Detroit And The Last American Value

Detroit

Detroit, Motor City, has seen better days...

JUST IN CASE you haven't been paying close attention to the news of the day, Detroit City, long on the frail side, is failing and failing fast. The key questions are centered, or at least, should center on the reasons of why the American automobile industry, once the paragon of manly strength echoing the pervasiveness of ingenuity, hard work, and the American Way, is failing. Even if you are sympathetic to this latest charade of tycoon muskateers looking for a bailout for their own house of cards, and want to believe in your hearts of hearts that everything is on the up and up—guess what—these empty suits are just there to collect a king's ransom, and even admit before Congress they have no clue how to turns things around.

Detroit's woes are not new. The irascible Pat Buchanan, in his latest column, has sounded a litany of reasons why this once proud industrial model has slammed into these hardest of times, placing the blame on the government and the unions. Or as another irascible character named Pogo once remarked, "We have met the enemy, and the enemy is us."

Nothing really new here, but the article is worth a glance, just in case you haven't been paying attention. And here is a poignant if somewhat ideologically unsympathetic comment by one of Buchanan's readers:

Our problems are...

1. In winning WWII, we inadvertently (most of us, not FDR and his cronies) made the world safe for communism, so part of the resistance to commie expansion included opening our markets to foreign imports. We don't need an export-driven economy, but have to reestablish trade balance.
2. As Pat points out, we won WWII in large part because we could build the weapons and vehicles to destroy the enemy. Not only our external enemies and rivals, but also the leftists who are our internal enemies, have been working to destroy that advantage ever since.
3. Our tax system is utterly unprepared for the degree of foreign participation and ownership of our economy, and much of the income arising from what we consume is now no longer taxable by the U.S.
4. The U.S. dollar is currently the world's reserve currency, in part because probably no country makes it easier for foreigners to own real estate and businesses, and the tax system lets them do it on a largely tax-free basis. We need to domesticate our dollar and establish a barter at the border, goods for goods trade system, that no goods can come into the U.S. without being paid for right then and there at the border by goods going out of the U.S. That would enforce trade balance.

I keep reading about this border barter solution. What a logistical nightmare for the boys down on the docks. But then, that's what heads up business communication and moral leadership is supposed to be all about, not a culture weaned on astonishing golf courses where everybody knows your name and overwrought golden parachutes and getaway private jets around every turn for these self-serving song and dance resumè-builders and corporate thieves who do little but handsomely enrich themselves while grappling for the next rung on the ladder, while the very businesses they were hired to run falter, or fail.

But things are never that simple. American cars aren't the problem, the business model is. Robotics in Detroit has greatly reduced the toil of the average line worker who now makes over $70/hr including benefits. The car companies have gone as far as they can in reducing labor costs but have more people on retirement than in production. Toyota and all other foreign companies now producing in the US have 1/2 the labor costs and do not have to contend with the many years of retirement and health cost benefits.

I'd like to add that while it seems outrageous that the rank and file have nice comfy retirements as Detroit suffers, shall we not point out that so do the executives, who by the way, have lived a lifetime in excess privilege while it was they who mapped out the corporate plans with all their papers and pie charts, jetting around to meetings and rounds of golf, living high on the hog in mansions. The fact that the future in the car business did not turn out exactly as they planned was THEIR failure in doing their own cushy executive job. But now they want the workers on the line who popped and welded and bolted and polished and shipped the cars to market, doing their jobs on the clock, now, years later, to take the big hit. Somebody should throw those number crunchers to the Lions...

Read it all.

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