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Thread: A Tale of Two Cities: Houston & Detroit

  1. #1 A Tale of Two Cities: Houston & Detroit 
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    I came across an interesting article comparing the cities of Houston and Detroit. Both cities were once dominated by a single industry, but when times got bad for said industries, the response in each city was quite different.

    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.

    Mona Charen: Houston and Detroit -- laboratories of democracy? | WashingtonExaminer.com






    Last edited by madanthonywayne; January 29th, 2013 at 05:26 PM.
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    Europe could learn a valuable lesson from that particular story, take the pain now get it over and done with and get back on the road to recovery.


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  4. #3  
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    Quote Originally Posted by Ascended View Post
    Europe could learn a valuable lesson from that particular story, take the pain now get it over and done with and get back on the road to recovery.
    So could president Obama, who is presently trying to turn the entire nation into Detroit.
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    The author left out a few things. Detroit is a union city...where Texas is a right to work state, with little union presence...many companies have moved here to avoid the unions. Also, no one moves to Detroit for the weather...where Houston has an influx of Northerners moving south for the milder winters. Detroit also doesn't have an influx of Hispanic workers from Mexico, like Houston. Just thought I'd point that out.
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    Quote Originally Posted by MacGyver1968 View Post
    The author left out a few things. Detroit is a union city...where Texas is a right to work state, with little union presence...many companies have moved here to avoid the unions. Also, no one moves to Detroit for the weather...where Houston has an influx of Northerners moving south for the milder winters. Detroit also doesn't have an influx of Hispanic workers from Mexico, like Houston. Just thought I'd point that out.
    The author did mention the fact that Texas is a right to work state, I even put that sentence of the quoted material in bold:

    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.

    As to the weather, while that might explain some of the growth in population in the south, it really don't think it explains the almost complete collapse of Detroit......

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  7. #6  
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    I believe there exists a growth picture (or lack of growth) unrepresented here. 50 years ago, the Nation faced it's first non-imaginary petroleum crisis, (yeah, it may have been contrived, maybe not, blah, blah, unimportant here), which caused petroleum product prices to skyrocket over the next several years. Adding to the problem, was the beginning of much more massive use of plastic products, replacing paper bags, glass bottles, etc., stuff having petroleum as its' starting basis.

    Costs of heating buildings both residential and commercial rose sharply, as well as, indirectly, the cost to cool buildings in summer. In the '70s, predictions were that large numbers of population, (thus, businesses as well), would predictably migrate southward to warmer states. They did. Houston experienced unprecedented population growth. Detroit went the other way. The process took decades, of course, to make really big "dents" in the conditions of both cities.

    Despite the steadfast cultural mores present in Midwestern folks, which dictated remaining in one's birthplace to raise families upon reaching adulthood, coupled with the contributions of a more "free-thinking" younger generation, many industrial areas in the north lost population and manufacturing bases. Detroit was not alone. If there had been no net birthrate present to offset the migration southward, it likely would have been far more impacting.

    Oil, and it's associated products, played a major role. As a kid, I witnessed the building of the "Big Inch" and "Little Inch" natural gas pipelines in my Midwestern home area, covering enormous distance from Texas on northward, to power and heat those businesses and homes traditionally located in Illinois, Indiana, Michigan, Ohio, and likely even Pennsylvania.

    Detroit is a pitiful-looking place today. Houston lays claim to some of the most stupendous "rush-hour" traffic problems in the nation. Statistics I won't claim to know, nor will I research them.

    Just my two cent's worth. Maybe I'm full of it, but I say, I saw it as it happened, was even a part of it myself, having left my birthplace of Illinois in 1972. (I did not move to Alaska!). jocular
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    There are probably a lot better comparisons to be made...in similar climates, where one city wasn't continuously infused with huge natural resource revenues which allowed low taxes and affordable cost of living such as Houston's enjoyed for many decades.
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  9. #8  
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    Quote Originally Posted by madanthonywayne View Post
    I came across an interesting article comparing the cities of Houston and Detroit. Both cities were once dominated by a single industry, but when times got bad for said industries, the response in each city was quite different.
    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.Mona Charen: Houston and Detroit -- laboratories of democracy? | WashingtonExaminer.com
    I enjoyed this post a lot; great information and it's of professional interest to me because I'm in a sales/marketing role for the oil & gas industry. My main territory of course being Texas. Thanks for posting this up!
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    I have never been to Detroit. I have had multiple opportunities to move to Houston. No frigging way! Prosperity? Yes, for some. Pretty bleak for those who aren't employed. Not so much fun for those in employment with a 1 1/2 to 2 hour commute each way. One decent Indian restaurant in the whole city. Endless strip malls and impossible traffic and seemingly non-existent zoning laws. (On the positive side - very good museums and the zoo.)

    Is this on topic? I've no idea.
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