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February 19, 2013 4:58 PM The “Original Sin” of “Southernomics”

By Ed Kilgore

Ah, Michael Lind, that maddeningly erudite but tunnel-visioned scholar of American history and politics, has struck again! In a piece for Salon that epitomizes his strengths and weaknesses, Lind forces Rick Perry’s “Texas Miracle” economic development scam into his eternal mold of virtuous Yankees and satanic southerners, and manages a drive-by slur on those who think the Earned Income Tax Credit is a pretty important boon to the working poor.

Lind quite properly notes that a recurrent theme in southern politics and economics has been the desire to pursue “low-road” economic development strategies based on cheap labor (and generally poor public services) attractive to footloose capitalists who want little else beyond the lowest possible business costs. He calls this “southernomics,” and appears to attribute it to an inherent regional and perhaps ethnic defect—an “original sin.” Lind appears, however, to be entirely unaware there was a fairly powerful revolt against this model of economic development in the South during the 1980s and 1990s—indeed, it’s one of the things that helped make Bill Clinton famous—based on the observation that better and more stable jobs paying better and more stable wages tended to be produced by companies that valued things beyond low labor and regulatory costs—you know, things like an educated work-force and a good quality of living. The revolt died out during the last decade, in no small part because Democrats lost their competitive status in the region, yielding the field back to atavistic pols like Rick Perry and Nikki Haley, to cite the most egregious examples. But the recent rapid adoption of the low road to development by Yankee pols like Scott Walker is another indicator that it is not some inherent or exclusive product of the evil Southern Character.

So attached is Michael Lind to his theory of ethno-regional determinism, however, that he extends the southern conspiracy to include those who support the Earned Income Tax Credit for the working poor:

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.

I’m sure Paul Krugman, among many others, would be interested to learn he is a “useful idiot” being duped by southern aristocrats (just as southern Republicans, who in my experience are virulently hostile to the EITC and the “lucky ducky” folk who thereby avoid net income tax liability, would probably be surprised to learn they are its staunchest supporters). The basic idea that socialized income supports subsidize irresponsible employers is what has led some “progressives” to deplore Medicaid as a big fat subsidy to Walmart, an argument Lind doesn’t make here.

But he does contradict himself rather stoutly via this paragraph:

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.”

Anyone who quits his or her job more than five years out from retirement age because after all if they don’t starve to death they’ll still get Social Security and Medicare is a lot braver than I’d ever be. The EITC—and for that matter, Medicaid—are vastly more important to actual working people than the portions of “the welfare state” Michael Lind happens to approve of.

But in any event, he’s absolutely right the Perry rap is worth rebutting and fighting and even demonizing, so demonically seductive it is to both conservative pols and “business-minded” people in places with little other than weaknesses to commend them to “job-creators.” If it actually worked, of course, Mississippi would be the economic dynamo of the nation. And that’s ultimately the problem with Lind’s analysis: he thinks it does work, which is why he’s so afraid of any approach other than making the South just like the “enlightened” rest of the country.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Don Elliott on February 19, 2013 5:21 PM:

    One might do well to consider Scott Walker to be a "Wisconsin born Southerner," rather than a Yankee. His background is Baptist, Suburban, and his influences have been Southern - college in Southern Ohio, the Kochs, and ALEC, a basically Southern snake-pit. He may not talk like Haley, but he may aspire to become Haley Barbour tat doesn't talk funny.

  • Helen Bedd on February 19, 2013 5:39 PM:

    It strikes me as true that Walmart can get away with grossly underpaying their typical worker because those folks are eligible for the EITC, Medicaid and Food Stamps.

    Medicaid can be seen as "a big fat subsidy to Walmart," but progressives don't deplore Medicaid, they deplore Walmart's exploitation of it.

    The fact that blue state taxpayers contribute to the profit of red state employers is part of the reason that red states get lots more tax money from Washington D.C. than they send in...

    PS
    “southernomics" has overwhelmingly worked for the Walton family.

  • boatboy_srq on February 19, 2013 6:09 PM:

    The problem of Southernomics isn't one of "'low-road' economic development." The problem is an enduring Southern disrespect for labor.

    Southern business enterprises spent the first couple centuries of their development (I'm counting from 1607, but even 1700-1865 is a long time) relying on labor that they paid for - once. They then spent the next century sorting out how little they could get away with in wages for the people they were now renting instead of hiring, and how much in fees and service charges they could assess to claw some of those wages back. This does not promote a mindset that employees have value, and it does promote a distinction between "employee" and "consumer" - since the one historically was much less of the other than elsewhere in the nation.

    The current Southern fixation on the low road is driven in no small part by this disrespect for labor as a whole; in the Southern mind, labor is fungible and easily replaced, skills are at once required of candidates and overrated as employee development tools, and wages and other compensation are an ever-increasingly resented debit on the balance sheets. The fascination with the bottom line, and the conviction that the bottom line will get bigger only if the charges against it get smaller, is endemic to Southern Conservatist thought. This is another facet of the "makers/takers" and "special rights" arguments; the idea that economic growth does not necessarily translate to economic costs elsewhere in the balance sheet is identical to the idea that equal rights for all means less rights for some, and related to the idea that encouraging skilled labor with improved compensation guarantees smaller profit margins goes hand-in-hand with the idea that recognizing discrimination is discriminatory in and of itself.

    There is no "race to the bottom" in the Newest South. There is only the resentment that the bottom is not low enough, and insistence that if only the rest of the nation understood this, then a return to The Way Things Ought To Be, where the Citizenry ran society and those Other people knew their place, would be welcomed by all. Southernomics is Jim Crow for accountants; nothing more.

  • Miracle Max on February 19, 2013 6:27 PM:

    Lind has been tooting this bit about the EITC for years. Like a lot of lefties (not that he is one), he takes a premise that sounds logical but is actually an empirical question. Empirical research on the EITC does not show much of it substitutes for wages. For one thing, calculating the EITC is notoriously complicated because of eligibility rules. Employers are not likely to know the worker's credit if workers do not either. For two, the credit is almost always paid well after the work is performed, when people file their taxes. If you employ someone in March typically don't know their total income for the year, especially if they work irregularly, for multiple employers. If you don't know their credit, you can't recalibrate your wage offer to take advantage of it. It makes more sense for an employer to take advantage of Medicaid by not offering health insurance, since that's a binary issue. Lind glosses over why work-conditioned benefits have more political juice -- they are conditional on work (like the minimum wage). People are less bothered by that than by public assistance.

  • c u n d gulag on February 19, 2013 6:28 PM:

    It’s kind of what I was writing about a few months ago – only he’s betterer and smarterer!

    AndI never looked at the EITC in that way before. Though I can see both sides on that one.

    Please, please, FSM, let the South secede again!

    This time, we swear we won’t life a finger to stop them. We’ll just wish them a “Sei Gesund!” and a “Don’t let the door hitcha, where the Mason-Dixon line splitcha!”

    And then, we’ll work on the exhange of hostages, and after that, we’ll build a nice, big, border wall.

    And then, when we need to keep the kiddies in line when they’re mis-behaving, we’ll threaten to send them to DixieJesusStan to work in the cotton fields, or the Soylent Green factories.

  • John on February 19, 2013 8:38 PM:

    This tangentially touches on a point I've been wondering about, which is what happened to the "New Democratic" coalition in the South?

    Republicans made immediate gains in the South in the immediate aftermath of the civil rights movements, and started being competitive for the first time and winning elections. But new biracial Democratic coalitions remained competitive in the South well into the 90s. As late as 98 and 99, Democrats were still winning gubernatorial elections and dominating state legislatures.

    What happened? Why did Democrats become completely unviable everywhere except those states (Virginia, North Carolina, Florida) that are full of northern transplants and that had originally been among the most *Republican* states in the South?

  • janinsanfran on February 19, 2013 9:02 PM:

    It's really hard for me to get enthused about the EITC. This is government by kludge. If public policy is to raise the incomes of low wage workers, raise the minimum wage. Even better, make it possible for workers to organize to raise their own wages by combining in unions.

    No low wage workers I know (and I do know some) can imagine that if they filed taxes they'd get something out of it. This is ass-backward policy making.

  • Anonymous on February 20, 2013 5:40 AM:

    into his eternal mold of virtuous Yankees and satanic southerners

    I think Lind was clearly referring to the 'political class' but calling it 'the Southern oligarchy' would've probably have been more accurate.

    and manages a drive-by slur on those who think the Earned Income Tax Credit is a pretty important boon to the working poor.

    I think that part could've been developed a lot better. If I have the EITC and a minimum wage, I'd think that was at least a start.

    Lind appears, however, to be entirely unaware there was a fairly powerful revolt against this model of economic development in the South during the 1980s and 1990s

    And there was it, and it was brief and then flickered out, as did the Populist movement of the 1880's and 90's.

    Outside the South (everywhere in the developed world actually) things got better over time for labor. Whereas people tried to make things better and got stomped in the face on several occasions. In the South, the oligarchy always wins, unlike everywhere else.

    But the recent rapid adoption of the low road to development by Yankee pols like Scott Walker is another indicator that it is not some inherent or exclusive product of the evil Southern Character.

    I don't think that there's a product of an evil Southern character (unless it's racism), but the low road development model (actually, the non-development model) seems to be hardwired into the culture... due to the hard work of the aforementioned oligarchy. It has persisted for three centuries, in the teeth of the evidence that this just makes everyone worse off and is nasty in and of itself. But I don't see much evidence it will be questioned.

    As for Scott Walker, well the problem is that the South has been trying to export the low road model, and boy, that hasn't gotten us very far.

    max
    ['If you exclude the EITC, I thought it was a pretty good column.']

  • Peter Fugiel on February 20, 2013 6:10 AM:

    Policy analysis influenced by national level politics invariably falls a little flat when you talk about the states. The states, each of them, are their own little Switzerlands, and in the case of Texas, their own little Brazils. Of course there are regional patterns, but state history and political culture is important. Texas was a country once, and it has a unique pro-urban culture that I think is the key to its decentralized might. Funding public education adequately will catch up with the state, as its growing urban middle class grows restive with junky schools.

  • MuddyLee on February 20, 2013 8:58 AM:

    What happened to the Democrats in the South? Rush Limbaugh and Fox News. The Koch Brothers and ALEC. There is a "worship the rich" mentality that causes middle and lower income people to vote against their own self interest. There's an anti-rational basis to a lot of this, as if politics is football (root for YOUR TEAM, especially if they have the prettiest cheerleaders - aka Fox News Babes). And there's racism - always was - but because of Rush and Fox News the ultra conservatives can claim there's an intellectual basis for their views and they have a big support group.

  • Zorro on February 20, 2013 10:34 AM:

    Don't forget history: the southern economic model has *always* been based on cheap labour. Can't get much cheaper than slaves, after all- and the south went to war to defend that aspect of their economy. People who claim that the Civil War was about states' rights are either stupid, in denial, or lying: the Civil War was over states' rights to own other human being as chattel. Was the issue the states' rights to license manicurists, there would have been no civil war.

    Simply put, the south has *always* been a cheap labour region- the nature of the labour may have changed, but the cheapness of it hasn't.

    -Z