Forum Post: northernomics & southernomics

Southern Poverty Pimps
The ‘original sin’ of the Southern political class is cheap,
powerless labor
By MICHAEL LIND from the Progressive Populist

Contemporary American politics cannot be understood apart from the North-South divide in the US, as I and others have argued. Neither can contemporary American economic debates. The real choice facing America in the 21st century is the same one that faced it in the 19th and 20th centuries — Northernomics or Southernomics?

Northernomics is the high-road strategy of building a flourishing national economy by means of government-business cooperation and government investment in R&D, infrastructure and education.
Although this program of Hamiltonianism (named after Washington’s first Treasury secretary, Alexander Hamilton) has been championed by maverick Southerners as prominent as George Washington, Henry Clay and Abraham Lincoln (born in Kentucky to a Southern family), the building of a modern, high-tech, high-wage economy has been supported chiefly by political parties based in New England and the Midwest, from the Federalists and the Whigs through the Lincoln Republicans and today’s Northern Democrats.

Southernomics is radically different - it is a strategy of specializing in commodities and cheap labor is intended to enrich the Southern oligarchy. It doesn’t enrich the majority of Southerners, white, black or brown, but it is not intended to.
The purpose of the age-old economic development strategy of the Southern states has never been to allow them to compete with other states or countries on the basis of superior innovation or living standards. Instead, for generations Southern economic policymakers have sought to secure a lucrative second-tier role for the South in the national and world economies, as a supplier of commodities like cotton and oil and gas and a source of cheap labor for footloose corporations. Contrary to what is often said, the “original sin” of the South is not slavery, or even racism. It is cheap, powerless labor.

Before 1900, the cheap labor was used to harvest export crops like cotton and lumber. Beginning around 1900, Southern states sought to reap benefits from the new industrial economy by supplying national manufacturing companies with pools of cheap, powerless labor as well. For a century now, Southern state economic development policies have sought to lure companies from high-wage, high-service states, by promising low wages and docile workers. Texas Gov. Rick Perry’s recent appeals to California businesses to relocate to the Lone Star State are the most recent example.

The essence of the Southern economic model is not low taxation, but a lack of bargaining power by Southern workers of all races. Bargaining power at the bottom of the income scale is created by tight labor markets; unions; minimum wage laws combined with unemployment insurance; and social insurance, such as Social Security and Medicare and Medicaid - anathemas to southernomics.

Naturally, the 21st-century descendants of traitors Jefferson Davis and John C. Calhoun want to weaken everything that strengthens the ability of a Southern worker to say to a Southern employer: “Take this job and shove it!”

Tight labor markets are anathema to Southern employers. They want loose labor markets that create a buyer’s market in wage labor. That is why, at a time of mass unemployment among low-skilled workers in the US, most of the calls for expanding unskilled immigration in the form of “guest worker” programs are coming from Southern and Southwestern politicians. Guest workers — that is, indentured servants bound to a single employer and unable to quit — are the ideal workers, from a neo-Confederate perspective. They are cheap and unfree.

Needless to say, private sector unions that pool worker bargaining power are anathema to today’s suave metropolitan successors to the slave-owning plantocracy. The whole point of the Southern model of economic development is to create a non-union region from Virginia to Texas, to which companies can be induced to move from states with unionized workforces. Besides, unions engage in collective bargaining, in violation of the Southern ideal of employer-worker relations, in which the master gives orders and the fearful worker obeys without question.

A high national minimum wage also threatens the Southern conservative program for stealing jobs and industries from other states and other countries. Particularly if it is combined with generous unemployment insurance, a high minimum wage gives Southern workers the ability to turn down jobs that pay poorly — that is to say, the majority of jobs in the South, if the Southern elite has its way. While the Southern right opposes a higher federal minimum wage, it has no objection to increases in the minimum wage by Northern states, which thereby help the South lure more businesses.

Ruthless and callous as they are, the old families and nouveaux riches who make up the Southern elite don’t want their workers to starve. On the other hand, they prefer not to pay a wage adequate for the necessities of life. The solution favored by the Southern oligarchy is the earned income tax credit, a wage subsidy to workers that tops up a too-low wage paid by the employer.

The major champions of the EITC in national politics have tended to be conservative Democrats from the South, like the late Lloyd Bentsen, a reactionary born into the South Texas aristocracy, and Louisiana’s Sen. Russell Long. What makes the EITC so appealing to Southern Democrats and Southern Republicans alike is that it forces the Northern and Western states, by means of the Internal Revenue Service, to subsidize low-wage businesses in the South, even as the South is using the poverty of its workforce to lure high-wage businesses from the North and West. Every penny spent on the federal EITC is a penny that Southern state governments and Southern employers do not have to spend on Southern workers to keep them from starving. By paying taxes to the federal government to fund the EITC, Americans in high-wage states are literally subsidizing the South’s job-stealing program. The progressive policy wonks who prefer a higher EITC to a higher minimum wage are useful idiots, from the perspective of the crafty Southern political-business elite.

Finally, there is the welfare state. Universal, portable social insurance programs like Social Security and Medicare increase the bargaining power of workers, by reducing the penalty for quitting a job because of poor wages or poor treatment. If they quit, they don’t endanger their healthcare access or their retirement security. Workers with adequate social insurance are more likely — to use a time-honored Southern phrase — to be “uppity.”

Apart from a high federal minimum wage, nothing could be a greater threat to the Southern cheap-labor economic strategy than universal, standardized federal social insurance. In order to maximize the dependence of Southern workers on Southern employers in the great low-wage labor pool of the former Confederacy, it would be best to have no welfare at all, only local charity (funded and controlled, naturally, by the local wealthy families).

But if there must be a modern welfare system, then the Southern oligarchy prefers a system that allows state governments, rather than Washington, D.C., to control eligibility and benefit levels. By controlling eligibility, Southern state governments can minimize the amount of the local workforce that has access to good social insurance, reducing the power of Southern workers to be “uppity.” At the same time, giving Southern states the option to have lower benefit levels provides the neo-Confederates with yet another bargaining chip, along with low wages and low taxes, that can be used by Southern state governments to lure business from more generous states or nations.

It is all a system, you see. Southern conservative policies toward immigration, labor unions, the minimum wage and social insurance don’t reflect supposed conservative or libertarian ideologies or values, even if conservative or libertarian intellectuals are paid to dream up after-the-fact rationalizations. These policies are reinforcing components of a well-thought-out economic grand strategy to permit the South, as a nation-within-a-nation in the US, to pimp its cheap, dependent labor for the benefit of local and foreign (non-Southern) corporations and investors.

“Pimp” is the mot juste. In the 1960s, conservatives referred derisively to community activists who were accused of lining their own pockets while representing the urban poor as “poverty pimps.” But the real “poverty pimps” in America are members of the Southern political class — many Southern Democrats and practically all Southern Republicans. By means of permanent economic repression of most Southerners of all races, Southern strategists hope to strip the non-Southern states of the Union of their best companies and industries, thereby crippling Northern revenue bases and sending Northern economies into death spirals.

The defeat of Southernomics is therefore in the interest of most Southerners and most non-Southerners alike. And the defeat of Southernomics requires the radical empowerment of Southern workers — white, black and brown alike. No American workers anywhere in the nation can ever be secure until the wage earners of the South are powerful and prosperous. And uppity.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation.

From The Progressive Populist, March 15, 2013