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