As Wisconsin Governor Scott Walker tries to strip away the collective bargaining rights of public-sector unions, many liberals have latched onto the idea that his real goal is to dismantle the labor movement and the infrastructure of the Democratic Party. That is almost certainly one of his aims, but it’s not the whole story.
Walker also has an economic vision for his state—one which is common currency in the Republican Party today, but hitherto alien in a historically progressive, unionist Midwestern state like Wisconsin. It is based on a theory of economic growth that is not only anti-statist but aggressively pro-corporate: relentlessly focused on breaking the backs of unions; slashing worker compensation and benefits; and subsidizing businesses in order to attract capital from elsewhere and avoid its flight to even more benighted locales. Students of economic development will recognize it as the “smokestack-chasing” model of growth adopted by desperate developing countries around the world, which have attempted to use their low costs and poor living conditions as leverage in the global economy. And students of American economic history will recognize it as the “Moonlight and Magnolias” model of development, which is native to the Deep South.
Just take a look at the broader policy context of the steps Walker is taking in Wisconsin. While simultaneously battling unions and calling for budget cuts, he’s made the state’s revenue quandary much worse by seeking to cut corporate taxes and boost “economic development incentives” (another term for tax subsidies and other public concessions) to businesses considering operations in Wisconsin. This is philosophically identical to the approach taken by new South Carolina Governor Nikki Haley, who hired a union-busting attorney to head up the state labor department and touted the state’s anti-union environment as a key to its prospects, explaining, “We’re going to fight the unions and I needed a partner to help me do it.” Despite large budget shortfalls, she’s also proposed to eliminate corporate income taxes and pay for it by restoring a sales tax on food. The common thread here is the quasi-religious belief that reducing business costs for corporations is the Holy Grail of economic development, while all other public and private goods should be measured strictly by their impact on the corporate bottom line.
Even before the arrival of Haley, this was the default model of economic growth in Southern states for decades—as the capital-starved, low-wage region concluded that the way it could compete economically with other states was to emphasize its comparative advantages: low costs, a large pool of relatively poor workers, “right to work” laws that discouraged unionization, and a small appetite for environmental or any other sort of regulation. So, like an eager Third-World country, the South sought to attract capital by touting and accentuating these attributes, rather than trying to build Silicon Valleys or seek broad-based improvements in the quality of life. Only during the last several decades, when Southern leaders like Arkansas’s Bill Clinton and North Carolina’s Jim Hunt called for economic strategies that revolved around improving public education and spawning home-grown industries was the hold of the “Moonlight and Magnolias” approach partially broken. And now it’s back with a vengeance, but no longer just in the South.
Why is this model of economic growth so appealing to the Tea Party? For one, it tends to jibe very well with the Ayn Randian belief in producerism: the idea that “job creators”—business owners—are the only source of economic growth in society, and that everyone else—the workers, government employees, and the poor—are just “useless eaters” shackling those who exercise individual initiative. While many Democrats are baffled by Scott Walker’s attack on the unions—shouldn’t he be focused on jobs rather than eliminating workers’ protections? they ask—the fact is that today’s conservatives believe this is the right and only way to create jobs. The same delusion is present at the federal level, where House Republicans insist that deregulation and spending cuts are the only ways to create jobs. That doesn’t sound like a formula for job growth, unless you account for the conviction that rolling back the public sector, and in the process impoverishing the middle-class families that depend on its services, is essential to keep any costs low enough for corporations to work their magic. The fact that the “beneficiaries” who get jobs as a result of this corporate development model will have to work for lower wages and fewer benefits, and suffer from poor schools and a violated environment, is beside the point.
The problem with this Southern theory of growth is that it won’t work: Economic development experts usually deride “Moonlight and Magnolias” approaches to job creation, noting that they track the outmoded first and second “waves” of basic economic development theory—which emphasized crude economic races to the bottom—as opposed to third and fourth “waves” that focus on worker skills, quality of life, public-private partnerships, innovation, and sustainability. If Wisconsin and other states—not to mention the country as a whole—end up adopting these atavistic economic ideals, they will simply begin to resemble the dysfunctional Old South societies that spawned them in the first place.
To read more, click here.