Tuesday, May 23, 2017

Trump, Democrats, and Trade

Donald Trump won the presidential election in 2016 based on a number of promises as to what he would do as soon as he gained power.  Most of his enumerated actions frightened his antagonists on the left, but one actually aroused some interest on the part of his Democratic rivals.  Trump claimed that the US had been taken advantage of in the arena of international trade and this had cost the nation wealth and jobs over the years.  This is an assumption that had arisen in Democratic circles numerous times over the years.  Could changing the rules of trade provide greater wealth and generate numerous jobs at home?  Could Trump and the Democrats actually collaborate in a specific area?

First, some background is required.  The term “free trade” is thrown around suggesting that trade proceeds with little or no tariff imposed on imported goods.  The implication is that all countries are trading from the same basis and thus the system is fair in that all countries compete on a level playing field.  Unfortunately, free trade has never been fair, and it was never intended to be fair.  The first era of globalization was inaugurated by Britain, usually by sending warships to impose trade conditions on weaker nations.  The most egregious example was probably the “Opium War” with China.  Britain had contracted an immense taste for the teas of China and had generated a huge trade imbalance.  For trade to work properly, China had to balance the deficit by purchasing British products.  The only product the British had that would sell in China was opium made in British-controlled India.  Since China had made opium illegal, Britain declared war on China and forced it to accept whatever Britain chose to sell.  And that is how free trade came to China.

The first age of globalization was also the age of colonialism.  The plan was to take over a country or region and force the inhabitants to sell the occupying country natural resources and low-value goods so that the occupying country could then add value to those goods and resell them to their captive market at a profit.  The terms fair and free are entirely inappropriate for this type of arrangement.

The major proponents of free trade are the US and the British.  Neither of them practiced free trade until they believed they were strong enough to dominate some or all markets.  It took the US until the twentieth century before it felt capable of competing.  If one examines the paths to wealth taken by countries such as Japan and South Korea, one discovers that they also restricted trade until they were ready to compete.  The goal of international trade in the second period of globalization, the current one, is to be a winner.  The dominant countries, with the US being the prime example, have set up rules and regulations and agencies that promote them such as the International Monetary Fund (IMF), World Bank, and the World Trade Organization (WTO), with the goal of encouraging developing countries to adhere to policies that provide an advantage to the wealthier nations.

Given this background, viewing the traditional line espoused by economists on international trade with a bit of skepticism seems appropriate.

It is fair to ask what exactly has globalization and free trade done for the world.  Is the world a better place for it?  Branko Milanovic uses income as a measure of benefit and tries to answer that question in his book Global Inequality: A New Approach for the Age of Globalization.  In it he produced a graph that gained considerable notoriety as “the elephant curve.” 



This chart plots the percentage gain in real income (2005 international dollars) over the period 1988 to 2008 across the world.  The horizontal axis is the percentile of the global income distribution.  One can conclude that the incomes of low to moderate income people have increased over this period by what appears to be a significant amount.  There is a dip in income growth to approximately zero at 80%, followed by a steep rise at higher income levels. Globalization has helped the low income people of the world and it has benefited the wealthy of the world.  Who are those left behind as indicated by Milanovic’s point B?

“They are almost all from the rich economies of the OECD (Organization for Economic Cooperation and Development).  If we disregard those among them who are from the relatively recent OECD members (several Eastern European countries, Chili, and Mexico), about three-quarters of the people in this group are citizens of the ‘old-rich’ countries of Western Europe, North America, Oceania….and Japan….People at point B generally belong to the lower halves of their countries’ income distributions.”

“In short: the great winners have been the Asian poor and middle classes; the great losers, the lower middle classes of the rich world.”

Milannovic’s conclusions are about what one might expect if one lives in one of the “old-rich” countries and has observed how fellow citizens have fared under globalization.  Some might even applaud these developments as a way of distributing wealth from rich countries to poor countries.  Milanovic provides another way of looking at the data that produces a critical insight.  The previous chart evaluated relative changes in income; the next converts those gains into absolute changes by providing a monetary value.



If globalization distributed income gain uniformly then every group would gain 5%.  In fact, most of the gain goes to those already wealthy: 19% to the top 1%, 44% to the top 5%, and 60% to the top 10%.  As a means of distributing income, globalization is extremely inefficient.  It seems best able to provide income to the already wealthy in both rich and poor countries.

One conclusion that can be drawn from this data is that whatever ill effects trade has had on the distribution of wealth, they are not unique to the US.  Consequently, if the US should pursue some new trade strategy that might be deemed beneficial domestically, all wealthy countries could follow the same path.  The international consequences would be enormous.

Douglas A. Irwin wrote a piece for Foreign Affairs, The False Promise of Protectionism, that assesses the policies that Trump has claimed he plans to implement.  Irwin is clearly dubious about Trump’s understanding of trade.

“In his inaugural address, U.S. President Donald Trump pledged that economic nationalism would be the hallmark of his trade policy. ‘We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs,’ he said. Within days, he withdrew the United States from the Trans-Pacific Partnership (TPP), announced that he would renegotiate the North American Free Trade Agreement (NAFTA), and threatened to impose a special tax on U.S. companies that move their factories abroad. “

“Although Trump’s professed goal is to ‘get a better deal’ on trade, his brand of economic nationalism is just one step away from old-fashioned protectionism. The president claimed that ‘protection will lead to great prosperity and strength.’ Yet the opposite is true. An ‘America first’ trade policy would do nothing to create new manufacturing jobs or narrow the trade deficit, the gap between imports and exports. Instead, it risks triggering a global trade war that would prove damaging to all countries.”

Irwin derides Trump’s approach as being “just one step away from old-fashioned protectionism,” but old fashioned protectionism has been beneficial to developing countries, particularly the US.  And the US is not the only country that feels a bit uncomfortable about traditional trade agendas.

“According to the WTO, the import restrictions imposed by G-20 countries since 2008 now cover a disturbingly high 6.5 percent of their merchandise imports. The rate at which new measures are being imposed exceeds the rate at which old measures are being removed, resulting in the steady accumulation of trade barriers. In January, citing “protectionist pressures,” the World Bank reduced its forecast for global economic growth in 2017.”

Irwin argues that protectionist moves “would do nothing to create new manufacturing jobs.”  He bases this claim on two justifications.  The first addresses the role of automation and improved manufacturing procedures in eliminating jobs.

“But the reality is that factors other than foreign trade are to blame for the country’s current economic woes. The share of Americans who work in manufacturing has fallen steadily since the early 1950s, mainly due to automation and productivity growth. The labor-force participation rate among working-age males has been declining since 1960. The stagnation in real earnings of men also dates back to the early 1960s. These trends started well before the era of deregulation and free trade in the 1980s and 1990s, let alone the “China shock” of the first decade of this century.”

No one would argue that over time the number of people required to produce a given quantity of an object will decrease due to various efficiencies.  However, trade contributes to job loss in a much more profound way.  Economists, in their ideal situation, would like production from a more efficient country to replace the less-efficient domestic industry.  In many cases this is what has happened.  Forgotten in arguments of economic efficiency is the fact that ceding manufacturing in a product line to another country also cedes to that country the associated technology, and future extensions of that technology.  We began making simple things in Asia because labor was cheap.  We now make complex things in Asia because that is where the required technology resides.

Yet not all industries are equal in a more strategic sense.  The Japanese and Europeans are correct in maintaining support for inefficient agricultural enterprises.  What country would be foolish enough to depend entirely on the good will of trading partners to feed its people?  Food sufficiency is not an issue for the US.  What about defense sufficiency?  Should we depend on others to produce our war making capability just for economic reasons?

Irwin also argues, counter to what some believe, that past experience has shown that trade restrictions have been ineffective.

“Why can’t trade protection be used to revitalize basic industries that have suffered? After all, some claim, in the 1980s the Reagan administration imposed many import barriers, which seemed to help domestic industries cope with increased foreign competition. Confronted with a large and growing trade deficit, the United States pressured Japan to agree to reduce its automobile exports, forced foreign suppliers to limit their steel exports, and negotiated a new arrangement that restricted imports of textiles and apparel. Because the economy recovered and employment grew, Robert Lighthizer, a trade negotiator in the Reagan administration whom Trump has tapped to be the U.S. trade representative, has asserted that Reagan-era import restrictions ‘worked’.”

But that judgment runs counter to the evidence.  In a 1982 report, the U.S. International Trade Commission found that most industries receiving trade relief were undergoing long-term declines that import restrictions could not reverse. Such measures did little to help companies, it stated, ‘either because so much of the firm’s injury was caused by non-import-related factors, or because the decline of imports following relief was small.' Four years later, when the Congressional Budget Office studied the question, it concluded, ‘Trade restraints have failed to achieve their primary objective of increasing the international competitiveness of the relevant industries’.”

Irwin then proceeds to point out all the bad things that followed from this attempt to manipulate the market.

“One should look back at the Reagan-era protectionism not with nostalgia but with regret, because it proved to be a costly failure. The restrictions on automobile imports raised the average price of a Japanese car by 16 percent in the early 1980s, socking it to consumers and handing billions of dollars to Japanese exporters. The limitations on steel imports punished steel-using industries, and those on textile and apparel imports raised prices for low-income consumers. When it comes to using protection to help revitalize domestic industries, the United States has been there, done that. It didn’t work”

It is not difficult to argue that the strategic interests of as large a country as the US demand the existence of viable auto and steel industries.  The domestic automobile producers eventually caught up to the Japanese in quality.  Just because an industry messes up and becomes economically inefficient, is not a reason to let it and the jobs and technologies it provides die.

Too many economic decisions are left in the hands of ideologues with a religious belief in the wisdom of markets.  Markets are there to be utilized and, if necessary, to be manipulated.  Every other country acts in its self interest, why shouldn’t we?  There is also the belief that markets are smarter than human planners.  We, as a nation, cannot have a strategic business plan because the markets will always be smarter than any planners.  That canard has been disproved many times. 

Irwin also resorts to the assumption that trade restrictions will hurt the poorest among us the most.  This is in spite of the elephant curve showing that trade and globalization have hurt the lower income people in our nation most.  Stagnating or falling incomes coupled with rising costs for housing, education, and healthcare are not balanced by the ability to buy cheap tee shirts.  

The point of this has been not to argue that Trump or the Democrats have a good plan for how to move forward, but rather to merely suggest that the current system of trade is not so perfect that it cannot be manipulated to ease some of the pain that is felt throughout the nation.  That pain is real and deserving of more attention than it has been getting. 

Trade may turn out to be an ineffective instrument to do what must be done.  If so, an explicit job creation plan must be implemented—and those who accumulated so much wealth from globalization will have to help pay for it.


The interested reader might find the following articles informative:




Tuesday, May 16, 2017

Economic Development: Taking the Red State Low Road or the Blue State High Road

Arlie Russell Hochschild is a sociologist at the University of California at Berkeley who was determined to understand why people in deep red states voted the way they did and what it was that drove the reasoning they used in deciding how to vote.  She chose to study a region in Louisiana that is home to the oil and petrochemical industries because she was particularly interested in determining why a people who lived in an area made toxic by industry would be dead set against environmental regulation.

Hochschild visited with many Louisianans over a period of about five years trying to gain understanding.  She presented her findings in the book Strangers in Their Own Land: Anger and Mourning on the American Right.  What she learned about their Tea Party leanings has been discussed in Strangers in Their Own Land: Republican Voters in the South.  The attitudes toward industry, religion, and the environment have been discussed in Louisiana Turns Itself into an Industrial Sacrifice Zone.  Hochschild proposed that what she observed in Louisiana in terms of economic development was a consistent red state strategy—the low road—which could be compared with a blue state strategy—the high road.  This latter subject will be the topic here.

Many of the people Hochschild met had been residing in essentially the same area for generations.  The association with place—and environment—was very strong.  It was very important for them to continue to inhabit the area in which they had grown up.  For that to happen, it was essential that jobs be created.  In fact, they were willing, begrudgingly, to allow their environment to be plundered in order to obtain jobs. 

This is the reasoning Hochschild saw in play in Louisiana.

“The logic was this.  The more oil, the more jobs.  The more jobs, the more prosperity, and the less need for government aid.  And the less the people depend on government—local, state, or federal—the better off they will be.  So to attract more oil jobs, the state has to offer financial ‘incentives’ to oil companies to get them to come.  That incentive money will have to be drawn from the state budget, which may lead to the firing of public sector workers, which, painful as it might seem, reduces reliance on government and lowers taxes.  It is a red state tactic.  But the paradox is that it goes with being a poor state with a lot of problems.”

Hochschild discusses this paradox with Paul Templet “a PhD in chemical physics” who taught at Louisiana State University and for four years was head of the Louisiana Department of Environmental Quality.  Templet was asked if the welcoming of oil companies had reduced poverty.

“’No,’ he answers, Louisiana was poor before oil came, and we’re poor today—the second poorest in the U.S.’  In 1979, 19 percent of Louisianans lived below the poverty line; in 2014 it was 18 percent.  In addition, ill-schooled poor people of any race find it hard to get the kind of highly skilled permanent jobs oil brings in.  And oil hadn’t improved the schools—they are financed by local property taxes, which are higher in rich areas and lower in poor ones.”

But if the oil industry brings in high paying jobs, shouldn’t that lead to economic growth and higher income for residents?

“One defense of oil jobs was that they were highly paid and that salaries would ‘trickle down’ through consumption that increased jobs and wages of other workers.  But did it?  ‘Not much,’ Templet says.  That’s because oil wages don’t trickle down; they leak out.”

A number of factors lead to this leakage.  Most of the oil and petrochemical industries are either foreign owned or located elsewhere in the US.  Profits are then generally distributed elsewhere, with dividend recipients most likely enjoying the social amenities—such as good public schools and a healthy environment— provided by more advanced countries or those available in the blue states.  Just because an executive builds a chemical plant in a poor region of Louisiana, that does not mean she wishes to live there herself, or force many others to live there either.  Those who could bring real wealth into the state stay away. 

When a plant moves to Louisiana it generates a large number of jobs—temporarily.  Skilled craftsmen are required for the building of the plant, but because Louisiana does not provide those skilled workers, most of them are imported from outside the state, or outside the country.  Less-skilled workers are also needed, but companies prefer to use even lower paid workers than they can legally employ in the US if they can get away with it.  Most of the earnings of both classes of workers leave the state.

“The industry is highly automated.  To build a petrochemical plant, you need many construction workers for a temporary period, and then their job is over.  To run a petrochemical plant, you need a small number of highly trained engineers, chemists, and operators to keep watch over panels of gauges and to know what to do when there’s trouble.  Then you need a few repairmen…”

“But a fracking boom was on, and maybe that meant more jobs coming in.  According to the 2014….Southwest Louisiana Regional Impact Study, some 18,000 jobs, a small portion of them permanent, would open up by 2018.  But seven out of ten of these jobs would be filled, the report said, by workers from outside southwest Louisiana.  Many companies would recruit professionals from around the world.  Construction workers building the ‘man camps’—barracks within enclosed encampments—were Mexican, people said.  The man camps would house 5,000 pipefitters, an undisclosed number of them Filipinos on temporary visas.  Filipino workers have worked for over a decade on oil platforms in the Gulf.”

What Hochschild saw in Louisiana is an example of what is referred to as a low-road strategy, one that is common in red states.  It involves eliminating union representation of workers as much as possible, keeping wages and taxes low, and removing any regulations and procedures that might be inhibit businesses from doing exactly what they would like to do.  This strategy has worked well over the years throughout the South as a means of luring industries away from other parts of the country.  But for it to continue to work, wages must be kept lower than other regions in a kind of race to the bottom.  And in feeding incentives to industries, the states necessarily cut back on social benefits for its citizens.  The state is in effect weakening itself and becoming more submissive to the will of the corporations.

Hochschild’s source, Templet, provides this perspective on Louisiana..

“As companies squeeze favors out of the state, he argued, the more urgent its citizens’ needs for good schools and hospitals, the less the poor are able to use what opportunities exist, and the more atrophied become other sectors of the economy—which further concentrates power in the hands of oil.”

If this is the low-road, red-state strategy, what might be the high-road, blue-state strategy?

“The ‘high road’ strategy….is to stimulate new jobs by creating an attractive public sector, as California did in Silicon Valley and Washington State did in Seattle.”

This implies a strategy that keeps wages high enough that people can live without public income support, investing in good public schools, healthcare, a healthy environment, and effective infrastructure.  These things of course are all expensive and require significant revenue from taxes.  They also come with a host of regulatory constraints on businesses.

It is difficult to conjure up two more diametrically opposed views of the path to economic development.  How well do they work?  Hochschild provides us with some data.

Let’s begin with some big picture considerations.

“Across the country, red states are poorer and have more teen mothers, more divorce, worse health, more obesity, more trauma-related deaths, more low-birth-weight babies, and lower school enrollment.  On average, people in red states die five years earlier than people in blue states.  Indeed, the gap in life expectancy between Louisiana (75.7) and Connecticut (80.8) is the same as that between the United States and Nicaragua.  Red states suffer more in another highly important but little-known way, one that speaks to the very biological self-interest in health and life: industrial pollution.”

The willingness to tolerate pollution in the name of economic development was not a Louisiana attribute; it was a true red state  marker.

“….a startling 2012 study by sociologist Arthur O’Connor that showed that residents of red states suffer higher rates of industrial pollution than do residents of blue states.  Voters in the twenty-two states that voted Republican in the five presidential elections between 1992 and 2008—and generally call for less government regulation of business—lived in more polluted environments.  Residents in the twenty-two Democratic states that generally favor stricter regulation, he found, live in cleaner environments.”

This is what one might expect from attitudes about government regulation.  But how has this affected economic development.

“A 1993 study that compared states’ ratings on strictness of environmental protection with indicators of economic health (overall growth, employment growth, construction growth) over twenty years found that stronger environmental standards have not limited the relative pace of economic growth.”

“In a 2001 study of new air-quality regulations for manufacturing plants in the Los Angeles area, researchers reported no evidence that local air-quality regulation, among the strictest in the nation, substantially reduced employment.”

“A 2002 study also analyzed the impact of environmental regulations on four industries that generate significant pollution—and might therefore be expected to suffer losses from the effects of environmental regulation.  In two of the four industries researchers studied (plastics and petroleum), the net employment impact of the environmental regulations was small but positive, while in the other two industries (pulp and paper, and iron and steel) there was no statistically significant impact.”

“….a 2008 study found that investments in environmental protection create some jobs and displace others, but that the net effect on employment is positive.  In fact, environmental protection is itself a major sales-generating, job-creating industry.”

Environmental protection depends on the development of new technologies.  The states that invest in education and encourage technology development will be the places that benefit from environmental regulation, while the states that promote low wages at the expense of educational development will lose.  It seems the red states acquiesce to a program of accepting the pollution needed to produce the objects blue states desire and then paying the blue states to provide them the technology with which to mitigate that pollution.

Environmental pollution is not the only issue related to strategies for encouraging economic development.  It seems the red-state strategy of providing incentives to industry has generally been counterproductive. 

“A 2010 study, based on analysis of national surveys of 700 to 1,000 local governments from 1994, 1999, and 2004 that tracked the use of business incentives over time, found that governments that rely most heavily on incentives may face more intergovernmental competition, stagnating or declining economies, and lower tax bases.  For such governments, business incentives may contribute to a cycle of destructive competition.”

The decision to provide incentives to industry means that funds will have to be withdrawn from some other areas.  This sets up competition between education and other social services for diminishing resources.  Couple this with a willingness to allow industry to set low wage scales and you have created a situation where workers will have an increased need for those diminished services—a kind of race to the bottom.

Several studies have demonstrated that the blue-state strategy of demanding “living” wages and providing the educational opportunities to make workers skillful enough to justify those wages is the appropriate path to follow.  Consider this study of the construction industry: The Economic, Fiscal, and Social Impacts of State Prevailing Wage Laws: Choosing Between the High Road and the Low Road in the Construction Industry.  It provided these conclusions.

“Prevailing wage legislation is part of a broader set of interrelated institutional arrangements that promote a strong construction industry and a thriving middle class, including a stronger emphasis on apprenticeship training, skilled workmanship, workplace safety, increased access to health insurance and retirement security.  Prevailing wage laws support a high road economy by establishing the underlying legal framework for a construction industry that provides the skills needed to build quality infrastructure for a growing, technologically-sophisticated, and competitive economy. By fostering an economy with a strong middle class, prevailing wages promote sound public sector budgets at all levels of government.”

“Legislators have a choice between this construction industry high road and the low road that leads to less training, lower quality workmanship, more waste and inefficiency at the worksite, higher levels of poverty, increased taxpayer burdens, and reduced economic activity.”

A study by the International Economic Development Council, Creating Quality Jobs: Transforming the Economic Development Landscape, examines case studies of places that attempted to improve local economic development.  The locations were as varied as Tupelo, Mississippi and San Jose, California.  The conclusion was that the high road is the path to pursue.  A skilled work force is the basis for job development and economic growth.

“The conclusion that emerges from an assessment of these cases is simple (with complex solutions)—a more volatile and dynamic economy is driven increasingly by the skills of people. The cases indicate that indeed aligning skills and jobs is now sine qua non for economic development. This is the heart of the transforming landscape of economic development.”

Hochschild is drawn to the conclusion that the red and blue states, taken together, form a cooperative industrial ecology—but one that benefits the blue states more.

“As sociologist Richard Florida notes, ‘Blue state knowledge economies run on red state energy.  Red state energy economies, in their turn, depend on dense coastal cities and metro areas, not just as markets and sources of migrants, but for the technology and talent they supply.”

“Indeed, Louisianans are sacrificial lambs to the entire American industrial system.  Left or right, we all happily use plastic combs, toothbrushes, cell phones and cars, but we don’t all pay for it with high pollution.  As research for this book shows, red states pay for it more—partly through their own votes for easier regulation and partly through their exposure to a social terrain of politics, industry, television channels, and a pulpit that invites them to do so.  In one way, people in blue states have their cake and eat it too, while many in red states have neither.”


Wednesday, May 3, 2017

Louisiana Turns Itself into an Industrial Sacrifice Zone

A common assumption is that industrial progress and the improved welfare of humanity provides sufficient benefits that certain geographical areas must be “sacrificed” for the greater good.  The manufacture of products demanded by the modern economy causes pollution and ill health for both humans and the environment; therefore both may need to be sacrificed on occasion.  Wikipedia provides this definition of a sacrifice zone.

“A sacrifice zone is a geographic area that has been permanently impaired by environmental damage or economic disinvestment. These zones are most commonly found in low-income and minority communities.”

We are not necessarily discussing minor environmental or health issues here.

“The concept of sacrifice zones was first discussed during the Cold War, as a likely result of nuclear fallout.”

Arlie Russell Hochschild is a sociology professor at the University of California at Berkeley who was disturbed and puzzled by the increasing political polarization within the nation.  Being comfortably imbedded in a liberal enclave, Hochschild had little opportunity to interact with the engaged members of the other party, and assumed that those with opposing political views would be equally isolated from contrary opinions.  She decided she must meet with red-state people and try to understand where their beliefs came from.  Ultimately, she settled on Louisiana as the place to set up shop.  Her findings are recorded in fascinating detail in Strangers in Their Own Land: Anger and Mourning on the American Right.

Louisiana seemed like a logical place to study the Tea Party phenomenon.

“In the 2012 election, in the nation as a whole, 39 percent of the white voters voted for Barack Obama.  In the South, 29 percent did.  And in Louisiana, it was 14 percent—a smaller proportion than in the south as a whole.  According to one 2011 poll, half of the Louisianans support the Tea Party.”

Louisiana is also a home for the oil industry and the many associated chemical processing plants. Sections of it merit the label of sacrifice zone: Yet the state is also the home of people virulently opposed to government regulation of industry.

Hochschild was particularly interested in learning why people who were so injured by environmental pollution would be so adamantly opposed to environmental regulations.  She referred to this contradiction as the “great paradox.” 

“Across the country, red states are poorer and have more teen mothers, more divorce, worse health, more obesity, more trauma-related deaths, more low-birth-weight babies, and lower school enrollment.  On average, people in red states die five years earlier than people in blue states.  Indeed, the gap in life expectancy between Louisiana (75.7) and Connecticut (80.8) is the same as that between the United States and Nicaragua.  Red states suffer more in another highly important but little-known way, one that speaks to the very biological self-interest in health and life: industrial pollution.”

Louisiana would be the place to come for understanding.  Hochschild’s findings concerning political leanings were discussed previously here.  The present topic will be attitudes relevant to economic and environmental issues.

It seems that the acceptance of industrial devastation must require at least tacit acquiescence of both politicians and the affected inhabitants.  The situation in Louisiana seems to combine a misbegotten political ideology with what Hochschild refers to as a “least resistant personality” on the part of the residents. 

She points out how the political environment has changed over time.

“In the last Louisiana oil boom, from 1928 to 1932, in the midst of the Great Depression, Louisiana governor Huey Long, the progressive demagogue—the Kingfish as he was called—taxed oil companies, using that money to put a ‘chicken in every pot,’ give out free textbooks to children, create evening literacy courses for adults, and build roads, bridges, hospitals, and schools.  Long curbed homelessness and poverty.  Before succumbing to the lure of oil money himself, Long embraced the ideal of an activist government that lifted the poor and added to the common good….And were he alive today, very few Louisianans would vote for Huey Long.”

Long’s approach is contrasted with that of recent governor Bobby Jindal who went out of his way to take money away from social services and education in order to pay for the incentives provided companies to encourage them to settle in his state.

“During the eight years Bobby Jindal was governor of Louisiana, he fired 30,000 state employees and furloughed many others.  Social workers increased their caseloads.  Child abuse victims were for the first time spending nights at government offices.  Since 2007-2008, in the nation’s second poorest state, Governor Jindal had cut funding for higher education by 44 percent….Given cuts to the state’s judicial branch, in which eight out of ten of the accused rely on public defenders, lawyers had been laid off, and the accused languished in jails….their names on waiting lists with thousands of others, no lawyers to defend them.”

“Jindal had cut corporate taxes as well as individual taxes and he had spent $1.6 billion in ‘incentives’ to lure industry to the state, offering companies ten-year tax exemptions.  Jindal had sold state-owned parking lots and farmland, potential sources of revenue.  He put the state’s hospitals in ‘business-friendly’ hands for which costs proceeded to rise.  He had gambled that oil prices would rise and companies would reap taxable profits, and he had lost.”

“….Jindal’s successor, Democratic governor John Bel Edwards, reluctantly announced in March of 2016 that in order to address the “historic fiscal crisis,” the state would need nearly $3 billion—almost $650 per resident—just to keep up regular services during the next sixteen months.”

Most of the Tea Party supporters Hochschild talked with had voted twice for Jindal because he “promised to enact their values.”  However, they did admit that he had left the state in a “shambles.”  They are against taxation and regulation and view social assistance as an unnecessary evil.  They viewed Jindal’s efforts to bring in new businesses, even if they provided low-wage jobs and polluted their environment, as good things.  They seemed to have Hochschild’s “least resistant personality.”

Back in 1984, California wanted to build a waste facility that would provide a difficult environment for any living nearby.  It would be noisy, smelly, generate a large amount of traffic, lower property values, provide few jobs and would likely produce unhealthy levels of pollution.  The thought was to learn how to convince any who might dwell in the neighborhood that they would be enduring something that was worth the discomfort.  A study was commissioned to Cerrell Associates, a consulting firm, that provided a completely different perspective.  The report was written by J. Stephen Powell.

“The plant manager’s best course of action, Powell concluded, would not be to try to change the minds of residents predisposed to resist.  It would be to find a citizenry unlikely to resist.”

“Based on interviews and questionnaires, Powell drew up a list of characteristics of the ‘least resistant personality profile’:”

·         Longtime residents of the South or Midwest

·         High school educated only

·         Catholic

·         Uninvolved in social issues, and without a culture of activism

·         Involved in mining, farming ranching (what Cerrell called “nature exploitive occupations”)

·         Conservative

·         Republican

·         Advocates of the free market

Hochschild concluded that most of the people she met in Louisiana fit “some or all” of these characteristics.  Those that would be willing to resist were a quite different class of individual.

“Those who resisted the oil industry fit a very different profile—young, college educated, urban, liberal, strongly interested in social issues, and believers in good government.”

This list of characteristics of the “least resistant” provides a template with which to evaluate the Louisianans Hochschild encountered and to try to explain why they acquiesce to the sacrifice of their land.

Louisiana certainly meets the educational requirement for a candidate sacrifice zone.

“When the big oil companies first came to Louisiana in the 1940s, 40 percent of adults in Louisiana had no more than a fifth-grade education, and its citizens were the least likely in the nation to move out of state.”

The building of oil and chemical plants has done little for the state.

The Measure of America, a report of the Social Science Research Council, ranks every state in the United States on its ‘human development.’  Each rank is based on life expectancy, school enrollment, educational degree attainment, and median personal earnings.  Out of the 50 states, Louisiana ranked 49th and in overall health ranked last.  According to the 2015 National Report Card, Louisiana ranked 48th out of 50 in eighth-grade reading and 49th out of 50 in eighth-grade math.  Only eight out of ten Louisianans have graduated from high school, and only 7 percent have graduate or professional degrees.”

It would seem that being a sacrifice zone is not a onetime thing.  The conditions that allowed the corporations to take over the land must be maintained.  The poor, undereducated, least resistant people must continue to be poor and undereducated, and unresisting for corporate prosperity to continue.

The federal government rushes in trying to help—for which it receives no credit—but merely ends up providing a tacit subsidy to the corporate owners.

“Given such an array of challenges, one might expect people to welcome federal help.  In truth, a very large proportion of the yearly budgets of red states—in the case of Louisiana, 44 percent—do come from federal funds; $2,400 is given by the federal government per Louisianan per year.”

Next, consider the first entry: longtime residents of the South or Midwest.  Many of the people Hochschild talked to had been residents of small towns where generations of family members had resided in the same area.  This produces a community with entangled relations, both familial and social.  Some will find such an environment comforting and supportive; others will find a place “where everyone knows your name” to be stifling and wish to escape.  Most of her Louisianans fell in the first category.

If you live in a city, you soon realize that a city cannot function without a strong and effective government.  The trash must be picked up on time; traffic must move on schedule; there is only the government to rely on for the care of the homeless and misfortunate.  In a small town, many of these functions either lose their significance or can be handled through social networks.  Government can be seen as an intruder—especially if it is incompetent government, the kind Louisiana seems determined to produce.  Consider the attitude of “Mike.”

“Even if the government helped people—and he didn’t think it did much—government should never, Mike felt, erode the spirit of community.  He had grown up in a dense circle of aunts, uncles, cousins, and grandparents, all within walking distance from each other….Now in his sixties, Mike felt happy to live in a community as close and cooperative as the one he had known as a boy.”

“It wasn’t the simple absence of government Mike wanted, it was the feeling of being inside a warm, cooperative group.  He thought the government replaced that.”

This feeling for the place in which they live is emotionally powerful.  Small towns can be difficult to maintain in a changing economy.  The promise of a factory bringing in jobs to help keep the place going can be a much stronger motivator than the inconvenience of a little pollution—especially when everyone you listen to tells you not to worry about it.

It seems a candidate place for a sacrifice zone requires people who are unlikely to move no matter how bad it gets.

It is interesting that when Hochschild chose to write a section about the effect religion had in forming attitudes in Louisiana she chose to also consider the effect of media.  Both their churches and their sources of news contribute to a narrative that must be recognized if the Louisianans are to be understood.

It can be difficult to understand how important church is in the lives of the people Hochschild met.

“People speak of children not as ‘going to church’ but as being churched.  And this is said with the same pride as others might say ‘highly educated’ or ‘well mannered.’  Church in Louisiana—usually Baptist, Catholic, Methodist, or Pentecostal—is a pillar of social life.”

Churches in other circumstances have been sites of social revolution.  In the world Hochschild entered, they were the place to go to gain the strength to endure what had befallen you, not to make you angry enough to fight back.

“Word from the….pulpits seemed to focus more on a person’s moral strength to endure than on the will to change the circumstances that called on that strength.  The service offered a collective, supportive arena, it seemed, within which it was safe to feel helpless, sad, or lost.  As in an hour of therapy, the individual drew strength from support to endure what had to be endured….Another grief-stricken parishioner, mother of an ill child living in the highly polluted town of Mossville, told me, ‘I don’t know how I could have gotten through this without my church.’  As for altering the pollution, poverty, ill health, and other things that had to be endured, for many that lay beyond the doors of the church.”

It is difficult to worry about things like climate change and ecological damage to the earth when you hope—and expect—that the present earth will no longer exist.  She shares with us the beliefs of one Louisianan named Madonna.

“….Madonna believes in the rapture.  According to the Bible, ‘The earth will groan,’ she tells me, ‘and earthquakes, tornadoes, floods, rain, blizzards, strife will occur, and the earth is groaning.’  Drawing from the books of Revelation and Daniel, Madonna believes that within the next thousand years, gravity will release the feet of believers as they ascend to heaven, while non-believers will remain on an earth that will become ‘as Hell’….After the rapture, the world will end for a time before Christ creates it anew and begins a new thousand-year period of peace, Madonna explains.”

“Madonna attended two years of Bible College in Mississippi and explains, ‘This is not what you would learn at your university, but mine is a true belief.’  This belief offered her a graphic image of the creation of the earth in seven days.  It put the age of the earth at six thousand years.  The City of Heaven, she told me, was a cube 1,500 miles square, divided into 12 bejeweled stories, each 120 miles high with gates, the largest one of pearls.”

Environmentalists believe that what humans are doing to the earth is a long-term problem.  To the religious who expect the earth to end—perhaps in their lifetime—what humans are doing is a short-term issue that is rather irrelevant.

“Across the nation, many share these beliefs with Madonna.  According to a 2010 Pew Research Center report, 41 percent of all Americans believe the ‘Second Coming’ ‘probably’ or ‘definitely’ will happen by the year 2050.”

Hochschild’s experience in Louisiana also makes clear that we cannot begin to understand the residents of that state without taking into account the effect of Fox News.

“As a powerful influence over the views of the people I came to know, Fox News stands next to industry, state government, church, and the regular media as an extra pillar of political culture all its own.  Madonna tunes into Fox on the radio, television, and internet….Fox gives to Madonna and others the news.  It suggests what the issues are.  It tells her what to feel afraid, angry, and anxious about.”

“All news programs address our emotional alarm systems, of course.  But with talk of a ‘terror mosque’ at Ground Zero, of the ‘left’s secret immigration plan’ to wipe traditional America off the face of the earth, of Obama’s supposed release of the ISIS leader Abu Bakr al-Baghdadi, of his supposed masterminding the massacre at Fort Hood, Fox News stokes fear.  And the fear seems to reflect that of the audience it most serves—white middle- and working-class people.  During the series of police killings of young black men, Fox reporters tended to defend white police officers and criticize black rioters.  It defended the right to own guns and restrict voter registration, and it continually derided the federal government.”

And, of course, Fox News leads the pack in condemning those who they claim would kill jobs by worrying about the environment.

“None of the people I talked to one-on-one, off and on, over five years used the extreme language I heard on Fox.  George Russell, a Fox commentator, spoke of the ‘green energy tyranny.’  Business anchor Eric Bolling referred to the EPA as ‘job terrorists’ who are ‘strangling America.’  Fox News Business Network commentator Lou Dobbs commented in 2011 that ’as it’s being run now, [the EPA] could be part of the apparat of the Soviet Union.’  One woman’s favorite commentator, Charles Krauthammer, compared the rise in EPA air quality standards to an ‘enemy attack’ on America.”

We come now to the final requirements that are necessary to make people willing to allow their region to become a sacrifice zone: conservative Republican advocates of the free market.  In order to appreciate the zest with which whites in the South switched from the Democratic Party to the Republican Party, one must understand the degree to which whites in the South maintain, however tacitly, their racist traditions.  Hochschild makes it clear that her Louisianans support the notion that whites occupy a privileged place in this country.  Their fury is aroused not by political or financial manipulation, but by the notion that their place of privilege is being eroded by a federal government that encourages people with different colored skin to succeed when they themselves are not getting ahead.  This is the narrative that the Republican Party encourages using Fox News to spew incendiary content to its viewers.  While the left views conflict as being between a small wealthy elite and everyone else, the right views the main conflict to be between middle class whites and the poor.

“For the right today, the main theater of conflict is neither a factory floor nor an Occupy protest.  The theater of conflict—at the heart of the deep story—is the local welfare office and the mailbox where undeserved disability checks and SNAP stamps arrive.  Government checks for the listless and idle—this seems most unfair.  If unfairness in Occupy is expressed in the moral vocabulary of a ‘fair share’ of resources and a properly proportioned society, unfairness in the right’s deep story is found in the language of ‘makers’ and ‘takers.’  For the left, the flashpoint is up the class ladder (between the very top and the rest); for the right it is down between the middle class and the poor.  For the left, the flashpoint is centered in the private sector; for the right, in the public sector.”

Hochschild recognized that the political logic involved in governing a red state generated a trend in which poverty, lack of education, and ill health were inevitable consequences.

“[In Louisiana] The logic was this.  The more oil, the more jobs.  The more jobs, the more prosperity, and the less need for government aid.  And the less the people depend on government—local, state, or federal—the better off they will be.  So to attract more oil jobs, the state has to offer financial ‘incentives’ to oil companies to get them to come.  That incentive money will have to be drawn from the state budget, which may lead to the firing of public sector workers, which, painful as it might seem, reduces reliance on government and lowers taxes.  It is a red state tactic.  But the paradox is that it goes with being a poor state with a lot of problems.”

Low wages are inherent in and necessary to the red state logic.  When that is combined with low public spending you end up with Louisiana and states like it. 

When a plant moves to Louisiana it generates a large number of jobs—temporarily.  Skilled craftsmen are required for the building of the plant, but because Louisiana does not provide those skilled workers, most of the workers are imported from outside the state, or outside the country.  Most of the earnings of these workers leaves the state as well as most of the profit made eventually from the facility.  What are left when the plant operates are a few highly skilled positions, often held by workers from outside, and a few lower skilled jobs.  Louisiana gains some in turns of income distributed, but not enough to overcome the lower property values inherent in sacrificing one’s land and the decrease in public services provided—such as education and health maintenance.

The goal of southern politicians has not changed for hundreds of years.  It is to allow the process described above to continue.  It is necessary to keep wages low and keep workers fixated on their place within the social landscape.  As long as the system has kept whites ahead of people with darker skin the system has remained stable.


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