Living Here in Allentown

For a business trip two years ago, I took a connecting flight from the Lansing airport to Detroit so as to catch another plane to my destination. It was a near-perfect fall morning with all the trees at full color, and I had a window seat. The pilot rewarded me further by plotting his route over the "Lakes Area" of western Oakland County, and for the first time ever I was given a "God's eye" view of the community where I spent most of the first 34 years of my life. It was breathtaking to pass above the dozens of beautiful lakes, parks, winding roads and much else that provided an idyllic place to grow up. The amazing part is how typical this is — just about anybody from Michigan could have these thoughts if they flew over their hometown. I was lost in pleasant memories that flooded back as fast as the plane was moving while we zipped by one body of water after another.

And then I got angry as a simple thought dislodged all the pleasantries: It took an awful lot to make this state an unattractive place to live and work. "Allentown," a popular Billy Joel song from my teenage years, popped into my head:

Well we're living here in Allentown,
And they're closing all the factories down.
Out in Bethlehem they're killing time.
Filling out forms, standing in line.

What did it take for Michigan to start closing all the factories down?

For one thing, we allowed the creation of a political and economic culture that encouraged us to fear that which made us strong. As Mike LaFaive and I noted early last year, the car-making business didn't run away from America, it just ran away from Michigan. According to the Michigan Senate Fiscal Agency (see page 26), American auto workers produced more motor vehicles in 2005 than they did in 1985.

But the contribution of the "Detroit Three" manufacturers toward that total shifted downward over the period, from 94.6 percent in 1985 to just 65.3 percent 20 years later. Yet, while places like Alabama and South Carolina and even Ohio saw foreign manufacturers build factories in them, the supposed "automotive capitol of the world" — Michigan — got virtually none of that foreign investment and thus few of the jobs.

Why not in Michigan?

Perhaps part of the reason is related to another childhood memory of mine. When the Japanese began exporting more successfully into the U.S. market during the early 1980s, Michigan autoworkers reacted with very public and heated demonstrations against the foreign competition. In staged protests, Japanese vehicles were battered and destroyed with sledgehammers by supposed defenders of the domestic auto industry. If you lived in Michigan back then, there was a severe social stigma placed on you for driving a car not made by the locals.

LaFaive and I pointed out one instance where this xenophobia went horribly out of control: The 1982 beating death of Vincent Chin, a Chinese-American man employed as an industrial draftsman for a Michigan automotive supplier. Chin's murderers were two laid-off auto workers who mistook him for a man of Japanese descent and thus — to their way of thinking — at fault for their unemployment. The attackers accepted a plea bargain and had to pay court costs, but after using a baseball bat to slay Chin neither man served time in jail.

LaFaive and I reasoned that foreign automakers learned a lesson from this. "The murder stood as a stark message to outsiders: you (and your investment) are not welcome in Michigan." Shortly after Chin's death, Honda — the world's largest manufacturer of engines — began opening their first auto assembly facilities in the United States. Some of the earliest ones went to Ohio, a state not too different from Michigan, but none have come here. The overwhelming majority of the other foreign assembly plants opened in America since then have followed this pattern.

We also made another, somewhat related observation:

Many of the winners in this boom have been southern states with voluntary unionism. Toyota manufacturing plants, for example, are in places such as Alabama, Mississippi, Texas and Kentucky. It is probably not a coincidence that nine of the top 10 states ranked by population growth from July 2006 to July 2007 do not have compulsory unionism laws."

Yeah, population growth. As Mike likes to say: "Demography is Destiny."

People wanting to stay is yet another indication of a good place to live...

"And we're living here in Allentown
But the restlessness was handed down
And it's getting very hard to stayyyyyyyayyy..."

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