'Intelligent discontent is the mainspring of civilization.' -- Eugene V. Debs

Monday, October 27, 2008

Death of Detroit (Part 1) 

From today's Sacramento Bee:

Sales of new cars and light trucks in California fell a whopping 19.1 percent in the third quarter from a year ago, according to a report released today.

The California New Car Dealers Association said its industry has been "turned upside down" by the credit crunch and general economic downturn. "Clearly this is not a prescription for a vibrant new vehicle market," the report said.

It was the latest evidence of a significant recession.

Mind you, the recession has just begun. There are between 7 and 23 more months to go, and possibly more, depending upon whether you believe the recession will be short, moderate or lengthy. Despite the loss of market share to Japan, the automobile industry remains the backbone of many communities. It absorbs a lot of semi-skilled labor that would have otherwise been paid much less, and therefore unable to live a middle class lifestyle. It has formed a critical component of consumption in an American economy that has fueled growth around the world.

With rumors abounding that GM and Chrsyler are about to merge, or, alternatively, that Ford or GM or Chrysler or any combination thereof must file bankruptcy, the future, at least within the US, looks bleak. At best, a downsized industry producing fewer vehicles, with many of them manufactured elswhere. At worst, an industry considered American in name only, with nearly all vehicles and parts manufactured and assembled outside the country, with the exception of plants operated by Japanese companies. GM is already seeking a $5 Billion loan, possibly for the purchase of financing a Chrysler merger.

The contraction, and possible eradication, of the domestic automobile industry will be an enormous socioeconomic development. If not for a crisis that engulfs the entire neoliberal capitalist world, it would be the domestic center of attention. It will accelerate the sub-proleterianization of America, hollowing out middle income consumption through deindustrialization. Foreclosed out of their homes, discharged from their jobs as plants are permanently shuttered, along with others in businesses that rely upon them, many will find themselves constituting a new floating population with no personal and economic security. The union movement would experience a devastating, if not fatal, blow.

It is hard to suppress thoughts about one possible solution: another war, much larger in scope than the ones launched by Bush, a war instigated for the purpose of utilizing the excess industrial capacity within the US economy. No doubt, an extreme solution after all else fails, but, so far, the all else hasn't been very effective, has it? If forced to choose between more egalitarian policies that would increase demand going forward, and a militarism that would present the allure of preserving existing inequalities and hierarchies of power, while employing people within the military and armaments plants, which one do you believe that the elite will choose?

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