I know. I said I was done with the whole subject of Economics. But it keeps injecting itself into my consciousness. The most recent instance of this was a column in the local paper. (See https://www.seattletimes.com/business/economy/spokane-makes-a-play-for-superstar-city-jobs-that-will-be-a-heavy-lift/). I'm not going to rehash the column, although it was well done. I'm going to instead focus on my reaction to one observation found in it.
The columnist mentioned in passing that the city he was discussing was located in a county that is "very Red". And by "Red" he of course meant Republican. And the main thrust of his column was that he didn't hold out much hope that the city he was writing about would experience rapid and sustained economic growth.
There is a profound economic split on view pretty much everywhere in the country. Urban areas are, generally speaking, doing well. Rural areas are, generally speaking, doing poorly. This is very apparent in my state, Washington. The urban "Puget Sound" area (Seattle and its environs) is doing very well. The rural eastern part of the state is not. And it will not surprise you to know that the Puget Sound area is "Blue" (Democratic) while the eastern part of the state is "Red" (Republican).
If it were just Washington State, that would be one thing. But it's not. Urban parts of the country are Blue for the most part and rural parts are Red. Urban parts are doing well. Rural parts are not. The obvious question to ask is "is there something about Blue economic thinking that leads to success and Red economic thinking that leads to failure?" I think the answer is Yes! And that's the subject of this column.
My label for Red economic thinking is "Plantation Economics". Many other names would work. But economic thinking in the modern Republican party is dominated by "southern" thinking. And by "southern" I specifically mean the thinking that was dominant in the antebellum South.
"Antebellum" is a portmanteau word composed of the Latin prefix "ante" meaning, in this case, "before" and Latin word "bellum" meaning, in this case, "war". So it means "pre-war" and refers specifically to the American South in the period before the start of the Civil War. So let's take a look at the economics of that region during that period.
The South in that period was dominated in every way, politically, culturally, and economically, by plantations and their owners. It was a predominantly rural area. There were cities like Charleston and New Orleans but they were seen as existing in service of the plantation system. Most plantations grew cotton or tobacco. Charleston and New Orleans existed to facilitate the world wide trade in these commodities. In other parts of the country cities politically dominated the countryside. But this was not true in the South. So let's look at the social structure of that time and place.
Plantations were owned by families in a very patriarchal and hierarchical structure. Members of the family lived in a big house that was a showpiece. Houses of the time were low tech as there was no electricity, indoor plumbing, etc. So there were outhouses in back and a detached kitchen. A detached kitchen was a good idea because the southern climate is warm and the heat of cooking would have made the rest of the house uncomfortably warm. By moving the kitchen to an outbuilding all that heat was kept away from the house.
The house itself consisted primarily of public rooms designed to show off the wealth, taste, and power, of the owner. There were also bedrooms, dressing rooms, storage rooms, etc., that were more utilitarian and less showy. And, of course, plantation houses featured a very showy front. It is never to soon to start the process of impressing people.
Plantations and their owners dominated the culture and economy of the region. The immediate family of the patriarch was catered to by a household staff. The plantation itself was often actually run by one or more "overseers" who supervised a large number of field workers. The household staff was commonly supervised by the wife of the patriarch of the family but this was hardly a full time job.
Beyond this there were small communities that provided services like banking, mercantile, and legal services. The clergy were also part of this group. There were also a small number of artisans to do metal work, carpentry, etc. These people constituted what passed for the middle class in the old South. They outnumbered the immediate family of the plantation owners but neither group, the plantation owner and his family, or the middle/professional class, constituted a large percentage of the population. The bulk of the population instead consisted of laborers and other unskilled or semi-skilled workers of one sort or another.
Some of the laborers were slaves. But the "free men" (poor whites) were only a little better off from an economic and political perspective. And neither group had any substantial political or economic power. Slaves were unpaid. Their "compensation" consisted of room and board. And their very position existed in order to complexly exclude them from having any political power.
Technically freed men were better off. But jobs open to them were poorly paid. If an unskilled or semi-skilled laborer could do the work and freed men demanded high wages the work was given over to slaves. So freed men had little or know bargaining power. And this lack of bargaining power extended to the political realm. Like all successful aristocracies, plantation owners were adept at collecting and retaining political power.
This structure resulted in a substantial informal economy. People hunted and fished to supplement their meager income. Cash money was scarce so bartering was common. The elites tolerated this because it kept labor costs low. Both cotton and tobacco are hard on soil if mono-cropped, which was the primary method in use. So land would "wear out" and be "abandoned" (left uncultivated) for long periods of time so that it could slowly recover. This meant there were plentiful woods and creeks available for hunting and fishing.
This is an economy that works well for the top tier. It works adequately for the small professional/middle class and badly for everybody else. Manufacturing and other alternatives to agriculture depend on markets. And in order to have a large market you need a large population that can afford the product. Yet only a small portion of the southern population had a substantial amount of money to spend on manufacturing goods. The small volumes of manufactured goods that were needed could easily be imported from somewhere else. So the North did a good business in selling manufactured goods to the South.
The structure of the Northern economy was quite different. This different structure produced a much larger component of the population with money in their pocket. So the North provided a much larger market for manufactured goods. And many manufacturing jobs paid relatively well. This virtuous circle produced an economy that produced more wealth per capita. And this in turn produced a larger population.
Southern plantation owners, both individually and as a group, were among the wealthiest people in the country. But there weren't enough of them to produce a robust overall economy. The far larger group of reasonably well paid people in the North were much poorer on a per capita basis than the southern plantation owner.
But there were vastly more of them. So they possessed much greater aggregate wealth. And as a result of these structural differences the North as a whole was far wealthier than the South. There were fewer people in the North who could match the wealth of the typical plantation owner but the aggregate wealth of the region was substantially greater than that of the South anyhow.
In short, the southern plantation economy worked very well for a few and badly for almost everybody. Yet it persisted for a long time. I would argue that it persists to this day even though the Civil War ended more than 150 years ago. For this to happen the large population of poor people must buy into the system even though doing so disadvantages them. The elites of the antebellum era pulled this trick off for a long time. I believe the modern equivalent of those bygone elites are continuing to pull the same trick off today. How do they do it?
The answer is to be found in cultural institutions. They have to tell a tale and they have to tell it in such a way that a large segment of the population believes it. And, since the tale is fundamentally a dishonest one, dishonesty is an important part of the process. This, in turn, requires control of two critically important cultural institutions, religion and education. The church must be co-opted and the educational system must be diminished.
Powerful interests have been using religion as a tool of control for as long as we have had written history, and probably for much longer than that. Southern centers of power quickly took control of religion and have maintained a stranglehold over it ever since. The most obvious manifestation of this is the Southern Baptist Church.
Why does it even exist? Because southern institutions needed a church they could control. And all it takes to get and keep control is generous funding of preachers and churches that preach the right message. Put simply, the right message is "the southern way of life is the good and moral way of life". This is coupled with "all other sources of moral guidance are suspect and likely the work of the devil".
Distance was quickly created between "southern" churches and their predecessors located in other parts of the country or the world. This was necessary because those other institutions would not have a reason to go along with the type of messaging that needed to be maintained. And a message contrary to the southern message could not be tolerated.
As a result of the successful strategy of creating "southern" churches, there were lots of "respected churchmen" available who were willing and able to declaim the rightness of the "peculiar institution" that was slavery. There was no hew and cry from these same people when black men were lynched for the entertainment of the crowd. And on and on.
What made this possible was what I have noted elsewhere. Modern religion is "faith based". And what this means is that adherents are required to "have faith" that the church's teachings are right and true in spite of massive amounts of evidence to the contrary. This is an exercise in putting lies on the same level as truth. If you can lie about some aspect of a religion's belief system and get people to accept that lie then you can lie about anything and expect them to accept it too.
So the lie that this or that is the morally right thing to do when it manifestly is not is easy to imbed into people's culture and belief system. The lie can not be effectively refuted by the truth because these same people have been trained to "have faith". And having faith requires that obvious truths be ignored. So they become adept at doing so.
But capturing religions and bending them to the needs of the elites is not enough. The other requirement is to discount the value of education and especially a liberal education. And the first step in doing this is to diminish the quality of the education available to the average person. Underspend on education then loudly proclaim its shortcomings, both real and imagined. Discourage people from getting an education and do what you can to make sure that what education they get is of poor quality.
The most obvious example of this is the long standing and well funded effort to inject religion into science. Science is the opposite of "faith based". Science is experience based. Experiments are done, data is collected, then all of it is subjected to rigorous analysis with the intent of getting to the bottom of what is really going on. Not what someone says is going on but what is actually going on. People trained to a scientific perspective are very dangerous to the ability of those in power to maintain the fictions their very power depends on.
So we see a general denigration of education. People are encouraged to leave school early. Education in rural areas is generally inferior to education in urban areas. People in urban areas value it higher. Almost all of the top tier colleges and universities are located outside of the south. Georgia Tech is not on the same level as MIT or Cal Tech.
There are no top tier Computer Science schools in the South. Utah has spawned more successful tech companies than pretty much all of the South. Utah is economically much like the south. But it is walled off from "southern culture" by the Mormon Church. That has been enough for Utah to be able to develop as a successful tech hub. Religion is a necessary condition for southern culture to flourish but it is not, on its own, sufficient.
On the education front the exception used to be Texas. But there is a peculiar history behind this. For many years Texas was flush with oil money. In a bid for prestige the state poured vast quantities of money into its major Universities. With this they were able to attract top tier talent. But the days of Texas generously funding their Universities has come to an end. And their reputation is slowly declining.
The South also benefited from a geographic fluke. The closer you are to the equator the easier it is to loft a rocket into space. For a time this was coupled with a number of very powerful southern legislators like Lynden Baines Johnson. They had a strong interest in directing Federal spending to their states. So we have the Johnson Space Center in Texas. We have Cape Canaveral in Florida. We have substantial rocket building capability in Huntsville Alabama. When the space program was flush a lot of that money got spent in the South. And the space program is a scientific endeavor at its heart.
The geographic advantage of being closer to the equator persists. But the Federal government has been cutting space spending for decades. So the new generation of space entrepreneurs are private rather than being tightly bound to the Federal government.
To the extent that space money is still flowing, new initiatives have moved to the West Coast. SpaceX is a California firm. Blue Origin, funded by Jeff Bezos of Amazon fame, is headquartered in my state. Paul Alan, Bill Gates' high school buddy, invested heavily in space. But his investment flowed into the west coast. (With his death it looks like that initiative will not continue but others will.) Then there are robust international efforts by the Europeans, Japanese, Chinese, and Indians.
None of these initiatives will ever find a home in the American South. And the South used to be only mildly hostile to this sort of thing. They have seriously amped up their hostility in recent years.
On the other hand, none of the thinking behind Plantation Economics originated in the South. It originated elsewhere and actually dates back much further. The European feudal system worked in much the same way. They even featured a ruling class that was largely idle. Actually managing your interests was considered unseemly. It was almost always delegated to some kind of overseer/foreman leaving nobles to tend to "more important" matters like entertaining and being entertained, preserving one's position, and because it was critical to maintaining one's position of power, military matters.
As with the Plantation Economy you had a small group of nobility that sat at the top of the pyramid. Below them was a slightly larger group of professionals like armorers, saddle makers, etc. that supported them. Then you had the peasants. While technically not slaves the differences were insignificant.
They were tied to the land. It was illegal for them to move. They lived in a non-cash world because they had no cash. Their farms were supposed to provide for them while also generating a small surplus that went to the local feudal lord. Religion was co-opted into a complete support of a structure that provided little or no benefit to almost all of the population. Most people were completely illiterate. So what passed for education was the sermon they listened to in church on Sunday.
And it was a shift away for this to an industrial society that resulted in a general increase in everyone's standard of living. Again, the industrial system produced many people with enough money to afford manufactured goods. And the virtuous circle raised the standard of living of everyone from the top of the system to the bottom.
We also find the same kind of system in banana republics. The system supports a small group of ruling elites. They are in turn supported by a slightly larger professional class while the vast bulk of the population consisted of poor peasants. Again, the aggregate wealth of these countries are low and tends to grow slowly when it grows at all. This doesn't matter to the small group of elites as they have enough money and power to live very well. Their aggregate consumption is too low, however, to lift the economy as a whole.
And if these ideas sound familiar it is because the Republican Party is pushing Plantation Economics yet again. The elites are now composed of the super-wealthy and the senior executives of large corporations. The US used to have a large middle class but it is shrinking. And yet again their effectiveness depends on their ability to sell lies. So far they have been quite adept at it.
If we take the bottom of the crash of '09 as our starting point (other starting points yield pretty much the same conclusions but are not as well documented) we can ask who is now doing better and who is not. And the answer is clear as a bell. Urban areas have rebounded more quickly and are in many cases actually ahead of where they were in '09. Rural areas were, if anything, hit harder. They have seen some rebound but not nearly as much as urban areas have. Urban areas generally support Democrats and Democratic policies. Rural areas generally support Republicans and Republican policies.
Trump got elected by getting rural voters to buy into the idea that he would make things better for them. But he has implemented an economic policy that follows the Plantation Economics model. And rural areas have seen no improvement in their lot. Lots of rural areas are now worse off then they were in '16. But rural voters continue to stick with him.
He lies to them and they believe the lies. He is running a totally faith based administration. "Believe what I say in spite of the evidence to the contrary, not because of it". He has strong and unwavering support from religious conservatives. This is in spite of the fact that he is the opposite of a Good Christian.
This should come as no surprise as these churches are the descendants of the "southern" churches of the antebellum period. He also has strong and unwavering support from the conservative press. Both of these institutions are happy to lie and cover up on his behalf. This is straight out of the Plantation Economics playbook.
This sort of thing has worked in a lot of places and for long periods of time. We will find out if it is going to continue to work in the US in less than two years.
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