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[bobf <bobford79 AT yahoo.com>]

A lot of the list members either live in or were born in the South.  I 
thought this essay from Mises , today, was a good read.  The lady who 
authored the article is from Detroit.

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Ludwig von Mises Institute - Tu Ne Cede Malis

Advancing the scholarship of liberty in the tradition of the Austrian School.


Uncivil War: Detroit Blames the South

Daily Article by Karen De Coster | Posted on 12/30/2008 12:00:00 AM 

 "Some of the old guard still hold on to pipe dreams of an all-conquering 
Union."The Union is squaring off against the South again. This time it's 
Detroit's union — the UAW — partnering with the auto manufacturers, 
politicians, and media supporters of the domestic auto industry to wage 
warfare against the entire South.

The problem here centers on certain southern states — Mississippi, Louisiana, 
Georgia and, in particular, Alabama — where certain bone-headed senators seem 
to have forgotten that the Civil War ended, with the appropriate outcome, 
almost 150 years ago.

What's more, these Alabama representatives argued that they and other 
southern states had plenty of automotive manufacturing capacity to take up 
the slack and keep the country's economy going if Detroit was to go belly up. 
Specifically, Alabama's Republican senator Richard Shelby called Detroit a 
'dinosaur' and said bankruptcy was a better solution to the problems facing 
U.S. carmakers. The state's other senator, Jeff Sessions, also a Republican, 
said Detroit's collapse would "not be the end of the world. We have a very 
large and vibrant automobile sector in Alabama."[1]

That's Detroit News columnist John McCormick, who labeled Southern 
politicians opposing the bailout "good old southern boys." 

Detroiters continue to embarrass themselves by placing the auto industry 
collapse into an us-versus-them framework. In the midst of all the whining 
and begging for a bailout, the South has been declared the new enemy, along 
with the foreign-car manufacturers who are producing cars — in Southern 
plants — that consumers want to buy. The army of politicians and opinion 
columnists in Michigan who lay the groundwork for resuscitating this fading 
industry don't bother to acknowledge that it is in the best interests of any 
public company to maximize quality for its customers and efficiency of 
production and profits for its shareholders. 

Instead, Toyota and Honda are pegged as evil because they are thriving. They 
are especially evil for building plants that aren't located near Detroit. 
However, it is important to remember that foreign auto manufacturers are able 
to build plants where they want to build them, according to what fits best 
into their strategic plans and potential for profit. The US automakers have 
UAW officials making those decisions for them for the sole purpose of 
enriching the union's overpaid officers and dues-paying members.

Moreover, the whole South is considered evil for luring foreign plants into 
the region. Sure, the massive subsidies granted to foreign automakers to lure 
them to the South are the quintessence of corporate welfare. But no country, 
no state, no region, is immune to such politics. Michigan does the same to 
lure high-tech companies to the state, and most recently, it offered huge 
incentives to Volkswagen to build a new plant in the state. The game is 
played the same everywhere. 

The free-market method would be to allow for a business environment that 
would be ideal for businesses to thrive (no taxes or stifling regulations); 
thereby encouraging companies to relocate to low-cost states on a mutually 
cooperative basis. This would engender competition among states that would 
drive down all costs everywhere. But that would mean that the people in power 
— the politicians and government planners — would become less influential and 
less wealthy; it is for that reason the free market has not prevailed.

Additionally, Southern members of Congress are seen as evil because they 
refuse to vote "yea" on a bailouts for debt-laden, deadbeat companies in the 
North. Immediately following the failed bailout vote, Michigan Congressman 
John Dingell accused Southern senators of "unpatriotically blocking a bill 
that was supported by the White House, that passed the House with a 
bipartisan majority, and that had the support of 52 Senators." Michigan 
Governor Jennifer Granholm referred to the lack of support for the bailout as 
"un-American."

Along the way, the Detroit, pro-bailout contingent is frantically seeking 
outside parties to come to its aid — assorted journalists, neocons, 
politicians, and ideologically compatible sympathizers who all wish to 
preserve and fortify the Yankee mercantile system.

Perhaps the most preposterous line of attack I've seen from one of the 
non-Detroit proponents is the tripe produced by Michael Lind in Salon, who is 
still fighting the War Between the States. He stated, "The South will have 
risen by bringing down the North. Jefferson Davis will have had his revenge." 
Lind refers to a "Southern economic strategy" as he charges the South with 
"poaching" key industries from New England and the Midwest in the early 20th 
century because it played dirty with less regulation and public spending. 

"It is in the best interests of any public company to maximize quality for 
its customers and efficiency of production and profits for its 
shareholders."He goes on to declare that "the neo-confederates" are aligning 
with the economic axis — Germany and Japan — to defeat a common enemy, the 
Northern union (as in UAW). Lind is distraught because Reconstruction of the 
South was never completed and thus he calls for a Third Reconstruction (the 
New Deal-Civil Rights era being the Second Reconstruction) that could be 
carried out by engaging the majority Northern congressional contingent, along 
with the executive branch, to use "the power of the federal government to put 
a stop to the Southern conservative race-to-the-bottom strategy once and for 
all." 

Then the Feds could foist Yankee traditions onto those poor, backwards 
Southerners who just don't know any better. The new Reconstruction would be 
consummated by turning out national minimum-wage laws ($12 per hour), more 
safety regulations, more environmental regulations, and higher taxes. So the 
brilliant plan goes like this: if the Detroit model doesn't work in Detroit, 
extend it everywhere else by the force of majority power and government fiat. 
Doing so, he says, will finally fix the broken South, making it a more 
suitable place. Poor Michael Lind believes he is still trying to free slaves 
from the ghosts of Southern plantation masters.

The failure of Congress to bail out Detroit's failed automakers has been 
identified as the cause for Detroit's flop. In fact, hyperbole-laden 
journalists keep saying, "Detroit is collapsing." But Detroit is not 
collapsing. Three auto manufacturers born of Detroit are no longer 
financially able to continue operations. They are financially failed because 
they long ago sold their souls to union brutes who have run their businesses 
in the best interests of the UAW's overpaid executives and managers, and 
their spoiled autoworker constituency. 

They have become insolvent because of the parasite effect: too many years of 
a top-heavy, management scheme sucking the blood from each company's 
long-term potential. They have ceased to sell cars because they have, for 
decades, been turning out scores of dreadful cars — with serious design flaws 
and quality concerns — that don't last as long as the car payments. And 
finally, American automakers have never saved for the rainy days ahead. All 
of their balance sheets reflect an attitude of "live for the day," and indeed 
they did.

Ford, Chrysler, and GM all went hog wild during the boom years — they reaped 
gorgeous profits from consumers loaded with the credit bubble's cheap cash 
and too much debt. The Big Three's financing arms became inordinately 
profitable while their profits from operations dropped and dropped — and then 
stopped altogether. Still, not once did executive management look forward, 
beyond the peculiarity of the boom, and prepare for the business environment 
and consumer demands of tomorrow. Instead, all three companies continued to 
put all of their resources into the short-term channel to secure today's 
profits at the expense of tomorrow's stability and survival.

Boom times and credit bubbles (and recent bailouts) have masked dead business 
models, considerable quality issues, and insolvency. Now that the veneer of 
phony prosperity has been stripped off the economy, the naked auto companies 
are a frightening sight to behold. And since Detroit came to rely so heavily 
on one industry, and put all of its eggs in that one basket, the region's 
economy is starting to crumble.

In response, Detroit automakers and unions seek to use aggressive tactics 
against others to remain intact. The automakers sought, and received, the 
theft and redistribution of other peoples' money in order to sustain their 
failed businesses. The UAW seeks to use legislative fiat to direct the terms 
of the bailout and extend their power by planting their gangs in the South. 
Some of the old guard still hold on to pipe dreams of an all-conquering 
Union. As one union president said (apparently, a guy who never got past the 
intro to macro and micro in high school),

What the economy needs now is rising wages so the country can get on the path 
of wage-driven consumption growth. That means stronger unions. Indeed, I 
believe eventually it will mean the unionization of the entire U.S. auto 
industry.

However, in the South the market has spoken in at least one respect — the 
unions are not welcome by the workers.

Getting back to John McCormick's limp line of reasoning, he ends his column 
by implying that Michiganders should boycott Alabama — especially the 
retirees and warm-weather family vacationers. As always, the little guys are 
told to give up their way of life to preserve the high-paying jobs of 
corporate and union executives — along with the jobs of people who make cars 
no one wants to buy. But what's in it for them? National pride?

Perhaps Detroit should just send a battalion down to Atlanta to rough things 
up a little. A new Civil War anyone?

Karen De Coster is a CPA and has an MA in economics. Born in Detroit into an 
autoworker family, she writes from halfway between Detroit and Minneapolis. 
See her website and blog at www.karendecoster.com. Send her mail. Comment on 
the blog.

Notes
[1] John McCormick, "Maybe it's time to turn the tables on the South."

http://mises.org/story/3278