Thursday, June 19, 2014

The backwards South is moving backward

It's strange and pathetic how the today's Southern states promotes themselves to businesses and investors as a kind of third-world enclave within the United States -- not only low-tax but also low-wage, and of course no unions.

Maybe that strategy is OK for Bangladesh, but touting oneself as low-wage is not a long-term winning strategy for the US of A.  Lower wages and incomes mean a lower tax base, leading to poorer schools, less infrastructure and hence weaker long-term economic growth.

Indeed, the poorest and most miserable U.S. states are located in the South.

By Nelson Lichtenstein
June 18, 2014 | Reuters

We used to call it the “New South.” That was the era after Reconstruction and before the Civil Rights laws — when the states of the old Confederacy seemed most determined to preserve a social and economic order that encouraged low-wage industrialization as they fought to maintain Jim Crow.

What was then distinctive about the South had almost as much to do with economic inequality as racial segregation. Between roughly 1877 and 1965, the region was marked by low-wages, little government, short lives and lousy health — not just for African-Americans but for white workers and farmers.

The Civil Rights revolution and the rise of an economically dynamic Sun Belt in the 1970s and ‘80s seemed to end that oppressive and insular era. The Research Triangle in North Carolina, for example, has more in common with California’s Silicon Valley than with Rust Belt manufacturing. The distinctive American region known as the South had truly begun to vanish.

This is the thesis of economic historian Gavin Wright’s new book on the economic consequences of the civil rights revolution,Sharing the Prize. Ending segregation, Wright argues, improved the economic and social status of both white and black workers The South became far less distinctive as wages and government-provided benefits increased to roughly the national level.

But the New South has returned with a vengeance, led by a ruling white caste now putting in place policies likely to create a vast economic and social gap between most Southern states and those in the North, upper Midwest and Pacific region. As in the late 19th century, the Southern elite appears to believe that the only way their region can persuade companies to relocate there is by taking the low road: keeping wages down and social benefits skimpy. They seem to regard any trade union as the vanguard of a Northern army of occupation.  

Exhibit A is the refusal of every Southern state except Kentucky and Arkansas to expand Medicaid under the Affordable Care Act. Senator David Vitter (R-La.), running to replace Bobby Jindal as Louisiana’s governor, made headlines Monday when he announced he would consider adopting the Medicaid expansion.

In 2012 the Supreme Court gave states the right to back out of this part of Obamacare. The South rushed to take this opportunity — despite the loss of billions in federal dollars. Now 5 million poor Southerners are consigned to health insurance purgatory

The Republican Party as a whole has made opposition to Obamacare virtually a fetish. But outside the South, Republican governors from Arizona and Nevada in the West to Iowa, Ohio, and New Jersey further East, have seen the economic logic and social utility of taking the federal money. After the 2014 elections, when Democrats look likely to oust Republicans from statehouses in Pennsylvania and Maine, those states will do the same. 

Southern states also keep wages low by neglecting to raise their state minimum wage standards. In the North and West, a movement to dramatically increase wages — to $10, $12 or even $15 dollars an hour — has caught fire. Seattle just mandated a $15 minimum wage that will kick in over the next few years.

Today 21 states have raised minimum wages higher than that of the federal standard of $7.25 an hour. But only two of these states, Missouri and Florida, border on the South.  As in the New South era, when textile factories were enticed to flee the North for the low-wage Piedmont region, Southern states now trumpet not just low taxes and an absence of trade unions, but low wages.

Although Oklahoma joined the Union in 1907, it immediately joined the ranks of the Jim Crow South with its strong segregation and anti-union policies. This continues today. In April, for example, when Oklahoma City residents sought to put a municipal wage increase on the November ballot, the state legislature quickly enacted a law banning any city or town from raising the local minimum wage or requiring that employees have a right to sick days or vacation, either paid or unpaid.

Of course, such regressive social policies, including voting rights limitations, are supported by a fierce white partisanship. The solid South has returned in full force. Black voters there are overwhelmingly Democratic, whites of almost every income level equally determined to vote Republican.

The presence of an African-American in the White House plays a large role in this racial-political polarization on the ground in Dixie. But not even Southern-born white Democrats, like former President Bill Clinton and former Vice President Al Gore, have been able to transcend this Southern partisanship. Despite for their cultural affinities and Southern accents, they could not persuade Southern whites to vote Democratic.

This is, however, not just a product of racial fears and resentments. Instead it appears to reflect an increasingly inbred Southern hostility to the exercise of economic regulatory power on virtually any level.  As in the 19th century, many in the South, including a considerable proportion of the white working-class, have been persuaded that the federal government is their enemy.   

As in the New South era, Southern whites, both elite and plebian, have adopted an insular and defensive posture toward the rest of the nation and toward newcomers in their own region. Echoing the Jim Crow election laws promulgated by Southern states at the turn of the 20th century, the new wave of 21st century voting restrictions promise to sharply curb the Southern franchise, white, black, and brown.

The new New South rejects not only the cosmopolitanism of a multiracial, religiously pluralist society, but the legitimacy of government, both federal and state, that seeks to ameliorate the poverty and inequality that has been a hallmark of Southern distinctiveness for more than two centuries.

The Civil War has yet to be won.

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