by Tom aka Rusty Rustbelt
The Pain of Economic Change
Michigan is the only state in the union showing a net negative population trend in the recent census report, and is an interesting case study of the pain of economic change.
For several decades after WWII, Michigan enjoyed above average prosperity on the backs of the Big 3 auto makers and the employment model of the United Auto Workers, with lateral benefits and trickle down to construction, tourism, retail, services and health care. Both the private sector economy and local/state government systems were built on the broad foundation of prosperity.
Tax and regulatory systems were not hospitable to non-manufacturing businesses and non-union businesses, but with enough money in the system all of this was tolerable (money can ease many hurts).
Globalization scourged Michigan with the offshoring of thousands of light and medium manufacturing jobs (your Electrolux sweeper is now made in Mexico).
Still, the Big 3 and Michigan were able to recover from every recession, until 2000-2001. By then the Big 3 was enfeebled and the transplants had tremendous momentum in many market segments. Optimism springs eternal, and every tiny sign of improvement was a reason to pine for the “good old days.” Governor Jennifer Granholm (D) (2002-2010) had terrible timing, and compounded the problems with lots of rhetoric about change but very little effort to make any substantive change, waiting for nirvana to return (I have some empathy on the timing problem, but not the inaction).
The 2008 “great recession” was a near death blow for GM and Chrysler, and only the federal government could save the two companies.
Now the pain is real and pervasive; the government sector will be shifting to a new reality and the private sector continues to deteriorate. Any “recovery” make take a generation. There will be much screaming as a new governor (Rick Snyder, R) attempts to introduce Michigan to the new reality.
Michigan is actually ahead of some states (say New Jersey) that totally denied reality until 2008, but that is small comfort. Whatever happens to the national economy though, the benefits are unlikely to roll onto the rustbelt states.
The pain is palpable.