Photo: eyeliam via Flickr
Is America turning into Dixie? And, if it is, is that a bad thing?The controversy over the blue social model keeps heating up.
With the controversy over Wisconsin’s restrictions on public employee unions metastasizing from the Madison protests to what increasingly looks like a national political battle, the blue state and red state models of social development and economic governance seem to be at daggers drawn.
The South — anti-union, anti-government and ‘pro-business’ — looks to be squaring off against what remains of the industrial North with its historically higher wages, stronger unions and more interventionist government.
Many liberals worry that what we are seeing with the assault on public sector unions in Wisconsin and elsewhere is the triumph of red state capitalism over the blue state model — and that the result will be the export of classic southern poverty and ignorance to the rest of the country. This is not, on its face, an unreasonable fear; many southern states rank at the bottom for school achievement, teacher pay, life expectancy and per capita income. (I remember hearing as a kid that South Carolina’s motto should be “Thank God for Mississippi!” since Mississippi was often the only state keeping the Palmetto State out of dead last on national comparisons.)
Wisconsin doesn’t want to thank God for Mississippi, and rightly so.
But jumpy Wisconsin liberals should relax — and Southerners should not feel so smug. The policies associated with red state economics aren’t the cause of Southern poverty; they are if anything associated with its cure. And in any case, the South is going to have to change its development strategy too. Red state ‘catch-up’ capitalism is as dead as blue state ‘coaster’ capitalism and the United States is going to have to strike out in a new direction that, while ultimately very promising, is going to cause trouble in every section of the country.
Most people in the south have been poor for a very long time. Before the Civil War a relative handful of Dixie planters were fabulously wealthy, while most whites eked out a hardscrabble living on small farms back among the hills and piney woods: Dogpatch, USA. Blacks, again with a handful of exceptions (such as the small number of antebellum free blacks who owned slaves themselves in states like Louisiana), were even worse off.
With the devastation of southern infrastructure during the Civil War, and 70 years of pro-northern economic policy by the federal government (featuring among other policies high tariffs, pro-big business legislation that consistently favoured big money banks and corporations mostly based in the Northeast, and a generous pension program for Union Civil War veterans), the gap between Dixie and the rest of the country became a chasm.
During and after World War One, millions of Blacks and whites poured out of the south into the expanding industries of the Middle West. During the Depression and World War Two they streamed west into the promised land of California. Crippled by Jim Crow and a destructive legacy of racial bigotry, hampered by poor schools, backward health care, a weak industrial base and dependent on producing commodities and raw materials, the South was America’s very own chunk of the Third World, with the corrupt oligarchs and demagogic populists to match.
As recently as 1950, per capita income in Dixie (which included relatively prosperous states like Georgia, Virginia, Tennessee and Texas) was 32% lower than in the rest of the country. Per capita income in Mississippi, at $764, was less than half the average northern level (and given the unequal distribution of Mississippi incomes, that number understates the deep poverty in which most of the state’s residents lived). In 1948, 38 out of every 1000 children born in Mississippi died compared to 26 in Wisconsin.
Poverty, malnutrition and illiteracy were endemic. My mother grew up in a house without electricity or running water in South Carolina; as a boy I knew families who kept their kids out of school in part because they could not afford to buy them shoes. Many adults could not read and did not have birth certificates — one service that southern congressional offices would long provide to their constituents was help with getting proof of birth so that older people could document their age to receive Social Security.
What the South did to catch up was essentially what much of the Third World has also done. It began by aggressively luring textile mills from New England and the North. Offering low wages, a non-union working force, low taxes and very low business costs (subsidized power rates, for example), Southern governors and business agents did everything they could think of to draw investment. The South also reversed the post-Civil War tilt of federal policy so that federal expenditure went increasingly to Dixie. (It’s not clear that all congressional Republicans are ready to change this today.)
Like many third world countries, the South started out with textiles and then gradually moved up the industrial food chain to heavier and more sophisticated industries. As early as the 1950s, the Research Triangle Park in North Carolina was bidding for high tech investment from companies like IBM. Banking and other sophisticated services would follow; ultimately corporate headquarters of some of America’s largest companies would shift into Dixie. In the first Fortune 500 list published in 1955, none of the top 15 companies were headquartered in the South; in the most recent list, the largest three companies were all based in Dixie. Overall three of the four cities with the largest number of Fortune 500 corporate headquarters are in the formerly Confederate states.
In the South as in many parts of the world, the model worked. The South is not only richer than it used to be; its social conditions have improved. Today Dixie’s per capita GDP is 90 per cent of the national average, up from 68 per cent in 1950. Infant mortality in Mississippi (at 10 per 1000 live births) is still higher than in Wisconsin, but the gap has narrowed from 12 to 4. Poverty rates across Dixie fell from 17.9 per cent to 15.7 per cent between 1969 and the recession year of 2009 even as they rose in the Northeast (from 8.6 per cent to 12.2) and Middle West (9.6 to 13.3). The South has largely closed the gap in educational achievement with the North; race relations have improved across the region.
The flow of migration reversed; millions of Blacks and whites streamed back into Dixie in search of better lives in recent decades, and after the 2010 census the South will have its greatest strength in Congress and the electoral college since the Civil War.
There are a lot of reasons to like the old blue model: for many Americans it brought high wages, secure jobs and great benefits — especially cheap health care and generous defined benefit pension plans. Back in the day, if you were a white, male American worker with a high school education you could reasonably expect a lower middle to middle middle class lifestyle with a job guaranteed for life in unionized industries.
That lifestyle depended on a lot of hidden exclusion: women and people of colour were not able to compete in the job market on equal terms — and many unions reinforced these barriers by restricting apprenticeships to people of the right race, gender and even ethnic group. More, with European and Japanese industry in ruins after World War Two and most of the Third World not yet able to attract capital for manufacturing, American workers and their employers faced little international competition.
The South, along with Japan, Taiwan, Korea and western Europe, began to chip at those exclusionary walls in the 1950s. In the 1960s, non-whites and women in the United States, and increasing numbers of people in Asia and southern Europe got into the game as well. In the 1970s and 1980s some of these countries — like the American South — began to experience competition from new entrants into the international manufacturing economy, and the competition to scramble up the value added ladder intensified.
In the United States today, neither catch-up nor coaster capitalism can help us much. Coaster capitalism is most clearly doomed; there are too many people playing catch up too well. Countries and states that do not provide business friendly environments cannot attract new investment; that might be OK for countries like Germany and Japan with falling populations, but the United States still has a lot of growing to do and we have millions of families north and south who want to build a higher standard of living moving ahead.
But if the Yankee model of building larger welfare states and mandating higher wages and tougher regulations has passed its sell by date, the catch up capitalism of the South also fails to provide a blueprint for the future. You can’t play catch up once you have caught up. The South can no longer poach enough business from the wealthy North to support its growth — and the federal subsidies to the region are also going to drop.
Both regions are going to need a new growth strategy — one that is likely to depend on new enterprises and small business rather than on established industries.
As many readers on the blog have pointed out, when I write about the post-blue world I don’t offer a detailed picture about what it will look like. That’s inherent in the nature of the changes we have to make: discontinuous change driven by unpredictable technological innovation is where it’s at. I will try to write more on this subject in future posts, but one can no more expect anybody to produce a map of our future world than Queen Isabella could have asked Christopher Columbus for a detailed map of the Americas before sending him on his first voyage.
Whatever the future looks like, it’s not about returning to Dogpatch, USA, or building a society that looks like outtakes from “Deliverance“. It’s not even about reducing the government to the “good old days” when the only federal employee most people ever saw worked for the Post Office. It’s about deploying America’s greatest social and cultural strengths to keep this country on the cutting edge of human progress.
Right now that means learning to restructure government so that adequate services can be delivered more efficiently. Soon it will be about restructuring our education and health systems so that American productivity in these services amazes the world. Ultimately it is about producing a society in which fewer people need government help as opposed to a society in which more and more people rely ib more and more subsidies to pay for necessary services they cannot afford on their own.
Coaster capitalism and catch-up capitalism are both relatively easy. Cutting edge capitalism is hard, and you have to make it up as you go along, but it is the only route to the kind of future Americans want.
And for all my Yankee friends and readers, let me assure you that whatever else this route to our mysterious future may be, it is not Tobacco Road. And there are no strange fruits hanging from its trees.
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