A Red Dixiecrat Dawn?
Published on: March 15, 2011
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  • I wonder if the task of keeping this country “on the cutting edge of human progress” is even one-half the real challenge we face. It may be that the other half is keeping (our notions of) human progress on another cutting edge: that of understanding the complexities of human need, and respecting the dignity of human beings, whatever their level of intelligence or entrepreneurial energy. I even suspect this rather old-fashioned sort of wisdom may involve – such an unmodern word! – something like greater mercy towards our natural human slowness, and fear of regimentation, and tendency to become overwhelmed and depressed in the face of environments of unrelenting complexity (even as we adapt to them “succcessfully” – but at what costs?)It would be a great shame if, in blithely assuming that all progress is unidirectional, we ended up choosing a direction that set us on a course of slow-boiling disaster. And what happens when you over-adapt to a particular model of efficiency – like, say, that of early-18th-century English plantation slavery? A model that is itself so poorly adapted to the requirements of human decency and morality? Notice how those requirements keep coming up on us, like a badly-digested meal, however hard we try to swallow them. But at the time (c. 1700) it all seemed so efficient, so inevitable, so cutting-edge!

  • WigWag

    Mead makes some interesting points, but ultimately I think his post is unconvincing. He claims that both “coaster” capitalism and “catch-up” capitalism are ultimately doomed and that the United States is marching towards a better day when a new form of capitalism emerges that takes advantage of our social and cultural strengths; the problem is that while he cites evidence for the demise of the “Blue State” model he cites no evidence at all that a putative new model will replace it. To make matters worse, he responds to the request for details with this disingenuous statement,

    “As many readers on the blog have pointed out, when I write about the post-blue world I don’t offer a detailed picture about what it will look like. That’s inherent in the nature of the changes we have to make: discontinuous change driven by unpredictable technological innovation is where it’s at. I will try to write more on this subject in future posts, but one can no more expect anybody to produce a map of our future world than Queen Isabella could have asked Christopher Columbus for a detailed map of the Americas before sending him on his first voyage.”

    Mead misses the point; no one is asking for a detailed roadmap. But if Mead is going to suggest that the demise of the “Blue State model” will lead anywhere other than to a “race for the bottom,” a less prosperous America for most of its citizens, and a nation where blue states look more like red states, then shouldn’t he provide a hint about what direction he thinks we’re moving in?

    Are his statements about American cultural and social capital, the need to do more with less and the generalized need for more small enterprises really anything more than a profession of faith? Considering how insistent he is about hard facts and rigorous analysis about, for example, the case for man-made climate change, shouldn’t Mead himself be held to a higher standard than he shows us here? If there’s to be a paradigm shift and the likely emergence of a new form of capitalism instead of a race to a poorer America, aren’t we entitled to at least a little evidence?

    The only thing I see evidence of, is blue states trying to recapitulate the policies of their less successful and poorer red state cousins. Blue states are abandoning union protections, they’re reducing marginal tax rates, their offering major tax incentives to lure employers (many of them foreign) and they’re reducing the social safety net; I agree with Mead-for the most part, they have no choice. But the likelihood that this will lead to greater prosperity for most of their citizens (which, after all, is the point, isn’t it?) seems very remote.

    Mead makes the point that red states have largely caught up with blue states in terms of per-capita GDP; this is deceptive. A significant portion of the collective improvement in red state GDP comes from red states with oil and gas wealth. Obviously these states are benefiting from high energy prices that look like they will be sustained. Remove states like Texas from the equation and the collective economic strength of the red states looks significantly less impressive.

    But even if you take Professor Mead’s statistics at face value, the idea that red states are 90 percent as wealthy as the blue states should encourage no one. Throughout American history, Americans have collectively become wealthier not poorer. Any wholesale adoption by the blue states of the red state model that moves those blue states in the direction of becoming poorer not wealthier is hardly a reason to celebrate.

    America will not be stronger or a more potent force in the world when New York more closely resembles South Carolina or Massachusetts more closely resembles Mississippi, America will be weaker and less influential. Mead’s argument that the south was always poor is also unconvincing. While the north may never have been quite as poor as the south, after World War II, the blue state model catapulted millions of Americans into the Middle Class. I just think that Mead’s implication that tens of thousands of clerks working at Walmarts throughout the south are as upwardly mobile as their blue state cousins once were, just doesn’t cut it.

  • Peter

    “The policies associated with red state economics aren’t the cause of Southern poverty; they are if anything associated with its cure.”

    Amen.

    As for the blue state model, much of government employement was really welfare for the less ambitious and/less talented of the white middle class.

    Blacks were eventually allowed onto the government employement gravy train for the political support they could lend to the system.

  • Mike M.

    “A significant portion of the collective improvement in red state GDP comes from red states with oil and gas wealth.”

    You say this as though it is a bad thing, but I say that this is how true wealth is and has always been created: by production and resource development. How do you think China has undergone its explosive economic growth in the last 10-20 years?

    I could retort that a significant portion of collective blue state development in recent decades has come from Wall Street and banking shenanigans like the creation of fraudulent, manipulative financial instruments designed to exploit the truly productive sectors of society. Is being in the oil and gas business somehow truly less noble than the business of creating phony asset bubbles like mortgage backed securities? Blue staters really need to get off their high horses and look at the beam in their own eyes before pointing out the motes in the eyes of others.

  • West

    Dr. Mead-
    I like your essay, as someone who lives a few miles from the headquarters of the world’s largest company, Walmart, I would point out two things. First, I don’t work for Walmart or a supplier, but you can’t live in Northwest Arkansas and not learn a lot about its history and how it works.
    You did not say this, but one could read your essay to imply that those big companies in the South were lured down here. Walmart and, to name just one other big Southern company in a very different sector, Bank of America are homegrown. The catch-up strategy didn’t just ‘steal’ others wealth, it created new new business models that were more successful than the old ones. That leads to the second point, exactly why did Walmart become the biggest company in the world? It identified underserved markets (rural America, initially) and relentlessly squeezed the waste and inefficiency out of its system and its suppliers. This did not and will not make it popular in lots of places. It did make it successful and made a lot of money for shareholders in Walmart and its suppliers, while giving lots of customers what they wanted at a great price. Seems like a metaphor for the new social model you are talking about.

  • WigWag

    “Both regions are going to need a new growth strategy — one that is likely to depend on new enterprises and small business rather than on established industries.” (Walter Russell Mead)

    I think that Walter Russell Mead gets it half right; he’s accurately identified the fact that the Blue State Model is in serious trouble, but he misses the boat on the implications of this reality. Even worse, although Mead takes heart from the historical success of the English speaking world in molding ever changing capitalist dynamics to its advantage, Mead is basing his optimism on the wrong historical period. Mead’s magnificent book “God and Gold: Great Britain, America and the Making of the Modern World” outlines how English speakers from the time of the Glorious Revolution onward have used their unique cultural advantages, their focus on sea power (Great Britain and the United States are both, to some extent, island nations although the American island is a continent) and the flexibility inherent in their political and economic systems to successfully navigate the currents and eddies of an evolving capitalistic system. This gives Mead great confidence that the Americans will be able to pull a rabbit out of a hat once again.

    I think Mead should look elsewhere for his precedents. The system that we are all moving towards, a universal Red State model, has been tried before; all we need to do is look at the United States before the New Deal to see the outlines of the future that it presents.

    What are the major characteristics of the Red State model?

    The answer is in the history books. Unregulated or lightly regulated capitalism; loose environmental standards; few worker protections; a hostility to collective bargaining and unions; low marginal tax rates, a nonexistent or barely extant social safety net and the unremitting worship of “free markets” all characterized the American economy for much of American history.

    The history books also tell us what this form of capitalism produced; a non-existent or tiny middle class, periodic economic depressions (as opposed to mere recessions), massive bank failures where ordinary people lost everything, workers immolated in horrible workplace fires (the 100th anniversary of the Triangle Shirtwaist fire is ten days from today) and massive inequalities of wealth.

    The blue states largely escaped that bleak history by dramatically regulating capitalism; the nation as a whole did the same. The failure of the red states to follow suit resulted in their continued impoverishment. Despite Mead’s claim that the red states have caught up, the red states still trail the blue states in virtually every development parameter you can think of.

    Mead is also mistaken in citing nations like Spain, Greece, Portugal and Ireland as the most important and dramatic examples of the failure of closely regulated capitalism and he is mistaken in suggesting that the experience of those nations necessarily foreshadows the inevitable demise of the Blue State model in the United States.

    While several European nations have certainly spent themselves into economic oblivion, it is also true that many nations including Brazil and much of South America have thrived in the past decade by specifically rejecting major tenets of the Red State model. When these nations rejected the advice of the IMF, refused to privatize much of their economic infrastructures, decided not to eviscerate their social safety nets and decided not to lower marginal tax rates to the benefit of the wealthy and foreign investors, these nations saw their economic performance skyrocket.

    At no point since World War II has economic growth in South America been as vigorous as it is now; many of these nations have leftist governments and most if not all have eschewed a largely unregulated form of capitalism.

    The same can be said of China which has experienced massive economic growth at the same time that it manipulates its currency, places major barriers to imports, is spending massively on infrastructure and is expanding its social safety next albeit slowly. Blue staters would happily see their government copy the system that is producing such rapid economic development in South America and China.

    While this may not be their intention, those who long for the demise of the Blue State model are also rooting for the demise of American greatness. It is no accident that the ascendency of the Blue State model and the ascendency of the United States to superpower status largely occurred simultaneously.

    Had the United States as a whole followed the failed economic strategy of the red states it never could have afforded the largest and most powerful navy in the world; it never could have defeated the Soviet Union and the Warsaw Pact in the Cold War and it never could have rescued the world economy during the Clinton Administration when Russia, Argentina and much of Asia imploded.

    It’s not that Mead doesn’t have a point. As I think he mentioned in another recent post, Joseph Schumpeter’s concept of “creative destruction” is certainly about to be played out in the public sector. There’s no question that this will squeeze inefficiencies out of services provided by the government and it will surely result in winners as well as losers.

    But Professor Mead still hasn’t explained to us why, as a society, we will be better off when government workers are paid like store clerks in Walmart. Nor has he explained to us how when college professors, lawyers, doctors, accountants and yes, school teachers lose their jobs and have to beg to stock shelves at Walmart and Target, America will be richer and stronger for it.

    Mead can engage in all the wishful thinking he wants to; in fact its charming. But the evidence points to a far bleaker future than the one he presents. The demise of the Blue State model might very well mean the demise of America’s greatness.

    Well, at least that should make the Iranians and Chinese happy. Why it would make an American happy is very hard to understand.

  • “Is being in the oil and gas business somehow truly less noble than the business of creating phony asset bubbles like mortgage backed securities?”

    There’s no doubt – at least to my mind – that oil and gas production are far more noble avocations than creating phony asset bubbles like mortgage-backed securities. At the same time I’m not sure that the original poster’s intention was to contrast present “blue state” and “red state” models of development, much less to tout the moral superiority of some asset-bubble-driven blue state development “path.” If anything – and I welcome his correction here – I understood him as contrasting present models, both blue and red, with past ones: – say, those that might have prevailed during the 20 years following World War II. On the other hand, if the past two decades’ “explosive economic growth” of mainland China (as distinct from, say, the South Korean, Taiwanese and Hong Kong experiences) is any kind of harbinger of where the world MUST GO TO REMAIN EFFICIENT – well, I don’t know. But in that event, I can’t help thinking that not only democracy, but most civil liberties as we’ve known them are not long for this world. And I think I’m speaking for many others besides myself when I say that, for all the nobility of the post-Red Chinese model, I’d much prefer to wallow in my natural state of ignobility.

    But then I keep forgetting, Early 21st-Century Progress is not so much about Choice as it is about the unflinching recognition of Necessity (where in Hegel’s name have I heard that before?). And with it, perhaps, the regretful embracing of the brutalities that must sometimes accompany it? The godlike Chinese certainly haven’t flinched from them. Anyhow, that’s what scares me. Of course let’s be reasonably optimistic about the future by all means. But for the sake of everything recognizably human, let’s try not to make a religion or a cult of it. And especially the kind of optimism that tends to make us extremely pessimistic about certain others of our species. Here I’m thinking in particular of those unfortunate souls who do not – or cannot? – meet our present (and possibly shortsighted) standards of talent, ambition and productivity.

    That’s why I keep suspecting that the real task involves not just “bracing for progress,” important as that may be. It may also require a careful , quiet – I almost want to say ruminative – reexamination of what we mean by Progress, and what we want from it. So that – just maybe – we might choose a path of Progress that is also individually and humanly sustainable, as distinct from our present one that seems largely in the business of sustaining the longevity and health of organizations. Assuming, of course, that anyone can still find the time.

  • Luke Lea

    It’s true that New England suffered considerable pain over a generation when its textile and shoe industries started moving South. But it was hard to complain considering we were all part of one nation, the population of the South was but a third of the North’s, and wages in the South were “only” half of those in the South. A third times a half implies a one-sixth adjustment in the language of comparative statics. Other things being equal a 16 percent decrease in wages over the course of a generation would be painful but not the end of the world.

    But suppose now that the South had been four times as populous as the North and wages here were only a tenth of wages in the North. That would imply a 97.5 percent decline in wages in the North before equilibrium were established between the two regions.

    That should give you some historical perspective.

    But suppose the South had been ten times as populous as the North and wages here (where I live) were only a tenth of wages in the North.

  • Luke Lea

    Somebody please correct my math on that previous post. I don’t have a pencil handy.

  • Luke Lea

    Ok, I found a pencil. According to my recalculation wages would only have to fall 72 percent in the North to make everyone equal. But then I was thinking of only one country, China — which, last I checked, was not a state in the Union, or even a democracy.

    “Let’s you and him share.” Is that what you are trying to tell your fellow citizens, Walt?

  • Luke Lea

    “Whatever the future looks like, it’s not about returning to Dogpatch, USA”

    I wouldn’t be so sure. When I drove from Tennessee to Ohio to take my daughter to college a couple of years ago I kept remarking that it looked more like we were going south than north. The roads were in worse repair, the restroom in the gas stations filthy, there were more Get Right With God signs along the highway, I even saw a Confederate flag painted on the tin roof of a barn. Is this really the road we want to be headed down?

    Listen, Walter, there’s a right way and a wrong way to play God in this world. I know our cosmopolitan liberals think free trade in a lopsided world is the right way to go, even if it does necessarily cause distress in the home country. But did you know that’s not what the trade textbooks say? They say the right way is to compensate the losers out of the winnings of the winners. That way everyone gains from trade and there is no danger of a backlash.

    The losers here, by the way, are ordinary working people all across the board. That’s because China’s (and other poor countries’) comparative advantage lies in its relative abundance of low-wage labor.

    When you look at the order of magnitudes of the adjustments involved (my post above) you’ll see why I say if we ignore the principle of compensation we are headed for disaster: destabilization of the new global economy, enormous human suffering both here and abroad, possible world war.

    Why don’t you have a look at Paul Samuelson’s paper on “Protection and Real Wages.” Whatever you do don’t ask an economist. They are about as reliable as climate scientists nowadays.

  • Michael Kaplan

    Prof. Mead

    You write: “Before the Civil War a relative handful of Dixie planters were fabulously wealthy, while most whites eked out a hardscrabble living on small farms back among the hills and piney woods: Dogpatch, USA.” I think you overlook an important social group in the Antebellum South: the white yeoman class. These were the independent small farmers who Thomas Jefferson called the backbone of the republic. As a social group they were in between the planter class and the piney woods folk, and were in fact numerically the largest group of Southern whites. Most of them owned no slaves, or at most fewer than five.

    The yeoman farmers (many of whom were of Scots-Irish origins) were, of course, the Jacksonian folk community and the populist base of Jacksonian Democracy in the South. Like all Jacksonians they valued self-sufficiency. Their farms, usually of 50 to 200 acres, were worked by family members, and they generally grew food crops like corn, sweet potatoes, and oats, raised hogs, and sometimes grew some cotton for extra cash. The King Cotton economy of the Antebellum South was actually quite beneficial to the yeoman class, allowing them to attain self-sufficiency with a modest profit. It was not beneficial, of course, to the slaves. This was perhaps a major reason why the yeoman class, for the most part, supported the planter-led Confederacy during the Civil War. General Sherman wrote a perceptive analysis the sociology of the South in 1863.

    http://books.google.com/books?lr=&id=pbQ9AAAAYAAJ&q=recognize+the+classes#v=snippet&q=recognize%20the%20classes&f=false

    It was the devastation wrought by the Civil War and Reconstruction that destroyed the yeoman class and reduced previously independent farmers to sharecroppers. This, along with the pro-Northern economic policies you mentioned, transformed the South into the impoverished Third World basket case you wrote of growing up in. And this led, despite a last gasp with the Populist movement, to a 100-year eclipse of Jacksonian America.

  • “I wonder if the task of keeping this country “on the cutting edge of human progress” is even one-half the real challenge we face. It may be that the other half is keeping (our notions of) human progress on another cutting edge: that of understanding the complexities of human need, and respecting the dignity of human beings, whatever their level of intelligence or entrepreneurial energy.”

    Well said, J.R. Yankovic.

    Now let’s consider something Mead wrote about “deploying America’s greatest social and cultural strengths to keep this country on the cutting edge of human progress.

    Right now that means learning to restructure government so that adequate services can be delivered more efficiently. Soon it will be about restructuring our education and health systems so that American productivity in these services amazes the world.”

    As a thought experiment, imagine we achieve perfect efficiency in the delivery of government services, education, and healthcare, i.e., it is all done automatically, with computers and technology and minimum of human labor. Is our problem solved? Why will the effect be any better, or different, than the effect of labor-saving technology in manufacturing, retail and wholesale trade, communications, etc.?

    The fact that less labor is required to satisfy all our material human needs means less labor must be employed to those purposes. The quantity of labor is measured in man hours. Thus either people will work fewer hours in the day and the week and devote more time to their families, friends, churches, and communities, or else they will continue to work 40 or now 50 and even 60 hours a week providing services to wealthy persons who employ them: as gardeners, personal trainers, cooks, house cleaners, drivers, shoppers, au pairs, butlers, caterers, decorators, pool attendants, pilots, personal craftsmen, designers, etc.

    In other words the choice is between being servants to a new privileged class or being free men and women who produce for the market part-time and spend the rest of their time the way I describe here: http://facingzionwards.blogspot.com/

  • Dracovert

    I do not recall ever having a serious disagreement with any WRM position, but this article appears to be incomplete at best.

    “Both regions are going to need a new growth strategy — one that is likely to depend on new enterprises and small business rather than on established industries.”

    Most job growth has always come from small entrepreneurial businesses. The growth rate varies with the tax and regulatory climate. When LBJ passed the War on Poverty and began taking an average of $220 billion (that amount was once considered to be a lot of money) per year out of the economy plus imposing other anti-business regulatory measures and taxes, the DOW flat-lined for seventeen years (1965-1983) with three major recessions, including the Carter Catastrophe. Carter expressed the idea that the end of American growth and supremacy was at hand, and it would be best to seek an accommodation with the Soviet Union.

    Reagan limited taxes and regulations and the economy took off like a rocket, creating the world’s strongest and richest economy until the disastrous Dot.com Bubble rose and popped during the Clinton years. The NASDAQ lost $2.5 trillion dollars before Clinton left office, but the real damage was not evident until after the DOW started down in the closing weeks of the Clinton Administration. The Clinton Surplus peaked at $236 billion dollars in 2001, but with NASDAQ and the DOW plunging, many more trillions were soon taken out of the economy and the Clinton Recession added $3 trillion to the national debt. This is a very typical pattern when economic bubbles burst.

    Bush took prompt corrective action to lower taxes and reduce regulations, and the effects of the Clinton Recession were minimized. By late 2003, growth resumed and jobs and markets hit new highs before the Democrat’s Calamitous Housing Bubble hit in 2007. Now the Democrats seem hell-bent to raise new costs and new expensive regulations that will further burden the economy and limit growth. USA corporate tax rates are now 34.6%, the highest in the OECD, while the average corporate tax rate for OECD countries is 18.7%, according to economist Greg Mankiw. When all our industries have moved overseas and taken our jobs with them, who will remain to pay the Democrats’ increasing tax burdens, just the entitlement recipients?

    Democrats have proclaimed and celebrated the death of capitalism every time they have created major increases in entitlement programs or otherwise mismanaged the economy. I defy you to explain how creating vast entitlement programs or promoting huge economic bubbles has anything to do with capitalism. On the contrary, this is government-mandated waste and foolishness at best, or a slavish copying of the Marxist economic model at worst.

    So I question that a “new growth strategy” is required, since WRM’s new growth strategy is identical to the “new enterprises and small business” entrepreneurial model that worked exceedingly well for Reagan and Bush. The Kaufman Foundation argues that ALL net new jobs are created by entrepreneurial start-ups, but that would include Microsoft and Google as well as millions of smaller operations. This is consistent with the creative destruction model; as older firms mature and stagnate, new firms with new ideas charge to the fore.

  • “The Kaufman Foundation argues that ALL net new jobs are created by entrepreneurial start-ups”

    The issue, as always, is about wages not jobs. If wages go low enough you can always create additional jobs until you run out of people who are able to work, including children and old folks. Right now a surprising number of parents with children to support hold down two and three jobs, working 60 and 70 hours a week. That’s not progress my friend, though it is the direction we are headed.

    It’s obvious to me that Walt knows nothing about economics if he imagines improvements in efficiency are going to solve our problems. Improvements in efficiency are constantly taking place (watch Modern Marvels) and there is no question they have the power to make everyone better off. But only if the fruits of efficiency are shared. Otherwise they lead to greater inequality.

    Study the move to the eight-hour day in relation to improvements in efficiency in agriculture and industry in the late 19th century and tell me this didn’t have a lot to do with the prosperity of working class people in the post-World War II era. Employers fought tooth and nail against the end of child labor and legislation regulating wages and hours. They argued such rules interfered with freedom of contract, which of course they did. As would legislation regulating trade and immigration.

    A purely libertarian philosophy, while intellectually satisfying perhaps, is as inhuman in its practical consequences as the idea of a centrally planned economy.

  • Jim.

    “It is no accident that the ascendancy of the Blue State model and the ascendancy of the United States to superpower status largely occurred simultaneously.”

    Perfectly right– but you have the cause and effect entirely reversed.

    The fact is, the Blue Social Model is a hothouse flower that could only thrive “with European and Japanese industry in ruins after World War Two and most of the Third World not yet able to attract capital for manufacturing”.

    The inequalities you need to look at are not inequalities between Red states and Blue states, but inequalities between 1st world and 3rd world workers — because (barring a major war) those inequalities are likely to disappear within two generations if not one.

    So if you like the Blue model — export it to China!

    What would a world look like, where 3rd worlders and 1st worlders made the same wages? Well, the only thing that might be scary about it is if we fail to find enough resources to pour into the system. If we turn our backs on cheap energy in the form of fossil fuels or nuclear power, or if we turn our backs on extraction industries that the Greens consider too “dirty” to pursue.

    Or, the game-changer that Mead’s looking for might be a real start at exploiting the resources out there for the taking in space. I’ll let you know how that goes. =)

  • Mike M.

    I would argue that the ascendancy of America to superpower status took place well before the ascendancy of the Blue State model.

    World War II may have officially cemented our status as the world’s preeminent nation, but America was already well on the way to being an empire-building global superpower when we whipped the Spanish in the late 19th century.

  • David Billington

    I concur with most of WigWag’s points. I don’t think oil and gas is as important in Texas as it once was. I would also say that Dr. Mead’s analysis has more to do with a social science lens than with a conservative bent, although a political slant in either direction gets in the way here.

    Government facilitated but did not create the great private industries of the twentieth century, and small business (ie. businesses that stayed small) had nothing to do with this industrial growth and its associated jobs. To understand the present, we need to see the rise and decline of major industries in terms of three stages:

    1. From 1876 to about 1913, private innovators conceived radically new ideas for industry, launched them with small amounts of private capital, and created huge industries mainly in cities that attracted people from farms in the south and farms in other countries. Consumption relative to investment was lower than it is today but the great industries did not depend on this difference. It was engineering that created the economics, not vice versa. For consumers, these industries were the Walmarts of their day, with Standard Oil slashing the price of kerosene and Ford slashing the price of cars.

    2. After 1920, massive new private industrial formation fell, and America began to embrace the view that more incremental innovation in existing industries, along with public works spending, would continue the industrial revolution. Republicans planned the major New Deal engineering projects in the 1920s and Democrats carried them out. By the 1950s, most Americans identified big business, big government, and big labor as the permanent state of modern society, and the question was how to balance the three and make society more inclusive of those still disadvantaged.

    3. After about 1970, existing private industries went into decline (after relying on incremental innovation for several decades) and public spending on infrastructure and defense began to fall. Faced with declining revenues, Reagan raised taxes after initially cutting them, and in 1994 Republicans swept into office determined to reduce the deficit. The boom of the 1990s temporarily balanced revenues; but the prosperity, and the prosperity of 2001-07, were largely asset bubbles. The nature of investment shifted from creating industry to creating exit strategies. Technology changed from physically radical scale changes (eg. replacing a rural society with an urban one) to micro-scale advances in information processing. Automation of white collar work is likely to be the next big result. The question about the next recovery is whether an underlying trends will continue, hidden behind another asset bubble.

    The red state and blue state models are really attempts to make the 1950s and 1960s into baselines, when in fact they were stages of industrial deceleration. That said, some countries have clearly done better than others at managing the trajectory. China is not a good model – it prospers because it is at an earlier stage of industrial rise, not because it has a different political economy. Canada has a mature economy like ours but avoided the real estate and financial disasters that overwhelmed our country.

    We need to understand how the wealth and income producing industries of the last century began and how they decelerated before foreign competition became serious in the late twentieth century. None of the ideological left-right arguments explain this or point to solutions that amount to more than returning to an earlier stage of decline. We need to understand more about our first industrial revolution, if we are to learn what we shouldn’t have taken for granted and what we can do to assure a better outcome if we are fortunate enough to have another one.

  • Dracovert

    Luke –

    “The issue, as always, is about wages not jobs.”

    Do you really believe that statement, when we have effectively 17% unemployment, are $14 trillion in debt, and when Japanese car manufacturers can produce quality cars more cheaply in Japan and in the United States than Detroit can? Every unemployed worker does not stop eating just because he lost his job. Every unemployed worker is a burden within the economy and in the community, and I am not accusing unemployed workers of blame or wrongdoing, having been there. But everyone at least must sustain and support himself or else become a burden on others, further reducing the growth of the economy.

    When others can produce satisfactory goods more cheaply than Americans can, what possible incentive can anyone, American or foreign, have to pay more than necessary? Altruism in support of our fellow Americans has its limits. The solution is to keep ahead of the curve in technology and innovation, but the union thugs in Madison don’t want that and the Democrats are deliberately dumbing-down the workforce, an in Dayton, putting the local citizens at risk to satisfy blatantly racist goals.

    Nor do I believe that confiscatory taxation on the wealthy solves any problems. You have a share of the wealth that Microsoft has created, and how well you utilize those tools is up to you. If entrepreneurs do not create wealth, there will soon be no wealth to be shared. Unless you are prepared to invent another Internet, or Microsoft, or Google, you are exactly where you ought to be, successwise. We will have a tremendous burden in cleaning up the Democrats’ destruction of the school systems but it should be obvious by now that more and more taxpayer money produces less and less educational results, so that is a starting point for the clean-up.

    “But only if the fruits of efficiency are shared. Otherwise they lead to greater inequality.”

    Well, yes. That is the Marxist philosophy exactly. The by-products and unintended consequences of the Marxist model are operational inefficiency and institutional corruption, death and destruction. I defy you to show me where it has ever been otherwise. Now we are seeing it in the USA, just as Northern Europe has recognized the error of their ways and turned to our rule-of-law, free-market, capitalist system.

    The other problem with the Marxist model is that sharing the wealth requires forced redistribution of the wealth that others have created, and Marxist have this uncanny knack for taking the biggest slice of the redistribution pie for themselves. For all the hard work that they do, I suppose. Giggle. Snicker. Tee-hee. HAR, HAR, HAR,

  • willigl

    From the viewpoint of a non-white, the article and its responders seem to write singularly from the views of the “white-eyes”, as the native peoples of this country used to call them. Its also interesting to read in their writing the new language of white supremacy (version 2.0.1). Read the true story of what Andrew Jackson did!

    I was in Miami during the height of the housing debacle and saw first hand what the banks were doing to the real estate. Was that red state or blue state?

    The black southerners will likely be waltzed back into slavery; 21st century version (following chattel slavery, Jim Crow, and sharecropping; those “progressive” forms of white supremacy, versions 1.8 and 1.9).

    Reflect for a moment on the deep hatred of Obama found throughout the South today. That hatred is un-shakeable despite his accomplishments. It is the life-blood of Republican strategies.

    For those non-white liberals who look to government as “Big Brother”; it was government law that enforced the privileges of what de Tocqueville described as the “tyrannical majority” in the United States.

    My Dad was a railroad worker in Missouri in my youth. He was on the ‘Colored’ union rolls and all workers on that roll were laid off before any white would be laid off. Unions, like the Democratic Party turn to non-whites in times of need.

    Read de Tocqueville; his view of the map forward for this country is still among the best. Read also H.L. Mencken, whose view of the South (old and new) is among the best.

    The non-whites of the South are too comfortable in their religion and their “educated ignorance” to help themselves. Their “education” and advancement brought us Clarence Thomas (who made the “W” presidency possible), and Condi who went shopping for new shoes while her people drowned like rats in New Orleans.

    Russell sounds like some of the old slave masters who “got religion” as they became feeble, and begged the slaves for “forgiveness”.

    This country will be on the right road when all citizens and the media stop asserting that they alone are “Americans” (ignoring the rest of both continents); and that “the American People” refers only to whites.

    I counseled a black scholarship applicant who informed me that Florida plans its prison bed construction based on the number of black males who fail the national tests in 3rd grade. That’s the face of the “new” red states.

  • steve

    Where to start? First, what state did the Triangle Shirtwaist Factory fire occur? Don’t believe it was a red state.

    As for the “whiteness” of this article, what is up with that? We are all supposed to be Americans, not some discrete, hyphenated subgroup. I was no fan of George W. Bush, but what was Condi supposed to do during Katrina? She was Secretary of State. Her portfolio was international diplomacy. Last time I checked it took 5 justices to form a majority on the Supreme Court. Clarence Thomas is an outspoken conservative, was appointed by a Republican president, and has a long and consistent record on the Court as one of its most conservative members. I would argue with the whole premise that was Bush v. Gore. A Court given to federalism and avoiding wading into state matters, reached out to find federal issues to stop the Florida recount and effectively end the 2000 presidential election. It was politics pure and simple. Five Republicans won out over 4 Democrats.

    As for what banks were doing in real estate in Miami, and everywhere else for that matter, was predicated upon the disastrous expansion of the Community Reinvestment Act, which occurred in 1999, with Clinton as President and the Republicans controlling Congress. While the original 1977 version of the bill was well-intentioned, its aim being to overcome red-lining, the later incarnation caused catastrophe. It helped birth the subprime mortgage market. This was the result of a law that allowed organizations like ACORN and others to shake down banks and force them to make risky loans to low-income applicants, especially those in minority communities. Those loans were given to people based on racial and ethnic background, poverty level. Used to be that those who couldn’t pay their bills or wouldn’t; once that insanity started you didn’t have to prove creditworthiness or even employment in some circumstances. This is a prime example of government intervention that went very wrong.

  • ashwin, sacramento

    I may be suffering from warped reasoning and comparison, but as I read the essay and then the comments it struck to me that there is a lot of blame that is placed n the distribution of reconstruction post civil war. Is it not true that a bunch of formally confederate states did not want any handouts. They being proud.
    And is it not true that todays Southern Governors are rejecting federal dollars for infrastructure and education investment ( also politely* called stimulus funds).

    And in the end, are we not, but one nation/

  • Greg

    The poverty (obesity, vagrancy, most serious crime, and even litter) rates are tied to demographics. It isn’t hard to notice that Mississippi, South Crolina, and Lousiana usually rank (in that order) in the same way that their negro proportions come in. The author ignores that, but he is hardly alone. It is the great Taboo. Whenever we get around to the “discussion on race” that one hears so much about, maybe we can take that up?
    In the meantime, without honestly broaching the race factor, how complete is the debate about the differences between the state models?

    • Walter Russell Mead

      It is not clear to me why Greg thinks nobody ever talks about the problems of Black America or about the poor conditions affecting Blacks in the South. That these problems are real and that they are not easy to solve is surely one of the most widely accepted truths in American life.

  • ron

    The north is imploding….

  • Aaron

    This whole analysis is flawed. The red state/blue state construct is a 1990s/2000s construct. The author, Mr. Mead, premises his whole analysis on it. That is not the right way to think about it, especially when using more than a century of history to try and make a point. Red/blue doesn’t tell us anything about the past because red/blue was different then, particularly in the Gilded Age/Progressive era when there were populists, socialists, Bull moose parties running around.

    There is considerable variation in the “blue states” Such as: Massachusetts lost most of its manufacturing base decades ago. It transitioned to higher tech fields and was spared the worst of the housing bubble and unemployment crisis. In New England as a whole, unemployment was less of a problem. That economy is very different from that of the upper midwestern “blue states.” Even among those… Minnesota’s unemployment is less than its neighbors.

    There is also considerable variation in the “red” states. South Carolina’s situation is very different from Oklahoma’s.

    43 states, blue AND red, are having budget problems now, mostly because they depend so much on sales taxes, and basically everyone now believes that the rich should not be taxed according to what they can afford. Instead they hope the rich will trickle their wealth down on all of us. A trillion or so of wealth was lost in 2008-09 and many lost their jobs. Of course sales receipts are going to be down.

    Witness Texas: its budget crisis is 2nd only to California’s in size and scope, despite spending less per capita on its citizens than any other state and being so “business friendly.” The ultimate red state is in just as bad shape as the ultimate blue state.

  • WigWag

    “Where to start? First, what state did the Triangle Shirtwaist Factory fire occur? Don’t believe it was a red state.” (Steve at March 17, 2011 at 1:16 am)

    The Triangle Shirtwaist fire took place in 1911 in New York City (the building actually still exists-it is right off Washington Square Park and is owned by NYU); there were no “Blue” states then. What Mead refers to as the “Blue State Model” was largely born of the New Deal which didn’t begin for at least two more decades.

    The fire caused the deaths of 146 women; they were immolated because the managers had locked the doors to the stairwells and exits. While the fire was particularly horrendous, the working conditions that the women who worked for the Triangle Shirtwaist Company labored under were not unique. Mine workers in, for example, West Virginia labored under similarly deplorable conditions. The rise of trade unionism was a direct result of the terrible and life-threatening working conditions and exploitation that many ordinary workers faced. It is doubtful that the reforms put in place by Franklin Roosevelt could ever have been politically viable but for the rise of the trade union movement.

    Some states like New York went on to become relatively wealthy as they became more heavily unionized and as the Blue State model took over; other states like West Virginia did not. But all of the states that resisted the Blue State model remained poor and backwards for quite a long time.

    Although many of these Red States partially caught up with their Blue State cousins by poaching jobs in much the same way that China is poaching American jobs now, Professor Mead has exaggerated how much the economies of the Red States have caught up with the economies of the Blue States.

    There are numerous development indicators that economists and demographers use to rank regions by economic achievement. Amongst the parameters examined are per capita GDP, literacy, life expectancy, divorce rates, percentage of the population with four year college degrees and many others. Collectively, the Blue states have an overwhelming edge when measured against Red States in every single one of these parameters.

    I hope Mead’s optimism is well-placed; it would be great if some new form of capitalism based on disintermediation or other factors that characterize the modern world resulted in increased prosperity for all Americans. But so far, in his posts on the subject, I think Mead has provided us with little more than blind-faith that somehow American ingenuity will get it all figured out.

    My guess is that we seeing something much more threatening to American prosperity; a race to the bottom where America’s successful Blue States come to resemble America’s failed or partially failed states; the Red States.

    While the Blue States are facing an urgent crisis, Red States aren’t doing particularly well either. And in the current climate, the relative strength of Blue State economies versus Red State economies doesn’t appear to be changing all that much.

    In both Blue States and Red States, a tiny sliver of the American population is thriving while a significant majority of Americans are facing economic stagnation. Ironically, this was one of the original motivations behind the trade union movement and it is more than a coincidence that as unions have lost power over the past 30 years, income inequality has gotten worse and real income growth for most Americans has disappeared.

    How long will it be before the tiny sliver of the American population that is prospering, seeks once again to lock the rest of their fellow Americans behind bolted factory doors metaphorically if not literally?

    It seems to me that any objective review of the data would have to suggest that the process of bolting the doors has already started.

    Will the United States continue to be the most powerful nation in the world when a few percentage of Americans who work in the financial and high tech industries own an ever-increasing share of the national wealth while the best everyone else can hope for are the wages paid to clerks by Walmart or hamburger-flippers by McDonalds?

  • willigl

    Settle down, Steve:

    Condi was a key member of the “W” administration who traveled around the world, at our expense, advertising how well a black southerner was doing; and how much better “white America” was doing. For Pete Sake! She could have at least taken a stand, like Colin, against the stack of bull that administration was racking up. Colin was guilty of some of the same crap, but at least he had the decency to resign after lying to the world for that bunch. Clarence gave his vote away to Scalia right away — everybody knows that by now.

    As for the real-estate debacle that administration left us with, lets find the numbers, by race and color, of those who were caught in the mess! To blame this on Acorn is some of the racist crap the Republicans have been pushing. Show me an Acorn member who created and sold mortgage backed derivatives.

    We are all “Americans” in that we are citizens of the Americas, North and South. We should represent ourselves, more fairly and accurately, as citizens of the United States of America. I’m sure the rest of the people in this hemisphere would appreciate that.

    Oh, and please explain to me why banks were forced to grant loans to people of any color who were not credit-worthy? Give me a break!

  • hamidog

    That’s really funny! This moron is equating the south with third world countries! You wanna see some third world countries within our own borders? Places with festering poverty, listlessness, poor education, high death rates among infants and youths, unemployment, etc? Check out: Detroit, Chicago, Washington D.C., Philadelphia, New York, Boston, Los Angeles … get the picture?! By the way, I’m a Yankee who has lived in the south for extended periods. I’ve heard some real ignorant northerners refer to the south as “stupid”. Look in a mirror, why don’t you?

  • INTJ

    Even Mark Twain showed the struggle with explaining to people the difference between “wages” and “buying power.” As he said in A Connecticut Yankee in King Arthur’s Court, “What those people valued was high wages; it didn’t seem to be a matter of any consequence to them whether the high wages would buy anything or not.”

    Any discussion, he was saying, of relative prosperity which does not include an adjustment for higher cost of living, including, for example, taxes and union dues in many “blue” states vs. “red” states, is simply put, worthless, as anyone who has lived for any length of time in those red states and seen the dramatically positive economic changes over the last several generations ought to be able to attest. Similarly, life expectancy figures absent an analysis of common racial health factors or other significant variables – one does assume, for example, that Southern food, traditionally higher in fats and sugars, may indeed contribute to lower life expectancy, especially as its population no longer works it off in the field – cannot possible hold any meaning in a comparison of health care.

    This discussion may have merit. However, this article does not really explore it, if it does.

  • steve

    I know that the Triangle Shirtwaist Factory fire took place in NYC. My point in that was pointing out the false North-South dichotomy that was being drawn. Feudalistic business practices were just as prevalent in the North as in the South, just the economically disadvantaged differed. In the South, the marginalized were mostly the descendants of Scots-Irish and English. In the North, the groups tended toward recent Irish, Jewish, Polish,Italian and other southern European immigrants.

    I would also disagree with some of your assertions about unionism. Most of my life I have lived in or near the Appalachian coalfields. The coal miners I have known mostly worked at union mines. When I was a teenager in the 1980s, there were few non-union mining operations around. Over the years the rate of union membership dropped, but wages have continued to get better in that industry. Unions serve a purpose, but the mining industry in this region would have died if the excesses of the UMWA would have been allowed to continue. Some of the same complaints about state workers in Wisconsin could have been made about union miners during the late 1970s and early 1980s. Pensions and medical benefits costs and work rules were becoming unsustainable and many mining operations ceased to exist. Virginia and Kentucky have right-to-work laws and that helped the trend of non-union mines to grow. West Virginia has somewhat liberalized its shop, but it is not truly right-to-work. It is better than before when it was a closed union shop, some industries in WV still do feature the closed shop.

    One thing is clear from recent history: the neoliberal model of economics has triumphed both here at home and abroad. The greatest priority for this country is to make that work for us as a nation. That will obviously entail educational and vocational training reforms, a reimagining of the labor-management paradigm and changing entitlements to become more affordable and self-sustaining.

    That is a tall order and will be difficult to accomplish. It will require leadership that is not beholden to ideas from the past on either side of the political spectrum. We need common sense in Washington that pragmatically solves problems, not operates from some predetermined ideological viewpoint. The last two presidents have been very much wedded to ideology. One seemed to worship the market as the solution to every problem. The other seemed to worship the government and the Ivy League as the be-all and end-all. Both have obviously been wrong. Let’s hope the next president bridges that gap in both word and DEED.

  • David Billington

    Wigwag – Regarding blue state vs. red state solutions, perhaps one needs to draw a line against relatively worse options, but I wonder if these differences are as far as we can usefully go in public debate.

    If you listen to the 2005 panel chaired by Norman Augustine, it is clear that key business leaders were and are concerned about where the country is heading. They don’t have the complete answer themselves but they know that we need better answers than the ones we’ve had.

    If blue state economies are nearly as unsustainable as red state ones in most of the country, then the question should be what to do about this underlying reality.

  • Nicholas Sackett

    Don’t buy into the same old hype based upon averages. If the schools in the South are so poor why do so many people more there.

    Wisconsin is rated 2nd in education.
    Texas is rated 47thth in education.
    But when you peel away the layers of averages it turns out that TEXAS does better than WISCONSIN everyday!

    See http://iowahawk.typepad.com/iowahawk/2011/03/longhorns-17-badgers-1.html

    Why would so many people move South when wages are only 90%. Let me tell you why – I make the same money I made in Washington, DC, but the PRICES (home, repairs, gasoline etc.) are much lower here. TO focus on only incomes and not prices is to miss half the story.

    Nicholas Sackett

  • I think probably the Western model is really what we need right now, the model of small business oriented states with low taxes, light regulation (usually) and well developed natural resources and transportation lines. Among the keys to this model is a state capitol that is friendly to new, starting business, local governance that makes goodboyism and intrigue increasingly difficult, and a less NIMBYistic America more respectful towards property rights.

    Also, no subsidies, for anyone, at any time. Allowing existing population centers and industries to die helps regenerate something that is otherwise gone forever, namely open territory.

    There are frontiers left to expand in to, especially Northern Canada, Alaska, and parts of the South Pacific like Palau and Wake Island, and when we’re finished with these maybe we’ll be ready for outer space.

  • Tom Holsinger

    The South had political and economic policies in place from the Jim Crow era through the Great Depression which were intended to, and did, maintain local elites in power at the expense of economic growth, because the latter necessarily entailed change and social mobility.

    Race was used not merely to keep blacks down, but to keep poor and middle class whites from threatening the political power of Southern white elites. Look at the history of the poll tax in Florida and Georgia. Race was the excuse. It was really about the power of local elites to keep everybody else down.

    Pressure from returning veterans of World War Two started to break this long-standing stasis, and the not-coincidental Civil Rights era and state legislative reapportionment decisions of the Supreme Court ended it entirely.

    The importance of the 1960’s US Supreme Court reapportionment decisions is often overlooked. IMO it was critical both in reviving the South and saving the federal system. National economic growth would have been much retarded had the states’ political power (and freedom to experiment) been centralized in the federal government due to state government paralysis from malapportionment.

    These political changes allowed major Southern public investments in labor force skills/capital, transportation, etc., which along with removal of government barriers to private economic activity made its economic boom possible. IMO it was much less a matter of federal spending in the South as it was of removing shackles imposed by local Southern elites on economic activity and public investments in labor force productivity.

    Somewhat later the Blue State model started increasing private transaction costs with consequent adverse effects on economic growth in those areas.

    Mr. Mead, I repeat that IMO you have significantly underestimated the adverse economic effects of Blue State model publicly imposed costs on private rransactions.

  • Thomas Paine

    Dear Author,

    I hope you’re merely engaging in yellow journalism, and don’t actually believe your own “statistics” and theory of causality.

    Because if you do, you need to go back to school.

    Rather than elaborate (I’m too busy), I’ll simply point out your use of simple averages does nothing to adjust for demographics, etc as correlated variables (as I was taught in grad school); that, and link in a deconstruction of a similar FALSE COMPARISON.

    http://iowahawk.typepad.com/iowahawk/2011/03/longhorns-17-badgers-1.html

    Study hard. Have a good day.

  • jason rogers

    The ONLY reason missssippi or south carolina were 49th and 50th was the blacks scores..FACT! And now california is 50th,dragged down by its hispanic illegals.So quit blaming whites with your obvious dixiecrat reference…we have the brains! Check the scores by race,hite southernersare always above national norms.

  • WigWag

    “If blue state economies are nearly as unsustainable as red state ones in most of the country, then the question should be what to do about this underlying reality.” (David Billington)

    Actually, the etiology of what you call the “underlying reality,” David, isn’t all that mysterious; the single factor undermining the Blue State model more than any other is the dramatically escalating cost of Medicaid and other health care provided by state and local governments.

    In New York State, Medicaid costs represent 25 percent of the state budget and other health care costs add a few additional percentage points onto that. Over the past decade, Medicaid costs in New York have escalated at a rate of between 6 and 10 percent per year.

    In Massachusetts, spending on Medicaid and other health programs account for 37 percent of the state budget; as in New York, costs have been escalating rapidly for years.

    But for the rapidly escalating costs of providing medical care, the Blue State model would be entirely affordable and the crisis that the Blue States currently face would be far less severe and in some Blue states, nonexistent.

    Indigent and elderly Medicaid recipients in states like New York and Massachusetts get marginally adequate care; indigent and elderly Medicaid recipients in states like South Carolina or Mississippi get care that is abominably poor.

    What Professor Mead and others routinely and mistakenly characterize as the unsustainability of the Blue state model should more accurately be described as something else; the unsustainability of the American system of health care.

    Not only does the hybrid American system of government run and privately managed health insurance provide inferior results, it is bankrupting the country. Fix the crisis in health care and many of the problems of the American economy, especially Blue state governments melt away.

    In fact, there is no crisis in the Blue state model but there is a crisis in health care costs that those who have always opposed the New Deal now wish to take advantage of.

    Whether it is good politics over the long run remains to be seen. Clearly those who discount the fact that the rise in health care costs trumps all the other supposed problems of the Blue state model have a fundamental misunderstanding of the real issue.

  • Scott Riley

    It takes a studious ignorance of history, and of reality itself, for someone to assert the superiority of the Blue States.

    The Blue States resemble, if anything, late Imperial Rome. Still great in terms of large buildings and “cultural” breads and circuses, but an inch below the surface, there is little but decay. They’re bankrupt, broke, dysfunctional, factionalized, and living on the final thin residue of ebbing greatness.

    Take a train ride through Chicago, and you will see 25 straight *miles* of nothing but war-zone-like crud. Ditto with New York, and, more and more, the same may be said of Los Angeles. And one does not see a stampede of talented people heading for Philly or Boston, either.

    Cities like Detroit and St. Louis and Cleveland have been run on blue-state principles for generations–and have progressively shriveled. Is this just coincidence?

    Behold, these are the great wonders of Blue State America.

    If the Blue States were so great, the last two generations would not have seen a colossal net migration out of the Blue States. This fact is, I’d say, the final, dispositive verdict.

    The Blue State Model is terminally ill, and only a fool would close his eyes to the evidence and deny it.

  • Alexander

    I did not realize that Arkansas was part of the Confederacy. Maybe that makes the whole article bogus.

    • Walter Russell Mead

      @Alexander: or perhaps it just means that you don’t know as much as you think you do about Civil War history… Arkansas seceded from the Union in May of 1861.

  • David Billington

    Wigwag – Sorry if I was unclear, but I was talking about economies, not state budgets. Budgets are relative to the tax base, which (even in the blue state model) is relative to the robustness of economic conditions.

    You are certainly right to note the rise in health costs. I’m not sure the increase in overall Medicare and Medicaid spending over what it was in the 1960s is greater than the decrease in the cost of national defense since then.

    The trend in health spending is what is worrisome and I agree that health care needs reform. But I’m sure you would agree that cutting aid to the poor is not the answer to the underlying economic problem. If the economy continues to decline, even reduced health care spending will become unsustainable.

  • Aaron

    http://en.wikipedia.org/wiki/List_of_U.S._states_by_unemployment_rate

    http://www.stateline.org/live/ViewPage.action?siteNodeId=136&languageId=1&contentId=15158

    The above links are state rankings of unemployment and budget gaps (deficits). You’ll see the top 10 of both lists includes red AND blue states, governed by democrats AND republicans.

    All red states ARE NOT better off than all blue states. And then there’s the problem of how we should classify some of them? Nevada? Run by republicans but voted for Obama in 08. Top of the list in both.

    When you get down to it, red/blue state “models” are meaningless. Almost all states are having very serious problems.

    • Walter Russell Mead

      @Aaron: the post does not say that red states are doing well and blue states are having problems. It says that while southern states have significantly narrowed the wealth gap in recent decades, the whole United States needs to adopt new approaches because neither model is working.

  • Brien Cronin

    How’s this for a new model.

    Produce something of value.
    Buy what Americans produce.
    Seal our borders.

  • I have to say, stumbling onto this article and then the blog has been a breath of fresh air. The ideas and rebuttals have been cogent and well thought out. I hesitated on whether to express my own reaction to the article, because it might lower the the IQ level of the discussion. Seriously, the give and take has been refreshing when compared to the typical attack and respond nature of most blogs.

    That said, I am a native Northener, conservative, enterprenuer, and small businessman, and have been literally since I was 8 selling Grit newspapers.

    I printed out a small sticker and placed it on my rear view mirror years ago that says “Be the solution” to remind me that my success is wholly dependent on my efforts and willingness to innovate. I must regularly reinvent myself to remain competitive, and cutting edge.

    What I gleaned from Professor Meads’ article is much more simplistic than who, how, where, and when. The Souths’ rugged individualism, distrust of anything having to do with “Gubment” in my opinion has served them well. As I stated earlier, I am a Northern enterprenuer. A bit of an conundrum, because you have to be a little off kilter to try and compete in heavily regulated states like Michigan.

    I have done business in the South many times and while yes they may make less money, the trade off seems worth it to me. When you put God and Family first the need for vast sums of wealth just don’t seem to matter as much. The Right to wake up each morning and determine one’s own success and future is worth more than Gold or Silver. I don’t see the statistical gaps from my front porch. I see a need for all of us to take a step back and reorganize our priorities. Yes I need medical care and I pay for it mostly out of pocket with a major medical policy to back it up. I don’t need a college degree to prove I can do my job, I just need to work harder than my peers. Besides, I can get all the information I need, without paying $850 a credit hour to have some pencil neck geek tell me my job when he has never had one in the real world.

    The answer to where we will end up is simple. We will end up exactly where we make up our individual and collective minds to be, and the individual has always been at the forefront. Sam Walton, Bill Gates, Ray Kroc, et al didn’t wait for the collective to decide, they were going to to try it anyway. In fact the collective told them “No Way”!

    We in Michigan as well as other “Northern States” are just waking up to the fact that the only way to financial salvation is through the individual, freed from reglulatory hell, hungry and imaginative.

    If each one of us were to “Be the Solution” the discussion here would be quite different. It would sure beat the “Be the Problem” society we have created from our intransigence, and fear of failure.

    Capitalism, without free market entreprenuership, gives us what we have today. Financial slavery of the many to the few. Some really smart famous guy once said, “A rising tide lifts all ships”. Another one said, “You can’t expect your ship to come in, if you never sent one out”.

    That, in a nutshell, explains the situation we find ourselves in, today. We have built seawalls to control the tide and regulated the shipbuilders out of business. Tear down the walls, shred the regulations, and the dreamers will wake up and save this economy.

  • “learning to restructure government so that adequate services can be delivered more efficiently.”

    From here in the antipodes this expatriate can see a large piece of ice with its nose buried deep in the Titanic of the US economy. Heath care running at 16% or more of GDP. Australia supports BOTH a private and universal public health care system on 8.5% of GDP. Can you say ‘cartel’ boys and girls? And I read today that the SEC is considering charging Fannie and Freddie execs while another government agency is defending them, but that in any case the exec’s legal fees will be paid by the taxpayer. Can you say ‘cartel’ girls and boys? I am seeing those political cartoons from the anti trust era depicting outsize octopi strangling the US economy. I think we need to euthanize the cartels before they euthanize us.

  • “I have done business in the South many times and while yes they may make less money, the trade off seems worth it to me. When you put God and Family first the need for vast sums of wealth just don’t seem to matter as much. The Right to wake up each morning and determine one’s own success and future is worth more than Gold or Silver.”

    Eric, I have little doubt that that is an extremely fair description of most hard-working “rank-and-file” Southerners. What I question is whether certain higher-placed individuals, who may command a great deal of influence in both business and government, feel the same way about the limited satisfactions of “vast sums of wealth.” I also question whether these concentrations of individuals are found thinner on the ground in Red State capitals – or other Big Important Places – than in Blue State ones. Neither are they necessarily ALL parasites or hangers-on. Some may be not only quite self-reliantly ambitious, but fiercely eager to bring out the best in themselves and others – regardless, sometimes, of whether those “others” like it or not. Indeed, they may be folks so much in a hurry to get certain Big Things Done, that they’ve lost track of how many corners they’ve cut – or how many others’ careers they’ve shaved, trimmed or stepped on. Not that they STARTED OUT that way, mind you. But even with the best of us, one thing can lead to another rather imperceptibly. Until one morning you wake up to find you’re at least as much a villain as a hero. At least in other people’s stories.

    In any case, who am I to judge that these folks haven’t worked very hard – or even very independently – to get where they are? Sometimes it’s the ones who’ve worked the hardest, and with the least (human) help from anyone, who are the ones who reach the top with the most bitterness, and the most urgency to “get their own back,” so to speak. Yes, I’m told, even in those unlikely places we call corporations. But I’m sure neither Red nor Blue States have anything approaching a monopoly of such institutions, or such people. Perhaps we all could put our heads together – and I know how uncompetitive (perhaps even un-American?) that sounds – and do some rather more thorough research on the goings-on in both Austin and Sacramento.

    And yes, we ALL need to step back and reorganize our priorities – even those among us who’ve been graced by God enough to become honest, hard-working, self-(and other-) sustaining entrepreneurs. Surely nothing is more tempting to arrogance and harshness towards others – whose stories, remember, we can never fully understand, much less judge – than honest, self-won success? I notice this is an Age which seems to believe passionately in the practical irrelevance of literature. But can we be so sure that – say, for example Shakespeare – has NO light to shed on this strange, humanly-intractable side of human nature? And that, whether by the things he wrote, or the times he lived in, or the various other times he wrote about? Have our modern facts, figures and intelligence completely nullified the rather more subtle truths history and literature have to teach us about our nature? Are we so much simpler now in the wake of Adam Smith? Or is that we’ve ALL become hyper-rationalistic libertarians, in spirit if not letter?

    More broadly, I wonder if some of the most evil (in effect) things do –at least those we do most often and most successfully –are not the result of malice or ill-will at all. What if it’s simply a matter of wanting to get Some Big Thing done very badly – so badly that you stop caring about the harm or hardship it may inflict, not only upon those who get in your way, but on those through by whose help you’re doing the big thing? Or even those on whose supposed behalf you started doing it in the first place? Big endeavors can take on a life of their own, that can very insensibly – without anybody meaning to – become very heedless of all sorts of human consequences. As can the organizations who drive them, or who expect to profit from them. And we all know how long it can take for markets FINALLY to correct such well-meaning – or at least GROWTH-meaning – arrogance and impatience.

    Lastly, by all means let’s encourage entrepreneurship. It may prove a permanent as well as productive way of getting the best out of some of the worst of us – myself included. But can we please TRY not to make it universally obligatory? Even the best individual paths have been known conceal some of the worst temptations (and who am I to play Satan to your Job?). And for those who don’t want it – or really aren’t cut out for it – I suspect entrepreneurship may be an equally permanent way of bringing the very worst out of some of our best.

  • willigl

    Great comments! I’ve learned a lot. Tom Holsinger reflects something my grandfather told me in 1954. I was a high school student in a segregated school and was threatened with integration. My grandfather cautioned by fear by telling me “there has to be some good white folks, or we wouldn’t still be here”. He started his own business in 1907, was burned out, robbed by the banks, but survived until the Republicans gained power in 1957 and bulldozed all the black businesses.

    Much of the response centers on fears of wealth redistribution. Our country was founded on the notion of checks and balances of power, or power-sharing — not wealth sharing. We need to learn this again. The red-staters do not believe in power sharing (witness re-districting). Whites have not integrated as much as non-whites have (witness a recent CNN look at racial attitudes today among children of all colors).

    The issues of money and race are serious and we ignore them at our peril.

  • wholetthedogsout

    Wisconsin has nothing to do with mississippi or whatever else, they elected a republican governor and republican state senators, i mean the whole state went red in 2010 and guess what rather than allowing their state to become Detroit 2.0 they decided to stop the spending. the unions were doing nothing more than assaulting the tax payers, and uh oh guess what the majority of those tax payers decided they’ll keep their own money.

    Scott Walker 52.3%
    get used to it.

  • Dracovert

    willigl @ March 17, 2011 at 2:14 pm

    I hope you realize that your second paragraph:

    “As for the real-estate debacle that (Bush) administration left us with, lets find the numbers, by race and color, of those who were caught in the mess! To blame this on Acorn is some of the racist crap the Republicans have been pushing. Show me an Acorn member who created and sold mortgage backed derivatives.”

    Directly contradicts your fourth paragraph;

    “Oh, and please explain to me why banks were forced to grant loans to people of any color who were not credit-worthy? Give me a break!”

    And both your second and fourth paragraphs contain major errors of fact and logic.

    All national laws and policies are signed off by both the congress and the president. Carter’s Community Reinvestment Act (1979) required that lending institutions give mortgage loans to qualified borrowers, meaning that the borrower had a good credit history and sufficient assets to pay off the home loan under reasonable expectations. Initially, this was no problem.

    But in the 1980s, a young Chicago community organizer working with ACORN led the charge to demonstrate and agitate for loans to the poor, qualified or not. These demonstrations and agitations took place at local banks and in the halls of congress. This led majority Democrats in congress to impose quotas on Fannie Mae and Freddie Mac for producing mortgages for the poor. With congressional endorsement, Fan and Fred began gaming the system. Prime loans were more valuable than sub-prime loans, so it was easier to meet the congressional quotas by labeling sub-prime loans as prime loans and this was done at least as early as 1993. Besides, the government implicitly backed Fan and Fred mortgages so there seemed to be no danger of default. Then the subprime loans were bundled with prime loans in AAA-rated investment-grade Collateralized Debt Obligations (CDOs) and sold worldwide. What could possibly go wrong? Well, lots, actually.

    With all this money flowing into Fan and Fred, the Fan and Fred executives soon discovered they could further game the system and make a lot of money for themselves. When Fan and Fred executives closed the books each year, any excess over the congressional quota was not reported, but was held in case the quotas were not met in subsequent years. By this maneuver, Fan and Fred execs were able to maximize their bonuses for a number of years, while misreporting their actual results by some $10 billion over the years. Somewhere in this murky sleaze, Senators Dodd and Obama and Representative Frank became the top three proud recipients of campaign donations from Fan and Fred.

    During this time period, the Federal Reserve Bank of Boston (FRB Boston) issued a policy paper called “Closing the Gap” that gave detailed instructions on how to make unqualified home buyers appear to be qualified. Reading that brief policy paper now makes it apparent that a federal entity was promoting fraudulent accounting practices. The assumption was that housing prices would never fall again, and that no one would ever be called for committing the fraud. In 1998, the Clinton Administration approved the FRB Boston policy, and “Closing the Gap” became official government policy.

    Carter’s CRA 1979 essentially required that mortgage loans be given to qualified borrowers. NO PROBLEM. Clinton’s “Closing the Gap” policy essentially declared that all mortgage borrowers were qualified regardless. PROBLEM. The perpetrators of this fraud were exclusively Democrats and the victims of the fraud were the poor, particularly Blacks.

    By 2003, it was becoming obvious to Republicans, if not to Democrats, that the Housing Bubble was rapidly getting out of hand. President Bush and Senators Hagel and McCain tried to reform the system but Democrats were not interested. All those campaign contributions to Democrats were probably not a factor, but the Senate Banking Committee refused to consider reforming Fan and Fred on a straight party-line vote in 2005, even though Fed Chairman Greenspan testified that the system was in danger:

    “We are placing the total financial system of the future at a substantial risk.”

    – Alan Greenspan, 2005, before the Senate Banking Committee hearings on Fannie Mae and Freddie Mac.

    The Bush White House tried seventeen times to address the problems with Fan and Fred, and succeeded only once when the Senate Banking Committee finally approved reform effort after the financial meltdown was well underway in 2008, and at the time that Fan and Fred failed and Fan and Fred entered conservatorship, which is somewhat short of bankruptcy, but is not a happy position to be in for a major entity of the US government.

    http://www.nevilleawards.com/fannie_freddie.shtml – Complete documentation.

    http://www.usnews.com/opinion/blogs/barone/2008/10/06/democrats-were-wrong-on-fannie-mae-and-freddie-mac – Summary.

    There is simply no record that any Republican promoted the fraud that you blame on the Bush Administration. Much of the congressional hearings records as documented in nevilleawards.com above would have been an historical footnote if the crash had not occurred. The Democrats could have continued their fraud indefinitely had not reality intruded. As it is the Democrats are exposed and are losing political power. And when the poor discover the fraud that Democrats have perpetrated against them, and on us, the poor will be pissed, big time, along with everyone else.

  • Jim.

    @willgl-

    “Whites have not integrated as much as non-whites have (witness a recent CNN look at racial attitudes today among children of all colors”

    Actually, “white” culture is the one that all the other races that make up America needs to integrate *into*. White America’s great sin (since slavery ended) has been to erect barriers to this assimilation. (These barriers are largely destroyed today, by the way.)

    Countries (and specific peoples) who follow what has been called the “Protestant Ethic” are more prosperous and advance more readily than any other culture on earth.

    The problem with “diversity” is that it focuses on the fact that people are different, seeks to maintain those differences (even the ones contrary to prosperity), and even claims that those differences (racial or ethnic-cultural ones) are a sources of strength. This is a fallacy.

    The *real* historical problem that we have to deal with is the fact that the elite culture (yes, white culture, but representing only a fraction of even whites) in this country has too often operated under its own malignant fallacy — the idea that non-whites (or even, in some cases, non-Northwest-European-whites) were somehow incapable of integrating into, or assimilating the values of, the Protestant Ethic.

    The goal — of a country where not only is social mobility is open to all, but the country itself is upwardly mobile — was subsumed in racial revenge-taking, racial hubris, unaffordable utopian wealth-sharing, and the systematic trashing of traditional values that really have made us the greatest and most prosperous country on earth.

    This tragic irony — where aspiring peoples choose to take a path that destroys what they dearly wish to achieve — was nearly inevitable, given the bitterness that past sins have evoked. It is the challenge of this generation to overcome this bitterness, overcome the twin fallacies of Racism and Diversity, and (re)discover — for all — the cultural assets that are necessary to drive a country to greatness and prosperity.

  • Peter

    Mr. Mead,

    In the unlikely event you did see it, Daniel DiSalovo makes reference to you and your ‘blue social’ model in his “The Reformist Right and the Reactionary Left’ in Commentary magazine, April 2011.

    DiiSalvo uses your critique of how things are a-changin’ to support his theme, but IMHO he does not come close to doing justice to your analysis.

  • William Walsh

    It’s an interesting idea but is based on a faulty premise. Government can never be efficient. Efficient government is a contradiction. Corrupt government is a tautology. Any plan or program that requires honest, efficient government is inherently flawed and doomed to failure.

    We don’t need better government. We need less, a lot less, government.

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