If you’ve lived in a red state during election season — and I advise you avoid doing so, if possible — you have witnessed how ferociously Republican candidates blame all the nation’s woes on liberals. This includes economic woes. To hear them talk, you’d think FDR-style liberals have been in charge of federal and state budgets for the past 75 years.
But in fact, especially since the late 1970s, conservatives have pretty much had a stanglehold on economic policy, both in many states and in Washington. Even presidents Clinton and Obama were able to put only a few cracks in the austerity-and-tax-cuts wall. And for a time congressional Democrats became deficit hawks, adopting paygo rules that stipulated any spending increase must be offset by a cut somewhere else.
States were and are even more extreme at times. In many red states, services have been cut to the bone to pay for tax cuts. Kansas got so broke it had to shorten the school year to close schools early. The tax cuts were supposed to create a flood of new businesses and jobs flowing into Kansas. They did not.
This will not surprise many of you, I’m sure. But there is new evidence that red states have been growing poorer and blue states richer, and the reason is … conservative economic policies don’t work. Imagine. Greg Sargent:
Its key finding: We’re in the grip of a paradox. Even as areas that vote Republican continue falling behind blue America economically — helping widen those oft-discussed regional inequalities between cosmopolitan and outlying areas — GOP elites everywhere are growing more committed to an increasingly uniform and regressive agenda that does little to address the problem.
States whose economies are falling farthest behind are tagged “low road” states in the analysis. These states, mostly southern, are largely hampered by “lower minimum wages, anti-union policies, and underfunded education and infrastructure.”
You can offer industry all the tax incentives in the world; if your state has an undereducated workforce, poor schools, and crumbling infrastructure, the higher paying jobs-of-the-future companies will build elsewhere. That’s something Kansas didn’t figure out.
Blue states are more urban and tend to have a better educated workfoce. Blue states are following a “knowledge economy” model, a term I had to look up. This page says,
The knowledge economy is focused on the essential importance of human capital in the 21st-century economy. The rapid expansion of knowledge and the increasing reliance on computerization, big data analytics, and automation are changing the economy of the developed world to one that is more dependent on intellectual capital and skills, and less dependent on the production process. …
… The knowledge economy is characterized by the presence of a higher percentage of highly skilled employees whose jobs require special knowledge or skills. Unlike in the past, when the economy depended heavily on unskilled labor jobs and consisted primarily of producing physical goods, the modern economy is comprised more of services industries and jobs that require thinking and analysis of data.
In the old industrial economy, a company’s most valuable assets were plants and equipment. In a knowledge economy, a company’s most valuable assets are patents, copyrights, or proprietary software or processes. Obviously, to thrive in this knowledge economy, people need good schools and access to higher education. I would think a reliable electrical grid and reliable infrastructure generally would be essential. Red states much more than blue ones also are plagued by closing hospitals, especially in rural areas, and they have more unhealthy people with limited access to health care.
To address resulting regional disparities, the analysis argues, these states should want expanded federal cash transfers and bigger federal spending on health care, social insurance and infrastructure. But that’s not happening:
Why? Because GOP policy at the federal and state levels is largely set by “national business groups and organized wealthy backers.” This undercuts “the prospects for robust intergovernmental transfers, both to spur local economic development and to finance the social programs” on which poorer, nonurban voters “increasingly rely.”
The national business groups are stuck in the industrial age, I take it.
We’re still waiting for the House to pass the covid bill. The vote will be this afternoon, latest news stories say. A lot of that money — a lot more than the $1400 direct payments — is going to people in red states whose congresspeople voted against it. Economists expect the economy to be humming through the next couple of years.
Will their voters notice?
Maha, I don't know about you but at my age and health (72 – poor) I am not up to moving out of the Mississippi of the Midwest (aka Indiana) where I reside. I keep looking but would have to give up the close access (15 minutes) to the good VA hospital where I get all of my health care.
As to why the undereducated working class whites continue to vote rePuknican, the best explanation I have heard is "I vote republican because they hate the same people I hate."
It is not possible to speak of "the economy". There are a handful of economies running in parallel, each completely (or nearly so) decoupled from the others.
The two largest are:
(A) the one that trickles down from government procurement, which is to say from Federal procurement, which is to say from DOD procurement;
(B) the one that is based upon the manipulation of financial instruments, mostly in the overnight-repo market.
If you are a supplier to (a supplier to …, etc.) the DOD, then you are in fine shape. (If you work for such a supplier, then hold that thought.)
If you are large enough to have enough cash to play in the overnight market, then you are also in fine shape, until that bubble collapses, which it might at any time. The important thing to understand about the firms who participate in (B) is that for them, doing what it says on the sign is now merely a loss-leader and/or a cover for the financial manipulations. This has been going on and getting worse for so long that the incentives to keep up the appearance of doing legitimate business are eroding by the day.
Then there is the knowledge market that you describe, in which intellectual property takes the place of overnight repos in (B). For these firms, doing what it says on the sign is also a cover; it is not the primary source of revenue.
Then there is the commodity consumer market, which is made up of Walmart, the grocers, the dollar stores, etc. For these firms, rapid turnover of small-ticket items takes the place of overnight repos; but at least they are doing what it says on the sign. Grocery stores have always pointed to their infinitesimal average margins, while glossing over the fact that those margins are compounded 365 times a year. Here everything depends upon minimizing operational expenses…
…which is our cue to go back and pick up the observation from above about employees. Even if your firm is doing well, if you are an employee, you must always keep in mind that your employer hates you, and that that emotion of hate drives all of their decisions. They are convinced that you are stealing from them, and that a conspiracy of politicians and thought leaders prevents them taking any measures to stop that loss. This fixation has driven them literally insane.
Then there are the various grey and black markets: still the smallest segment, but growing. Their practical importance will increase over time as we become a third-world country.
“Why do so many conservative Americans vote against their own economic interests?”
The politicians never take responsibility for their bad policies or lack of any real policies, but choose to blame their woes on POC and capture voters by appealing to their racism. As it is, most conservative whites don’t want any policies that a POC would benefit from too. It seems the voters don’t see it as against their own self interest if it’s done for spite.
“A lot of that money… is going to people in red states whose congresspeople voted against it. Economists expect the economy to be humming through the next couple of years.”
When the benefits of this legislation starts bumping up economies in red states, I can assure you that GQP members of that state will take credit.
And the taking credit has begun.
Tweet from Senator Roger Wicker:
Independent restaurant operators have won $28.6 billion worth of targeted relief.
This funding will ensure small businesses can survive the pandemic by helping to adapt their operations and keep their employees on the payroll.
The more I read about this $1.9 Trillion, the more shocked I am that the RepubliKKKLANS didn't do more to kill it.
This bold plan sneaks a lot of money into mundane things, like the child tax credit, which will likely cut child poverty in half.
There's all sorts of money in it for cities and towns – let's hope they don't decide to use that money to up-arm their police department's with military hand-me-downs.
Also, a lot of money for schools.
This bill, THIS BILL, was the one upon which they should have been willing to die on. But they meekly objected, and didn't put up the fight I expected.
Maybe Ol' Joe lulled them to sleep?
Sleepy Joe strikes again!
Minor nitpick: Democrats also allowed spending increases to be balanced by revenue increases. Of course, that was impossible to do other than via reconciliation, for a large portion of that time, since Republicans decided they'd make a stupendously idiotic pledge never to raise taxes.
It's really stunning – I believe that "never, ever raise taxes" is the same attitude that led to Kavanaugh saying "we must prevent New York, or any other state, from imposing public health rules on houses of worship, because they might do so again" – as if *no* epidemic could be contagious or deadly enough to warrant keeping people out of church gatherings. Good thing he wasn't a judge when smallpox was a thing.
(I saw an article saying that smallpox was actually frightfully like Covid-19 in how fast it would spread- but it's also killed some 30% of the people who got it – thankfully, past tense.)
They've now really proven that there is no emergency serious enough to overcome their lust for power, and their methods of seeking it.