The ongoing operation of the "new" General Motors proceeds in a universe of surreality. A case-in-point being the machinations around the Orion plant. While making plans to return to some semblance of financial viability, GM execs decided it was best to close their problematic plant in the northern Detroit suburb of Lake Orion. It simply wasn't a profitable operation. But wait -- you can't possibly put those workers out in the streets, think of the cost to society! Best we keep the plant open and running, says the UAW -- which also happens to be the biggest GM shareholder. So deals are cut and arms are twisted and the great State of Michigan offers GM a Dr. Evil-esque one billion dollars in tax cuts (because the bailout money they've already received wasn't enough) to keep the plant open. Now the plant can be profitable, right? Well, no. You see the money is to be used to re-tool the plant to build tiny little econoboxes that adhere to the desire of the federal government (the second biggest shareholder in GM) for fuel efficiency -- despite the fact that such vehicles have never, even at the height of gas prices, sold enough to make money in this country. So the "new" GM business plan is:
- The Orion plant needs to close since it does not make money.
- The State of Michigan coughs up 1 billion in tax cuts so it can stay open and not make money.
- The Federal government says thanks, but you have to build the cars we want not what will sell, so it will always not make money.
- Profit!
Maybe they'll make it up on volume. How long before I can write off my portion of the bailout as a tax loss?
On the other hand, there is at least one example of someone dealing with reality rather than surreality. A consortium of Credit Unions has developed something called Save to Win wherein you get an entry in a raffle for a grand prize of up to $100,000 for every $25 dollars you deposit into your savings account. Now, a few moments thought will quickly reveal the absurdity of this. Your chance of winning is so small that you are almost certainly better off taking the time to find a higher interest rate than the somewhat low one offered by the program. But thoughtful people are not the target of the program. Easy money seekers are the target. The short-sighted are the target. People who simply do not have the intellectual wherewithal to do contingency planning are the target. The bank gets cheap assets (deposits on which they pay a lower interest rate). The suckers, er, customers get all tingly over a possible big payoff, but they also get something else -- money in the bank for a rainy day, although they won't have any appreciation of it. Absurd, definitely; but brilliantly rooted in reality. Nice to see that for a change.
Meanwhile, the City of Detroit wallows in its own persistent hell. The school system isn't just a total failure at education. It is corrupt beyond description, violent as a third-world hell-hole, and now, effectively bankrupt. Some choice quotes:
"The school system also has been rocked by corruption. A few years ago, an audit revealed that Detroit's school system misused more than $46 million on insurance and other contracts and was forced to sue venders [sic] to get some of its money back. Two of the system's employees were recently indicted for allegedly embezzling $400,000 from the school system over the past couple of years."
"In June, to stem pay-check fraud, [emergency financial manager Robert Bobb] required that employees pick up their paychecks in person. Paychecks for 257 suspected "ghost" employees--people who had improperly been getting checks--went unclaimed."
"In June, seven students were wounded in a shooting near Cody Ninth Grade Academy just two weeks after 16-year-old Tenecia Walter was shot in the chest shortly after leaving class at Denby High School. Earlier this year a gunfight broke out in Detroit's Central High School and last year a student was shot and killed walking home from Henry Ford High School."
"Detroit schools have lost 60,000 students."
"This is why [bankruptcy expert Ray] Graves and others see little alternative to declaring bankruptcy..."
How could things get like this? Well...
"In 2003 the state, under pressure from the Detroit Federation of Teachers, turned down a gift of $200 million from philanthropist Robert Thompson that would have established 15 charter schools in the city."
"In 2006, the union illegally went on strike, killing a plan to force teachers to take a pay cut to balance the system's books."
"[The Detroit Board of Education] is seeking a court injunction to block private companies from running district high schools."
Did you even have to ask?
Strangely enough, as bad as Detroit is -- and it's very, very bad -- if left alone to succeed without regulatory boards and layers of bureaucracy, some people have found a way to make something of the place. Specifically: Farmers. Imagine that. The return of rural Detroit. If left to their own devices, these folks could probably go whole hog and have barn-raising parties and build one-room schoolhouses where kids actually learn something. But what would the Board of Education say?
The article is a bit confused, especially in its implied ideas about economics. The thought chain is that since there are no longer grocery stores in Detroit and everyone has to shop at convenience stores, people eat atrociously and are severely unhealthy. If they farmed their own food, they could simply feed themselves and live holistically (whatever that means). That's not how farming works; it's an industry and the way it would help is by making use of the arable land that Detroit has in abundance now that everyone is abandoning their homes. This builds income for people who can then support the existence of profitable grocery stores so they can get a well rounded diet. But the hippie-commies at Guernica magazine have the right general idea which is to allow creative and clever people make use of the available assets rather than let everything sit in decay because it's impossible to get the bureaucracy to act without some kick back involved. Sadly, I think the only real question is how long it will take the powers of the City to find a way to crush them.
But just so I don't end on a sour note, we Michiganders who are staying have some good reasons.
