I’m certainly oversimplifying the world, but two articles today helped clarify for me today why the private sector is still the best way to save America and Americans. When the semiconductor industry was beginning to heat up in the 1960s in Southern California around San Jose, the City of Detroit was beginning its inexorable decline.
In his “A Requiem for Detroit” opinion piece in Tuesday’s Wall Street Journal, William McGurn points out that the decay of this city is entirely man-made. Detroit’s population was over 1.8 million in 1950 but starting to waver. I believe he goes on to correctly lament the anointment of the city as a “Model City” by the Johnson administration which pumped hundreds of millions in government investment in infrastructure into the City. Population steadily declined to under 715,000 people in 2010. Fundamentally, the vast majority of Americans want to help people who are less fortunate and the Great Society and Model City program certainly embodied that at the polls in the late 1960′s. But I believe it set in motion a precedent that has taken deep root…failure by our citizens, and their cities, must be pre-empted. This has become our national behavior.
Let’s take a look at San Jose over that same time. Population jumps from 95,000 in 1950 to 950,000 today. This was spurred on by the private sector exploiting the new technologies of computing and semiconductors. The self-interest of computer scientists, right out of Adam Smith and the inspiration for this T’echonomic’ Man blog, is what led to the birth that sprawling area that allowed us to continue the economic run that began for us when Henry Ford, driven by self interest, built Detroit.
So, when I saw this Pittsburgh-Post Gazette story about how the Detroit private sector is beginning to compete with the Silicon Valley for engineering talent, I was delighted beyond belief. The founder of Quicken, Dan Jones, has started a venture fund and is launching an incubator in downtown Detroit. Ford is trying to lure lithium-ion battery techs and mobile software applications developers…to Detroit. I’m sure that there are state incentives in place to help facilitate this. But not enough to crowd out private investment. Empower the private sector, especially those that facilitate innovation with long term job creation potential and Detroit would have a true chance for an Eminem-style recovery.