Writing in Bloomberg View, Noah Smith offers Four Ways to Help the Midwest, prompting Brad DeLong to go off on a bit of a tangent, musing about “Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns” (aka “the Human Condition”), causing Paul Krugman to muse on the rather pithier subject, “What Do Trump Voters Want?”.
Not to keep you in too much suspense, but none of Noah’s four ideas—pump up the infrastructure, pump up the universities, provide “how to” assistance to new businesses (as if that hasn’t been done before), and make old manufacturing cities more attractive to the “creative class”—impress me as winners—and fat chance with the last one in particular.
Moving on to Brad, well, I didn’t quite lumber all the way through his lugubrious lucubrations, so I skipped to the end and found Brad endorsing Noah’s four-point plan, even though what he largely, and sourly, said beforehand largely contradicted what Noah had to say, because what Brad largely and sourly said beforehand was largely, and bitterly, to slam the good white folks of the Great Lakes states for voting for Donald Trump. The problem is, those folks just haven’t wrapped their heads around the fact that “Polanyian disruption of patterns of life” is just freakin’ inevitable, and the smart man learns to roll with it. Which is to say, when your $20+ an hour Carrier job disappears, you roll with it. You don’t manically insist that you have some sort of inner virtue that entitles you to a $20+ an hour job, come Hell or high water. You take a $10 an hour job and accept the Earned Income Tax Credit and maybe go on Food Stamps and Medicaid. You don’t look down on government programs as fit only for “those [i.e., black] people.”
Brad, I fear, is a little overly pissed at the world, leading to a summing up in three largely leaden bullet points:
• no, none of us is worth what we are paid.
• we are all living, to various extents, off of the dividends from our societal capital
• those of us who are doing especially well are those of us who have managed to luck into situations in which we have market power—in which the resources we control are (a) scarce, (b) hard to replicate quickly, and © help produce things that rich people have a serious jones for right now.
Well, I don’t think it’s quite the case that all of us are in the business of selling what rich people want to buy. Most of us are not employed making Benzes1 and Beemers and Coach bags and Cartiers.2 I think that, given a fairly demanding list of “ifs”—if you are reasonably intelligent, reasonably educated, know what you’re doing (the hardest part, usually), and live in an area with a healthy economy, you will be worth what you’re paid, economically at least. As for morals, ability to appreciate the “finer things”, etc., which la-di-da folks like Brad and myself often pride ourselves on, well, that’s another story.3
The hard part for Great Lakes folks—most of them, anyway—is the last. Noah thinks we shouldn’t ask them to move:
“Nor should we simply encourage Midwesterners to move to more vibrant regions. As economist and writer Adam Ozimek has noted, many people can’t easily abandon the place where they grew up, where their friends and family are, and where they often own homes.”
Well, yes, we should. Americans left the farms for the factories, and now they should be leaving the factories for the jobs in the “new industries”.4 We should make it easy to transfer eligibility for social programs from one state to another, and we should eliminate the myriads of NIMBY provisions that inhibit housing development in the growing coastal areas, which is to say that California and New York should become more like Texas when it comes to land-use policies. When the U.S. had an effective monopoly on the infrastructure and skills to operate efficient, modern manufacturing, the Great Lakes states flourished. That monopoly no longer exists, and there is no economic reason for a high-wage industrial economy to flourish in those states. The fabled Carrier jobs that Trump “saved” are a relic of an era when unions could extract monopoly wages from companies that could themselves impose monopoly prices on consumers who had no choice.5 Now consumers have a choice. Companies that charge monopoly prices, or pay monopoly wages, will go out of business. Carrier, of course, can afford to pay $20 an hour for what are effectively $10 an hour jobs to 1,000 employees to avoid the wrath of Trump. But this cost will surely be covered somewhere within Carrier; another 1,000 employees, slated to lose their jobs in five years’ time, will lose them in four instead. Big whup!
I am as disappointed as Noah, Brad, and Paul6 combined that so many people voted for Trump’s xenophobic bullshit, but I (obviously) don’t think that we can revitalize the Midwest.
Afterwords
As lots and lots of people have pointed out, it is automation, not wicked trade policies, that are causing the majority of job losses in the Midwest. But as automation, and productivity, increase, those who have jobs should get richer, right? But that hasn’t happened, and that’s where foreign competition is causing the shoe to pinch (a lot). So where is the money (or value) going? To consumers, in large part, in the form of better products and lower prices, and to employees of companies in other countries that are now competitive with the U.S., but also to “the bosses”. You can make a lot more money selling in a market of 2 billion, rather than 200 million, particularly when production costs keep falling. These are the realities, but if you were making $20 an hour when you were 20 and are making $10 an hour now that you’re 40, these economic realities don’t make a lot of sense to you. The other hand, if you’re a worker in Mexico or China, and now you’re making $30 a day instead of $5, it makes a whole lot of sense.
What did Obama/Clinton do “wrong” in the Midwest? Not that much, really, but there were a few things. I’ve often argued that ObamaCare was a bridge too far, particularly when compounded by the disastrous, and entirely avoidable rollout, and by the decision to force insurers to provide only “good” (i.e., costly) plans, which led to both a good deal of presidential deceit (“If you like your plan, you can keep it”) and embarrassing premium increases, which always seemed to arrive at politically inopportune times. The Democrats’ “War on Coal” was a bad idea. Better to let the beast die a natural death. Obama should have bitten the bullet and approved the Keystone XL Pipeline and let the environmentalists go hang (particularly since the pipeline didn’t actually, you know, pollute). Unfortunately, environmentalists are numerous, rich, and easily offended. And Democrats should have stayed “smart” (i.e., silent) on gun control.
- Whoa! Word can spell “Benzes”! What the fuck! Maybe we are all working for the rich folks! ↩︎
- According to Word, “Cartiers” is not a word. Is Bill strictly a Rolex guy? Or is he too rich to wear a watch in the first place? “I’m Bill Gates! I don’t need to know what time it is!” ↩︎
- I “appreciate” Charlie Parker’s “A Night in Tunisia” break, particularly the Massey Hall version, a lot! Have I ever gotten a dime for it? No! ↩︎
- This is, of course, already happening, and has been happening since the dawn of the Industrial Revolution—this is the “Polanyian disruption” that Brad is talking about. One reason for the bitterness of the Trump vote (and the Sanders vote) was the sense that “we” are being left behind. It’s my fairly obvious East Coast elitist bias that the Great Lakes glory years are over. (Karl Polanyi was an Austro-Hungarian economic historian, author of The Great Transformation, a “socialist” work that, to a very large extent, attacked the Industrial Revolution and the emergence of the market economy—events that, to my mind, were necessary to free 90% of humankind from lives of almost blind drudgery, fulfilling the promise that socialism could not keep. Polanyi wrote The Great Transformation at Bennington College in Vermont. Coincidence? Perhaps not.) ↩︎
- It is, if anything, too much of an irony that Carrier makes air conditioners, which make it easier to bear hot summers than cold winters. The father of a friend of my mother’s was a bricklayer in Chicago before WWII. If you grew up in DC like I did, a Chicago summer isn’t much, particularly compared to a Chicago winter, but he feared the summer more. “You can come in from the cold. You can’t come from the heat.” Ten years ago, at a conference in California, a young man told me why he’d moved from Massachusetts to Arizona: “You can’t come in from the cold.” ↩︎
- I kind of forgot about Paul, who introduced me to the conversation. He ably summarizes Brad, without all the Polanyi palaver. (Ha! Ha!) ↩︎
