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<a href="http://www.nytimes.com/"><img src="http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif" alt="The New York Times" align="left" border="0" hspace="0" vspace="0"></a>
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<div class="">August 15, 2013</div>
<h1>What Really Ails Detroit</h1>
<h6 class="">By
<span><span>STEPHAN RICHTER</span></span></h6>
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<p>
IS Detroit’s collapse the story of one American city gone awry? Or is it
indicative of a more profound nationwide problem? The facts point to
the latter. </p>
<p>
Though Detroit’s bankruptcy is exceptional in many ways — notably, its
size and its disproportionate impact on African-Americans — the overall
decline of America’s manufacturing centers is evident in the
deterioration of many smaller cities and towns throughout the Midwest
and Northeast. </p>
<p>
What accounts for this sad turn of events? </p>
<p>
The traditional narrative holds that globalization, outsourcing and,
after 2007, the recession have been responsible for devastating American
manufacturing by moving jobs out of the country in enormous numbers.
But at best, that is a convenient half-truth. </p>
<p>
American manufacturing has been in trouble even since its heyday, in the
1950s and 1960s, when the United States was the global economic
powerhouse and American assembly-line workers earned very decent
middle-class wages. </p>
<p>
That era of prosperity was not, as is so often claimed, the
manifestation of the American dream. Rather, it was, or should have
been, a warning sign that America was riding a fleeting wave of
progress. Almost nobody was looking hard enough to the future and asking
what it would take to sustain success. </p>
<p>
The reason so many manufacturing-sector workers in the United States
received such high pay at that time was not that they had exceptional
skills or had received superior training; it was that the corporations
for which they worked were unsurpassed in their dominance and generated
huge revenues. </p>
<p>
But that dominance was, to a considerable degree, a momentary quirk of
history: the absence, in the wake of World War II, of any real
competition from other nations. Once foreign competition was
re-established, in Europe and Asia, only the superior skills of a
nation’s workers and a focus on long-term workers’ training would allow a
country to stay ahead. </p>
<p>
For the United States, the day of reckoning came as other nations
recovered from the war. In the 1970s, for example, American car
manufacturers began facing competition on their home soil for the first
time. Belittling the Japanese and their funny little cars was not an
effective competitive response, though not for want of trying. </p>
<p>
In that moment, American companies, communities and employees should
have started taking the competition seriously. That did not happen.
Companies like General Motors continued to shower blue-collar workers
with handsome pay and benefits. </p>
<p>
Who was to blame for this? Not the unions. They did what they were
supposed to do: ask for higher pay and more benefits. No, the fault lay
with the top corporate managers: it was their job, as capitalists, to
deny such increases if they were not justified by productivity trends.
</p>
<p>
But with a fatal arrogance, executives at American manufacturing
companies did allow those increases, in part to maintain a society of
contented, trouble-free workers, though executives would also use those
increases as cover for their own rapidly swelling compensation. In the
1960s, the average compensation of an American C.E.O. was about 25 times
the average compensation of a production worker. That ratio rose to
about 70 times by the end of the 1980s, and to around 250 times these
days. </p>
<p>
It is tragic to hear voices from Detroit declaring themselves ready for a
resuscitation of the city. Revival is a question not just of will but
also of the available skills base, which unfortunately has deteriorated
as a result of a failure to invest in training. </p>
<p>
That skills deteriorated is, to a considerable extent, the fault of the
unions. Unfortunately, they shared the management class’s shortsighted
focus on extracting the maximum amount of compensation from companies,
even in the face of the underlying businesses’ failing strength. </p>
<p>
Developing the necessary skills base is not a short-term project. It
requires decades of concerted effort on many fronts, by many national,
regional and local actors, including collaboration among companies,
government, trade associations, schools, colleges and universities.
</p>
<p>
This kind of common purpose, however, is not something that American
society, with its ethos of individualism and personal independence,
seems capable of undertaking. Doing the right thing for the long haul is
typically put off for a later time, if it ever happens. </p>
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That such a “strategy” is self-defeating ought to be obvious. Sadly, it is not — not in an instant-gratification world. </p>
<p>
Globalization, in many ways, serves as an early warning system for the
changes required in a domestic society. No society should have been
better prepared to utilize this tool than the United States, given its
traditional — but at least for now largely lost — proclivity to embrace
change. That it didn’t work out that way is a tragedy of the nation’s
own making. </p>
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<p> <a href="http://www.theglobalist.com/AuthorBiography.aspx?AuthorId=1">Stephan Richter</a> is publisher of The Globalist, an online magazine. </p> </div>
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