Saturday, September 01, 2012

Rust Belt Chic Pueblo

There are a bunch of Rust Belt cities outside the Belt. These post-industrial archipelagos are a thorn in the sides of libertarians arguing for lower taxes and right to work legislation. A city's dependence on coal for manufacturing is a better predictor:

We followed the intuition of Chinitz (1961), who argues that industries dependent upon mineral and coal deposits, like steel, involve large companies that create executives, not entrepreneurs. We use the presence of mineral and coal deposits in 1900 to provide us with variation in the level of resource-intensive industries. These deposits are associated with larger establishment sizes and lower birth employment shares in the 1960s and onwards. Using this spatial proximity for instruments, we continue to …nd a signi…cant link between our measures of entrepreneurship and urban employment growth.

The big concern with this variable is that it is quite plausibly correlated with aspects of the local economy other than entrepreneurship, such as manufacturing decline. We tried to control for these factors with city-level variables, region …xed e¤ects, and so on, but we recognize that our measures are far from perfect. We focused then on industries that were not directly related to mining, and on industries that were highly concentrated spatially, which suggests that they do not depend on a local market. We also focused on warmer cities, which should be less sensitive to the decline of the Rust Belt, and we modeled city growth projections. Our core results remain unchanged.

Emphasis added. Path dependency, not state policy, calls the tune. Sorry, Indiana. That also means you'll find Rust Belt culture in unexpected places. Óxido Correa Chic Pueblo:

In some respects, Pueblo is like a pint-sized Rust Belt city. It's a steel town that was once more prominent than it is today with strong ties to the Old World -- something that's still obvious when you visit Pueblo's Italian and Slovenian bakeries and markets.

The town's Arkansas River served as the U.S.-Mexico border in the mid-1800s, and Pueblo was a prime Colorado business center before the decline of the American steel industry in the 1970s and '80s resulted in tough economic times.

With that sort of rise and fall, it's easy to see parallels to the Rust Belt's past. But those similarities evaporate when you consider Pueblo's most famous food item -- the Pueblo green chile pepper.

Emphasis added. I respectfully disagree. Green chile is a different Rust Belt Chic accent, the spice of choice for working class food. Anthony Bourdain is salivating thinking about the mash-up with Slovenian cuisine. Spain is part of the old world, too. Don't sleep on Portugal and the blue collar ethos found in Southeastern New England. The cultural connection is global, "Символы нового мира. Чем унитаз лучше больной души."


Jardinero1 said...

You state a dichotomy where there isn't one and impute beliefs on others where they don't exist. "Libertarians" are not an homogeneous mob who all believe the same thing.

This libertarian agrees with you that path dependence is a critical factor, but so is location and state policy. Labor laws and tax policy can either hurt or harm economic growth regardless of the path followed, depending on how they are structured.

Jim Russell said...

I was referring to libertarian think tanks, not all libertarians. The arguments advanced in favor of right to work are weak, at best. At worst, they demonstrate a fundamental misunderstanding of economic geography.

Jardinero1 said...

Cool blog, by the way, I found you via New Geography and New Geography via Houston Strategies.