TA Victoria Fast
18 November 2012
The Motor City: Industrial Hero to Zero
The Genuine Progress Indicator (GPI) is a fantastic model to measure the overall well being of the economy in great detail. Opposed to the Gross Domestic Product (GDP), which only takes into account total dollar value, the GPI does just that, but also includes figures that represent the cost of the negative effects related to economic activity. It gives the important details of the economy and the state of the citizens within in it that the GDP simply cannot. Look at Detroit, Michigan; the “Motor City”, was at one time one of the most prosperous cities in the world, and a global industrial giant. Today, it’s a ghost town, not to mention a hellhole. The collapse of the automotive industry from the early 2000’s to the present has completely destroyed the former global giant in every way. The precipitous decline of the Detroit economy can be substantiated by using both the GPI and GDP method. Using academic and popular media references, these two approaches will be compared using the issue of the collapse of the automotive industry in the “Motor City”. The GPI approach represents this situation most accurately, and is most relevant because it not only takes the financial state of Detroit into consideration; it takes the environmental and well-being factor of the citizens into consideration as well. The GDP does not. Through the disappearing population, the rising rates of unemployment and poverty, and the exploding crime rate, it is clear that the costs of the overall well being of this city are much more important than just the economic costs.
The city of Detroit, Michigan was once the most prosperous, ‘booming’ cities in the world, especially in the second half of the twentieth century. This was thanks to their automotive industry, ‘the Big 3’. ‘The Big 3’ included Ford, General Motors, and Chrysler, who all have their world headquarters located in Detroit and its vicinity. During this time period, ‘Big 3’ sales had soared from 6 million units in 1950, to 17 million in 2000. To break this time period down in depth, from 1950 to 1991, the sales of the units increased by double-digit percentages annually. In contrast to that, from 1992 to 2007, figures of annual sales rarely fluctuated by more than 3 percent per year (Klier, and Rubenstein 36). Consumers had an insatiable appetite for American vehicles manufactured by the ‘Big 3’; they were on top of the world so to speak. This surge in sales was not only bringing in great amounts of money into Detroit and its vicinity, it was bringing in great job opportunity, whether it was factory jobs or office jobs. This was truly the golden era for Detroit, and its populous prosperity was to be found everywhere. The statistics don’t lie, stating that Detroit’s population peaked at around 2 million in the 1950’s (Linebaugh). During that time, it was the fifth largest city in the USA only behind New York, Chicago, Philadelphia, and Los Angeles, and was in the top 10 as recently as 1990 (Linebaugh). With all going so well, it was just a matter of time before things turned for the worse. As the saying goes, “all good things come to an end”, and this describe Detroit’s ugly, disastrous transformation in a nutshell.
According to CNBC, Detroit is the 3rd worst city to live in the USA, and is the most dangerous (Crowe). What was the catalyst for this metamorphosis from prosperity to urban decay? It’s quite simple; their automotive giants were getting out performed by foreign competitors such as Toyota, Honda, and Hyundai. One of the factors that lead to this was that the ‘Big 3’ became complacent and arrogant due to the fact that they had little to no foreign competition prior to this decade. Thus they had an extremely large portion of the North American market share. Because of this arrogance and complacency, both quality and reliability began to suffer....