Wednesday, September 14, 2011

Oh Detroit, We Hardly Knew Ya

When I took Micro and Macro Economics in college, I felt like I was in a foreign country and didn't speak the language.  I sat in those classes totally baffled scribbling furious notes to try and capture every word out of the professor's mouth so that at home I could try to somehow piece it all together and somehow pass these two courses.  Somehow I got a B in micro and a C in macro but I never really got it, although of course that didn't stop me from using the word widget in a sentence every chance I got to pretend I did.

Of course, my whole life up to that point, I always knew the only economics I would ever need.  It went like this:

"What's good for General Motors is good for the country."

When I was growing up these 9 words were, in everyday language, the cornerstone of the American economy, at least where I was from.  If General Motors was turning a profit it meant that the country was fulfilling the all important healthy economic triangle --companies were manufacturing, people were working, consumers were buying.  I cannot tell you how many times this phrase got thrown around during my youth.  In the last 30 years that phrase has gotten passe, a feeling that this type of thinking was old fashioned, it had exhausted it's worthiness, the world was different now.  All true, but lately I have been thinking that perhaps it was right all along.

To be honest, while growing up my own family's livelihood directly depended on General Motors being in the black.  My family owned a furniture business in the Monongahela Valley in Western Pennsylvania.  Although far from Detroit, our customers largely were people who worked in the coal mines all up and down "the Mon" as it is called by locals.  This area of the world supplied much of the coal for the steel industry which of course was critical to the auto industry.  The Mon valley of my youth was was slightly past its prime but it was a haven for blue collar workers.  Kids were born, grew up, finished high school and went on to find good jobs, union jobs with good wages and benefits, jobs which afforded them houses, cars and the ability to raise children, go to the bar and have money for hobbies like boating, fishing, hunting, motorcycles.  Not rich, not yuppies (who are terribly overrated anyway) but a good life.  Although coal mining is a dangerous, risky job as recent mining disasters have put before our eyes much too often in the last years, in the Western Pennsylvania of my youth, there was plenty of work and the pay and benefits were very good.

And it was the people who risked themselves in the coal mines every day who financed mine and my family's lives.  Mine was truly a middle class existence ala 1970s and 80s America--ranch houses, Chevrolet station wagons (complete with faux wood paneled sides), swimming club memberships, vacations to Florida to visit relatives.  We were not rich, but we had everything we needed.  I wore my cousin's hand-me-downs (what kid of my generation didn't), my mom patched my jeans but my mom also had her jewelry and my parents went out on the weekends and my mom bought whatever she wanted.  It was not a designer lifestyle but we certainly didn't want for anything.

My brother, cousins and I all went to college (all financed by our furniture business) and while growing up my dad and my aunt spent years getting their Ph.Ds -- although my dad technically worked in the store while he was getting his doctorate, "work"  consisted of going to the store only on Saturdays so my grandfather could get the day off and also put together our bi-weekly advertising circular.  My dad spent the better part of 4 years getting his Doctorate full time but nothing changed in our lifestyle so as to be able to afford it.  I had the same toughskin jeans as every other kid (the height of fashion then, trust).  Our stores supported us and my aunt's family while she worked on her own Ph.D (although my uncle did work full time in the business).  In fact when you get right down to it, our life was afforded to us through all those coal miners who went down into the pits of the earth every day.  Although our fingernails were clean, we were just as much a part of the auto industry as everyone else.

 Our store sold a lot of very ugly furniture.  Brown plaid and printed couches with lots of orange and rust and wooden arms and legs sold like hotcakes down at Gross Furniture along with formica dining room tables and orange shag carpeting which we sold in our carpet showroom.  To be fair, this stuff was in style, this was the time when wood paneling lent an air of sophistication to a room, so what can you expect?   I remember once going to the furniture market in North Carolina with my grandparents and I was astounded by all the beautiful furniture, miles and miles of it and I couldn't understand why my grandfather insisted on buying that tacky ugly plaid stuff when there was so much more beautiful things available, leather couches as soft as butter and beautiful sectional brocade sofas in muted colors were so much nicer than the "log pile living rooms" that littered our store. He said simply, "this won't sell in our store as this is not the kind of furniture our customers like."

In the 1960's and 1970's our business boomed.  My grandfather opened additional stores and things were humming along.  Fridays were particularly busy because it was pay day and we were open late on Fridays, precisely so that people could visit us, a convenient two stores down from the bank on their way home and buy themselves a recliner, a kitchen table, a fridge, a tv or whatever else they had their eye on.  There were always customers in the store and I can remember going there as a kid and always trying to guess what people would buy when they came in and often each time I visited, much of what I had seen on the floor was gone.  I used to love to go through the whole store and count how many red "Sold" tags there were on the furniture which meant that soon it would leave our store and be delivered to someone's house.  I remember once being in the office when a customer came in to pay for some furniture he had bought.  He had came to us on his way home to pay the payment on his La-Z-Boy recliner.  My grandfather happened to be in the office when the man came and he was obviously excited to be paying off his chair and asked my grandfather if the chair could be delivered the next day.  My grandfather quietly asked one of the girls in the office how the deliveries looked for the next day and he assured the man that the chair would be on the truck the next day.  He then turned to walk out of the office, I went with him since it was near the end of the day and I was sleeping over at their house that evening because the next day my grandmother was taking me into Pittsburgh, to Saks and to Kaufmanns to buy me some new clothes.  The customer ran over to my grandfather again and happily shook his hand.  My grandfather, not one for small talk, thanked the customer and muttered something incomprehensible and walked away.  The man's hands and fingernails were dirty and when I looked at his face, it had soot on it too as did the white t-shirt he had on under his plaid flannel.  I followed my grandfather silently to his office where he immediately walked into the kitchen adjacent to it (my grandfather to this day is the only person I know to have an actual kitchen in his office -- to be fair it was a kitchenette, but it did have a daybed in it).  I grabbed a pack of lifesavers out of the kitchen and said to my grandfather, "that man was so dirty, why couldn't he clean himself up before coming in."  My grandfather immediately said in his heavy Yiddish drawl, "eet ees dat man's dirt dat pay for us, it ees a living, Dana."  It was a good lesson (one of many that I learned from him).

In the 1980's, things really started to change.  The steel industry had fallen on hard times as the American auto industry was under pressure from Japanese competitors, who were producing smaller, more fuel efficient cars with less maintenance costs and were cheaper than the American Big 3.  Western Pennsylvania really started to transform from a blue-collar haven to a tired, depressed place as wide scale lays offs set in which created record-high unemployment in our corner of the world.  Families who for 2 or 3 generations provided for their families through the mines and mills became poor overnight as jobs dried up, hours and benefits were cut.  Our stores fell on hard times too, we ended up closing all but our main store and our business was scaled back considerably.  Managing a business is cyclical, you have good years and bad years and luckily my grandfather managed the record profits of the good years to ensure survival in the leaner years that came.  Thanks to my grandfather's prudence somehow we were weathering the storm, although my grandfather was also getting older, in 1980 my grandfather was 75 and although he still worked every day it became harder and harder for him to manage everything.  My dad, was teaching by then at a nearby college and spent more time in the store and talked through a lot of things with him on how to keep going.

In 1985 a big flood came to the Mon Valley and wiped out about a third of our inventory.  This was, for my grandfather the straw that broke the camel's back, he decided to retire and my dad took over the store.  Things were changing a lot in our family too, the details are for another post but let's just say there was a falling out and skip over to  that it ended up that my dad bought out my aunt and my grandfather and became the sole owner of the store.  A few years later, as things became even more depressed in the Mon Valley my dad decided to liquidate the business.

While Pittsburgh has certainly recovered from the loss of the steel industry and has even flourished the Mon Valley, a meer 30 miles south of Pittsburgh has never truly recovered.  When things went south for GM and the American auto industry things with south for much of the industrial north including Western Pennsylvania.

Now a couple of decades on from Gross Furniture, in the midst of first the credit crisis and now the debt crisis I come back to those  9 words.  The entire Internet is analyzing-- it is the Republicans, the Democrats, the Tea Party, the Banks, the Real Estate Bubble, the Bush Tax Cuts, Clinton, the wars in Iraq and Afghanistan, Al Quaeda.

The truth is that there is not any one cause for what is happening in the world economically now, it is lots of things kind of coming together and rushing much the same way that rivers converge on one another, just like how the Monongahela flows north into Pittsburgh and meets the Ohio and Allegheny Rivers to form the Point in downtown Pittsburgh, making one river indistinguishable from the other.  That is how it is, all these causes, great and small just form this economic mess the world finds itself in.

But I come back to the real economic truths ala moi.  A healthy economy is a triangle with three very important points - companies need to be manufacturing, people need to be working (earning money) and consumers need to buy.  This is what is necessary for the economy to stay solid and healthy.  When one of these things is out of balance, it is not good.

The other day I was watching an episode of The Wire and one of the characters said something like:
" used to be that America was manufacturing,we were a country that created things, now we are a country with our hands in other people's pockets."
This was probably one of the most profound economic statements I have heard in a long time and it spurned this post.  What do we manufacture now?  Sure we create corporate cultures and fancy accounting and conglomerates and Enrons.  We merge, acquire, buy, sell, trade, sue.  But in the grand scheme of things as a country we create very little.  Manufacturing has been sent to second and third world countries so that profits can benefit from low wages.  We have outsourced and off-shored and consolidated, centralized, de-centralized. We have done this for decades and have slowly but surely eaten away at Middle America.  Corporations grew into conglomerates with resources greater than many countries (and the same rights as people) and a reach so strong that their interests can't do anything but come first.  It is no longer possible for Joe-Six-Pack to get a good paying job out of high school, because we don't manufacture.  Hell, even a lot of MBA's can't get good paying jobs.  When I was a kid a college education was as close to  a guarantee as you could get that you would end up better off than your parents (unless you wanted to be a teacher of course-- then all bets are off).  If you had a college education you had to work really really hard "not" to make it.  Now, a college degree means less than a high school diploma did 30 years ago.  We just keep getting more selective, more exclusive.  I shudder to think what will be required to be successful in 20 years.

I don't have a degree in economics (I chose Political Science and History which means I am by profession cut out to be a contestant on Jeopardy) and I am sure I am missing, omitting or ignoring some important facts.  Or maybe I am just nostalgic for the look of brown plaid sofas and the smell of carpet glue and the view of the Monongahela River from the roof of our store.  But now more than ever I am convinced that the American economy and way of life is in the toilet because we lost sight that America needs to be producing to have a healthy economy.

Or maybe I should stick to autism and chicken soup recipes?

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