities who were excluded by lending policies. Pension payments pale in comparison to Detroit’s loss of tax basis from auto industry and white flight.

The auto industry, always cyclical anyway and heavily dependent on discretionary spending, was further damaged by the collapse of the unregulated financial system. GM and Chrysler depended on federal bailouts. Few have pointed out that bailout terms for the auto industry or the home owners hurt by the collapse of the real estate and auto markets were far harsher than for bankers. The auto bailout further reveals this double standard with its two tier wage structure, requiring that new hires start at substantially lower pay scales than their older predecessors.

Though working class whites may have gained initially from suburbanization and preferential treatment within the factory they have suffered long-term losses. Job migration to the suburbs, then the south, and finally to Mexico has exerted downward pressure on wages. Discontented, underpaid minorities have been easy to scapegoat thereby dividing the constituencies who might have joined in the fight to build a modern auto industry that might require more worker participation and ecological awareness.

The future of the auto industry and thus of Detroit will depend on financial regulation. Scaling down too big to fail banks, making banking heads far more liable for speculative losses, and a restoration of Glass-Steagall’s separation of commercial and investment banking would be good places to start. Increased spending on badly needed infrastructure repair would help Detroit and would also create a market for a new generation of green transit systems. A sound infrastructure and educated workers are more likely to attract business investment than is the zero sum game of continual tax cuts.

Progressives must contest the wedge politics of race so skillfully exploited by corporate conservatives. Affirmative action programs remain a necessity in many realms, but these should acknowledge and give credit for the impediments faced by many lower class whites. Just as importantly the role of minorities in helping to build the union movement and in forging a sustainable economic alternatives outside the market needs to be publicized and further encouraged.

John Buell lives in Southwest Harbor, Maine and writes on labor and environmental issues.

From The Progressive Populist, June 15, 2015

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