President Obama's discussion of young urban black men getting "left behind" by the modern economy prompted a response from Selena Zito of Real Clear Politics, pointing out that it's not just young blacks. Zito travels to the northwest Ohio town of Van Wert, "a farming and manufacturing community," and finds, quoting a local, that "Van Wert is very much a town that has been left behind." Though neither urban nor very black, Van Wert has suffered from the closing of many of its businesses and the opening of a nearby Wal-Mart that has left many vacancies in the otherwise charming downtown. Citing Walter Russell Mead, Zito bemoans the decline of America's "core institutions, ideas and expectations" that "shaped American life for 60 years after the New Deal," an "old system" where "both blue-collar and white-collar workers held stable jobs, and living standards for all social classes steadily rose."
I often enjoy the writing of both Zito and Mead, but I think they just have a fundamental mis-perception of the supposedly "good old days" and of the processes of creative destruction that were at work then just as much as now.
First, let's consider Salisbury, Connecticut, the town where I'm hanging out this week. It is the most northwest town in Connecticut, bordering both New York and Massachusetts. If the decline of manufacturing and agriculture makes a town "left behind," then Salisbury has to be the most left behind town in the whole country. In this town, manufacturing and agriculture have declined from total dominance right down to the vanishing point.
At the Salisbury Association on Main Street, they have this week an exhibit on Salisbury during the Civil War. The exhibit begins with a description of Salisbury and its economy as the war opened in 1861:
In 1861 Salisbury was a bustling industrial and farming town of 3000 people. Along the brook flowing from Mount Riga to Salisbury center stood two forges, a tannery, the Washinee Woolen mill, a grist mill, hattery, and two additional forge and trip hammer shops. The great mine at Ore Hill provided tons of rich iron ore, while local charcoal burners produced mountains of fuel to power the furnaces and forges belonging to Landon & Company, Oliver Ames, and Barnum and Richardson in Amesville and Lime Rock. In addition to the heavy industries, many Salisbury businesses flourished. Lakeville was home to a brass and tin shop, the Welch & Seymour firm that made surgical splints, as well as the highly successful cutlery factory operated by A.H. Holley. Outside the village centers, scores of substantial farms supplied meats, grain, fruit and dairy products to a wide range of near and distant consumers.
Today? It's literally all gone. In the intervening 153 years, the population has crept up to 3,747 (while the population of the U.S. has multiplied by more than 10 times in the same period), but the "bustling industrial and farming" economy has almost completely disappeared. The iron businesses that once defined Salisbury have been gone for a good century. As to other manufacturing, I can't find a single factory of any kind today in this town. The closest possibility is a very small ITW facility in the Lakeville section of town, but I don't detect them actually making anything there. A site that has compiled some census data for the town has a big 1.66% of its workforce engaged in "production, transportation and material moving" -- but there is a company in this town that provides school bus transportation that could account for pretty much all of that.
Agriculture? There are still a few farms, but if there's a story to be told about agriculture around here it's that even the tiny amount of remaining agriculture is still declining. One of the most popular posts on this blog continues to be one of the very first, called the "Defunct Agriculture Tour," with pictures of recently abandoned farms in this area where the land has been leaving agriculture and reverting to forest for a good century and a half. The census data show all of 0.63% of the workforce engaged in "farming, fishing, forestry." That would be fewer than 25 people, and some of them are in the firewood business.
So therefore we've been left really, really behind, right? Well, actually not. The fact is that in the modern international economy there are thousands upon thousands of types of goods and services that can be sold on a world market. Without actually making any tangible things to speak of, this is a very upscale town.
So what do they do? The two largest businesses are private boarding schools, Hotchkiss and the Salisbury School. Hotchkiss charges like the most expensive colleges, with annual tuition, room board and fees coming to $52,430. The buzz is that starting next year they plan to fill the place up in the summers, and charging top dollar, with students from China looking to learn English. Also in Salisbury is sports car racing mecca Lime Rock Park, made famous by frequent visits from Paul Newman while he was alive. A regional bank, Salisbury Bank, has its headquarters here. Ascendant Compliance Management is a consulting firm that advises the securities industry on regulatory compliance. And I could go on. The side roads are dotted with beautiful houses, many of them second homes of people from New York or Boston. The unemployment rate is 4.6%, well below the national average, and median household income is reported at $65,625, well above the national average. The loss of all the manufacturing and almost all the agriculture did not "leave the town behind," but rather was the impetus to move on to new and better opportunities.
And that, by the way, has always been the deal in the United States as far as I can tell. This business from Mead and Zito that there was once an "old system" where everybody had a stable job and incomes just rose naturally and steadily -- that's a pure fiction. The real big picture story of the U.S. economy from the 1800s through close to the present is the vast involuntary exit of virtually everybody from agriculture -- forced out by inexorable market pressures, mechanization decreasing the need for labor, painfully low incomes, backbreaking work for little pay, crop failures, bankruptcies and foreclosures.
Below is a chart from Department of Agriculture data of the decline of the percent of jobs in agriculture in the United States from 1790 to 2000, going from 90% of all jobs down to just 2.6%. Even if you assume that Mead's "old system" only refers to the period immediately after World War II, that period started with about 17% of U.S. employment in agriculture. There was plenty of pain in the loss of those last 10 million or so agricultural jobs in the 1950s, 60s and 70s.. But that's how the modern economy was created.
The idea that there was some kind of more humane "old system" in the post-war period is just an illusion resulting from diverting our gaze from the vast dislocation out of agriculture during that period, and focusing instead on the world of large-scale manufacturing that then was on the ascendancy and provided for what seemed like stability and security. Today, such large-scale manufacturing is no longer the future in the United States. We can look upon that change as creating people and towns that are "left behind," or alternatively we can look upon it as giving people the chance, with a strong push from behind and with a vastly expanded international economy, to pursue new and better opportunities. The same principle applies to the young black men who are the focus of President Obama's attention.