Paper 2 and haiku (blog 8)

Collapse of Detroit, Collapse of the American Dream

Should Detroit shut down 

Did the big three let us down

Who should lift them up

And here is a song to set the mood… 

The topic I have taken on for my paper to, if the Haiku didn’t clue you in, is the collapse of the auto industry in Detroit in 2008. In order to get a better understanding of this large topic I actually had to take a look at a couple of sources to get the ball rolling.

First this video, an interview with Obama, was actually helpful.

Furthermore, this article about the lessons learned from the bailout was great and so was this detailed CNN article 

The auto crisis of 2008 was the result of poor management and that is what makes it such an awesome topic for paper two and the white paper. The Big 3 US auto makers, GM, Ford and Chrysler had fallen seriously behind in terms of being competitive and responsible within their industry. They made “repeated strategic mistakes” according to Obama and this is absolutely true.

The auto industry is iconic of our country’s growth and the American dream. Ford himself is a legend, we all know the Model T. Does what happened in Detroit reflect a lack of ability to achieve the American dream these days.

So what happened to lead these auto makers to face bankruptcy and need a bailout from the US gov’t?

In my opinion, a great industry got lazy and tried to ride things out. It didn’t work obviously. The industry began to change, a lot of which our generation witnessed, to a more energy efficient and compact market. People wanted smaller and cheaper and these companies missed the boat on those change. Foreign nations, who had their sights set on smaller and better, were the go to choices for car buyers. Trucks had been a great product with a high profit margin, and these companies continued to produce those products, thinking only of their high returns, rather than what the outcome was going to be. Their mismanagement led to failure to adapt to changing times.The ethics behind the decision the managers made need to be evaluated. And also the bailout solution needs to be evaluated as well.

The deontological approaches make most sense to me in evaluating the decisions of these companies. What duties did they have and ultimately fail to uphold? What solutions make sense in the grand scheme of “do unto others?”

Issues stemmed from the companies decisions to offer large healthcare benefits that extended to retired employees. They had a duty to their employees to support them but the line had to be drawn somewhere. The companies didn’t have sustainable practices in place and put off changes. This violated duties to their employees and stakeholders. They risked their jobs and futures based on their poor business practices that bent the industry over backwards when oil prices rose, their cars were out of favor and they weren’t prepared to make changes.

What duty did these companies have to the industry? What about the environment? Their cars directly impact the environment through emissions and yet they continued to produce “gas guzzlers” even when interests shifted towards being green.

Also the solution has ethical questions. The gov’t misused TARP funding to help the companies. In this way it was like poor decisions were being rewarded. However the industry is so large, and so many jobs were going to be lost, that the gov’t may have had a duty to save them. Tax payers money is going to fund the mistakes of CEO’s and managers who made millions.

It may best best to focus on the ethics of the solution rather than the cause for my paper, maybe both.

The topic is great but I have a lot to explore to write a paper 2!

For more on the latest read the following…


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5 thoughts on “Collapse of Detroit, Collapse of the American Dream

  1. I think this is a great topic that can give you a ton of options to go with. Will you be exploring the idea of too big to fail or are you more focused on the decisions made by management that resulted in the failure?

  2. I would separate the decline of the big 3 from the government using TARP funds. That would work well for a policy analysis- what can federal policy do to encourage industry? What do we do about falling wages for workers and the middle class?

    FOrd, an interesting person, hated unions, admired Stalin, and also believed he needed to pay workers enough that they could buy Ford products.

    The legacy pension and health care commitments of the older work force are tough issues. At the same time, that is also a good topic for a policy analysis.

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