The rise and fall of the Detroit automotive industry is a classic example of the problems of cronyism, labor unions, and corporate welfare. Thomas H. Klier, who is the author of “From Tail Fins to Hybrids: How Detroit Lost its Dominance of the US Auto Market,” points out some key concerns with the decline of the auto industry. However, Klier fails to demonstrate the imperative issues of US government marketplace meddling and power-drunk control, and how the government was the biggest driver for the auto industry’s demise and crash.
Klier begins his narrative with determining there are three distinct phases that made up the decline of the US auto market: One, The 1960s’ foreign imports; Two, the 1979 oil crisis; Three, the 2008/2009 Great Recession.
First, a market, in order for it to be the healthiest and most productive, is best left alone with little-to-no government involvement. A market thrives on competition, supply, and demand, while freely and voluntarily exchanging goods and services. When the US government involves ‘itself’ in the business of others, it automatically stunts the growth and capabilities of that industry.
After the gas-powered automobile was invented in Europe, Americans had gained an edge in the market with lower wages and overhead compared to that of Europe. By 1899, there were already over 500 automaker companies in the US. However, this created a saturated marketplace, and after WWI by 1929, there were only 44 companies making gas-powered automobiles in the US. The Great Depression would then finish off the remainder of these, dwindling that number down to an even fewer number which would eventually make way for the US “Big Three,” i.e. General Motors, Ford, and Chrysler. The Progressive Era, from the late 1890s to the 1920s, ushered in more government involvement in all industries, including that of the automotive industry.
Of course, as any labor union will proclaim, this coerces the market to higher prices in order to pay workers higher wages. Labor unions also restrict the flexibility of the company because once a labor union is established, there is more bureaucracy, red tape, fees, and fields where only the “specialized” laborers are allowed to do their part. This essentially drives out competition through a coercive government monopoly by fixing prices, and removing the flexibility of standard supply and demand, while only allowing certain political elites to arbitrarily determine what a “fair” price should be.
Simply put, if subject A, Jane, says she will only work for a certain price as determined by the government and labor union, but then subject B, Joe, says he will work for a lower price as to be more competitive, this would not have been allowed by law. So, along with many other economic factors, the prices of cars went up along with the subsidized pensions and wages of the auto industry’s workforce. In the 1960s, with an influx in imports due to more competitive pricing, the Detroit automotive market began to decline, as pointed out by Klier.
Klier is also neglecting the emphasis on tariffs, which choke markets. After WWII, any “benefits” the US had gained from the war had already begun to significantly diminish by the 1970s.
Second, almost since the very birth of the oil industry in the US in the 1800s, the US government has been involved in controlling who can and who cannot be involved via government cronyism. Examples of government tampering and controls of the marketplace, which includes that of the automotive and oil industries, are the Sherman Antitrust Act of 1890, heavy oil provisions to France and England in WWI, the Mineral Leasing Act of 1920, the 1928 Red Line Agreement, 1933 oil production quotas, 1933 oil import duty taxes, WWII rations, 1948 Marshall Plan, 1959 Mandatory Oil Import Program, establishing OPEC in 1960, 1967 Arab oil embargo, and so on.
Along with these coercive involvements in the marketplace, by the 1960s there were also laws implemented to force car manufacturers to have certain safety features, which also leads to increased costs. Nevertheless, oil and petroleum products such as gasoline were already strictly regulated, and slowly choking the auto industry. Today, the US oil industry “benefits” from over $200 Billion in subsidies, and countless regulations. Much like the story of ‘I, Pencil‘, which demonstrates the complexity of the marketplace, so too are the numerous subsidies that plague many industries and stages of production, especially that of the auto-industry- petroleum, oil, gas, plastics, metals, workers, manufacturing, import tariffs, export tariffs, foreign manufacturing, shipping domestically and abroad, etc.
Three, the economic crash or Great Recession of 2008, or others cite 2009, which assisted in the temporary downfall of the auto industry of Detroit, specifically, was again caused by government involvement. With a minimum of nearly 600 confirmed laws that regulate and set pseudo-standards for the automotive industry in the US, it makes it so that running a car manufacturing company, much less starting one, is nearly impossible.
Various states and the federal government have continuously provided subsidies to the Big Three of Detroit, and this negates the standard of measuring supply and demand. When people or companies are given “free money” they do not have to compete in the market the same way, and they do not have to concern themselves with their next dollar earned as someone who must work and compete for it. Finally, when the bailouts came for the Detroit auto industry, it was nearing $90 Billion.
Of course, subsidies do more than redistribute wealth from those paying taxes to those that are gaining the plunder. Subsidies, as previously mentioned, also cut supply and demand, while also driving out competition due to inability to compete with increased funding, and stifles creativity and flexibility in the marketplace as demands and desires increase. It makes the company receiving the subsidies lose interest in market needs because they are doing better with the easy money from the government.
Many will support subsidies because they believe it helps save jobs or makes things cost less, but in fact, that is an economic fallacy to assume such. A subsidy is still supported through taxes, which come from the citizens, and this proves to add to inflation and falsifying prices as it helps falsely prop a market. It also influences the GDP as it assists in purchasing and subsidizing products that many people may not actually want. GDP will reflect as being up, when in fact it was all junk coercively purchased off the dime of everyday citizens.
While I can agree with the author that certain stages are evident in the downfall of the auto industry, especially in Detroit, it was ultimately caused by government influence, laws, coercion, subsidies, and cronyism, not the marketplace itself.
Get awesome merchandise. Help 71 Republic end the media oligarchy. Donate today to our Patreon, which you can find here. Thank you very much for your support!
Kiss, otherwise known as one of the worst bands of all time, released a semi-mediocre song in 1979 titled “Detroit Rock City”. This song tried to capture the spectacular wonder of the once great city of Detroit. Let’s take a look at life in Detroit before the 60’s. This city was where Henry Ford drove his first prototype car on the street. This event sparked the rich history that Detroit has had in producing automobiles, becoming the car capital of the world. Not only did it employ some 296,000 people in this industry, but it was also the city where Berry Gordy founded Motown Records, which produced some of the most famous artists of the time such as The Temptations, Stevie Wonder, and The Jackson 5.
But alas, this wonderful capitalist city began to change for the worse in the 60’s. The 12th Street riots were the first sign of change to come. Rioters attacked the police, who then called the army. All in all, 43 people died and 342 were hurt. The small flame eventually spread into a forest fire, and nobody could stop it. How could this have possibly happened? Let me tell you how: big government policy.
The last Republican Mayor of Detroit served until 1957, and after the Democrats took after, things took a drastic turn down the wrong path. Of course, the city was already in a tumultuous time with the riot. Ultimately, it pinned inner-city blacks against the police, not dissimilarly to how the same thing occurs now.
Along with the riots came the crippling regulations to the economy. Businesses started to move away from the city due to the regulations that the Democratic Party imposed. People lost their jobs, and poverty increased. Detroit’s population used to be close to 1.9 million, but today, only around 672,000 reside in the city. Most people left, but some stayed, and of those people, many are unemployed As of 2017, the official statistic was 8.4%, which is double the national level. And going back just seven more years yields a whopping 27%, higher than the national average during the Great Depression.
The politicians that ran the city into the ground focused greatly on government spending hikes. They continue to spend taxpayer money to support unhealthy, unproductive lifestyles, instead of encouraging them to return to the workforce. By receiving handouts, many don’t learn how to work and make a life for themselves.
Luckily, some of Detroit’s population has realized they don’t need government to help them out. They realized that what the government of Detroit really makes it worse for them because the social programs rarely work. That is why a group of citizens is volunteering to clean up the city by donating their time to perform labor tasks, such as mowing grass and picking up garbage. Basically, they are creating their own Crisis Engagement Taskforce to do some essential community services. When looking at these few individuals, it is clear that government involvement is simply unnecessary. Judging by the economic record of late, it often makes problems a whole lot worse.
Get awesome merchandise and help 71 Republic end the media oligarchy by donating to our Patreon, which you can find here. Thank you for your support!
“If people don’t have something to vote for, we have to give them something to vote for.” –Matt Kuehnel
Matt Kuehnel is one of the founding members of the Libertarian Socialist Caucus. He is running as a libertarian for the 22nd District seat of the Michigan State House and this week, the Socialist Party of Michigan voted him their candidate for the 22nd district marking the first time that any libertarian has represented as a dual socialist candidate in United States history. The LibSoc Caucus that he helped found and represents is a small but growing group of self-proclaimed libertarian socialists that have been the source of much consternation and confusion within the Libertarian Party over the past year.
I met Mr. Kuehnel at the 2018 Libertarian National Convention and in him, I saw someone who was an honest, direct, charismatic, unafraid intellectual making headway in a political party that, for all of its alleged openness to free thought, can oftentimes feel rather one note. His penchant for attacking landlords was met with a chorus of boos and many simply refused to hear anything the slim Michigan man with a denim jacket had to say. But I kept listening. He was saying a lot. He was speaking for and as a group of people that rarely gets mentioned in the Libertarian Party: the poor. Kuehnel’s distaste for the police state and his outsider messaging on social media shows a different side of libertarianism that routinely goes underrepresented.
The Libertarian Socialist Caucus sits on the deeper ranges of modern libertarianism but their roots lie at the very beginning of the movement itself in the catacombs of Paris where the first anarchist and influential mutualist philosopher Proudhon lived and wrote. “Proudhon believed that a libertarian order would accomplish the goals of socialists, that in fact, only such an order could accomplish socialists’ goals. Within this framework, Proudhon sets out to scrutinize political economy and its institutions, to break them down and lay bare the truths within them.”
The caucuses call for the abolishment of private property sit in stark contrast with much of the modern Libertarian movement. However, on police abuse, non-violent crimes, non-aggression and decentralized power, much of the Libertarian Socialist platform falls neatly into the echo chamber of modern libertarianism. Their ideas, branding, and members all strike an unequivocally and excitingly diverse chord in the Libertarian Party. Their members have campaigned for a bottom unity platform that seeks to bridge the seemingly unbridgeable gaps between anarcho-capitalists, pragmatists, anarcho-communists (and yes, even socialists) into a singular group that stands against the various illegitimate powers of the state.
To some, the Libertarian Socialist Caucus is quite suddenly, the greatest ideological threat to the party as it moves forward. So much so that the LibSoc caucus was addressed during a hearing at this months Libertarian National Committee meeting that ended in renewed animosity on all sides. Steven Nekhaila, region two representative, penned a resolution to clarify the party’s position on private property and in a video on “Disenthrall,” LNC at large member Joshua Smith pointed to Kuehnel’s recent exposure on Russia Today as representative of a misrepresentation of the Libertarian Party. The measure did not pass.
I reached out to Mr. Kuehnel recently to discuss his ideas for the Libertarian Socialist Caucus, his run for 22nd district of Michigan and some of the goals he has for the future.
71 Republic: “Rent is theft” has been the rallying cry for the Libertarian Socialist Caucus. It has disturbed many throughout the party. What does the slogan mean to you?
Kuehnel: In my experience, especially in the community around here, one of the biggest issues is rent. It’s such a high price to put on the people who have the lowest income. It’s unequal. It’s made worse because the city is now charging three times the amount of property tax for a rental. It’s generating money for the city so they’re promoting it. The city then helps by having the enforcement zone come and bully people out of their homes.
I see that as an issue. I liked the “taxation is theft,” logo, it was part of what got me into the anarcho-capitalist side of it at the beginning so I just transferred it. I thought, “taxation is theft” and “rent is theft.” There are a lot of things you can point to that make rent theft in the current times. Just having a base in fiat currency is theft. It’s not based on a real supply and demand.
71 Republic: Should rent be abolished?
Kuehnel: Yeah, idealistically. To me, they say it’s voluntary but it’s not voluntary. I never wanted to rent and I didn’t even know how to buy a house. When you don’t have people walking you through it, you don’t know how to build your credit. You’re just stuck there, especially if you’re low income. You’re not going to get out of renting.
Landlords are authoritarian roles. Nobody should want to do that if they’re anti-authoritarian. Nobody should want to say what kind of things you can have in your house and what kind of things you can do in your house. If you believe in property rights, then you should believe that everybody should be able to have property so we can exercise those rights. Otherwise, it’s just centered into the hands of the few and who does it help? I try not to focus on the ‘mom and pops’ that have an investment property, it’s the banks that have 13 million vacant homes that they keep off the market to inflate values.
71 Republic: Do you support punching Nazis?
Kuehnel: I don’t practice it but I support it. I’ve never had an occasion where I felt it necessary to do that. We are much closer to fascism than a republic or democracy. People are literally being killed by the state every day. They are being targeted for their identities because they are immigrants or black. They are being deported, detained and killed. There is a lot of aggression going on in the world. Fascism is built on getting a public platform, using your advantage to spread hate, playing on people’s fear and the police just protect them. I think a lot of people who think like this seek positions of power. I think a lot of police are white supremacists. When you’ve got an opportunity and you’ve got someone like Richard Spencer, that’s a Nazi and I don’t see anything wrong with punching them. I don’t think that person is innocent.
71 Republic: You are running to represent District 22 of the Michigan State House. How is the race going?
Kuehnel: Politics are an elitist club. I could never even dream to compete in that kind of club. I take a lot of pride in the fact that during this state rep election I spent 100 dollars on registering for the ballot and 15 bucks a month for a domain. That’s all I’ve spent and I just got on RT [Russia Today]. I think that’s something that me, Brian Ellison and James Weeks II are all trying to do. If you make a message interesting enough that you can draw the attention, then that’s a way to compete without the money.
I didn’t plan on running. My plan was to hold off initially because my wife is still going to school. I got talked into it because we needed representation on the ballot. It’s good to have someone on the ballot, to give a person the choice to vote for a libertarian. I’ve picked five planks. I want to disarm the police. People are talking about gun control and I think we should have gun control on those who are the most violent amongst us which are the cops. I want to take their weapons and give them to marginalized people.
I want to deport ICE. I want to make Michigan a sanctuary state. I believe in Medicare for all and that’s my pragmatic stance. People are suffering, we all have bills. The current system is not a private system and it’s nothing like a free market system either. Libertarian solutions happen outside the state and I believe that we need to build up mutual aid communities. In the meantime, people are suffering and they need help. I see Medicare for all is as an improvement. And finally, we are anti-fascist. That came about after what happened in Charlottesville.
71 Republic: Who are you and where do you live?
Kuehnel: I live in Warren Michigan, just north of Detroit. I’m 34, I come from a middle class, average family. I ended up getting into drugs real early, around 14. I graduated two years late and started working on houses soon after. That’s the main thing I’ve been doing for about a decade. I got my life straight about 7 years ago and got married. I’ve got my associates in heating and cooling and now I’m doing buildings and commercial rooftops.
71 Republic: What brings someone like yourself into the Libertarian movement?
Kuehnel: Around 2007 Youtube started blowing up and I found Alex Jones and Ron Paul. I showed up to one of the first Tea Party’s here in Michigan. It was on our state capitol and around 5,000 people showed. I came in camo and I was wearing a big green mohawk and my sign said “The Federal Reserve is a private bank that owns America” on one side and on the other it said, “Eat the rich, burn the banks.” I wasn’t prepared for what I was going to encounter there at the Tea Party. It was a family orientated event with Joe The Plumber speaking. They did a moment of silence before a prayer and I screamed at the top of my lungs during the moment of silence “separate the church and state.” 5,000 heads just stared cold at me… It was a lot like the debate the convention.
71 Republic: You don’t sound like a Tea Party type. Where were you coming from politically at that time?
Kuehnel: I was still young and pretty open. My first vote, when I was 18, was for Bush’s second term. My parents are Reagan Democrats and they voted for him and I was thinking “oh, we can’t change our President during the war!” I totally fell for that. Then I found Ron Paul, and even though he lost I voted for Obama because I thought “I’m not voting for another dirty white guy.” Then he signed the NSA bill and that’s when I decided I was done with old parties. That’s when I found the Libertarian Party. I didn’t get involved but I was going to vote for Gary Johnson in 2012 but he wasn’t on the ballot so I voted Jill Stein. No matter where I would’ve gone, I would be out of place in some way or another.
71 Republic: Then you joined The Libertarian Party?
Kuehnel: Ya, in 2016 I was following the Presidential campaign leading up to the campaign. I knew I didn’t like Austin Petersen. He was such a conservative. That’s when I really started to see how the liberty movement was so much about appealing to conservatives and I grew a disdain for these people. Then with the freedom ninja stuff online, I was just completely turned off. I was already a Gary fan so I definitely had some bias. I’m not sure if I would’ve joined if Austin Petersen had won. Johnson won and the next day I joined the party.
71 Republic: What were your first experiences with the party?
Kuehnel: My first ever interaction with libertarians here in the state [Michigan] was when they suspended James Weeks’ II membership and right away I got a bad taste in my mouth. They suspended his membership for two years. Even I thought, “you mother fucker, that totally delegitimizes us!” I didn’t think highly of it but watching that whole thing go down was weird. Jeff Wood was there and he’s one of the best we’ve got. He was the one who was saying there were no bylaws or precedence for this. He fought it and they won anyway. They ignored the rules just to take out a personal vendetta against James.
71 Republic: You are a founder of the Libertarian Socialist Caucus and yet socialism is a word that frightens libertarians. Why would you form this group?
Kuehnel: I helped found it. It was a journey through libertarian philosophy. I was an anarcho-capitalist for a little bit. It was the first anarchist philosophy I’d ever read. I always identified as an anarchist, it made sense to me and also something that I could promote to my friends who are also anarchists. But it wasn’t working on my friends. When I tried to reach out to left anarchists, my idea was that we should all be working together, but when I tried to appeal to them and spread my views of anarcho-capitalism, I ended up being persuaded by their philosophy. It felt like it completed the circle. Where anarcho-capitalism was very vague, this actually laid out that we are done with all authority and all hierarchy. We oppose it not just from the state but in all interactions. We should all be helping each other through mutual aid and defending each other. It gives a blueprint for a society like that where you have different theories of syndicalism and municipalism that we approach as equals.
71 Republic: What were the early days of the Caucus like?
Kuehnel: When we first formed we called ourselves the Black Flag Caucus. That’s what I preferred but we wanted to make sure we lived out our ideas so we took a vote and Libertarian Socialist Caucus won. The interesting thing is that there was already a Socialist Libertarian Caucus that existed so that was ringing in our ears. The Democratic Socialists of America have a Libertarian Socialist Caucus that is very radical. It’s purely direct action for them. I’m fully prepared to say right now that they’re more anarchist than us because it’s hard to even get them to participate in electoral politics. They want to feed their neighbors, take care of the homeless and things like that. I think there are a lot of things we could do that would achieve the same goals. They do this thing called a ‘brake light clinic’. They will set up in a parking lot in a poorer neighborhood and they’ll do a free clinic where they’ll check all your headlights and educate you about democratic socialism and also why they’re doing it. Why they’re doing it is because they want to avoid police interaction, so they are helping people by making sure they don’t get pulled over by the cops.
71 Republic: Brian Ellison is a member of the Michigan Libertarian Party and he is running one of the most progressive candidacies in the country. He has advocated for arming the homeless and has been arrested for first amendment activism during his campaign. I’d be interested to know your opinion on Mr. Ellison?
Kuehnel: Brian and I are really close. I love that guy. He showed up to our meeting one night when James Weeks was running for Senator. James hadn’t told me he was talking about dropping out and Brian shows up and says “I’m running for US Senate.” He was in a suit and I was thinking “fuck this pragmatic ancap!” But James ended up becoming his campaign manager and he totally broke out with the “arm the homeless” thing. He’s absolutely fearless. He’s got balls and he’s got integrity. I worry about him because he has no problem being a martyr and it’s both brave and awe-inspiring.
71 Republic: What is your relationship with the Socialist Party?
Kuehnel: They voted unanimously in Michigan to approve me and most likely I’ll be the first libertarian to ever get this nomination. They called me up during the convention and put me on speaker phone so I could talk to them all. They said “the way we see it, the Socialist Party has always aimed at these lower class income, working class, and marginalized communities whereas the Libertarian Party is a more middle class, business-owners membership but we have a lot of the same struggles and sadly we’re pitted against each other.” I want to cement these two as being in the same struggle. Especially when it comes to war, police violence, and the big things. I think there’s a lot of crossover in the platforms.
71 Republic: What do you think of Alexandria Ocasio-Cortez?
Kuehnel: I like her for the most part. There are parts where I disagree. I’d vote for her in a second on my ballot if she was up against a Republican and no Libertarian that I preferred. That’s kind of the demographic I’m going for. When I started on the Gary Johnson campaign, I was also helping a progressive candidate with her primary challenge in the Democrat party. I know they’re against corruption and that’s the big things that plague local communities here, the corruption.