GM broke: America goes socialist
June 2, 2009
Guy Rundle is Crikey’s roving US correspondent. He followed Obama into the Whitehouse filing Hunter Thompson-style copy form late night bars in Ohio and Caucus rallies in Wisconsin and the like. Seems he is still rattling around the US…today he writes this from Detroit - intriguing idea from Engels…that in the end the Capitalists would just give up and hand the keys of the kingdom over the the Socialists, exhausted…
There’s many places you can visit with your limited time on earth — the Turkish rivieria, Finland’s Ice Hotel, Mt Fuji, Wobbie World — but everyone who wants to understand the last century and this one, should see Detroit.
Why? Because Detroit is the first modern urban ruin, the largest city that has simply been allowed to die. From the 1970s onwards, successive state and federal US governments allowed this once incredible city — home to some of the first skyscrapers, to an urban black culture that came north for jobs, of a prosperous working class — to choke and fall over.
Warsaw, Frankfurt, Coventry — cities bombed into non-existence were put back together by their nations, often brick-by-brick. Faced with the far less challenging circumstance of industry moving out, the US turned its back on a city that had been the arsenal of the allied effort in WW2.
It staggered, stumbled, tried to revive itself. Now with the bankruptcy of GM, it’s all over. From an urban population of two million in 1960, Detroit has fallen to around 650,000. With GM about to be consolidated, it will fall further — effectively below a level where it is really serviceable as an urban centre.
Your correspondent was there in 2006, and it was bad enough. In the centre of the city, whole rows of skyscrapers were boarded up — 20, 30 storey buildings, some pre-WW1. Whole blocks were vacant, tumble weeded, because it was cheaper to pull them down and avoid property taxes. Whole suburbs were empty, vines and creepers reclaiming the mansions of old auto execs. Because no one was there to squat them.
Geographers developed a new concept — “urban prairie” — as foxes and weasels not seen in the area for 300 years, reclaimed areas within 15 minutes walk of the city centre — around which you could walk for five minutes without seeing another human being, while the monorail, the “people mover” with perhaps three customers on the entire route, circled uselessly above, like stars round the head of a suddenly whacked cartoon character.
With GM’s bankruptcy arrangement, by dint of the failure of American capitalism, the US has transitioned into actual socialism — though it may be a temporary holding pattern. Ownership of GM and Chrysler is shared between the Federal government and the United Auto Workers Union, and explicitly or otherwise, they are now directing the core industrial enterprises of America, the company whose director once said “what’s good for General Motors is good for America”.
The bitter ironies of this are multiple. In the 1890s, after Marx’s death, Fred Engels pondered the possibility that socialism could occur without violent revolution. At some point he reflected, the contradictions of capitalism would become so great, its failure so obvious, that the capitalist class in sheer exhaustion and despair, would hand over the keys to the castle.
In the 1970s, Sweden developed a variant of this called the Meidner plan. The trade unions and the state would achieve full socialism by using public capital and pension plan money to buy up the shares of heavy industry on the stock market. A variant of the plan was a major part of the Whitlam government’s strategy, advocated most vociferously in minerals and energy by Rex Connor and his amanuensis one P.J. Keating. Wonder what happened to that bloke?
Bizarrely, the US has now implemented a variant of this to save its economy. One of the reasons the auto industry failed was because it was carrying so many social costs — because of the asinine system of employers bearing health care costs. In the fat years, the auto companies cut deals with the UAW guaranteeing health coverage for retired employees to death. When you add that to their hopeless refusal to design smaller, better cars, a disaster was inevitable.
Now here’s the really funny part. There’s one place where an overextended auto maker was allowed to fail, to be subject to market discipline. Which one? Saab. Where? Sweden, the country that Republicans — lining up at the stimulus trough — wave as the dire example of socialist unfreedom.
How did this happen? Though Sweden is not unexposed — especially due to its investments in former Soviet Baltic states — its private sector is leaner and more efficient because its social capital is so high. Poverty is at 4%, health is high, social costs are low. Businesses can operate efficiently because a stable social democratic civic order is in place.
Meanwhile, in the US, the right is spruiking as an alternative to GM etc, the Toyota plants in the south — with unionisation practically illegal, a lack of health and safety protection, and a relatively good wage dependent on a 56-hour overtime week. In five years, when Mexico has stabilised cities like Juarez and Nogales, those plants will disappear across the border in a single week, leaving nothing behind, not even Detroit-style ruins.
So let’s be clear. For decades we’ve been running an experiment — US style capitalism versus social democracy in Europe and Australia. And the experiment’s over. America failed. Social democracy delivers the greatest spread of prosperity, freedom, health, and stability. US capitalism delivers uncertainty, chaos, and collapse — which then has to be mopped up by full socialist measures.
And if you want a demonstration of that, go to Detroit and then its twin city, Windsor in Canada, just across the water — it too was dependent on the auto industry. But decades of government investment in education and new industries have guaranteed it as a viable living city. We should send schoolkids to these two cities to show them what works and what doesn’t. No other argument would be necessary. RIP Detroit and much more.
The bank-shaped recovery
June 1, 2009
According to a Barclays Capital survey published today, just 17.5% of investors think recent market gains are sustainable.
Global markets have lifted by some 60% since their bottom in march.
Last Week Gillian Tett wrote in her column in the FT that she sees the recovery as “bank” shaped - not V, W, or U shaped, as the analysts would have it. By “bank”-shaped, she means the shape of the word “bank” in the Pitman system of shorthand:
This’ll happen if the survey data is correct - and investors are going to sit on their hands from now on, negating any further rapid gains - but only if there aren’t any further big shocks…
I never finish anyth
May 12, 2009
WAIT! Don’t click away. Don’t. Honestly, I know there is something more interesting on the other side. There is, absolutely and for sure. But here on the interweb there is always something more interesting on the other side. There are billions of sides!
I don’t know about you, but I have been feeling extremely fragmented lately. What with twitter and blogging and work and children and the Four Corners report I missed last night but want to catch up with, the Ricky Gervais interview that I just stumbled upon, the three new business ideas that are nagging at me, and the rest, the constant distraction is driving me to… distraction.
… sorry. Just checked my email. Nothing but spam as usual, but a couple of good jokes on twitter. Where was I…O yes…
I don’t know about you, in particular, but I do know that it is not only me. Just about everyone I talk to reports the same problem, a singular difficulty in actually concentrating on the same thing for more than a few minutes. It is a population-wide pandemic of attention deficit disorder.
And I do think technology is the cause – because technology today is so compelling – there is no urge too base or trivial, no question too difficult, no task too complex that it can’t be addressed immediately by a quick interweb surf. And if you don’t find satisfaction on that particular item, no matter, something just as distracting will come along during your search, and your original concern will get buried under a pile of new, equally trivial, grave or compelling.
Does it matter?
In a new book, Rapt: Attention and the deliberate life, Winifred Gallagher argues that it does matter, not because being distracted is in itself a bad thing, not because of some fogeyish sense of things were better back when, but because being distracted makes for more fragmented being. Gallagher argues that the self is the sum of the things that we focus on. And by focusing on many things but nothing really very much, we become fragmented as people.
The skillful management of attention is the key to a happy life, says Gallagher. She recommends actively taking control by taking one’s mind by the scruff of the neck, as it were, and forcing it away from the destructive or dispiriting and towards what seems meaningful, productive or energising.
Is this the wisdom of the ages? Isn’t this the advice of the meditation teacher at the top of the mount who instructs you to stop the internal chatter, the delirious bounce of thoughts inside your skull, the permanent state of distraction that fragments so much of our day.
Easier said than done, perhaps. For the moment I have to check my email. And put this on my blog. And twitter it. Then get back to work.
*headline with thanks to twitter post from some bar in America from some musician I’ve never heard of.
Green shoots of the soul
May 6, 2009
Last November, when things were grimmer than grim and every economic article contained the world “since the Great Depression”, I sat in an editorial meeting and called recovery for April/May this year. O how they laughed!
I have been known to be wrong in the past, and time will tell whether or not I’m wrong again now, but there was method to my madness and I’ll stand by it. Read more
Executive Tweets
April 27, 2009
It may turn out to be a fad, or collapse under the weight of its own self unimportance, but if used cleverly Twitter can be a simple and effective management tool. It takes a bit of thinking and organisation, but it can be used source of breaking news and insight from your industry, general knowledge providers – such as the business schools and management consultants – and general news providers.
Here is what Lucy Kellaway has to say about executive twittering. She thinks it s a bit of a joke, which, I guess is one perspective. But as a senior executive these days, not twittering is as much as statement about your management style as twittering. Problem is that, as with all media, the potential for screw up and embarrassment is high. Not just that, as anyone with any experience of twitter can attest, it can be an unhelpful distraction - in an age when distraction is like a viral disease, causing thought patterns to dissipate, tasks left undone, and the self feeling jittery and unsatisfied. Read more
Executive Central: Ten mistakes leaders make
April 23, 2009
Niche management and leadership consultancy Executive Central has put together a list of the ten mistakes leaders most commonly make. Read more
The organisation and the individual
April 23, 2009
Working with multinationals can be fabulous. Big money, big toys, big achievements. It can also be a disaster for the individual, tearing the ground out from under their own definition of self. Read more
Marley & Me
April 21, 2009
New in the cinema is Marley & Me, a romp through my family life and the central role within it played by our dog, Kinchassa. Owen Wilson does a serviceable impression of me, a bumbling if talented journalist who, having convinced his sweetheart to marry him (against all odds), buys her a dog to stave off the inevitable arrival of children and termination of LIFE AS HE KNOWS IT. Read more
Sheep, Tribes and Leadership: book reviews, March 09
March 13, 2009
Throwing Sheep in the Boardroom
Matthew Fraser and Soumitra Dutta
John Wiley & Sons, 2009, $42.95
Two stars
Tribes
Seth Godin
Piatkus, 2009, $22.99
One and a half stars
The Leadership Code
Dave Ulrich, Norm Smallwood, Kate Sweetman
Harvard Business Press, 2009
$29.95
One star
Business book publishing is a funny old game. It takes at least six months to write a decent book, and – goodness knows why it takes so long – usually six months or longer to get it from final draft to an actual product that can be shipped in boxes out to bookstores and publicised in magazines.
So the “new releases” table at your local Borders is actually an insightful snapshot into the mindscape of the publishing industry 12-18 months ago. Clearly publishers thought Web 2.0 or social networking was going to be hot.
Despite the onset of the most significant economic downturn in living memory, they may have been righter than they can imagine. If we’re entering a period of massive creative destruction, then perhaps the single most important foundation on which the new world will be built will be the social network, the ties that bind us all together across companies, industries, and geographies. Read more
The Carbon Economy
February 25, 2009
Moving Australia into the low carbon lane will mean economic change of a sort that comes around only once a generation.
It means, in effect, creating an imaginary, parallel economy that trades in something which will never exist – tonnes of carbon not emitted – alongside the ‘real’ economy of things and services. It means pricing something that has not been priced before, create generating carbon dollars where none existed.
Before a single tonne can be traded however, an entire infrastructure has to come into being. Consultants, technicians, financiers, strategists and a broad variety of carbon professionals are flocking into an industry with huge potential. It is boom time in carbon town.
How big is the market?
Australian emissions are estimated at about 450 million tonnes annually. Even at a relatively modest carbon price of $20 a tonne (the EU is pricing carbon at about euro 25 a tonne at the moment) that adds up to $9 billion market in carbon, much of which will be traded, launching in just a few years.
None of that counts counting the opportunities internationally. With international trading possible under the Kytoto Protocol – using clean development mechanism (CDM) and Joint Initiatives (JI) – the market for carbon abatement is effectively infinite. Read more
