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Tags: GM | Ford | middle class | Midwest

Author McClelland Recalls Blue Skies in the Midwest

By    |   Thursday, 12 September 2013 02:41 PM EDT

Liberal author Edward McClelland recently presented his book "Nothin' But Blue Skies: The Heyday, Hard Times and Hopes of America's Industrial Heartland" at a bookstore in Milwaukee, Wisc., a representative city in the industrial Midwest.

His thesis is consistent with that of one or two recent events that documented the argument that the prosperity enjoyed by the middle class in the post-World War II years may have been an aberration, and the persistent economic stagnation the U.S. economy has endured since the 2008 episode of the ongoing financial crisis may be the norm.

What makes McClelland's lecture especially informative and even entertaining is his talent for connecting dots that might otherwise be overlooked.

As the story unfolds, America enjoyed a period of prosperity after World War II, and even as of the late 1960s, the auto industry prospered, because unlike World War II, General Motors was able to produce vehicles for the Vietnam War without having to shut down domestic production. However, after this work was done, major plants were demolished, with GM proclaiming "Demolition Means Progress."

McClelland calls this story "the biography of the American middle class," and he contrasts the experience of the industrial heartland with that of the trend-setting centers on the coasts, as the Midwest has remained concentrated in manufacturing.

McClelland tells this story from the standpoint of Everett Ketchum, a tool and die maker who was able to make $27 per hour and then retire with full benefits to a $2,000 per month apartment.

Now this lifestyle is in jeopardy, and McClelland concludes that the opportunity to enjoy a prosperous career as an industrial worker was an aberration that grew out of the unique conditions created by the periodic wars that occurred in the post-war years through the 1970s.

The story goes back to the establishment of a sawmill in Flint, Mich., in 1861. Later, the availability of this resource enabled the transition to the production of carriages, and still later, engines were attached to the carriages by Mr. Buick. In the process, the population of Flint quadrupled.

However, plant workers were subjected to volatile conditions and could be arbitrarily issued yellow slips as they would be fired or laid off and their jobs given to people with better connections. Flint was the site of the first sitdown strike that led to the establishment of the United Auto Workers (UAW) as a powerful union capable of confronting management with demands for higher wages, shorter hours and generous, even lavish, fringe benefits that enabled the workers to establish themselves as members of the middle class.

McClelland notes that the United States enjoyed primacy in industrial production in the aftermath of World War II, accounting for 50 percent worldwide, but it helped rebuild Europe and Japan and also assumed the burden for their defense.

Then, he points out, the Yom Kippur war in 1973 enabled the Saudis to drive up the price of oil. (McClelland paused to note that the prime minister of Israel at the time, Golda Meir, was a teacher from Milwaukee. He could also have pointed out that the current prime minister, Benjamin Netanyahu, is a management consultant who graduated from Cheltenham High School in Philadelphia.)

The U.S. auto industry was totally unprepared to compete in a market that either wanted or would need smaller cars and cars that offered better mileage than the 13 MPG Detroit offered. Moreover, small cars lacked sufficient scale to support the benefits called for by union contracts.

Ford Pintos caught fire, and Chevy Vegas leaked oil. Mother Jones magazine got hold of a Ford memo that documented the decision not to spend the modest amount required to relocate gas tanks and make them less susceptible to fires. As the auto industry declined, Flint went from having the highest wages to the highest murder rate in the country.

In 1980, Wisconsin Steel, which had thrived along with the auto industry, closed, and 3,400 workers were laid off. Since Al Gore had not yet invented the Internet, an enterprising Texan picked up copies of the Houston Chronicle and drove them to Chicago so that unemployed workers could read the want ads.

Vice President Mondale coined the term "Rust Belt" as the Midwest underwent a serious recession coincident following the Iranian revolution and the anti-inflation policies of Federal Reserve Chairman Paul Volcker, both in 1979. However, on the whole, Chicago survived the demise of the auto industry in better shape than other industrial cities in the Midwest, because it had a more diversified economy, including financial services, and Mayor Richard Daley had invested in infrastructure, including O'Hare Airport. A young Barack Obama studying at Columbia in New York spotted an ad for a community organizer in Chicago.

The experience of Slavic Village in Cleveland is instructive as a case study of the transformation of a middle-class community into a depressed neighborhood, where housing values had declined from $70,000 to $20,000. Representatives of subprime lenders like Ameriquest and Countrywide went door-to-door selling toxic mortgages based on "stated incomes" that led to foreclosures, vacancies, crime and ultimately demolitions.

McClelland cautions that there are no lessons from Chicago for other Midwestern cities to follow, because Chicago is where college graduates from Michigan State and other Midwest schools migrated in search of work.

However, he found a happy ending to the story in Lansing, Mich., because that city was able to make use of the combination of available manual labor and the academic institution at Michigan State to adjust to the changing times.

On the other hand, Syracuse, where air conditioning was invented, unwittingly enabled its demise by making industry feasible in the Sunbelt.

Finally, I would add another observation that bolsters the theory that the economy may be finding a new normal after the boom and bust of the auto industry. During the heyday of the auto industry, a worker graduating from high school at 18 could retire after 30 years at 48 or when he reached 55 with full benefits. This meant that he would be drawing on retirement and healthcare benefits for perhaps 25 years or longer, a burden the industry could not support. So add demographics to the forces working against the myth of middle-class prosperity.

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Liberal author Edward McClelland recently presented his book "Nothin' But Blue Skies: The Heyday, Hard Times and Hopes of America's Industrial Heartland" at a bookstore in Milwaukee, Wisc., a representative city in the industrial Midwest.
GM,Ford,middle class,Midwest
Thursday, 12 September 2013 02:41 PM
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