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There are all kinds of theories about how to save the Big Three automakers. At the radical end of the spectrum: lease the entire state of Michigan to China.
Josh Hyatt, CFO Magazine
January 1, 2009
The specter of Detroit's Big Three CEOs begging Congress for handouts has become all too familiar in recent months. At least one observer, though, begs the question: Why is Michigan making cars when it could be manufacturing money? Steve Balkin, a professor of economics at Roosevelt University in Chicago, contends that Michigan could bail out the entire economy. His immodest proposal, which he set forth on a faculty Website: lease the state to China. Could he be serious? Well, partly. "We need to consider new strategies," Balkin says. "Maybe mine will spur some fresh thinking."
CFO: How would the Motor City's new owners get the Big Three rolling again?
Balkin: Part of the deal would be that they would have to invest in the automakers. We almost let Dubai buy our ports, so why can't the Chinese take over these plants? We've got the prowess in marketing and design; they've got 1.3 billion drivers. With those economies of scale, they could bring green cars down to affordable prices.
CFO: How would you value Michigan?
Balkin: You've got 36 million acres of land. About a third of that is public land for China to buy, the rest would stay in private hands. If it pays $4,000 an acre, that's $40 trillion. It seems high, I admit, but I'm sure we could work something out.
CFO: Michigan has the highest state unemployment rate; Detroit is notoriously crime-ridden. Why wouldn't China lowball its offer?
Balkin: Like Rome, Detroit is beautiful because of its ruins. China is overpopulated, with no place to expand. Among the Chinese, there would be tremendous competition to be one of the 10 million Michigan settlers. Why not make this economic marriage and use the money to move us into a fiscal recovery? Why not let Michigan save us?