"The truth will set you free. But first it will piss you off."

Gloria Steinem

Friday, January 17, 2014

Can We Blame the Federal Government? (Second in a Series)

     It is said that the road to hell is paved with good intentions.  The road to the urban hell of today was not only paved with them, good intentions were the graded rock of its foundation.  There is blame to go around for what happened to our urban areas, and I will spread it, but we can begin by focusing on two decisions made by the Federal Government at the very end of and not long after the end of the Second World War.  The Government made both decisions with the best of intentions and a total unawareness of how extensively they would affect post-war America.  The effects of these two decisions joined forces, and the results would be so far-reaching that we can identify them as two of the prime movers behind what was going to happen to our cities and towns. 

     The U.S. government made two fundamental decisions between 1944 and 1947, one focused overseas and one focused at home.  Each was actually a number of decisions, of course, and I merely combine them, sacrificing factual detail for the sake of brevity.  I’ll refer them as the “domestic” and the “overseas” decisions, and I’m going to take them out of chronological order.  The domestic decision was made at an earlier time, but I’m going to discuss the overseas decision first.  Unlike the domestic decision, the results of the overseas decision gathered strength outside of the U.S. for decades, peripheral to our story.  Then those results appeared on our shores and joined with the already underway effects of the domestic decision; together they ravaged our cities and towns.

    The overseas decision was to help the countries devastated by the war.  The immediate post-war years were bitter ones for Europe (and much of Asia as well); hunger, homelessness and unemployment stalked the continent.  The war that had raged across Europe had left more than physical desolation; its surviving—or newly reinstalled—governments were obviously inadequate to the enormous task that confronted them.

     This decision to revive shattered countries and their industries not only included our former enemies, Germany and Japan, that was its focus.  We had spent the war years trying to bomb and burn their industrial capacity into rubble, including all forms of transportation, and we had largely succeeded.  Once our nation’s leaders were confident that the war was being won, some of them began to think about what they wanted the new peacetime world to look like.  They concurred that the physical—and psychological—consequences of what they had accomplished during the war had to be corrected, but there was fundamental disagreement as to how to proceed with both Germany and Japan.  An influential faction argued that both should be permanently transformed into agricultural states, forbidden any significant industry.

     This is where another factor came into play, one that was crucial to the final decision.  The immediate post-war years spawned the Cold War.  An enormous Soviet army sat just on the other side of a rapidly-descending “Iron Curtain,” and the Communist co-victors of the war gave every indication that they wanted to extend its rule over pretty much all of Europe they didn’t already occupy.  A strong West Germany was the core of any alliance to resist this.  Even more threatening than the Red Army, however, was the threat of a Communist revolution among the discontented masses of Western Europe, which seemed very real at the time. 

     America’s answer to these problems was to lend money and expertise to the suffering, both allies and former foes alike, to promote economic recovery.  Its most famous component was “The Marshall Plan,” which focused on Western Europe (the Plan was offered to the Soviet bloc states, but was refused).  The decision has been hailed (rightly) for the suffering it eased and the lives it saved, but our motives were not entirely altruistic.  U.S. leaders, convinced that prosperity was Communism’s worst enemy, resolved to help those masses, and to fend off Communism.  The answers to the Soviet army and the threat of revolution were the North Atlantic Treat Organization (NATO) and the Marshall Plan respectively, famously termed “two halves of the same walnut.”

     Much less well known is the decision about Japan.  The early plans to radically restructure Japanese society (under the direction of Douglas MacArthur, who would dearly have loved the opportunity to continue) were changed sufficiently to give the decision the title of “The Reverse Course.”  As with Germany in Europe, Japan was the key to Asia, and Communism threatened both.  These decisions to aid our recent enemies were controversial, but for reasons that were then current in people’s minds, not because anyone saw what would be coming down the road two decades later.    

     This “overseas decision” led to the expenditure of a considerable amount of money in several countries, and it was remarkably successful.  The Iron Curtain did not advance, and the peoples of Europe embraced consumption rather than revolution.  As U.S. foreign policies go, this was one of the winners.  Make no mistake about it, however: the recovery of both Germany and Japan was due to their own efforts; they worked hard, went without, and invested surplus capital once basic consumption requirements had been met.  U.S. aid played a part, but we should keep a sense of proportion here.

     One discovery of the industrialists during this transfer of capital and experience was that when one is forced to start an industry virtually from the beginning (there being precious little of the old to build on), one can employ the newest ideas about production and efficiency, unencumbered by old physical plant, old machinery and the old way of doing things.  You will also find workers grateful enough for a job that they would put little pressure on management (at least initially).  Thus our two primary World War II adversaries spent the post-war years building a modern industrial plant to replace that destroyed by Allied bombs.  They focused on the basics, steel among them.  Once they had gained sufficient strength, they began to market worldwide.  Their brand new and efficient factories could turn out products of a quality and at a price that the old, worn-out factories in places from Detroit to the Schuylkill Valley could not match.

     Yes, their employees worked harder and longer for less than did our employees, and this was part of the advantage foreign industry was able to exploit, but to blame “the unions” for the collapse and near-collapse of several industries is to place prejudice where knowledge should be.  As further evidence, we should remember that in subsequent years what Japan did to us, Korea has done to Japan and China is doing to Korea—take away the heavy, “smokestack” industries with new factories, lower paid workers and no environmental restrictions.  The more things change…

     All this took time.  In 1960 the Volkswagen was making disturbing inroads in the domestic automobile market, but “made in Japan” was still a punch line for comedians.  The change from joke to threat seemed to develop quickly after that, as imports from foreign industries rose quickly to prominence in a number of fields, steel and automobiles among them.  The early Honda step-through motorcycles were precision Swiss watches compared to U.S. (yes, and British) offerings.  They were hardly worthy of the name by American standards, but they caught on, and had a Beach Boys song celebrate them.  By 1960, the health of the U.S. steel industry was tied to that of the automobile.  Everyone involved, whether in steel, automobiles or the plethora of parts and services that automobiles require, subscribed to the same belief: “If we don’t sell cars, we won’t sell steel, and if we don’t sell steel there will be hell to pay.”  Truer words were never spoken.  Japan Incorporated learned from its initial forays and began to market automobiles here.  They were small and underpowered at first, but that was corrected; many more arrived on our shores and were sold.  We (almost) stopped selling cars, we sold even less steel and hell duly arrived, bill in hand.

     But by the time foreign competition began to be felt, the picking clean of our urban carcasses was already well underway.  We will begin discussing that subject next time, with that “domestic decision” mentioned at the beginning.

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