Say’s Law in Detroit
This news link of the 20th century history of Detroit, MI is fascinating in what it teaches about a core principle of human prosperity.
http://www.telegraph.co.uk/portal/main.jhtml?xml=/portal/2008/07/05/sm_america05.xml
At the turn of the century, Detroit became great because of its great private car industry created by entrepreneur Henry Ford. It attracted and provided a better life for millions of Americans, including a wave of blacks migrating from the South.
Today, Detroit has declining population, property values, etc. The desires of the people there have not changed: nice homes, good food, safe environs, safe medicines, fun leisure activities, etc. What has changed is that the city and its citizens are no longer producing in quantity products the rest of the world wants. Implied in the road back to recovery for Detroit (a lesson that can be absorbed by any community of individuals) is that it must again discover a product that the rest of the world wants and begin producing it again. It’s an excellent example of Say’s (Economic) Law – supply precedes demand.
Detroit has two paths of survival: service or plunder. Service worked once before – creating cars that the rest of the world wanted. If its community of individuals work toward that end again – the state and local bureaucrats, the entrepreneurs, the workers, the investors, etc., there’s a prospect for recovery. Or they can try to plunder the life’s work of other individuals with political machinations. This seems to be the current stratagem of the city leaders as they increase taxes and regulations there. I think this path is very temporary at best, as there are many more political entities competing at the welfare trough, and with declining population and economic strength, just how much political clout Michigan has to get a good bite of the shrinking welfare apple is debatable.