On Salom.com, Michael Lind excoriates Southern states for leading the attempt to “kill” the North’s auto industry by opposing the multibillion-dollar bailout of the Big Three (or should we now call them the Midsized Three?) automakers in Detroit. He accuses Southern states, led by “Neo-Confederate” elites, of engaging in beggar-thy-neighbor economic development policies to advance the interests of their own foreign-owned automobile manufacturing interests.
He finds this “race to the bottom” economic development strategy to be “shocking” and a threat to national prosperity.
Today the division is no longer between slave and free states, or agrarian and industrial states, but between two models of industrial society — the Northern model, based on adequate public service funding and taxation and unionization, and the Southern model, based on low-tax, low-service government and low-wage, non-unionized, easily exploited labor. If the industrial North and the industrial South compete for global capital investment, then the industrial South is likely to prevail, because Northern advantages in the form of a skilled workforce and superior public services are unlikely to overcome the South’s advantages of low wages and low taxes and state and local tax subsidies. The result, sooner or later, will be the Southernization of the North and Midwest, as states in the historic middle-class core of the U.S. are forced by economic pressure to emulate the arrangements of Alabama and Mississippi and Texas.
The alternative to the Southernization of the U.S. is the Americanization of the South — a process that was not completed by Reconstruction and the New Deal and the Civil Rights era, which can be thought of as the Second Reconstruction. The non-Southern states, through their representatives in Congress and the executive branch, and with the help of enlightened Southerners, need to use the power of the federal government to put a stop to the Southern conservative race-to-the-bottom strategy once and for all.
Lind brushes up against the truth in one regard, although he really doesn’t understand the meaning of it: Southern states do subsidize economic development projects, and such beggar-thy-neighbor competition is indeed harmful, insofar as it undermines the state/local tax base. To a large degree, the states of the old Confederacy concentrate resources on corporate and industrial recruitment, an outmoded economic development model. But the solution isn’t unionism and government. The path to prosperity and higher living standards in a globally competitive economy is through productivity and innovation, achieved through the development, recruitment and retention of human capital (Economy 4.0 in Bacon’s Rebellion parlance).
Lind’s prescription of achieving industrial prosperity led by unionism and government is tragically wrong-headed. The states that have tried it, like Michigan, are sliding down the economic drain pipe.
Lind is obtuse on so many levels that it is hard to know where to begin. Let me try.
First, he seems oblivious to the fact that opposing multibillion-dollar subsidies with no accountability is not a long-term solution to the woes of the Northern automobile industry; subsidies are no more than a license to pick the pockets of taxpayers nationally and will accomplish nothing more than delay the painful but necessary restructuring of a failing industry. Furthermore, Lind evinces no awareness that Southern employees of automobile manufacturers might legitimately resent subsidizing unionized competitors that countenance unproductive work practices and support health care benefits for workers and retirees that are not only more generous than those of Southern auto workers but more generous that those of just about anyone in the country — excluding, possibly, federal employees and members of Congress.
Secondly, Lind makes appalling generalizations about the political economy of economic development in the South. The industrial recruitment approach to economic development doesn’t emanation from “conservatives” or “neo-Confederates.” It reflects the conviction of both Democrats and Republicans and politicians of all races that the creation of jobs and expansion of the tax base is a worthy object of public investment. That philosophy has its flaws, as I have enumerated on this blog. But it has nothing to do with “conservatism,” nor even the South — just look at the tax breaks handed out by New York City in years past to prevent the flight of its leading corporations.
Thirdly, Lind ignores the extent to which many Southern metropolises have pushed beyond the industrial-recruitment economic development paradigm by focusing on entrepreneurial growth. Northern Virginia, Austin, Atlanta, Charlotte and the Research Triangle are the best examples. Sadly, not a single one of the unionized/big government cities of the Midwest have reinvented themselves to the same degree.
Fourthly, as for the “race to the bottom,” decaying Midwestern and Northeastern states are far better illustrations of that phenomenon than even Mississippi or Alabama. Although progress is measured in incremental gains over decades, Southern states are slowly but surely closing the wage gap between themselves and the rest of the country. The states that have adopted Lind’s paradigm have squandered their lead despite enormous advantages, including a better educated populace, the presence of corporate headquarters and major industry clusters, world-class universities and massively endowed not-for-profit institutions that underwrite community initiatives.
Lind seems totally unaware that he is defending a failed governance model: the idea that taxes don’t matter, that corruption doesn’t matter, that productivity-stifling work rules don’t matter, that higher levels of state/local public spending miraculously inure to the benefit of the general good and not to the benefit of politically powerful constituencies. He would use the coercive power of the federal government to impose an antiquated and ruinous philosophy upon the entire nation. I don’t think he will find too many “enlightened southerners” willing to go along.