Let me say this latter part another way because as written it sounds like a contradiction when compared to the entry. There will always be some number of American cities that will continue to work even as the rest fail. While which cities those are may be the partial function of choices made at the local or state level, the presence of those cities are NOT the function of choice, but rather the function of the system itself. So going back to Detroit, people have been talking about how it should wean itself off of the auto industry and follow the path of X (Baltimore, Cleveland, Pittsburgh, you name it). And I use to buy into that argument. But I do not any longer.

I don’t know how you’d address this in a general way. Technology and markets will change over time, and trying to lock them in place would probably be worse than the instability if it were possible at all. I have a feeling that the notion that everyone should buy a house on a 30 year mortgage and accumulate equity as their only real form of savings is one source of great inflexibility.

Aren’t some cities better at adapting to these changes over time than others? It seems like you want cities that can adapt to changes, and that aren’t bound to a single industry. That way, American car makers’ demise doesn’t have to destroy your city. (And I am not convinced that their demise is as much about cheaper overseas labor as about lousy products from the American companies.)

Thanks again, Lester, for taking the time to answer my question in such detail. And thank you also to the other readers who also provided me with a considerable amount to think about and digest.

Better technology does decrease the demand for human labor hours per unit of output (better technology changes the production function), but this doesn’t entail that the laborers would lose their abilities to negotiate for fair proportions of the profits with the entrepreneurs or capitalists.

For me, Detroit is case study #1. What happened here? Laborers lost their ability to negotiate for fair proportions of the profits, because they were faced with competition from cheaper labor pools. This is the norm, not the outlier.

If the laborers’ skills were to increase as technology advanced, they would be able to negotiate for more income per hour of labor.

Note that I talked about the role of education above. How exactly are skills supposed to increase if the institutions designed to increase the skills are bureaucratically designed not to do so? Again Detroit is the case study. What happened to the potential labor population–the ones who would have normally gone into the plant?

Rob:

I understand where you are coming from. And, I know how things have been done in the past, in the U.S. and other nations. Technology, however, was not the wrongdoer. Those who used their superior influence over the rules to manipulate the resources and relationships and to bleed the laborers dry were responsible for making laborers worse off despite the efficiency gains made possible by technology. Those who chose not to share, those who could have forced or pressured them to share but didn’t, and those who inhumanely stranded so many laborers in order to invest their capital in more profitable pastures were the wrongdoers, not the technology.

I didn’t intend to argue that capitalists and their entrepreneurs are more likely to be altruistic than not. Indeed, I all but explicitly stated the opposite. However, what ignoble capitalists and entrepreneurs have done in the past and how they got away with it only informs us of what we might expect from them if they were given the same opportunities to control or make (or break) the same or similar rules. I am thinking about what is possible in systems where the rules might be different or the power to control or make (or break) them might be distributed differently.

What is possible, with capitalists and entrepreneurs who would care as much about social justice as they would about profits (these types of capitalists and entrepreneurs are indeed rare; however, they exist), and who could navigate through municipal, state, federal, and international corruption; antiBlack laws and regulations; anti-entrepreneurial laws and regulations; tricky political environments; and a whole bunch of other things they would have to deal with in order to help deprived communities profit from their resources and relationships, are profitable business organizations that would enable people to live close enough to their jobs so that public transportation shortcomings would not make it very difficult for them to start earning decent incomes.

Successful businesses such as these have been built and are being built. We just need to build many, many more. If we could begin to build many more businesses such as these, and begin to bring much more capital into these communities, then we could build on that.

“Technology reduces the need for labor. A reduction in the need for labor reduces demand. A reduction in demand here diminishes the capacity of the individual to negotiate prices (I read your use of prices here as prices for their labor hours).”

Better technology does decrease the demand for human labor hours per unit of output (better technology changes the production function), but this doesn’t entail that the laborers would lose their abilities to negotiate for fair proportions of the profits with the entrepreneurs or capitalists. If the laborers’ skills were to increase as technology advanced, they would be able to negotiate for more income per hour of labor. They could then earn the same amount of money selling fewer hours of their labor or more money selling the same amount of labors hours.

Nor would a decrease in demand for human labor hours per unit of output necessarily decrease the number of jobs. If the market for an economic system’s outputs were to expand and the laborers were to increase their skills (enabling them to negotiate for more profit per hours of labor), then there could be more high-skill laborers working fewer hours for the same amount of opulence they once had to work more hours to obtain.

I don’t assume that advances in technology couldn’t make everyone better off.

And, I think the unsustainable model you describe, as I understand it, is sustainable indefinitely. Technology, increased efficiency and transportation of outputs, decreased barriers to trade between states and nations, and efficient training or retraining of laborers would sustain it.

Technology reduces the need for labor. A reduction in the need for labor reduces demand. A reduction in demand here diminishes the capacity of the individual to negotiate prices. It diminishes the capacity of the union to negotiate prices.
Technology also reduces the need for certain types of land. Certainly with an increase in communication power there is a reduced need for office space, and an increased capacity to move industry and finance in response to various external forces. This in turn reduces the ability of local governments to make demands upon corporate citizens.
Now in the case of something like the automotive industry, it relies upon a market with the income to purchase its products. If the labor pool no longer has the money to consume–because they are no longer PART of the labor pool, or if they are they aren’t make the same type of loot–then they can no longer purchase the product.
If they can’t purchase the product the corporation will fail.
Unsustainability in a nutshell. And I haven’t even touched the environment–or the idea of social entreprenuers yet.
The other model is much more sustainable because it is not based on external consumption and demand as much as it is in creating local products that can be in turn exchanged for local goods. At its best it is a closed circle that in turn overlaps with other circles.

I might disagree with you here. I’m not sure. I think the model you describe as sustainable, the model based on “local development and modest growth,” might circumscribe economic growth if the society that would take this approach would be required to compete directly or indirectly with other societies that wouldn’t agree to restrain themselves similarly and would have immodest political economic ambitions. The society that chose to use the sustainable model you describe might plant the seeds for its own demise in a capitalistic global (or national) political economic market by uneconomically, and perhaps unintentionally, limiting its output and long-run economic exchanges with external economic agents/organizations.

And, I think the unsustainable model you describe, as I understand it, is sustainable indefinitely. Technology, increased efficiency and transportation of outputs, decreased barriers to trade between states and nations, and efficient training or retraining of laborers would sustain it. Profits needn’t necessarily stop increasing due to the economic forces you describe: “diminishing returns, competitors, market saturation, etc.” The best business organizations defend themselves against these types of encroachments with their managerial innovations, superior strategies, partnerships, technological innovations, and political influence. Some protect market share by intentionally or unintentionally establishing barriers to entry. And, markets can always expand.

I think the obstacles to building or rebuilding the most deprived cities from the ground up are obstacles I would seek out our nation’s most talented and altruistic entrepreneurs to take on. However, trying to find entrepreneurs who would be both talented (those who would know how to build competitive businesses that generate millions in profits) and altruistic (those who care at least as much about social justice as maximizing profits) might be difficult.

When I look at our deprived Black communities through an entrepreneur’s lens, I see them as sets of relationships, rules, and resources. I call these the 3Rs. Entrepreneurs evaluate a social system’s or organization’s 3Rs in addition to the opportunities to meet the needs of internal or external economic agents/organizations in order determine which forms of business organizations might enable us to achieve our desired profit margins, given those 3Rs. Unless a social system’s 3Rs were so invaluable or there were no way they could be combined to profitably manufacture outputs that would meet the needs of external economic agents, the social system’s 3Rs could be used to help it accumulate capital.

I don’t think we have any predominantly Black U.S. communities that have 3Rs that would be impossible profit from. Some of these communities would require a higher level of entrepreneurial talent or entrepreneurial genius than others. Most experienced entrepreneurs realize that the same amount of effort, and perhaps capital, would probably enable them to generate 40% profit margins during the first seven years of operations in communities with better 3Rs as would enable them to generate 15% profit margins during those first seven years in many of our most deprived predominately Black communities. And, I suspect there aren’t many able entrepreneurs or capitalists in the U.S. who would be willing to sacrifice so much profit. Even talented and altruistic entrepreneurs might have great difficulty obtaining enough capital to get profitable businesses up and thriving in many of our deprived communities—no matter how strong their relationships were with the world’s most powerful or wealthiest capitalists. But the best and most altruistic entrepreneurs would not be deterred.

We need more talented, experienced, well-connected, and altruistic entrepreneurs who understand real-world business and real-world politics (real world business operations are a little foggier and messier than most university courses lead their students to believe) to go build some businesses using the 3Rs that our deprived communities have to offer.