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Robert Rhode's avatar

It's sad that places like Flint decline, but the roots of this decline run deeper than local disinvestment or one party’s policy choices. Flint’s long slide is part of a broader story: the cumulative impact of decades of poor fiscal, monetary, and regulatory decisions that eroded the foundations of American industry.

In particular, U.S. auto manufacturing was battered by complacency, inflationary pressures in the 1970s, inconsistent trade policy, and regulatory frameworks that too often favored short-term consumer gains over long-term industrial resilience. These macroeconomic missteps—across both parties—hollowed out not just Flint, but entire regions once anchored by thriving sectors: think of Pittsburgh's steel mills, Binghamton’s electronics industry, or textile and furniture industries in the Carolinas. In Kalamazoo, there were robust paper and pharmaceutical industries as well as the Checker Motors cab company (out of business) and Gibson Guitars (left town). Port Huron had a robust boat industry with Chris-Craft and other companies. In each case, the government’s policy made it too expensive or difficult to keep doing business in these places.

Here's an example of the negative effects of US monetary policy. The Federal Reserve has a goal of 2% annual inflation. If the Fed is successful in meeting that goal, that means the price of everything increases 20% over 10 years instead of increasing, staying the same, or decreasing based on actual market conditions (market conditions are simply the cumulative effect of individuals freely interacting amongst themselves to determine the value of products and services). Apply this to the hundreds of parts that constitute a vehicle made by GM and labor contracts that contain raises based on inflation and we can see why GM is not making cars in Flint anymore.

The mega site might have produced some jobs, but at a significant reallocation of resources. That type of socialism rarely works or if it does, does not work for long. It’s more likely that the mega site would have been another Auto World. The government cannot create wealth; it can only protect wealth (through honoring/protecting property rights and enforcing contracts) or destroy wealth due to misguided policies or outright appropriation (takings and excess taxes).

The simple solution, which works every time, is to improve the fiscal, regulatory and monetary policy of the country. History shows us that even when we make some temporary improvements in those areas, the situation improves. Unfortunately, it's human nature for people to complicate or attempt to control things. People like to complicate things by searching for silver bullets (Auto World, the mega site) or to just outright control things by having the government allocate capital instead of letting the public do that themselves.

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