How Detroit Drowned in a Sea of Troubles

Photographer: Jeff Kowalsky/Bloomberg

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Photographer: Jeff Kowalsky/Bloomberg

The first time I went to Detroit, I got lost. I had been looking at the old Packard plant, and I ended up ... well, I’m really not sure where I ended up. That’s why they call it “being lost.” It was getting dark, and I had no idea where I was or where I was going. I kept driving, figuring that eventually I’d reach either the city limits or downtown.

What I do know is that the people around me didn’t think I belonged there. I was told as much. I stopped to get gas and an elderly gentleman stared at me. “Little girl, you do not belong here,” he said. Item: I am 6-foot-2.

Shortly thereafter, a cop pulled up next to me while I was waiting at a light, and rolled down his window.

“Are you lost?” he said. I affirmed that I was. He asked me where I was staying.

“Make a U-turn,” he directed me. Item: There was a no U-turn sign, somewhat tattered, directly in front of me.

“Start driving,” said the cop. “Don’t stop at the lights until you get to downtown.” I think it was downtown. I don’t remember anymore. When cops start telling you to break the law, you get a little nervous.

During the first six months of this year, Detroit had only slightly fewer homicides than my native New York City, even though New York has more than 10 times as many people. And as you can imagine, homicide is not the only elevated rate of crime. The population of the city has fallen by more than half since its heyday. That Packard plant I’d been looking at once employed tens of thousands of workers; now it is a rotting hulk, beloved mostly of ruin-porn photographers and graffiti artists and human predators who occasionally skulk along its decaying walls. (You can see a moving video about its history here.) The neighborhoods near it are also falling toward urban ruin.

What happened to one of the most prosperous areas on earth?

If you listen to the interwebs, the answer is “terrible, Democratic-run urban politics.” Or “union-busting anti-labor policies” in Southern states that transformed solid middle-class jobs in the Midwest into near-minimum-wage jobs in states such as Alabama and Tennessee. Or maybe “racism.” Or “the urban underclass.”

All of these answers are impossibly reductive. The city of Detroit has no one problem; it has a constellation of them. Here, in no particular order, are some of the most important factors.

The fall of geography: When Detroit became the auto king of the world, its prime location on the Detroit River, right off Lake Erie, was a significant competitive advantage. Heavy raw materials and metal parts could be shipped in by water, and cars shipped out the same way. By 1919, 53 million tons of cargo were carried along the Detroit River, which amounted to more than half the tonnage shipped by all the ocean ports in the U.S. For comparison, the total 2012 tonnage on the St. Lawrence Seaway, which connects the Great Lakes to the Gulf of St. Lawrence, was less than 40 million.

Production of raw materials such as coal and iron ore, and intermediate goods such as sheet steel, is no longer concentrated in the giant foundries of Pennsylvania and Ohio, and so a good port connection to Lake Erie no longer confers the benefits it once did.

The decline of the U.S. auto industry: In 1950, to a first approximation, 100 percent of the cars sold in America were made in America, by American companies. In 2013, it’s less than half. The newcomer companies have mostly avoided unionization by making cars in right-to-work states.

Contrary to what you might have heard, even before the crisis, the wages of General Motors and Chrysler and Ford’s UAW workers actually weren’t that much higher than their Southern competitors. But they got about $10 an hour extra in benefits. They were also protected by strict work rules -- for years, if something went wrong, the whole line shut down while you called a specialty worker to fix it, even if the line workers could have fixed it themselves. Workers who got laid off could hang out in the job bank, doing nothing. And retirees were eligible for generous pension and health benefits: by 2008, for every worker in the plants, GM had to pay the United Auto Workers an extra $15 an hour to cover unfunded benefits for retirees.

That extra cost was taken out of the quality of the cars. But even if the American South wasn't union resistant, the United Auto Workers probably wouldn't have been able to maintain the extremely sweet deals they won in the 1960s and 1970s. Eventually, reports Paul Ingrassia in his book "Crash Course," even Leonard Woodcock, the guy who had negotiated the rich deals that UAW workers became accustomed to, began to think that he’d created a monster: “Our members have the best contract that people with their skills and education could ever hope to get.” Woodcock told a friend. “But we’ve convinced them that with every new contract, they’re entitled to more.”

UAW contracts used to be established through something called “pattern bargaining.” Essentially, you’d pick the weakest company, the least able to withstand a strike, and you’d threaten to strike unless it gave you a better contract. Then you’d take that contract to the other two companies and demand the same. This helped the UAW in two ways: It set a high baseline for compensation, and it also effectively shielded the Big Three from cost competition; their cost basis was always the same. Essentially, a cozy cartel extracted big benefits for workers and managers.

But pattern bargaining gets really difficult when you add more companies; it’s probably no accident that the UAW got the biggest compensation packages after Packard and Studebaker collapsed. It’s especially difficult when you add international companies, because if you threaten to strike Volkswagen U.S., they’re not desperate the way that GM or Ford would be; this isn’t where they sell the majority of their cars.

In other words, though right-to-work laws didn’t help, they were not the major problem with the U.S. auto industry. The major problem faced by the U.S. auto industry was that they lost their cartel.

The rise of the Sun Belt: Even if right-to-work laws hadn't existed in Southern states, Michigan would be suffering. As soon as air conditioning became a mass-market item, people began fleeing cold, snowy, built-up areas with high services and high taxes for warm places with low taxes and cheap land. And as road networks opened up, it became less and less critical to be near a network of suppliers. A closed-shop Alabama might still be attracting manufacturers such as Honda, Hyundai, and Mercedes-Benz. And people who don’t want to shovel 30 inches of lake-effect snow off their car every winter.

Industrial monoculture and overbuilding: Detroit was a one-industry town. When that industry changed, the city was extremely vulnerable. Especially because it had spent so lavishly when it was successful. A sprawling city with lots of services. A well-paid and numerous workforce with ironclad union contracts. Generous pensions and benefits. They needed a profitable auto industry with very high employment numbers to keep paying for that. They built as if that industry couldn’t change or move. That was an enormous mistake.

Arguably, even “successful” cities such as New York or San Francisco could suffer the same fate. Imagine New York if the finance sector shrank back to its 1950s size; the Bay Area if the U.S. tech industry became moribund. It isn’t that the cities would go away -- but their tax bases wouldn’t cover the spending they’ve committed to, and which the majority of voters would continue to demand regardless of ability to pay.

Crime: Although the region around Detroit has lost a lot of population and business to the South, there has also been considerable migration to the suburbs. The normal pattern of urban development has rich people in the center, poorer people on the outskirts, but for fifty years, the U.S. inverted that pattern for basically three reasons: the automobile, schools and crime. White flight is often chalked up to sheer racism, but that isn’t really fair; especially in the 1960s, the people of all races who fled America’s inner cities were racing away from serious disorder. From 1944 to 1951, murders in the city increased by a third, while robbery, burglary and aggravated assault rose by 50 percent. As the roads opened up the way to the suburbs for both manufacturers and citizens, more and more of the prosperous left for greener acres. This led to a vicious circle: More crime meant more of the middle class fled, which in turn concentrated poverty, leading to more crime.

The riots of the 1960s sealed the city’s fate. After the riots, the white middle-class pretty much vacated the city, and much of the black middle class followed. Pulling so many of the people and institutions that had anchored communities out of the city all at once sent much of the city tumbling over the edge. The crime statistics tell the tale; between 1960 and the early 1970s, the homicide rate basically quintupled.

Why did crime rise so much during that era? I think Kevin Drum has made a very convincing case that the answer is leaded gasoline. Lead exposure, particularly in early childhood, stunts the parts of the brain that are responsible for impulse control. And criminals, by and large, have very poor impulse control.

So it’s probably not a surprise that Detroit was particularly hard-hit by the crime waves of the 1960s through 1980s; Motown was a city created by and for the automobile. Generations of kids were growing up inhaling tiny particles of lead, making them less employable and more prone to crime and violence.

Race: Of course, you can’t discount the role of race in making Detroit what it now is. It was a very segregated city, in part, I’m told, because even before blacks arrived, it was a very ethnically tight city, populated by immigrant groups who didn’t like one another all that much, and definitely didn’t like the hillbillies and blacks who were pouring north to compete with them for jobs. When courts ruled that residential segregation was illegal, those people picked up and moved. Block-busting -- where real estate agents would trigger panic selling among white homeowners by suggesting that blacks were about to move in -- was common. The people who stayed in the city naturally didn’t have a very kind opinion of the people who fled from them, which raised the hostility between city and suburbs still further ... and lowered the chance that Detroit would attract businesses, or higher income taxpayers, back in.

Bad government: Jonathan Chait describes the toxic politics that Detroit’s poisonous racial history left behind:

“White and black politics were locked into mutually reinforcing pathologies. Whites fled the city, blamed blacks for its destruction and, in many cases, gloated in its failures. Hostility toward the white suburbs shaped Detroit’s politics, which frequently amounted to race-to-the-bottom demagogic contests to label the opposing candidate a secret tool of white interests, with the predictable result on the quality of government. The worse Detroit got, the more whites hated and feared, fueling black racial paranoia, which made the city worse still. (Some national commentators recently suggested that Mitt Romney be brought in to turn around the city, which is a bit like suggesting that Benjamin Netanyahu would make a great Prime Minister for the Palestinians -- hey, he’s from around there!)”

Any political system that has a convenient other to complain about will use that other to excuse the failures of its politicians, and Detroit has been no exception. The city has been plagued by flagrant corruption and plain old bad management. It’s also confronted the same painful math as Rust Belt cities like Buffalo and Rochester: The poor folks in the city want high levels of government services to alleviate their poverty. But if you raise taxes to pay for the services the voters want, the taxpayers will leave.

So no one factor pushed Detroit over the edge; they were the victims of decades of bad decisions and bad luck.

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