Inside the Glove: Things are getting dicey here in The Mitten. Actually, things have been dicey for quite a while. Now they are looking apocalyptic. Michigan, wracked with a contracting economy for years, now gets to feel the full force of the national recession as transmitted through the auto industry. An enormous number of jobs in Michigan are linked to cars and the ramifications of GM/Chrysler/Ford going belly up are huge. For the City of Detroit proper, it might be the end of the world.
That's not necessarily an argument for a bailout, though. If I were a narrow-minded political animal I would argue there is no option whatsoever and the loss of the U.S. auto industry would be dire for the nation. The fact that I have many, many friends facing real income consequences from this, and the ancillary affect it will have on everyone in these parts, means that I should feel that way. And I do, superficially. But, sadly, I have inflicted upon myself the habit of trying to see the big picture.
The number being tossed around is $34,000,000,000.00. Lots of zeros, there. Now let's say you're sitting in Ft. Lauderdale or Tucson or Eugene or Burlington. If the car oligopoly destructs, you're not going to see your friends trickle away in search of employment or see local strip malls abandoned. You probably drive a Toyota anyway. Why should you give those clowns shivering away in the Michigan winter any of your money, even if they call it a "loan" or a "bailout"? Didn't they get themselves in this predicament to begin with? Well, if that's how you feel, then were screwed (perhaps justly).
But suppose you do want to help out, the question then becomes what is the smartest way to spend your 34 billion. The auto industry wants you to give it to them, but what are you actually trying to achieve? Is the goal to keep the auto industry alive, or is it to assist the desperate people associated with it. Those are two very different things. What is magical about the auto industry that having it around means more than having that much more of some other industry? In other words, why is it better to prop up the auto industry rather than use the money to expand a different sector (or sectors) of the economy as a way to employ the ex-auto people?
This is why there is all the hemming and hawing about the future plans of the big-but-diminishing three. There is no point in providing 34 billion to the auto companies if it is going to go down the toilet for the UAW monopoly and the incompetent corporate bureaucracy, just so we can keep uncompetitive businesses going so folks don't have to adapt. That's not a loan or a bailout. That's welfare. If you give us the 34 big ones and we squander it trying to avoid adaptation, then the joke's on you.
On the other hand, if you give out the 34 billion to get us resituated in industries that are healthy and growing, thereby providing us security an avoiding us coming to you with our hands out again, you can declare victory. Yes, that massive proportion of the labor force all looking for employment would be traumatic, but 34 billion could sure help that along, couldn't it? Nobody wants their life turned upside down in relocation and have to assimilate in a new working environment, but I beg your pardon, I never promised you a rose garden.
The point is, it's not a simple binary choice: give the Big Three the money or the let everyone fend for themselves. There are options. There are outside the box strategies that may be better and may or may not include letting GM/Chrysler/Ford live on as they were.
Then there's the question of whether it is really good for Michigan to get the bailout at all. If the auto meltdown brings the reality of Detroit to the broader state, are we really better off getting 34 billion? What are the chances that we would be asking for another few billion in debt forgiveness every few years -- not competing in the market anymore but at the public trough, just so we can hang on a little while longer? Meanwhile, our taxes would shoot through the roof because fixing the roads and paying for the lousy school system would fall on a smaller and smaller number of people. The raise-taxes/lose-population death spiral would speed up (this death spiral has been present in Detroit for years). What, exactly, is the endgame and how do we get there so we can start over? I don't know. Perhaps it would never happen. Perhaps we would become wards of the federal government, like the District of Columbia. Perhaps we would end up burning the abandoned homes for heat and eating roadkill venison all winter. It's nice to think we are going to find a way to turn things around, but as much as I love Michigan, I see no evidence that there is that kind of foresight and ambition among the political leaders or the electorate. Whatever the endgame is, we will have to reach it before anything really changes.
Why am I so negative? Because I know what a lost cause looks like. I have seen Detroit "rebuilding" for the last half-century with less than nothing to show for it. Imagine the millions or billions of dollars that have been poured into that city over the past fifty years, all wasted in the name of trying to save the unsavable. Are the folks who appear in the pages of Detroit Blog really better off for having been caught the endlessly-fraying safety net for decades, rather than having bitten the bullet and started a new life in, say, Raleigh NC, 20 years ago?
Of course, I live in a sort of bubble. Ann Arbor has the insulation of University as its tax base, and I work as a software development manager for a company that serves the private financial and regulatory sector, so I have a very safe job. The only debt I have is on my condo and considering I would probably pay more in rent than I do in monthly mortgage and property taxes, I am in no trouble. Even the latest investment meltdown didn't alter my lifestyle. Now, I have had hard financial times in my past and I know very well what it's like to be out of work, but maybe I am far enough removed from such pain that I don't have sympathy anymore.
Yet, I do hope the money comes here. For me, personally, yes, I want the 34 billion. I don't want my friends to feel pain or move away. I'd rather have the option of shopping at Whole Foods and Macy's instead of Kroger's and Wal*Mart. I don't want my property takes to double because sales tax revenue has disappeared. Give me the money, keep stringing me along. In twenty years or so, I'll just slide off to Sarasota, hike my polyester pants up under my armpits, and spend my time bitching about everything over my senior coffee at McDonald's.
But looking at the big picture, 34 billion might be less of a loan or even a gift, and more of a curse.
Postscript: The death spiral begins with things like instructing traffic cops to write more tickets as a source of revenue and leads to cops writing thousands of tickets for personal gain. This is the on-ramp for the road to ruin, and there are no exits in sight.
