Tuesday, January 05, 2010

Greenfields And Brownfields

Perhaps I'm wrong, but I think too much fuss is made over state tax regimes and labor costs. These variables do a lousy job of explaining the rise of the Sun Belt and the decline of the Rust Belt. Fueling the predominant wisdom is a poor understanding of history. The struggles of manufacturing centers began long before Southern states crafted more favorable terms to lure industry. Globalization was also late to the party transforming American economic geography. But that doesn't absolve high taxes and unionization of playing a major role in accelerating the demise of manufacturing.

A holiday week spent in my hometown, Monroeville, Ala., gave me a close-up view of those problems, brought on by globalization. Like many Southern towns, Monroeville, never wealthy, survived on textile manufacturing. Now, most of those jobs have shut down or shipped out. And they're not coming back.

Some of my high school classmates who used to work in textiles exist on low-wage jobs such as elder care, waiting for their Social Security eligibility. (They would have been better off with the option to buy into Medicare, a proposal Sen. Joe Lieberman killed off in the health-care reform debate.) Others have tried to upgrade their skills by taking courses at the local community college, but the job landscape still looks bleak, even after they've learned word-processing.

Workers like those in Monroeville - bypassed by the information revolution, washed up on the shoals of globalization - languish all over the country, whether in big cities like Detroit or rural outposts. Getting them back on their feet will take imagination and resolve - the willingness of the political class to take some risks and to concentrate on more than the needs of the moneyed interests that back their campaigns.

Bankrupt Birmingham is located in Alabama, a right-to-work state. Tennessee also has this distinction and is home to recovering industrial-dependent Chattanooga. Both the South and the North experienced an implosion of the manufacturing sector. Supposedly better state policies in the Sun Belt didn't save any of those places from this fate. Why would it work magic in Pennsylvania for Erie?

In the face of globalization, states seem increasingly impotent. I suspect that most people, including the politicians, don't understand the forces at work. I see a number of parallels with the brain drain issue. There is a poor accounting of the current situation. Ideological thinking dominates political discourse and policy suffers as a result.

During the 1980s, deregulation was the economic dogma of choice. The states with the least rules and lowest taxes should win. That's not how it played out. If your city was saddled with high legacy costs, then state policy didn't matter. Just so happens that the Rust Belt had (still has) a lot more of those cities than the Sun Belt did.

You can find the same economic geography within regions concerning the urban core and suburban periphery. Essentially, Americans have moved from brownfields to greenfields. When the unit of analysis is state, that trend gets lost in the data noise. Yet despite these residential relocations, wealth is increasingly concentrated in the city center where taxes and labor costs are often highest.

Other than win the climate lottery (we'll see how long that lasts, Florida), I don't know what Sun Belt states did that was so great as to earn the fortune that moved south over the last few decades.

1 comment:

Mark Arsenal said...

Florida's very cold right now...