The Right Opinion

Tale of Two Cities

By Mona Charen · Jan. 29, 2013

It isn't often that you get reading suggestions from a United States senator, but that's what happened this past weekend for those who attended the National Review Institute's summit meeting in Washington, D.C.

The three-day conclave, part election post-mortem and part revival meeting (that is, reviving conservatism and America), featured a bracing dose of conservative intellectuals along with activists, campaign professionals and office holders. Newly minted Senator Ted Cruz of Texas spoke in his characteristic fashion – fluidly without notes or podium.

Cruz, while praising Mitt Romney in general and acknowledging that anyone can have a slip of the tongue, zeroed in on the 47 percent gaffe. It is precisely to those who are striving for something better, Cruz argued, those who are poor or unemployed, to whom Republicans should aim their message of opportunity and growth. They are the ones who stand to benefit most from policies that promote growth.

I was sitting near Mario Loyola of the Texas Public Policy Foundation as the senator spoke, so I caught Loyola's surprised expression when the senator quoted him. We should reflect, the senator suggested, on an article Loyola wrote for National Review in 2011. 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.

Senator Cruz mused that if government had been as intrusive in the early 20th century as it is now, the automobile itself would have been delayed. “We would have been subsidizing all the buggy makers.” When Democrats say they have the answers, he advises to remember Detroit.



Capt. Call in New Mexico said:

And also remember Chicago, Illinois, Philadelphia, PA and Washington, DC. Remember all that the Democrats have given us.
Then, reject these progressive idiots.

Tuesday, January 29, 2013 at 1:17 AM

Tod the tool guy in brooklyn ny said:

Inane smelly rat policies lead to nowhere, Amen. thankyou Mona Dickens.

Tuesday, January 29, 2013 at 6:05 AM

Wayne in Hinesville, GA said:

During this latest recession most of the right to work states fared better than those with large union membership. This was certainly true in those states where public unions are small and not a major part of the job market. I am not saying that cities in those states did not suffer but usually no to the extent of those in union states. Demorats as usual, blame ever ill in the country on the Republicans while in reality it is they who have royally screwed up the country with their Progressive ideas.

Tuesday, January 29, 2013 at 7:02 AM

wjm in Colorado said:

Marxist statist ideology always fails, every time. In every failing state and city, government marxist statism is the reason, in every one. Why in the wide wide world of sports would anyone vote for the failure of Marx (Democrats)? Slaves to the state, who vote for their free sustenance. More takers than makers, and that will end in failure as well for America next.

Tuesday, January 29, 2013 at 10:44 AM

Howard Last in Wyoming said:

A better comparison is Houston and New Orleans. If you look at the location of New Orleans it is located on the Mississippi, the major shipping route for a good part of the country. It is also surrounded by oil fields and chemical plants. While Houston is on a man made ship channel and adjacent to oil fields and chemical plants. Why is Houston the headquarters of major oil and chemical firms while New Orleans is not? Now do you say political corruption?

Tuesday, January 29, 2013 at 5:58 PM