THE RED AND THE BLUE part 2: THE ECONOMICS

I’ve been chewing on Matthew Yglesias’ comment about ‘the heartland’ for a while.
Here’s Matthew:

I think it’s fine that salt of the earth types often feel put off and excluded by the elitism of some highbrow liberals, but does anyone in Middle America need to put up with this sort of direct abuse from the top leaders of the Democratic Party? Of course not. And we on the coasts get it all the time, from Bush’s cracks about “sucking salt air” and “swilling white wine on Martha’s Vineyard” on down. Frankly, I’m getting a bit sick and tired of it. We’re Americans just like everyone else. We work, we pay the bulk of the taxes that support the government’s generous subsidization of rural life, we obey the law, we’re good citizens, what’s the problem? I can’t help but feel that there’s a hint of racism in the sentiment that the “real” America is the part least reflective of our nation’s grand diversity, and there’s far more than a hint of truly asinine anti-intellectualism in it.

Now as I read this, Matthew is simply suggesting that the coastal elites…and make no mistake, they are elites, based on income, wealth, and influence…just be considered one voice in the pluralist choir of American politics.
Now the reality is that Trent Lott is just as much a member of the coastal elite as anyone. When he retires from the Senate, he will most likely, as do most Washington officials, keep a house in Mississippi, but make his home in New York or Washington where he can capitalize on his connections.
But he (Lott) is trying to appeal to the interests of the non-“coastal elite” folks, who for the most part feel not only excluded from the majority of the national dialog, but explicitly threatened by the economic and social policies promoted by the coastal elites.
The leading policy issues here are globalization and immigration. Now before you accuse me of becoming Pat Buchanan (ack!), I’m not necessarily against either one. I personally benefit from both. But that’s tempered in me by the knowledge that the people who are hammered hard by both of those are the people in the red states, the blue- and pink- collar people, the people who I always believed the Democratic party stood for.
Look, I know that as a society, we’re better off if we can buy our jeans for $3.00 less. And poorer people benefit disproportionately. And that even if I didn’t believe this, that there is nothing you can really do about it; we can’t saw our economy off from the rest of the world. So instead we push the folks standing on the edge off, and explain to them that they are now in competition with not only Mexico, but with China.
Take a look at this article from the L.A. Times magazine this weekend.

The plant was shut in June, one of six Levi plant closures that left the San Francisco apparel giant with just a tiny U.S. manufacturing presence–a plant in San Antonio, Texas, devoted to quick turn-around products that have deadlines overseas plants can’t meet. At the end, the Blue Ridge workers stood in small knots, tossed about by a maelstrom of emotions. Some were in shock. Some muttered that they would never again wear Levi clothing. Most worried about the future. Brenda Pope was one of those.
Blue Ridge is a town of nearly 2,000 in north Georgia, just south of the Tennessee and North Carolina lines. Blue-green hills rise sharply a few miles south of town and provide a gateway to the Appalachians, gaining loveliness as they gain height. Residents are mostly Scots-Irish, descendants of the hard-edged people who broke the Cherokees, and then broke the soil. Today, many here, like Pope, are working poor.
Measured against what most of us feel we need, the 44-year-old single mother asked little. She wanted to live among familiar pines and trustworthy people, create value with her hands and raise her child in the old ways. She did not think she needed a college degree to do these things. She was right, until she made the mistake of pricing herself out of the labor market–a feat accomplished by earning $14 per hour putting zippers in Levi’s famous blue jeans.
When Levi moved Pope’s job out of the country, she became one of hundreds of thousands of American workers who have lost jobs during the past six decades as the garment industry seeks lower wages in underdeveloped countries. In that context, the decision to close the Blue Ridge plant was hardly unusual. Levi had clung to its last U.S. manufacturing plants long after most of its competitors had fled.

Sure, the economists can explain, we can migrate the workforce to higher-wage, higher-skill jobs…like computer programming.
Except that I’m working today on a project where the vendor has a staff of 15 (entirely Indian immigrants) here, and a staff of 45 in Calcutta. There are five management personnel working with the vendor. So we five are gonna be OK. It’s the programmers and system analysts who thought they had the world knocked up who suddenly have to look over their shoulders the way the Brenda Popes of the country do.
Look, it’s simple. The income gap is real, and is caused by two things: a decline on the middle and bottom caused by both the rising productivity of the automated manufacturing and service economy (we used to talk about this in the 50’s and 60’s, remember?) and the increasing irrelevance of distance as communication and transportation make everywhere in the world close to everywhere else. And an increase on the top as the miracle of compound interest adds to the wealth of those who have investable assets (yes, even after the crash).
And what that means is simple. We will have five managers, who all get to be in the top 5% on the income spectrum, and we will manage folks who now have to compete with Bangalore, Kowloon, and Manila, as well as with North Carolina and Texas. And we’ll wait our turn to face that fierce competition as the top .5%, who control the organizations we all work for, increasingly try and find ways to cut costs (they have no choice, as Levi’s had no choice).
Others can talk with greater exactitude about the long-term economic effects of this.
But what I can point to is a collective feeling of anxiety, of irrelevance, sometimes of naked fear that reaches from the top of the working class to the bottom. I see it in my friends. Sometimes I feel it myself.
Neither the Republicans or the Democrats have any meaningful policy response to it. Each party is so deeply in hock to the .5% that any policy that would challenge the “markets” would never get out of the conference room where it was proposed. And the reality is that we can’t fight the markets.
But we on the coasts…we folks who make their living creating and managing intellectual and financial capital…get the benefits of low prices and have less to fear.
We get the low-wage nannies that let us work and raise our kids, and the cheap jeans that let us fashionably clothe them, and the low-wage help that lets us get inexpensive dinners when we take the family out.
The folks in the hinterlands…in the 909 here in Southern California…just would rather have a chance to be more than nannies and servers. They’re trying to climb a wage and class ladder that’s sinking underneath them.
Now the Republicans can get all Nativist, and appeal to patriotic symbols, and to social issues (about which more later), and stand on their belief in a strong defense and low taxes. And the Folks (Kevin Starr calls the Midwestern immigrants to California ‘the Folks’) like strong defense and low taxes (someone needs to point out that they aren’t necessarily getting the benefit of the low taxes…but that’s just me channeling Ann Salisbury).
What have the Democrats got?

4 thoughts on “THE RED AND THE BLUE part 2: THE ECONOMICS”

  1. Toast the Coast

    I’m alternately riled & fascinated by this post from Armed Liberal. No, not riled AT A.L., just riled in general. Check it out and come back. I’ll wait. Back? OK.

  2. Dear AL
    It’s going to be hard to solve these domestic problems when we will be called upon to save Western Civilization. This morning’s Manchester Guardian had an article about Arab Malcolm X (Abou Jahjah)who is a leader of the Belgium Arabs and active in the Arab European League. His comments are a warning shot across our bow. Historically as we move toward a crisis of cultural conflict of this kind (According to Thomas Freidman of NYT, we are just one more 9/11 away from the storm) domestic issues take the way back burner. We may have to wait for the next post war era to even think about such things as Red/Blue ecomonic disparities.

  3. Hey, I’m a coastal resident (born and raised in Seattle) and I can’t stand the coastal elites. But for me it has less to do with complicated economic issues, and more to do with the open contempt they proudly display for the “red states.”
    Attacks on “redneck gun owners,” cracks about sincere conservative Christians, and a general contempt for a simple, unpretentious way of life piss me off. I really have to wonder if the cultural rift isn’t more important than all the worry about computer programmers in Bombay. Here in Washington, the farmers in the eastern half of the state are more excited about the ban on leg-hold traps than about Indian tech workers.

  4. As Paul Krugman has pointed out, international trade isn’t what’s keeping wages low (like in your heartland example); back of the envelope calculations show the net result to effectively be zero.

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