Wednesday, March 27, 2019

Democrats, Heartland Cities, and Monopoly Capitalism

The 2016 Presidential election still vexes Democrats. Few pundits thought that Trump could win. Most experts argued that not only would the electoral "blue wall" of upper Midwest states prevent a Trump victory but also buoyed by demographic change as well as gender solidarity, Clinton would win in states that had long been Republican leaning-i.e. Georgia, Texas, Arizona and North Carolina.

We know what happened. Clinton won the popular vote but lost the election. Trump became President. Some Democrats still blame Jill Stein and Bernie Sanders. Others blame Russians. And so on. Democrats blame a number of people or events besides Clinton for Trump's victory. But lately more people want to blame the country's political institutions and rules: the Senate, the Electoral college, the voting age, separate state elections, etc. As discussed before some people are furious that Wyoming and California have the same number of Senators. They're irked that running up the popular vote count in one state (as Clinton did in California and New York) is not helpful to winning the Presidential election. Some Democrats want to make the Senate representation proportional by population (if not jettison it entirely), and eliminate the Electoral College. 

Per the Constitution the Senate's equal suffrage for states can't be changed unless every single state agrees. That won't happen. Eliminating the Electoral College necessitates a constitutional amendment, which requires agreement of 2/3's of the House and Senate and 3/4's of the states.That's highly unlikely. 

Frustrated, more media types/Democratic political operatives have argued that because their states are more forward thinking and wealthier it's self-evident and only fair that they should have a stronger voice in national elections and/or the Senate. Those rubes in "flyover country" shouldn't have the ability to stand in the way of progress--especially since they don't produce as much--as measured by GDP and tax redistribution.

I don't think we want to continue down the path of arguing that wealth or income should give anyone an outsized voice in politics. By that argument the 40% of US citizens who pay no federal income tax should have less of a vote. Republicans would love that outcome.

As David Block argues in a compelling Washington Monthly piece, the Democratic political coastal/urban over representation is in part caused and worsened by Republican backed deregulation of utilities, banks, financial services, airlines and other businesses. Increased monopolies and oligopolies have contributed to opportunity and population shifts to coastal areas. By spreading resources more equally among the states and reversing industry consolidation, Democrats will get more voters outside of coastal regions. This argument is primarily about the Midwest. This not coincidentally happens to be the region which cost Clinton the election. 

To avoid watching in horror as the Senate slips away forever while the Electoral College map becomes ever more daunting, liberals need a long-term strategy to combat the decline of heartland cities—to turn Clevelands into Denvers. To do so, they need to first recognize that geographic inequality did not come out of nowhere. It is not the inevitable product of free market forces clustering new skill and innovation around where all the old skill and innovation are found—nothing makes people in St. Louis or Milwaukee any less talented than people in San Francisco or Washington, D.C. 

Instead, it’s the result of nearly four decades of policy choices in Washington—such as giving large banks and other corporations in elite coastal cities free rein to acquire rival firms headquartered in cities in America’s interior. This has stripped those interior cities of what were once their economic engines, even as it has enriched the already wealthy coastal megalopolises. 

Fixing America’s regional inequality would be a good idea irrespective of its political implications. It would increase innovation and GDP across the country. But reducing regional inequality is a case where what’s good for the country would also be good for the Democrats. In fact, if the party can’t find policy levers to boost growth rates—and hence the number of Democratic voters—in purple and red state metro areas, they will have a hard time ever overcoming the Republican geographic advantage in the Senate and Electoral College. Yet almost no one on the left talks as if they understand this reality. To fix the problem, Democrats first have to realize they have one, and how it came to be.

Regional prosperity wasn’t always a zero-sum game. From 1930 through 1980, virtually every geographic section of the United States saw its per capita income trend towards the national average. In 1933, average income in the Southwest was not much over 60 percent of the national average. By 1979, it was nearly on par. New England, once 1.4 times wealthier than the country as a whole, fell to just slightly above average. These gains were visible in the nation’s cities. In the mid-1960s, the twenty-five richest metropolitan areas included Milwaukee, Des Moines, and Cleveland. This convergence helped the country develop a broad middle class.

But suddenly, these trends reversed, and over the next several decades, regional inequality exploded. In 1980, New York City’s per capita income was 80 percent above the national average. By 2013, it was 172 percent higher. Incomes in Washington, D.C., and San Francisco, respectively, went from being 29 and 50 percent above average to 68 and 88 percent higher. Heartland cities, meanwhile, saw their wealth slip away. Gone from the list of America’s richest cities were Milwaukee, Des Moines, and Cleveland. By 2018, twenty of the top twenty-five were on the East or West Coast. Seven are in California. Minneapolis, which clocks in at number twenty-four, is the only entrant from the entire Midwest... 

The likeliest explanation for the regional divergence, then, doesn’t come from economics or sociology. It comes from politics and policy. Between the mid-1930s and the mid-1970s—the height of America’s regional wealth convergence—elected officials worked to level the economic playing field through policies specifically designed to enhance regional and local competitiveness.

The Republican Party’s current economic strategy—tax cuts and less regulation with tariffs on top—will not help heartland cities. It isn’t designed to. It’s therefore up to Democrats to advance policies that will distribute economic power and opportunity to parts of America beyond the coasts. That means, first and foremost, challenging monopolies head-on.

I think that Block's piece is a hypothesis worth testing. It is a corrective to the seductive idea that "we" (however we is defined) deserve more because we're just naturally smarter and more productive people. Democrats must make changes to win under the rules as they currently exist. 
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