The Rust Belt Challenge
by Bruce Fisher
How decline here presages American irrelevance
The notion of decline starts with a notion of success, and whenever success is the issue, Americans get all emotional. The current Washington conversation about decline is underway with renewed energy, and with plenty of animus, in part because of the 2012 presidential election, but it was the same conversation underway, much more urgently, in 2008. We are always having the conversation about whether we are on the right path. The wise historian Perry Miller described the Puritans in his enduring Errand into the Wilderness as setting the rules of our story: from the earliest days of the English-speaking settlements here, Americans have believed that we’re going to be the ones who are actually going to get it right, and create a novus ordo seclorum, “a more perfect union” as our Constitution’s preamble has it, relying on the “better angels of our nature” that Lincoln knew. And we’ll do it bravely as FDR said we would, once we just banished fear the way that Christ told us to in the book of Matthew, and with the great energy of youth as JFK said we would in his inaugural address, and in proud reassertion of first principles, with a copy of a few selections from the Federalist Papers, mostly the ones that Hamilton anonymously wrote, in Ronald Reagan’s formulation. Our project is to outlast tyranny and to crush it when necessary, to lift up American humanity with a defiantly and definitively 18th century Boston merchant’s notion of what private property is and not bother ourselves too much about inequity, exploitation, or trading with monstrous regimes across the sheltering seas, except every once in a while (the Civil War, the Civil Rights movement, the belated official actions against apartheid) when the heat of religious-inspired indignation gets too hot. These days, the celebrated public intellectuals who drive the discourse in the District of Columbia address issues as either celebrants of the success that American institutions are achieving, or as agitators for the greater and more perfect results that we Americans could achieve if only our government got it right.
Two new books by neoconservatives, one that scoffs at the very idea of American decline, and one that sourly purports to explain who is to blame for American decline, should be read together. And after one has finished that assignment, it’s hard not to be pessimistic about the ability of our public intellectuals to understand what’s really going on here, because neither of the authors is able, or willing, to see that what the Boston merchants’ ways have wrought are problems that are getting too big for anybody, especially American elected officials, to handle. If you listened to the first and last parts of President Barack Obama’s 2012 State of the Union Address, you may have heard that there is another group of public intellectuals, not the ones who get invited to the Sunday morning talk shows, who may be getting listened to, because the intellectual-in-chief imagines them helping.
The World America Made is a short book by Robert Kagan, a Harvard PhD who is a pro-Israel hawk with State Department experience and a big position at the Brookings Institution. Kagan is the kind of Washington insider who gets listened to in part because of his prolixity—he’s a Washington Post columnist and has four other books on his shelf—but also because he’s telling the story that Wall Street financiers need told, namely, that it’s American economic rules that need to continue to rule, because that’s how we’ve achieved the best of all possible worlds. When Kagan writes the word “America,” gloss it this way: banks backed up by a leashed or subservient military that secures our access to oil. This is different from what conservative, pro-American strategic thinkers were thinking two or three decades ago, and radically different from what George Kennan and his generation were thinking back when the biggest question, indeed the existential question, was whether Stalinism was going conquer the planet. Not so long ago, industrial corporations and the AFL-CIO moved PhDs in and out of staff and senior executive positions in Washington, and informed the policy debates about taxes, infrastructure, trade, foreign relations and where the national interest lay. Now, industrial corporations matter hardly at all compared to financiers. Labor is no longer a part of the industrial-policy questions, and despite former Service Employees International Union president Andy Stern’s efforts to re-internationalize labor, it’s just nowhere today, making one wonder how it ever could have been that the AFL-CIO under George Meany used to be a shaper of American foreign policy. The oil companies and the big banks, the big investment houses and the new, unregulated fund aggregations have so much more money and so much more power than anything or anybody else that they fund the campaigns of both parties. Through their subsidy of universities and friendly think tanks, they’ve bought intellectual firepower, too. As the 2010 film Inside Job showed, the financial industry purchased Columbia and Harvard economists outright; on camera they stumble or bluster when challenged about how they were paid extraordinary sums for studies that endorsed the toxic roster of inside deals, de-regulation, catastrophically risky over-leveraging and other items on the financial industry’s agenda, the agenda that brought the global financial crisis of 2008 and the subsequent global recession. Exposes galore on this pervasive corruption of once-independent professors are no more galling than the study, by non-mainstream economists who don’t get much media attention, showing that the economists who do get the kudos are the ones who play by the rules as established by the Federal Reserve Bank, which doles out grants and appointments to coveted career-advancing positions at the Fed, but demands adherence to an orthodoxy that advances the interests of banks, investments banks and hedge funds.
Kagan must know this, but he overlooks it. This is not to say that Kagan is dishonest or comparable to the Columbia Business School economists Glenn Hubbard and Frederic Mishkin whom Inside Job presents as egregiously dishonest, expensive hacks. Kagan is an enthusiastic endorser of the “liberal world order” that has, under American leadership, made “this age, with all its brutalities, a golden age for humanity.”
That’s no Doctor Pangloss speaking. That’s the voice of an unapologetic, patriotic American who adduces indisputable facts. There really are more people live today than ever before in human history—surely a sign of progress. More people in many, many places have more to eat, live longer lives, have more prospects for advancement and less exposure to the brutalities of either disease or the arbitrary exercise of state power. There are more democracies and fewer Stalins today than before World War II. And Kagan’s essay is not just applause: he does not trot out statistics about troubles ahead, but he does put forth warnings, chief among which is that the risen masses here, and the rising masses around the world, have no guarantor of the reign of free trade, free markets and technological innovation other than a strong, democratic America. China isn’t going to be the world protector of trade or personal or any other kind of freedom. Vladimir Putin and Dmitri Medvedev won’t do the job. The scowling French and the increasingly annoyed Germans have a full day’s work keeping their bankers on a leash so that at least some Greek civil servants have some prospect of a paycheck before they all flee Greece for jobs as taxi-drivers in France or Germany, leaving behind a failed state and their rioting relatives. It’s only us, says Kagan. And there is no guarantee on the historical record that even the best-run empires can endure indefinitely.
The problem in our empire is the subject of the other conservative best-seller making waves in Barack Obama’s re-election year. Charles Murray’s Coming Apart: The State of White America, 1960-2010, has been seen as The Bell Curve without the reference to race. Murray didn’t want his new book to face the damning criticism that his previous book did, and so wrote such that he could have a new chance to shape policy re-fighting the poisonous issue of statistical “proof” of one group being constitutionally less able than another. What he has written, however, is a portrait of social stratification that goes into every dimension of the behavior changes, family structures, and lifeway choices of Caucasian Americans over the past 50 years, without mentioning, except in passing, that over the past 35 years, between about 1975 and 2010, the unfolding hegemony of the financial industry made tens of millions of low- and moderate-income white people, especially white men, poorer. Much poorer. Much much much poorer.
Robert Reich, whom his fellow Rhodes Scholar President Bill Clinton made Labor Secretary, wrote intelligently more than twenty years about the rise of the “symbolic analysts,” by which he meant the 20 percent of the working population that has to know math, or law, or medicine, or computer code, or something other than the business end of a shovel in order to earn the daily bread. For much of the happiest times of the period 1945 to 1975, when America was the dominant industrial producer of everything, every last thing, low-skill people not only worked but got paid well. Paul Krugman’s economic history of the 20th century, Conscience of a Liberal, makes the case that more Americans became more secure and their children healthier, better-educated and socially mobile than at any previous time in US history.
Then came the great change. Just around the time that Richard Nixon’s Supreme Court sentenced Rust Belt cities to permanent status as warehouses for impoverished children in the Milliken decision, capital fled—from the Rust Belt to the Sun Belt, then to the Maquilladoras, then overseas. The American working class got internationalized. The serious scholar who described most authoritatively how overwhelmingly harsh these changes were for the huge unskilled American labor force is William Julius Wilson, and he did it in his 1996 book When Work Disappears, which Krugman cited when he took exception to Charles Murray’s new book. William Julius Wilson saw first-hand what was happening to the industrial working class in the early 1980s in Chicago: it’s fifteen minutes by car down Cottage Grove from the University of Chicago at 57th Street to the suddenly-darkened steel plants and coke ovens at 95th Street. Wilson had written about the primacy of economics earlier, in his 1978 book The Declining Significance of Race. The white working class that had been a couple of generations making steel in union-protected jobs suddenly had no jobs; the black working class that had just recently arrived and had been getting a toe-hold suddenly had a no-hold. Everybody in the middle of that crisis suddenly understood that they were being treated black.
Wilson, like a young community organizer named Barack Obama who was working precisely then and precisely there, and young journalists and social workers on the scene as well, saw exactly what Charles Murray describes in Coming Apart: the white kids who did well enough on standardized tests like SATs to get into good schools moved the hell away from that world. They may have hummed along with John Lennon’s lyric, “A working class hero is something to be,” but they didn’t want any part of it. The kids who became symbolic analysts physically removed themselves from the old neighborhood. They did not go for bowling or beer at the Legion Post. The ones who stayed did, until the neighborhood became so poor that the even the bowling allies and saloons closed.
Murray focuses not on the phenomenon of wrenching economic change, but on the epiphenomenon of social disorder, and makes a thick book out of cataloguing the dysfunction of households that have no daddies, as if none of the money matters matter. Murray also much of church membership: he sees membership in a congregation as a distinguishing marker, something that high-achievers practice and low-achievers don’t. This is beyond curious, and it’s about as ahistoric an analysis as you’ll ever see. Intact nuclear families of the high-achieving, schooling-endorsing upper-middle classes may belong to a church congregation, but every mainline Protestant denomination has seen a collapse, and the Catholic church assiduously abandons old congregations, while the new big-box churches, descendants of the Puritan Congregationalists of centuries past, have a presence that is unquestionably larger than ever, but it’s a culturally-specific presence. Northern Episcopalians, Presbyterians, Methodists, Congregationalists and Baptists are scraping by. Southern congregations are doing much better. Catholics are doing okay where there are lots of Mexican, Polish and Irish immigrants, but all these organizations are flickering shadows of their former selves. And church identity has always been problematic in America, because, as Yale’s Jon Butler and the late Dan Smith of the University of Illinois at Chicago have pointed out, the un-churched have outnumbered the churched for most of North American history, including today—and not just because low-income people don’t go to church.
Murray’s central point is unquestionable: low-income white men don’t act like educated, economically-stable middle- or upper-middle-class men who derive income from the use of their cognitive skills. Low-income white men act like the black men they’ve been treated like ever since working-class men of every hue, faith and occupation became surplus labor. Men became surplus labor when the financial elite told the industrial elite that labor could be had cheaper someplace other than in America. Whites with high SAT scores, blacks with high SAT scores, Asians with high SAT scores—statistically speaking, they are all, regardless of race, doing better than low-achieving men, for whom there is less comfort in the financialized, globalized new liberal American world order. The problem with Murray’s analysis is that he doesn’t connect the dots—because there is no highly positive correlation between academic achievement and social or family “values” unless one’s income status is in the analysis. If you leave out income, you’ve missed the whole story. It’s money that matters, and since the American working class lost union scale and started working for minimum wage, the American working class lost any resemblance to the American middle class.
The reason you’re not going to hear about the problem of money being at the root of the power question, as it’s the core of the social question, is that our policy elite is far, far too comfortable with the world that the bankers prefer than with the America of shared sacrifice, progressive taxes, national service, deferred gratification and what in some countries, at some times, has been called “blood and soil” patriotism—the values and issues that are of particular meaning to the folks to whom Barack Obama pointed at the opening and at the closing of his State of the Union address. The New York Times columnist Thomas Friedman recently observed appreciatively that globalized manufacturing firms have gone from “out-sourcing” to “world-sourcing,” but his analysis did not indicate any appreciation for the consequence of that shift, namely, that when capital is international and labor has no bargaining power anywhere on the planet, then not even the designers, engineers, marketers and other “symbolic analysts” have any bargaining power, either. How long before unemployed lawyers, software specialists and university professors worry Charles Murray for leaving their churches and foregoing the formalities of expensive undertakings like weddings? In the world where only the bankers and speculators and capital-holders matter, much loss and disruption can be expected, but it’s dishonest to say that family disorder happened before jobs and income were lost.
That gets us to the difficult question, the one that Americans don’t talk about. Yet. I do not know what the American military thinks about its role as guarantor of the liberal, financialized, globalist free-trade empire that Robert Kagan’s essay is glad of. As the most formally stratified organization in America, in which uneducated working-class kids are privates and NCOs and elite-educated achievers are General officers, there is a deep class consciousness. But we also know that the military is the closest to an American meritocracy, a true Jeffersonian ideal of an organization, as we will ever see. A broad redefinition of the American military was envisioned 23 years ago when the Berlin Wall came down, about the time when Francis Fukuyama published his acclaimed essays The End of History and The Last Man seemingly just minutes after November 1989’s events. Fukuyama, a predecessor to Kagan in celebrating American liberal democracy and capitalism, boldly stated that history was essentially over, not because Karl Marx had been correct about the ultimate demise of capital and the subsequent triumph of an awakened global proletariat, but because American liberal capitalism had won, and that there would never be a challenger.
Kagan is more cautious. He is not a caricature of Pangloss who says that this is the best of all possible worlds, but even as he praises it, he warns that it could end.
Those of us who pay attention to the intractable problems of the Rust Belt, to the problems of energy, and to environmental economics, suspect that we have a pretty good idea of what the challenges are to the liberal hegemony of America as the well-armed, well-financed Boston merchant. The Rust Belt itself is the most potent challenger of all—for the Rust Belt, in its sprawled-out metros that haven’t grown in forty years, metros that are full of marginally-employable whites and blacks whose incomes and prospects are shrinking, in its intractable concentrations of poverty, in its federally-subsidized regimes of corruption and favoritism for financiers and developers, in its angrier and angrier politics, lies a great threat to the legitimacy of capitalism. In its environmental legacy of brownfields and of poisoned waterways lies some potential for regeneration, but only if that environmental devastation is changed, in the national interest, at great national expense.
The Rust Belt is where four out of 10 Americans live. They are not poor remnants of the former Eastern Bloc. Chances are, they will not starve or freeze. Many tens of millions of them are poor, but not destitute. Many of them will even go to college and become symbolic analysts; some few of them inevitably will become members of the ruling financial apparatus. They are still Americans, and American global economic hegemony will still get them cheap foreign-made goods in the huge chain stores that have made their downtowns and their villages ghostly.
But the triumphalism that Americans have always practiced has a hollow ring to it because of the dimensions and endurance of the Rust Belt’s troubles. There has yet to be a president, or even a governor, who has recognized that the great swath of America that lies between the Hudson and the Mississippi, between Canada and the Ohio River, is trapped in a negative-feedback loop of unsustainable practices that weakens the country as a whole, in significant consequence of Wall Street having reshaped Washington to believe that the national economic interest is an obsolete concept, a concept undeserving of serious support in a “world-sourcing” world, because, they’ve concluded, the interests of speculators in global production, commodities and exchange are the best of all possible ways to go.
So while Robert Kagan’s view of global American free trade and free market capitalism as justly triumphant sounds like good old-fashioned Americanism, a large piece of America hears the words but sees a different reality. The Rust Belt knows population decline while the rest of America knows population increase. The Rust Belt knows radical social restratification while the rest of America still experiences comparatively more of the social mobility that used to define our country. Immigration is mainly non-existent in the Rust Belt, whereas there has been a transformative trend toward ever-more-sizeable in-migration in the West and South. But what is also true about the Rust Belt is that, should the dire projections of increasing drought in America’s South, Southern Plains and West bear out, this is the place that may—of necessity—have to become both breadbasket and receiving area, simply because of the unavailability of water resources elsewhere.
The insights of Kagan and even of Murray are important because they will shape policy, but also because of what they don’t touch. Somebody else will have to finish the picture. That picture won’t be complete until America’s broken heartland is in it. Read more:
http://artvoice.com/issues/v11n7/news_analysis#ixzz1n37gMQWK
AV columnist Bruce Fisher sends in this dispatch on Governor Andrew Cuomo’s State of the State promises to Buffalo:
A newly revised version of a Penn State study of the powerful positive impact of locally owned businesses was released just before New York Governor Andrew Cuomo announced a $1 billion economic development package for Buffalo. Citing the persistent poverty and population decline of Buffalo, Cuomo announced an unprecedentedly large set of inducements for the area, specifically targeting out-of-town investors.
“We know from experience that large investments in growth industries can pay substantial dividends,” said Governor Cuomo in his second State of the State speech on Wednesday. “We saw great results from a substantial, sustained state investment,” he said, citing the recent history of growth in high-tech industry in Albany. The state-funded Center for Excellence in Nanotechnology is one of the most often-heralded success stories.
Penn State economist Stephen Goetz earlier this year published his study of the impact of locally owned, stand-alone firms with between 10 and 99 employees compared to large, remotely headquartered firms that employ more than 500 workers. He found that the small firms create a much greater overall economic impact, including paying higher wages, than the large, out-of-town firms.
Goetz and his co-authors, who report their findings in the current issue of Economic Development Quarterly, studied data from the Edward Lowe Foundation on the economic growth and residence status of business owners in 2,953 US counties, including both rural and urban counties. “This is really a story about startups,” said Goetz. “Many communities try to bring in outside firms and large factories, but the lesson is that while there may be short-term employment gains with recruiting larger businesses, they don’t trigger long-term economic growth like startups do.”
Cuomo said in his speech that he will look to the recently-empaneled Buffalo Regional Economic Advisory council, co-chaired by UB President Satish Tripathi and Larkin District entrepreneur Howard Zemsky, for advice. “Let’s empower the Buffalo Regional Council to develop a viable plan to create thousands of jobs and spur at least $5 in new investment and economic activity.”
“Today,” said Cuomo, “I say to national and global industries: Come to Buffalo. The State of New York is ready to invest $1 billion in a multi-year package of economic development incentives,” he said, in order to leverage a five-to-one return on investment. Cuomo also announced major initiatives in energy, including seeking increased hydropower from Quebec, increased “fossil fuels” from Western New York for Downstate users, and a plan to create more Buffalo-area access for renewable energy, including hydro and solar, that is generated regionally.
Buffalo Mayor Byron Brown responded to the governor’s statement by stating that developments like Canalside and the Buffalo Medical Campus were already underway and should receive further state investment. The recent recommendations of the Regional Economic Council, however, made no reference to Canalside, focusing instead on workforce investment, technology development and various anti-sprawl initiatives.
