Deja Vu All Over Again: Detroit Blues

As many know Detroit is in the news. A recent L.A. Times story asks “Are the Big Three worth saving?” Now I hate the Pistons and have never been to Detroit, but that does not mean I think the auto industry should implode. Yet, with $25 billion in loan guarantees in place and new requests for government help, one has to wonder whether the industry did it to itself. And here’s the déjà vu of sorts. An article from 2000, yes that’s correct, 2000, called Detroit Plays Catch-Up In Race for Hybrid Car; With Fewer Subsidies, Japan Is Ahead details how despite $1.4 billion given to the auto industry, universities, and national laboratories, Japan, well, Japan kicked our butts. I hate that; not because the Japanese did well, but because this country can still do great things yet seems to squander opportunities. Could it be that Good To Great was not published in time? No. It was published in 2001, and Built to Last came out in 1994. Maybe it is good old fashioned corruption (perhaps Lessig will show that). Or maybe it is a bureaucratic problem. That many actors easily beget bureaucratic balderdash.

And now there are the calls for an energy plan that mirrors the moon shot. Would it go the same way as the previous investment? Maybe not. We seem to do better when we are up against the wall. Unlike the article’s point that in 2000 there was “little sign that Americans want high-mileage cars in an era of relatively low gasoline prices and rising national prosperity,” we are in a different place. So although we seem to be poor at preventative measures, we can move quickly to attack serious problems. But what is the best way to do that? One possibility is that the government needs to spread the money to small companies that are in fierce competition for a piece of the energy solution. Would that lead to railroad era problems? Possibly. But insofar as the moon shot paid a huge sum of money to a broad range of players, it probably had some waste, yet did not seem to create the large scale problems that the rail industry did.

To be honest I need to read more about the economics of the moon shot. So if anyone has suggestions for good reading please share. Nonetheless, it seems that we are in one of those moments in history when we can leverage possibility to solve one problem and in so doing gain a broad range of beneficial outcomes. It is sort of a perfect moment for Brett Frischmann’s work. We can invest in a serious piece of infrastructure and if we plan it properly (in other words limit the ability for the players to end up as neo-railroad barons), we can have tremendous spillovers (Brett and Mark Lemley wrote this article) for the economy and the country as a whole. That’s the hope at least.

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7 Responses

  1. Patrick S. O'Donnell says:

    Re: “one has to wonder whether the industry did it to itself.”

    I am absolutely convinced that the industry did indeed “do it to itself,” but in the end I’m afraid that will have to be set aside in order to save the auto industry (and thus the livelihoods of many workers).

    Much of capitalist industry lacks the ability to look very far down the road (i.e., it is structurally myopic), is allergic to long-term forecasts and planning of any sophistication, hence the truth of your proposition that “We seem to do better when we are up against the wall.” The short-term profits (returns to shareholders) have simply proven too bewitching….

  2. Deven says:


    Dead on as usual. When one looks at the language out of corporate law, especially Delaware, the reliance on high risk to serve shareholders is stark.

    Now as you tend to know much in many areas, I have been wondering about the Fabians. I know there some fairly dubious aspects to what they implemented, but some of the general ideas about public/private partnerships seem to have possibilities. My instinct is that the wild highs may be less common but so too the deep lows.


  3. Patrick S. O'Donnell says:


    You’re too kind. And I’m afraid I don’t know nearly as much as you imagine I do! For alternatives to the status quo I would explore not only the Fabians but the traditions of social democracy and socialism in general, as well as much of what falls under the heading of “economic democracy.” By way of avoiding the messy because complicated details that rely on an awful lot of presuppositions and assumption having to do with my my particular take on economic history, economics, democratic theory and practice, and so forth, I would simply ask those interested in the “big picture” (inclusive of, but beyond a critique of contemporary corporate practices) take a serious (i.e., careful and sustained if not sympathetic) look at the literature being produced by the “Real Utopias” project. It is here one finds many suggestive ideas and proposals shorn of dogmatic character and ideological rigidity but no less inspired by ideals, values, and principles common to tradtions of democratic and socialist (and to some degree anarchist) theory:

    To their important and timely series of books I would add two volumes in the Reinventing Social Emancipation series edited by Boaventura de Sousa Santos: Vol 1, Democratizing Democracy: Beyond the Liberal Democratic Canon (London: Verso, 2007), and Vol. 2, Another Production is Possible: Beyond the Capitalist Canon (London: Verso, 2007).

    I’ll send an e-mail in the near future with some of the messy details explaining how I see such things (largely along the lines of the late Michael Harrington in Socialism: Past and Future, 1989) if perhaps you’re (still!) interested.

  4. Patrick S. O'Donnell says:

    For a brief sketch of ONE proposed MODEL of “socialism *as* economic democracy” (which presupposes political democracy) that I find more than plausible, indeed attractive, see pp. 60-77 of David Schweickart’s Against Capitalism (1996). The model has elements in common with worker self-management in the former Yugoslavia, Japanese capitalism, and the Mondragon worker cooperatives in the Basque region of Spain, although this “model differs from each of these experiments in various crucial respects….”

    In short outline, “each productive enterprise is managed democracratically by its workers” (although workers manage the workplace, they do not own the means of production, which are the collective property of the society), “the day-to-day economy is a market economy” (permitting both regulation and government intervention when markets malfunction), and, “new investment is socially controlled” (or ‘democratically mediated’–here is the locus of planning, which is not, as is evident, economy-wide; this includes taxing capital assets rather than payment of interest, as there is a return to the ancient proscription on usury). As this is an all-too-brief sketch, would-be critics and eagerly reflexive nay-sayers should read his entire book with care before jumping to any conclusions.

    Schweickart happens to be a very bright fellow: a professor of philosophy at Loyola University of Chicago with doctoral degrees in mathematics and philosophy. As to his personal worldview, I find it most congenial if not compelling:

    “I believe, with Jean-Paul Sartre and Simone de Beauvoir, that we collectively, but also individually, are responsible for the world, and that feelings and opinions count for much less than actions. One is what one does.

    I believe that we are living in a time when almost every human being could live a fulfilling, meaningful life, and yet, for reasons that are mostly structural, the majority of humanity live lives of quiet desperation (as Henry David Thoreau put it) or worse.

    So I believe, with Karl Marx, that it is not enough to interpret the world. The point is, to change it.

    And I believe, with Emma Goldman, Arthur Murray, and St. Francis, that everyone should learn to dance.”

  5. Patrick S. O'Donnell says:

    Schweickart’s book above was first publ. by Cambridge University Press in 1993 (my copy is a pbk. version by Westview Press in 1996).

  6. I worked for a Japanese automaker for 7 years and we did some benchmarking exercises with the Big-3. This, plus having lived in Michigan for 2 years, has given me some insight into the industry and its problems. My take is that you can throw all the money you want into Detroit to rescue them, but if you don’t change the mentality of “doing the same old thing” at each company, nothing will change. (My logistics professor at Michigan State used to call this the Tevye syndrome, after the main character in “Fiddler on the Roof”.)

    The blueprint for success has been available since the 1970s — the Japanese car makers. All of the Big-3 have joint ventures or own parts of Japanese automakers. They have seemingly learned nothing. Of course, when your leaders all come from the same tree, you’re not going to grow maples instead of oaks all of a sudden.

    Detroit still lags in making a quality car and in making cars people want to buy. My parents used to be staunch GM buyers since they got their first car in the 1960s. Everyone of them had significant problems, but that was all an accepted part of the car ownership experience. In the late 1980s, I convinced my sister to get a Nissan for her first car. Not a single problem in the 5 years of ownership. My parents have owned Nissans, Acuras and Toyotas ever since and haven’t ever considered going back to a GM product.

    My parents are not alone. Expectations were changed by the Japanese (see the airline industry for an analog). The Big-3 need to start building cars that people want and that will last without problems. If not, others will and do. And even if the Big-3 do so, there will be a lag before the public comes around to a new reputation. But they need to start now.

    It’s not solely about money. It’s moreso about smarts.

  7. A.J. Sutter says:

    If you can read French, there is also the «Dictionnaire de l’autre économie» [“Dictionary of the ‘other economy'”], ed. J-L Laville & A.D. Cattani (Gallimard/Folio 2006). This includes over 60 articles about a wide range of movements and institutions, each with a bibliography. Some articles, like ones on civil society or CSR, cover topics you’re probably familiar with, but many others cover various concepts and movements, such as décroissance/de-growth and anti-utilitarianism, that are far less generally known in the US.