.

[Hobie]

Sure there were problems with labor costs but in the mid-late ’80’s Toyota Celica had a ‘betty’ to announce if your door was a-jar. No American car had this. The wow factor coupled with a affordable price point garnered consumerism attention and money.

Market forces prevail and the cool factor of the hip, airplane cockpit gauges took hold. Detroit countered with the Pinto and Gremlin. or K car even. C-mon. The Japanese skunked us. We did not learn and they took, and continue, to take huge market share.

Simply put, with or without unions, Detroit had viable competition that is winning by delivering a better product.

Relax the enviro constrictions on manufacturing and relax the constraints of energy production and Motor City will return as we will always need lots of new cars/trucks.

[njtosd]

[quote=Hobie] relax the constraints of energy production and Motor City will return as we will always need lots of new cars/trucks.[/quote]

Really? How many people want to move to the rust belt? If you look at any representation of population change by state the northeast is losing population and the southwest is gaining. Michigan is perpetually overcast and humid, with hot summers and cold snowy winters. With auto manufacturing plants all over the country, Detroit’s rebirth is unlikely.

This is not the first time this has happened in Michigan. The capital of the state was at one time suggested to be Calumet. Have you ever heard of it? It’s in the upper peninsula and was the seat of the mining industry in Michigan, which was huge up until about 1900. According to Wikipedia:

“Copper mining in the Upper Peninsula boomed, and from 1845 until 1887 (when it was exceeded by Butte, Montana) the Michigan Copper Country was the nation’s leading producer of copper. In most years from 1850 through 1881, Michigan produced more than three-quarters of the nation’s copper, and in 1869 produced more than 95% of the country’s copper.”

The mining companies pulled out, moving to Arizona and other parts of the southwest; Calumet (and the rest of the area) imploded and never came back. Detroit is obviously much larger, but I believe the same will happen there. Industries change, and areas that depend on single industries are vulnerable.

[spdrun]

Really? How many people want to move to the rust belt? If you look at any representation of population change by state the northeast is losing population and the southwest is gaining

This isn’t universally true — NYC, Boston, and DC all gained in the last 10 year, and have similarly harsh climates to Michigan. OK, NYC and DC have less strong winters, but still unfavorable to many people.

The problem isn’t climate or location; it’s lack of industry and laws/corruption that don’t favor establishment of new industry.

[CA renter]

[quote=SD Realtor]It is hard to admit that other employees will do the same work or even higher quality work for a fraction of the cost.

In some circles, that is simply not acceptable.[/quote]

EVERY worker in the U.S. is competing with others who would do the work for less. Should we all just continue down the rat hole until we are all living in mud huts and eating a bowl of rice per day? Maybe we should all strive to live with 15 people in a single room with dirt floors? Would our corporate masters be happy then?

All the while, corporate profits are at historic highs — and executive compensation is also at historic highs — because companies are able to take advantage of cheap labor and lax environmental standards in poor countries, and then sell their products and services to people in developed countries…people who still believe that their wages will eventually “catch up” to costs with inflation, so they’ve shifted from buying with wages to buying with debt. That is doomed to fail, eventually. Seems to me that we need to rebalance and shift more of the profits back to the people who actually do the work that makes the profits possible in the first place. We should work to bring everybody up, not down.

[Jazzman]

[quote=CA renter][quote=paramount]Another victim of public sector unions.

Public Sector Unions are a Terminal Cancer.[/quote]

That has got to be one of the most ignorant statements you could possibly make. Detroit’s problems are tied to the demise of the manufacturing sector (largely because of **mismanagement,** not unions), white flight, and the resulting demographic/population changes.

Some history:

http://www.reuters.com/article/2013/07/19/usa-detroit-timeline-idUSL1N0FP00F20130719

http://www.npr.org/2012/09/11/160768981/racial-regional-divide-still-haunt-detroits-progress

http://www.changinggears.info/2011/03/23/detroit-a-boom-town-goes-bust/%5B/quote%5D

As far as I have been able to discern the proverbial camel’s back was broken by a derivatives bet with UBS and BoA on which way interest rates would go. That lead to the default. Granted a long history of decline preceded that, but it s the familiar story of breaking your neck and going to the knackers yard to get it fixed.

[The-Shoveler]

Well I thought it was going to be Stockton to be the first to default on pensions, but it looks like Detroit has a much better argument and is in much more dire situation.

Once that is done I think there will be an avalanche of defaults coming IMO.

Like I said I fully expect the Fed to step in and bail out the pensioners but with some Cap’s on maximum benefits (maybe 50-70K per year).

[njtosd]

[quote=spdrun]

Really? How many people want to move to the rust belt? If you look at any representation of population change by state the northeast is losing population and the southwest is gaining

This isn’t universally true — NYC, Boston, and DC all gained in the last 10 year, and have similarly harsh climates to Michigan. OK, NYC and DC have less strong winters, but still unfavorable to many people.

The problem isn’t climate or location; it’s lack of industry and laws/corruption that don’t favor establishment of new industry.[/quote]

There is a difference between being willing to relocate to an economically viable area (NYC, DC) and convincing enough people to move to a blighted area to revitalize it. I grew up outside of Detroit. The Renaissance Center (which you see in every stock photo of the city) was built 30 yrs ago as part of a major effort to revitalize the city. At that point it was probably possible – but I don’t think it is any longer. And I do believe it was politicians (influenced by the unions and the big three) that killed the city. Case in point – Kwame Kilpatrick, who will soon be sentenced to an additional prison term of 20-30 years.

[scaredyclassic]

If we had half as many children could labor demand more money?

Are there just too many of us?

Should I have had less kids?

I’m sorry.

[FlyerInHi]

Convincing Americans to move Detroit is not possible. Detroit is done as a big city. It needs to scale down.

It should follow the example of Baltimore and welcome new immigrants who will open small businesses to bring back to life the store fronts.

Free birth control for the population would be a good idea to stop the cycle of poverty.

[FlyerInHi]

[quote=The-Shoveler]Well I thought it was going to be Stockton to be the first to default on pensions, but it looks like Detroit has a much better argument and is in much more dire situation.

Once that is done I think there will be an avalanche of defaults coming IMO.

Like I said I fully expect the Fed to step in and bail out the pensioners but with some Cap’s on maximum benefits (maybe 50-70K per year).[/quote]

Avalanche of municipal bankruptcies? I doubt it. The creditors and the politicians don’t want bankruptcies. They will reduce services to the bones before they ask for haircuts.

Nobody but the citizens of the cities have anything to gain in bankruptcy. And the citizens don’t have control.

Detroit is different because it’s losing population. But growing cities, such as LA, can cut services and defer maintenance to pay creditors. The citizens will suffer and they might move with their feet but that takes decades.

The politics of bailing out Detroit are dicey. It’s a black city with “crazy” outspoken leaders (not so much the mayor, but the other civic leaders). The more they scream, the less likely there will be a bailout.

The governor of Michigan is republican as is the legislature. The governor signed off on the bankruptcy and he’s taken ownership. Detroit will have to look to Michigan and its constitution for a bailout.

As far as the bankruptcy goes, a big chunk of the $18 billion is secured and fhe bondholders will fight. The math does not really work.

I think the Feds will come to the rescue later rather than sooner. Obama will not touch this hot potato unless Rick Snyder personally calls for bailout.

[livinincali]

At some point somebody has to take the loss. I figure it will be the pensioners. Even if you do manage to force the losses onto the bond holders the bond holders are likely somebody’s pension fund, so a Detroit pensioner maybe gets paid while some other pension fund has an increase in unfunded liabilities.

20 years down the road when this pension things has been washed out pensioners will look back in hindsight and realize that accepting promises for deferred compensation from people that aren’t going to be around when they want to collect was the dumbest thing they ever did. Many public sector employees got trapped in a job they didn’t particularly like to guarantee themselves a comfortable risk free retirement. It’s starting to look like that risk free retirement was a myth. They’ll likely be wishing they had a defined contribution plan they managed themselves.

[FlyerInHi]

20 years down the road? I think more like 50 years.

Some rust belt cities will go down, but the other cities still have a lot left to cut. They can continue to cut services and dedicate an ever larger portion of revenue to salaries, pensions and debt service. The cuts in services will spur a call for higher revenue which will pass because voters are worried about cuts to services their kids use. But those new revenue will be diverted to maintain the status quo.

Employees have built layers of legal protections (all the way to the constitution in MI) into their contacts and bondholders will demand security to refinance. Or they will demand senior priority to revenue.

Detroit, thanks to cheap real estate and tax abatements, could revive the urban core by attracting young urban professionals and new immigrants. But the vast expanse of the city is hopeless and needs to be bulldozed and returned to unincorporated areas.

The lesson is that if you want parks and services, avoid the cities in decline. Avoid the edges of cities. Stay in hip urban neighborhoods, or move to the suburbs.
We all know that as cities get older and infrastructure and houses need maintenance, and taxes increase, people will move away. Eventually, more and more of the population is poor and can’t take more taxes. As the voter base becomes less educated and ignorant, scoundrel politicians move in to loot. Witness Orange County as an extension of LA and what’s happened to the working class cities of LA county.

Cities who adopt defined contribution plans will ensure their own long term survival.

[no_such_reality]

Maybe CalPERs has cadillac plans, but regular family plans aren’t much different.

On a hourly rate, those CalPERS plans run $9.65/hr.

That’s our real problem. Obviously, minimum wage isn’t going to cut it. That’s the hard truth we need to address. $25/hr isn’t going to cut it. Not just in Detroit, everywhere.

Anything less is in reality, a starvation diet. People need sustainable wages. Jobs that can be done profitably with a sustainable wage need to go away.

The sooner we get there the better.

[CA renter]

[quote=no_such_reality]

Maybe CalPERs has cadillac plans, but regular family plans aren’t much different.

On a hourly rate, those CalPERS plans run $9.65/hr.

That’s our real problem. Obviously, minimum wage isn’t going to cut it. That’s the hard truth we need to address. $25/hr isn’t going to cut it. Not just in Detroit, everywhere.

Anything less is in reality, a starvation diet. People need sustainable wages. Jobs that can be done profitably with a sustainable wage need to go away.

The sooner we get there the better.[/quote]

Yep, and many public employers will tell you that medical benefits (for current employees, not just retirees…again, retiree healthcare has been getting phased out for decades) are a greater burden than the much-maligned pension benefits.

On the bolded part of your post, do you mean, “Jobs that cannot be done profitably with a sustainable wage need to go away”? If so, we largely agree on this issue. I would also argue that too many (very profitable) companies are receiving indirect subsidies from taxpayers via publicly-funded healthcare for their employees who do not receive benefits, or are under-insured, at work. Think Walmart.

Additionally, this healthcare debacle is why many of us are staunchly opposed to a for-profit healthcare system. There are far too many conflicts of interest in such a system, and we are NOT getting better care as a result.

http://www.pbs.org/newshour/rundown/2012/10/health-costs-how-the-us-compares-with-other-countries.html

[no_such_reality]

Yes, cannot, bad typo on my part. My self-imposed net-nanny time limit for non-productive sites, cut me off.

I view low wages as an external cost like pollution. Saying you need to pay low wages is like saying you must be allowed to pollute in order to compete.

They’ll whine that ALL those jobs will go away, but they won’t. Only some will. So instead of having the 100 people at the poverty wage paying place all dependent on the dole for food stamps and health care, we’d have some of them on the dole and many of the remainder would be working at the place that paid real wages and still made decent stuff that was worth the price paid. We’d all have to do with less disposable stuff.

But that’s me, I don’t think it’s horrible to contemplate a life where we’d actually still have cobblers around because everybody actually resoled and repaired their shoes instead of buying disposable slave labor products.

And heaven forbid if the twinkies or their knock-off made in Mexico in the vending machine at work needs to $2.50 instead of a $1.25 in order to pay the people involved. That’ll do us good too.

[Author]

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