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Saturday, September 29, 2007

Is New Jersey the Michigan of tomorrow?
Posted by Jill | 8:31 AM
Edward McClelland writes in Salon about the long, protracted death of his home state, Michigan:

The UAW strike was just one distressing headline in a week of bad economic news for Michigan. As usual, the state has the nation's highest unemployment rate -- 7.2 percent. (In 2005, it was the only state not hit by a hurricane to lose jobs. It regularly wins United Van Lines' title of most-fled state, and the state of Wyoming put up a billboard outside Flint to lure workers west. That's a reversal of Henry Ford's old practice of sending his agents to wander the South handing out free one-way train tickets to Detroit.) On Friday, thousands of state employees will be told whether to report to work next week. Thanks to obstinate Republicans in the state Legislature and an ineffectual Democratic governor, Michigan may not meet its Oct. 1 budget deadline. The governor wants to raise taxes. Republican legislators want to freeze school funding and cut social services. If they can't agree soon, the state government will shut down. Drivers have been warned to renew their license plates now. The state police won't patrol the roads, and even the casinos will close.

How did the state that Franklin D. Roosevelt called "the Arsenal of Democracy" fall on such hard times? By clinging too hard to that title, is how. Michigan is hopelessly attached to the 20th century. It's not just the UAW with its longing for graduation-to-grandparent job promises. The Big Three have never gotten over the idea of muscular American cars ruling the highways. The SUV -- pumped-up descendant of the Fleetwood and the Electra -- was the automotive status symbol of the 1990s, so profitable that Detroit turned up its nose when Japanese automakers introduced hybrid cars.

"Hybrids are an interesting curiosity," then-GM chairman Robert Lutz said in 2004. "But do they make sense at $1.50 a gallon? No, they do not."

This year, with gas at $3 a gallon, GM is introducing a flex-fuel vehicle called the Volt, which can run on electricity, biodiesel, E85 or gasoline. But by waiting so long, GM yielded the title of environmentally friendly automaker to Toyota. The Prius will always be the hybrid car.

Detroit made the same mistake in the 1970s. It was too late getting into the small-car market, and the efforts it turned out were junk. My factory-town DNA tells me that buying American is a patriotic duty (as did the graffito "Assholes Buy Jap Cars" that I once saw painted on an overpass near Flint), so I suffered through the Chevy Chevette, the Ford Escort and the Plymouth Volare. I think I abandoned them all on rural roads, with blown head gaskets. My Ford Focus runs like a dream, but it can't seem to compete with the Corolla. This year, Toyota will become the biggest-selling automaker in the world.

When I think of Detroit's stubborn self-image as "the Motor City," I think of the Boll Weevil Monument in Enterprise, Ala. Enterprise was a town that grew cotton, and no other crop. After boll weevils struck, the farmers thought their livelihood was over. Then they started planting other crops, such as peanuts, and prospered more than ever.

Michigan did not become great because of the auto industry. The auto industry became great because of a Michigander, Henry Ford. The state still produces creative people. Google founder Larry Page, a Ford of the 21st century, grew up in East Lansing, and studied at the University of Michigan, whose main function seems to be giving young Michiganders the credentials to get the hell out of Michigan. Page went to California, but as a sop to his home state, Google is opening a 1,000-employee office in Ann Arbor.

(I've moved back to Michigan three times since college. My last attempt lasted a year -- until I was laid off. I now live on the North Side of Chicago, which is so crowded with my fellow economic refugees that we call it "Michago.")

I can only hope Google Ann Arbor is the beginning of a post-industrial era for Michigan. The picketers in the UAW's two-day strike were mostly gray-haired, protecting jobs and benefits they've held for years. Like the music of Bob Seger -- who celebrated Michigan's glory days with "Makin' Thunderbirds," "Night Moves" and, fittingly, "Back in '72," -- auto work belongs to the baby boom generation. GM has been culling them as quickly as possible, buying out 35,000 last year.

They're not being replaced with younger workers. My generation never heard the promise. We never counted on a career in the shop. If we have a mission, it's finding Michigan a new industry, and a new image, that take it beyond the automobile.


The dependence of an entire state on a single industry -- any industry -- is a huge mistake. Michigan is suffering, not because of "greedy auto workers", but because of decades of boneheaded decisions by Big Three executives, who continued to disgorge gas guzzling V-8 engines during the oil crunch of the 1970's, and continued to disgorge ever-more-mammoth SUVs as gasoline climed to $3.00/gallon and upwards.

It's all well and good that Larry Page is throwing a life preserver at his home state by opening a Google office there, but no single industry can save a state.

I read about Michigan and then I think about New Jersey. With less return on our federal dollar than any state in the country, and with a mammoth debt left to us by the fiscal mismanagement of Christine Todd Whitman, her successor Donald DiFrancesco, and the hapless and troubled Jim McGreevey, it now falls on a former Goldman Sachs executive, Jon Corzine, to try to sort out the mess in a state whose citizens seem unwilling to accept the pain necessary to get us out of it.

It turns out that the state pension fund has been hopelessly mismanaged for the last fifteen years and now has a deficit of $56 billion, which is going to have to be made up somehow. State employment is increasing, property taxes are skyrocketing (mind have gone up $300-$500/year every year since we bought our house in 1996), and not even Corzine has been able to make a dent in cleaning up the mess because of an intransigent state legislature unwilling to make hard choices.

If Michigan is the Automobile State, New Jersey is the Pharmaceutical State. Attempts are being made to make the state a center for stem cell research, but pharmaceutical jobs are heading south. The combination of high taxes and debt are stifling both business and residents alike. And no one in Trenton seems to have a clue what to do about it. Selling state roads is just not going to cut it. Now it seems taxpayers are going to have to bail out a failed golf/resort project in the Meadowlands.

As long as New York remains a world cultural and financial center, it may produce enough jobs to keep New Jersey limping along for a while. But New Jersey residents should look very carefully at Michigan and think about how dependent we've been on Big Pharma, noting carefully every time a pharmaceutical company moves or expands operations in the southern states. Because for those of us stuck here because of family, or because our age makes finding new jobs in another location unlikely, the future of this state looks bleak indeed.

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