Success Can Lead to Failure

The story of Detroit’s precipitous decline is, on a human level, heart wrenchingly sad. Even with the rebound in profits at the Big Three automakers, the city is still a shell of its former self. The question that now needs to be answered is this: What factor(s) led to the downfall of one of America’s great industrial cities, and could this fall have been avoided? The answer to this question is not easy. There are many people who think that the automakers’ big push for profits led to blue collar jobs being outsourced and sent to other countries. Some say that union demands led to lower profit margins and, ultimately, lower quality cars. The idea that the Big Three failed simply because they weren’t able to design the kinds of cars that Americans found attractive is another rational theory. Inept government and the technology revolution also most definitely played a role. In truth, the fall of Detroit was probably a combination of all these things. In order to answer the more important question of whether this situation could have been avoided, it is instructive to look at how Detroit was graced with the good fortune of becoming a big successful city in the first place.

In his book Triumph of the City, Edward Glaeser describes Detroit in the early twentieth century as being very similar in spirit to the Silicon Valley of the 60s and 70s. Instead of computers though, Detroit’s young innovators and entrepreneurs were focused on the automobile. The concept of the automobile was actually formed from the merger of two other inventions: the engine and the carriage. Early on, Detroit’s engineering firms had become very profitable building and maintaining the ships that crisscrossed the Great Lakes. Detroit also became a massive producer of carriages due to Michigan’s abundant supply of timber. Glaeser argues that Detroit’s early success had a lot to do with the city’s fierce competitiveness and its openness to new ideas. As the automakers steadily merged into gargantuan corporations, though, people became accustomed to taking jobs at the Big Three, rather than starting new companies. Glaser points out that college education rates in Detroit remained below that of comparative cities because people were able to join Ford or GM at age 18 and a live a middle class life with only a high school diploma. In the short run, this situation was tenable. American industry did extremely well after World War Two. In the long run, though, disaster could have been forecasted.

Detroit has struggled to innovate its way out of its long slump because one big industry has held a monopoly on ideas. With the car companies becoming more profitable lately, Detroit’s residents should heed this lesson and not fall back into the same trap.