Tale of Two Cities

It isn't often that you get reading suggestions from a United States senator, but that's what happened this past weekend for those who attended the National Review Institute's summit meeting in Washington, D.C.

The three-day conclave, part election post-mortem and part revival meeting (that is, reviving conservatism and America), featured a bracing dose of conservative intellectuals along with activists, campaign professionals and office holders. Newly minted Senator Ted Cruz of Texas spoke in his characteristic fashion — fluidly without notes or podium.

Cruz, while praising Mitt Romney in general and acknowledging that anyone can have a slip of the tongue, zeroed in on the 47 percent gaffe. It is precisely to those who are striving for something better, Cruz argued, those who are poor or unemployed, to whom Republicans should aim their message of opportunity and growth. They are the ones who stand to benefit most from policies that promote growth.

I was sitting near Mario Loyola of the Texas Public Policy Foundation as the senator spoke, so I caught Loyola's surprised expression when the senator quoted him. We should reflect, the senator suggested, on an article Loyola wrote for National Review in 2011. It's a tale of two cities — Houston and Detroit — symbols of two radically different governing philosophies.

Both cities were once dominated by one industry — autos in Detroit, oil in Houston. Both grew robustly during the Second World War, but the cities responded very differently to setbacks in the years that followed. Detroit and Michigan attempted to favor and coddle their big industry and the big unions associated with it. Houston went for competition.

Both cities (and most of the country) had histories of racial strife. Detroit unfortunately elected a leader in 1973, Mayor Coleman Young, who stoked racial animosity rather than attempting to unify the city. This accelerated the white flight (and capital flight) that had begun after the 1967 riots.

When the auto industry faced global competition starting in the 1970s, Michigan and big auto sought protection from Japanese imports. President Reagan extracted "voluntary" quotas from Japanese carmakers. The big three were thus shielded from the consequences of their own bad labor and management decisions. This permitted them to stagnate. They failed to adjust to market pressures and have continued to collect government bailouts to the present.

Michigan and Detroit used "targeted" tax credits and other incentives to lure jobs to their region — more than $3.3 billion over 15 years. The government has often intervened to help favored industries — condemning, for example, 1,300 houses, 140 businesses, 6 churches and a hospital to make way for a General Motors plant in the early 1980s. City and state taxes are high, and strikes have damaged the school system.

Between 1900 and 1930, Detroit was the fastest growing city in the world. Today, many of its buildings are abandoned. The illegitimacy rate is 80 percent. Half the city's population is functionally illiterate. During the recent recession, the unemployment rate reached 30 percent. Detroit is one of the most dangerous cities in America.

Houston roared to life as the oil capital of America. But because oil was extracted by hundreds of independent operators, the industry never consolidated as the auto industry had. Producers competed with one another, and with the world, rather than colluding to get protection and special breaks from the state.

Houston fell on hard times in the mid-1980s when oil prices suddenly declined. Rather than intervene to protect the ailing industry, government did nothing. Layoffs were massive and painful. Unemployment shot up to 9.3 percent. But within a couple of years, employment snapped back. Whereas before the shock, oil had represented 80 percent of Houston's economy, it dropped to 50 percent after. Left to its own devices, the economy diversified, expanding to include computer makers, airlines, retailers, utilities, food and grocery companies and medical centers. They were lured not by special tax incentives or breaks from the government but by a low tax environment, cost-conscious environmental regulation, right to work laws, and tort reform.

During the first Obama term, fully half of all the jobs created in America were created in Texas.

Senator Cruz mused that if government had been as intrusive in the early 20th century as it is now, the automobile itself would have been delayed. "We would have been subsidizing all the buggy makers." When Democrats say they have the answers, he advises to remember Detroit.

Mona Charon

I doubt that many on this board have the attention span that would be necessary to read and comprehend that short essay. Hopefully some will, because it was quite good.

I'll go to my grave wondering how some intelligent people, when presented with a set of facts cannot come to a logical conclusion, but alas, it is the way of the left.

VIVA CAPITALISTA

@blackmouth...

LOL!

Not surprised that you, along with Hankster and Illy, as members of the non-reality based contingent would feel that way.

Not surprised, but constantly amused.

Fish on...

Todd

Ted Cruz is a impressive guy.

It is at my pleasure that I choose to amuse you.

Oh, no...the pleasure is all mine. I promise.



Fish on...

Todd

I am also feeling quite pleasured, thankee sir.
I'd be wilin to bump a glass wih you anytime, Sir.

Comparing autos to oil doesn't really do it for me. Two entirely different industries, and while they are complimentary to each other, the choices surrounding the consumer's buying decision for each product also differ greatly.


I can buy a used car, but I can't really buy used gasoline.

Gee Andy.................why do you insist on thinking like that?

+1

Fish on...

Todd

It is truly amazing how concise and unambiguous Todd's posts
become when impacted by irrefutable fact.

An echo: Viva Capitalism
I wonder, is there any correlation in the governmant's funding
of the Car and the Oil industry.

Carbon dioxide is not wasted, the plants use it to make Oxygen and energy when the sun don't shine. And when the sun does shine;
Photosynthesis, if you don't mind 5 syllables.

148

I believe he prefers MR. 148.

It must be the economist in me, and apparently I hate 'merica.

lol

Illy, like most RWWJ's, when faced with the reality that his "facts" and "logic" are neither facts, nor logical, does the smart thing...

Repeats them, only louder.

Fish on...

Todd

I agree with Dogfish. Were it not for the apples to oranges nature of any honest comparison between the auto industry and the petroleum industry, the argument posed would be very compelling. As it stands, it flies in the face of reality.

Adding on to Dogfish's point: does anyone out there really think about what brand of gasoline they buy? I know I don't. It's a chemical compound, with a very standard recipe. Concepts such as "winter blends" are no more than tools to justify price-gouging throughout the rest of the year. I submit that most of us, when we do bother to make decisions about where we buy gas, do so on a basis of price, or perhaps depending on ethanol content (which is not a brand-specific distinction). Because such factors are relatively consistent across the entire market, there is no resl, market-driven competition in the petroleum industry. Big Oil is an oligopoly, and possibly the most villainous one in the entire world, let alone the US. (Sorry; I can't resist an opportunity to demonize Big Oil.)

When we buy a car, on the other hand, we tend to be much more selective, due in no small part to the fact that there are so many variations in design, function, and quality, many of which are brand-specific. There is also much greater variance in price across the market. That variance was not the only factor in Detroit's fall from grace, but it played a huge role. I know that my general preference for Japanese autos has been based on cost, not only at the dealership, but also in terms of maintenance and fuel. I'd love to have a nice, big, 'Merican-made 4x4 as much as anyone, but it simply doesn't pencil out for me, so my fishing rig (and commuter) is a stripped-down Toyota Tacoma, powered by only two wheels and a wimpy, 4-cylinder engine. By the way, to Dogfish's point, I purchased it "lightly used," but I have only been able to find "new" gas to put in it.

All this aside, this Cruz fellow seems well-spoken and intelligent, so I kind of like him so far. Hey - if I gotta get screwed over, it might as well be by somebody that doesn't come off as a moron. Being abused by Congress is hard enough without the realization that most of them are idiots. I wish him well (until he pisses me off).

Cue the wingnuts to tell us even more emphatically why buying gasoline and buying a car made in Detroit are exactly the same, and why it's Obama's fault...

Perhaps while they are at it they will blame Obama for the failure of the BetaMax, and if the gubmint had just left the BetaMax alone like they did with the precise nature of sliced bread that the BetaMax would still be around.

Fish on...

Todd

Betamax reference=automatic WIN!!!!

I'm going to go out on a limb here...I mean, I'm not an economist or anything...but I'm going to guess that, in Houston, 30% of their local economy went into something other than the oil industry...and that out of the thousands of oil-dependent companies in the Houston area some closed, some downsized, and some consolidated.

Oh, that...and it's Obama's fault.

Fish on...

Todd