Why President Obama Could Lose Michigan in the Fall Election – An Improving Economy Because Mr. Obama’s Policy Saved the Auto Industry

So Why Would He Lose the State? – Well Republicans Will Depict Him as a European Socialist Who Just Wants to Take Over Everything

Paul Krugman has a nice post on the success of the Obama program to save the auto industry.  If anyone remembers, the Conservatives wanted the government to stay out of any program to help the industry; they wanted it to fail and be liquidated and they forecast that the government program would be a failure.  That didn’t happen, and here from Mr. Krugman is the unemployment rate in Michigan.

The economic rationale for the bailout was not just to preserve the auto industry, but to preserve the related industries whose health and well being were tied to a strong auto sector.

the classic logic of industrial clusters still applies very strongly — which is music to my professional ears, since that’s the sort of thing that was a central theme of my own research (pdf) for many years. Manufacturing firms often stand or fall not just on their own merits, but because they do or don’t have a surrounding cluster of related firms that are suppliers or customers, provide a ready pool of suitable labor, and so on.

This of course is Econ 101, except that when it requires government intervention then Conservatives abandon logic for ideology.

Mr. Krugman’s conclusion

Aren’t you glad that Obama didn’t listen to the other party on this issue?

But why has Michigan elected a Republican Governor and turned the state over to Republican control, the same Republicans who would have allowed the auto industry to fail?  And why would anyone single voter in the state vote for Mr. Romney over Mr. Obama?  Well Mr. Romney is from the state, so that must count much more than saving a critical industry, and Mr. Gingrich says Mr. Obama just wants to put everyone on food stamps, and the people of Michigan, millions of whom probably were kept from hunger by food stamps don’t want that.

So in the end Michigan may be a state that is saved in spite of itself.