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Posted at 10:29 AM ET, 02/22/2011

Did the auto industry cripple Detroit?

By Ezra Klein

An interesting thesis from Ed Glaeser:

Ford, Durant, David Dunbar Buick, the Dodge Brothers, the Fisher Brothers, Henry Leland – it seems as if Detroit once had an automotive genius on every street corner. ... But while their great invention made Detroit wildly productive for decades, it also sowed the seeds for the city’s decline. Cities work best when they are filled with smart people and small companies that innovate by exchanging ideas. Huge automobile plants, like Henry Ford’s River Rouge Plant, were highly productive, but they were isolated from the rest of the city.

Part of Ford’s genius was that he was able to provide high wage jobs for less-educated workers; this helped turn Detroit into a city with too few nonautomotive skills.

Glaeser concludes that Detroit has spent too much upgrading its infrastructure -- note the beautiful, but empty, people mover -- and not enough on its people. But there might be a reason for that. If you build a train in Detroit, you can be pretty sure it'll stay in Detroit. You can't say the same for its residents. Consider this study examining the way one state's investment in education can end up benefiting a more desirable neighbor. "Massachusetts, California, or New Jersey may benefit more from an investment in Mississippi’s research universities than Mississippi does," the authors concluded. Education, in other words, gives people the option to leave. And they take it.

The question for Detroit, then, isn't just about making investments in human capital, but about keeping the humans around long enough to see some returns on those investments. So what does Detroit have over New York or Washington or Portland? It's not weather, potential income, safety, or school quality -- the normal markers of comfort and opportunity. Perhaps it's the pride of place, and the emotional appeal of a resurrection narrative, that we saw in the ad Chrysler ran during the Super Bowl. Or perhaps I'm just grasping at straws.

By Ezra Klein  | February 22, 2011; 10:29 AM ET
 
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Comments

Whoah there, "it's not safety?" I googled detroit and crime and found it was ranked last year as the third most dangerous city in the US:

http://gawker.com/#!5695776/the-25-most-dangerous-cities-in-the-us-are-mostly-nice-places

Which Portland did you mean? If you meant Oregon, it's ranked at 174. And its weather is much, much nicer than Detroit's. I would bet the schools are better too but I haven't done research on that.

Posted by: chadde | February 22, 2011 11:01 AM | Report abuse

What Detroit has now is vacant land that is being turned into agricultural production. It is the same strength/potential you see in Cleveland and other Midwestern industrial cities who now have lots of cheap, available, inner city land due to foreclosure, etc. It makes a perfect palette for a local food, green revival. A recent study funded by the Cleveland Foundation projected a enough local agricultural and food processing jobs to employ one-eighth of the currently unemployed.

TG

Cleveland

Posted by: tgibson1 | February 22, 2011 11:08 AM | Report abuse

@chadde:

Ezra said the exact opposite of what you seem to think he said:

"So what does Detroit have over New York or Washington or Portland? It's not weather, potential income, safety, or school quality -- the normal markers of comfort and opportunity."

He's saying Detroit doesn't have those things, so they would need some sort of other draw.

I think the pride of place argument has the most appeal. Those of us who have a connection to Detroit see it as sort of a family member or friend that can't seem to get it together; you talk about how they're a screw-up, but you really want them to get it right. Also, you feel sort of protective/defensive of them; nothing gets me more riled up than when someone from California starts talking about how awful Detroit is.

Posted by: bampote | February 22, 2011 11:12 AM | Report abuse

As a Detroiter and a teacher in a school not far from the one Glaeser visited, I was disappointed in the quality of his analysis. Brain drain is only one cause for Detroit's decline. And FYI, downtown Detroit's loft/condo market is one of the few growing real estate markets in the metro area--it's an increasingly desirable place to live for young professionals. See this article, remarkable for the deal being done in this economy: http://www.modeldmedia.com/devnews/broderick011111.aspx

You say that Detroit's challenge is making the city attractive enough to hold on to its educated professionals. That's only part of the story, and not the most important part. A more important factor was a culture too dominated by corporate behemoths (think GM) and too unsupportive of startups and entrepreneurs. Venture capital was very hard to come by, so spin-offs in nanotech, biotech, etc coming out of Ann Arbor tended to move to California as soon as they were bought. State policies are improving access to venture capital, however, and the startup climate is improving.

More broadly, Michigan policy-makers and citizens felt too comfortable placing innovation in the hands of giant corporations. For individuals, it was somewhat counter-cultural to want to take on the risk of forming your own venture when you could have the security of a Fortune 500 pension behind you. On a larger scale, officials focused on catering to the needs of giant companies' R&D. Pfizer used to maintain a huge research center in Ann Arbor. Good for the economy, but not good for innovation, since many of the best minds got pulled into their labs rather than creating a more diversified, dynamic startup culture. Pfizer has now left, and the U. of Michigan has bought the 2,000,000 square feet of space for a startup incubator (among other things). A painful transition, but in the end it's better to have 20 scientists each at 100 growing companies than to have 2,000 scientists at one static company.

Detroit is already on the upswing, and in 10 years it'll probably look more like Cleveland or even Pittsburgh in terms of business growth and health.

Posted by: KevHall | February 22, 2011 11:35 AM | Report abuse

Correction--I guess I agree more with Glaeser and less with Ezra. Ezra, my point is that the desirability of living in Detroit has been increasing for years. It's not hard to get entrepreneurs to want to live here. But it used to be hard to start a company here.

Posted by: KevHall | February 22, 2011 11:45 AM | Report abuse

"So what does Detroit have over New York or Washington or Portland?"

A comparative advantage in manufacturing?

Posted by: Castorp1 | February 22, 2011 12:05 PM | Report abuse

@KevHall

What's your take on how good a job Robert C. Bobb has done with Detroit?

Posted by: jnc4p | February 22, 2011 12:06 PM | Report abuse

@bampote

Ha. Oops. You're right. The perils of reading blogs while listening to the radio and trying to work at the same time....

Posted by: chadde | February 22, 2011 12:07 PM | Report abuse

What's killing Detroit is what's always killed Detroit — lack diversity or any interest in it.

I grew up there in the '50s and '60s when three out of four people in the greater Detroit area worked directly or indirectly (suppliers) for the automotive industry. Three generations of my family worked for Chrysler. Of the 6 ad agencies I worked for there, 5 had auto accounts. Yet, it was a wonderful feeling being the Motor City, the forge and factory that supplied the Arsenal of Democracy.

But intellectually, it stayed a one-horse town — cars. Intellectual interests were for eggheads, nerds, people who hands never touched grease.

Racially, it was a divided town. After the riots of 1967, it became a semi-abandoned town with the White Flight to the suburbs which grew enormously in the '70s and '80s. Most of the auto executives already lived in the suburbs. After 1967, they moved their offices there too. As did many working class whites. (Me? I left for San Francisco in 1975—to work on an car account!)

The auto industry was never interested in anything other than cars, selling as many as they could for as much as they could get. It fought safety developments (seat belts, unprotected gas tanks) and environmental controls (anti-pollution technology, unleaded gas) every step of the way. It ignored the innovation and economy of foreign cars, saw no threat in them. Its idea of innovation was muscle cars. The biggest worry GM had was keeping its market share not to high above 50%.

Now the Big Four (remember American Motors?) have become the Big Two and a Half, dependent on overseas sales, still pushing trucks and SUVs here because that's where the highest profit is, never mind the pollution.

And Detroit is still a dying town, a reverse Oreo, a third-world city whose idea of diversity is a weekend in October when the Lions, Tigers, Wings and Pistons are all playing.

Posted by: tomcammarata | February 22, 2011 12:32 PM | Report abuse

No, white flight crippled Detroit. The wealthy white core of the city's tax base fled en masse for the suburbs. The automobile industry exacerbated the problems; a fervent car culture helped spread out the city and ensured there would be no decent public transportation. (Kind of crazy, really: nearly 2 million people lived in the city in 1950 and they have never constructed even a single light rail line.)

All of the white people still live outside of Detroit. Look at this map created from the 2000 census data: http://www.flickr.com/photos/walkingsf/4982034696/.

Posted by: bobbyv3 | February 22, 2011 12:36 PM | Report abuse

"Consider this study examining the way one state's investment in education can end up benefiting a more desirable neighbor. "Massachusetts, California, or New Jersey may benefit more from an investment in Mississippi’s research universities than Mississippi does,""

Yet Another strong reason for Federalism. American's rights and human rights are vastly more important than state's rights.

With free rider problems and diseconomies of scale and complication, having things fragmented 50 ways for state's rights, or 50,000 ways for local rights can sometimes be grievously costly. It's far harder for the press and the public to monitor 50 times the elected officials, or thousands of times (How many people make informed votes for small local officials they've never heard of, and have no time to find out about them?). And absolutely there should be certain basic standards of decency in protection, education, and more that any American can expect no matter what state he lives in.

Posted by: RichardHSerlin | February 22, 2011 12:50 PM | Report abuse

The comment about encouraging and entrepreneurial culture and the comment about inner city agriculture are both well taken and, in fact, complimentary. City farms beget farmers markets, really cool restaurants and clubs, etc. A well run city farm can anchor revival in a whole area, while sucking up the badly used (and, in those areas, oversupplied) land.

All of which spurs a greater entrepreneurial culture and improves lifestyle.

Posted by: drinkof_more | February 22, 2011 12:59 PM | Report abuse

If there's a correlation between a college education and the ability to relocate, does that mean part of the higher return to a degree is derived from relocation? Does that mean it would be worthwhile for the government to subsidize relocation expenses for those without a degree?

Posted by: bharshaw | February 22, 2011 1:06 PM | Report abuse

"Cities work best when they are filled with smart people and small companies that innovate by exchanging ideas. Huge automobile plants, like Henry Ford’s River Rouge Plant, were highly productive, but they were isolated from the rest of the city."

Let's be honest here. To live and enjoy a city despite the possible quality of life, one must be able to make a living. Detroit maybe appealling for some, but if they can't find jobs they can't stay. Detroit made the mistake of depending too much on the auto industry and now is struggling because of its decline. Furthermore, everyone with an education is fleeting to more prosperous cities. To rebuild, Detroit must invest in a new industry to draw people back to the city and then develop a diverse business community apart from this to maintain growth in case an economic slump hits again.

Posted by: oweiss | February 22, 2011 1:17 PM | Report abuse

The brain drain is absolutely the greatest threat facing the metropolitan area (the city itself is probably past the point of no return). A few anecdotal data points:
--I am of an age where my kids and my friends kids are a starting careers. Virtually none are staying in Detroit. One friend has 4 children between 20 and 30. All have left. Friends' children who have remained are the least accomplished of the bunch.
--one child is in law school at Michigan Law. Michigan Law was traditionally the primary feeder for the best law firms in the city. She knows one person in her class who is staying in the area.
--sticking with law firms, which I know best, it has become increasingly difficult to attract top talent, which triggers a vicious circle of less talent attracting lesser quality work, leading to lower compensation, leading to lesser talent. Top flight lawyers stand to make at least 30% less in Detroit than in major markets. It was probably 10% 20 years ago, with much of the difference offset by cost of living and other quality of life amenities.
--at the risk of offending some, the Jewish community in Detroit is now the oldest in the U.S. outside of South Florida and barely 2/3 of the population 20 years ago.

Urban farms are not going to pull us out of this spiral Absent offering major incentives to keep and lure talented young people, there may be occasional cyclical upswings, but no real improvement.

Posted by: sdklein | February 22, 2011 1:30 PM | Report abuse

Wretched unions in Indiana are ordering Democrats to pull the same underhanded fugitive tactics.

Posted by: krazen1211 | February 22, 2011 1:52 PM | Report abuse

There's nothing inherently wrong with the end of Detroit. People only migrated there because of the chance to earn a decent living in the auto industry in the last hundred years. That era is over, so the smart people will leave.

It was never one of the major US cities before 1900, and now won't be again. It's terrible if you live in Detroit, but not a problem for the rest of the country.

Posted by: johnmarshall5446 | February 22, 2011 2:19 PM | Report abuse

@jnc4p He was doing a great job until he got stripped of most of his authority. It's an impossible situation. But long-term, what's likely to happen is that Detroit Public Schools will continue to lose students to a growing charter movement. The challenge, then, is to make sure that those charter schools are really good. My understanding of the research on charters is that most of them actually do worse than the public districts they're in, but the really exemplary ones are WAY better than anything you see in public schools. So the question is why are states not revoking the charters of ineffective schools, and is it possible to scale up the successful ones to the point where they could serve a significant proportion of the population. That does not mean that public schools are not part of the solution. I think New York, for example, shows that public systems can sometimes accomplish more than charters.

Posted by: KevHall | February 22, 2011 2:25 PM | Report abuse

"Wretched unions in Indiana are ordering Democrats to pull the same underhanded fugitive tactics."

And yet you have no problem with underhanded tactics such as unfair gerrymandering by the GOP, and have advocated for it here.

I think the Dems should show up and allow whatever happens to happen, and teach Wisconsin voters about being careful what you wish for or about being an apathetic voter.

Maybe then voters elsewhere will start thinking of what they are doing when they pull the lever.

In sum, don't be offended by underhanded politics unless you get offended at both parties.

Posted by: lauren2010 | February 22, 2011 2:55 PM | Report abuse

@Ezra
The thing you've got to keep in mind when you're talking about middle-sized cities like Detroit is that we ain't competing with NYC, LA, or London. We're not even really competing with Chicago.

We're competing with Portland and Phoenix. Here's what we've got that at least equals the stuff they've got. Teams in all four major sports, three of which have made it to the championship series in recent memory. Two major universities in the city limits, and a bevy of smaller schools in the 'burbs. We're less then hour from two nationally-recognized Universities, one of which (the University of Michigan) is internationally renowned.

As for what we don't got, I could write a book.

But IMO the biggest problem is that from 1920-1975 things were great, which allowed us to afford a lot of ridiculous crap, and that since then things have returned to normal but nobody's wiling to give anything up without a fight.

Pensions are one example, but another is the whole political map of the region. We have areas less then 1 square mile with multiple Mayors, all of whom are power-brokers because in 1920 the state could afford to give every new development it's own city charter, and none of them have given up any power since them. In some areas it's truly ridiculous. Grosse Pointe, for example, would be too small to be a neighborhood in most cities, but it's got five official Cities. One is only two blocks wide.

Since the City is black, and the suburbs are almost all white, there's frequently a racial angle to their fights. Which is never productive. But even fights pitting one 'burb against another can get ridiculous. Tienkin Road for example, was supposed to a major thouroughfare according to one city's (Rochester Hills, IIRC) plan, so they widened it. Another (Auburn Hills IIRC) wanted it to be a peaceful country lane, so literally 20 minutes after one of their people complained about the noise they dumped a load of dirt across the road, and declared it a park. Solving that took more then a decade.

Posted by: NickBenjamin | February 22, 2011 5:01 PM | Report abuse

I was under the impression that automobile industry MANAGEMENT killed Detroit.

Poor decisions based on short term economic gains at the expense of quality and all that.

Posted by: grat_is | February 22, 2011 5:44 PM | Report abuse

Having lived in downtown Detroit for four years, 01-05, I can attest that it is a fabulous place full of fabulous people, if making a lot of money is not that important to you. Detroit has one of the most vibrant music and art scenes in North America, though few outside the area know about it or care. Land and property are cheap, and people who don't want a three-car garage -- including many of the so-called creative class -- are only too happy to grab a fixer-upper or rent a space in a funky old building, and there are no shortage of those. Scenesters and academics from the world over make pilgrimmages to Detroit to behold its awesome ruins. I met many of these visitors. I decided that once you embrace the dysfunction and post-industrial blight, it's really a delightful place to live. I never felt threatened once in Detroit, and I was out on the town all the time. I'm in the West now to be near my kids but I miss Detroit and its people every day. I'd move back in a heartbeat if I could.

Posted by: jayvee | February 22, 2011 7:51 PM | Report abuse

You may also get a discount if you take a defensive driving course. If there is a young driver on the policy who is a good student, has taken a drivers education course or is at a college out of the area without a car, you may also qualify for a lower rate. search online for "Clearance Auto Insurance" they are the best for student drivers

Posted by: stellaveiga | February 23, 2011 1:30 AM | Report abuse

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