Continuing the conversation about the role local culture plays in the economic fate of a city, a reader posts a link to a Bloomberg BusinessWeek commentary about Detroit’s decline. The writer is Chris Farrell. Excerpt:
Why did Detroit sink even as other major American cities like Chicago rebounded? Cities are incredibly complicated places, but several factors stand out, especially economic openness and civic engagement. For example, it’s well known that Detroit was dominated by a single industry: automaking. The city thrived during the years of U.S. auto industry dominance, and its economy declined as the Big Three lost out to foreign competitors. Less appreciated is how the car business evolved from a dynamic, cutting-edge enterprise in the early years into an insular industry resistant to outside influences. When sales soared in the 1920s, Ford Motor(F) and General Motors (GM) adopted a strategy of building their own parts rather than relying on outside suppliers. The strategy had the effect over time of sealing off the industry from outside influences, new ideas, and different ways of doing business. The insularity dampened the vitality of Detroit. So did its lack of immigrants. The foreign-born make up 5.1 percent of the city’s population, and 9.3 percent of its population speaks a language other than English at home.
Chicago had a more diverse manufacturing base that in the aggregate was more dependent on global markets. The traders at the Chicago Mercantile Exchange and the Chicago Board of Trade kept the city well-informed on global trends. Chicago is also a city of immigrants: The foreign-born make up 21 percent of the city’s population, and 35.5 percent of the population speaks a language other than English at home. Immigrants revitalized neighborhoods, not just in Chicago but also in New York, San Francisco, Minneapolis, and other urban centers. “The broader leadership of Chicago was global before global was cool, while Detroit was much more insular,” says Bruce Katz, director of the Metropolitan Policy Program at the Brookings Institution. Adds Robert Sampson, social sciences professor at Harvard University: “Chicago has seen a healthy influx of immigrants for a long time. Detroit is a more home-grown town.”
This put me in mind of a terrific 2010 episode of This American Life, in which reporter Frank Langfitt explored the fate of NUMMI, a joint production plan by Toyota and GM in the 1980s, and what its failure tells us about the culture of the US auto industry, and the people who worked in it. Toyota shared with GM its secrets for building great cars — but GM couldn’t get it done. From the transcript:
This is what the NUMMI commandos were up against– entrenched, defensive bureaucracies and workers many of the places they turned. They were not only trying to change the biggest corporation in the world, they were trying to change a corporation that had been essentially a collection of individual car companies– Cadillac, Oldsmobile, Pontiac, Buick– each with its own design team, own leadership, and its own way of doing things.
Those exact numbers– GM went from 47% of the US market in the mid 1970s to 35% a decade later. One reason car execs were in denial was Detroit’s insular culture. Yes, unions and management were always at each other’s throats, and yes, GM and its suppliers had a destructive relationship that seemed to almost discourage quality, but everyone had settled into comfortable roles in this dysfunctional system and learned to live with it. And in the late 1980s, with their market share in free fall, Jeffrey Liker says they were more apt to blame others than themselves.
[Jeffrey Liker, Univ of Michigan researcher:] “I worked with all the big three at the time, automakers, and it was common in all three automakers. They all believed that if the consumers think we have quality problems, it’s because ConsumerReports is misleading them, and they’re biased toward Toyota. They all believed thatConsumerReports was against them, that there was somewhat of a myth of Japanese quality.”
Read the whole thing. Seriously, do. What you see is cultural failure that led to economic failure. The insularity of GM — from the corporate offices down to the production line — caused the company to resist and reject the new ideas and ways of doing things that might have saved it. Instead, people reacted with hostility, defensiveness, and ultimately, self-sabotage.
That word, “insularity,” is present in both the Bloomberg column and the TAL piece. It brings to mind one big lesson from John Barry’s great book Rising Tide, about how the 1927 Mississippi River flood changed America. That lesson is about the insularity of New Orleans’s aristocracy, which reached its twilight in the flood era. After that, oil was discovered off the Louisiana coast, and major oil companies established beachheads in New Orleans, which was at the time a grand city. According to Barry, the outsiders found all kinds of obstacles to living there. The elites wouldn’t let the oil executives and their wives participate in their local culture. Eventually, they all moved to Houston, which had a culture that was more open to outsiders at that level. Compare New Orleans to Houston today, and you can see one economic consequence of cultural attitudes and practices.
It must be said, though, that from a culturally conservative point of view, the insularity of Detroit (and New Orleans) seems natural and even right. Looked at from one angle, it’s admirable that the US automakers manufactured their own parts right there in Detroit. From the same angle, taking measures to protect one’s own cultural particularism, is a good thing, not a bad thing. But it becomes a very bad thing indeed when doing so makes it likely that you are going to lose what you have in time. It’s a simple-minded conservatism that simply says NO to every innovative proposal that comes down the pike (and this is a cultural conservatism that the UAW workers embraced too). Some changes are necessary for the conservation of the most valuable things in the community — and none is more valuable than its economic viability, because without an economy, you’re done.
In a microcosm, we’re dealing with that in West Feliciana Parish, where I live. Everybody wants things to stay the same, but we are beginning to decline economically. Things have to change, but there are powerful culturally conservative forces — not necessarily politically conservative (I’m thinking of the local African-American community — who do not want any change at all. What they don’t see is that if things stay the same, and we pootle along without new economic development of any kind, we are going to lose a great deal — especially the quality of our local school, which is the heart and pride of the parish. If we want things to stay the same, we have to change.
Y’all talk about this. I’m about to leave for Stephanie Lemoine’s funeral. I’ll post comments as I can, via iPhone. I’ll be back this afternoon.