Supersonic Man

December 19, 2016

red country vs blue city

Filed under: Rantation and Politicizing,thoughtful handwaving — Supersonic Man @ 10:11 am

Anyone who’s studied election maps has seen that when you look at which areas voted conservative and which voted liberal, it isn’t a matter of “red states” vs “blue states”, it’s a matter of urban areas vs rural areas.  The cities in red states are blue, and the countryside in blue states is red.  The balance of the state as a whole largely comes down to how urbanized it is (though the racial composition of rural areas can also be a factor).


So what is it about city and country that correlates with liberal and conservative views?  I think there is one factor which explains most of the difference.  It comes down to investment.

The philosophy in conservative areas is in theory all about self-reliance.  In practice it’s about individuals, families, and small communities.  People are expected to work hard and invest their work in their own families’ futures, along with that of their neighbors at times.  Investments of effort to help other families, as in traditional barn raisings, are not rare, but it is rare for such investment to be done on any kind of large scale.  In the city, on the other hand, it’s common sense to do investing on a large impersonal scale, in public projects that benefit a hundred thousand or ten million people at a time.  In a city the need for this is obvious, since without it there would be no true city — you’d only have a sort of embiggened shantytown, even if some of the houses in it were palatial.  Issues such as transportation and plumbing would be unworkable on a full urban scale without public planning and public investment.

The thing is, once you have the sort of public large-scale investment going which is required to support a city, it can do much more than that.  It can have a tremendous multiplier effect in terms of additional benefits.  To put it plainly, this investment is the reason why the cities are wealthy and the country is poor.  When a city becomes poor, it’s usually because some form of investment has been withdrawn from it, for instance by the closure of factories or the flight of affluent citizens.

Some feel that corporate greed is a city phenomenon, which enriches them at the expense of the country.  There may be some truth to that, but greed is everywhere, and the same cruel forces that wipe out marginal family farms are just as willing to blight and pollute disadvantaged urban districts.  Greed that ends up in the city often didn’t start there.

In some ways, it doesn’t make sense for cities to be as concentrated as they are.  In an optimal arrangement the cities would probably be separated into smaller communities linked by transportation corridors, and there wouldn’t be any gigantic skyscrapers in the center.  There isn’t really any practical justification for huge vertical buildings.  But stuff gets centralized anyway, even though people end up having to commute further as a result.  This shows that the more you invest in the infrastructure, the more it attracts and promotes successful business, and the more successful business there is, the more you can, and must, invest further in the infrastructure.  In short, the city centers grow because “them that has, gets.”

This confluence of investment also attracts people with bright ideas and talent, who can make the most of it.

So urbanization tends to concentrate itself until it reaches a point that further density brings more problems than benefits.  At that point it may start building up an outlying area, but it’s generally one that tries to be conveniently within reach of the original center.

It’s possible for a new investment center to start up in a remote area, and thereby in time a new city, if there is some factor that makes it worth building up that region even though nobody lives there — for instance, some exploitable resource.  This creates lumber towns and cattle towns and so on, which enlarge as economic operations in the area increase.  Or industries which are accustomed to making large initial investments, such as mining or factories, can make a fresh start wherever there is a workforce and some means of freight transportation.  But usually investment goes where infrastructure has already been built up.

So people accustomed to an urban environment are also accustomed to large scale planning and large scale public spending, while those in the countryside are not.  And it makes some sense to be reluctant to invest heavily in a rural environment for public purposes, because generally you have to work on a larger scale while benefiting fewer people, due to how spread out everything is.  For example, in an area of low population it may be more cost effective for homes to have individual propane tanks than to build a system of natural gas pipes, because the number of households served per mile of pipe would be much lower than it is in the city.

This difference in attitude toward public spending creates a conflict when trying to decide policies on a national or statewide level.  On the one hand, rural people don’t see much value in putting a lot of money toward public investment, but then the federal or state government takes their money and uses it anyway, often in ways that don’t come back to them.  On the other hand, when people in the rural mindset criticize the tax-and-spend behavior of city folk, they tend to do it from an abstract moralistic stance, as if it were wrong everywhere.  This amounts to telling the city folk how to run their cities, and as such it’s bad advice, which if followed in an urban context would have many negative consequences.  So at times, each has taken what works for them and tried to impose it on the other, with harmful effects going both directions depending on who gets their way in a given place or time.

Maybe the long term fix for this conflict would be to shift more taxation from the federal level to the local level, which is certainly an idea that many conservatives have supported in the abstract.  We could, like, have cities and counties charge their own income tax by adding a percentage to the state tax form, or something.  But it would have to be worked out in a way that burdens both residents and commuters — maybe a payroll tax based at least in part on your place of work, rather than on your home address.  Yeah, it sounds complicated.  But some progress in that direction might help alleviate some of the severe conflict between city and country, and also help blunt the forces which push cities to ever greater size and density.  A lower tax rate in rural areas could help make the countryside more financially attractive again, and thereby help reduce the urban concentration of economic growth.

We’d have to be careful that a lower tax rate in the country does not produce as a side effect a lower investment in public necessities such as education.  One of the most important drivers of long term urban success is the degree of its support for good schools and universities.  If we want the less urbanized parts of the country to thrive over the long haul, the availability of solid education is essential.

In the meantime, with things as they are today, this conflict of outlooks creates a pernicious effect at the state level.  Where there are more rural voters than urban ones, you end up with state governments whose elected officials reflect — or pander to — the attitudes and beliefs of the countryside, who then sometimes try to run large-scale governments by principles which are only valid for the small scale.  This is how you end up with disasters like the Brownback administration in Kansas, which has sent the state’s economy right down the toilet.  Governor Brownback’s policy platform was to cut taxes and spending, which means that what actually got cut was investment.

Similar problems occur throughout the more rural and conservative parts of the country, though they’re usually not quite so severe.  Time and again we’ve seen the rhetoric of self reliance and tax reduction result in impoverishment due to reduced investment.  As a result, the “blue states” are now substantially wealthier than the “red states” even when comparing cities to cities and countryside to countryside.  (This video by economist Robert Reich explains some of the details of the process by which states with high taxes counterintuitively end up attracting and producing more wealth than states with low taxes do.)  But unfortunately, many of those advocating the anti-tax agenda have not mollified their views; instead, they have hardened it into a rigid faith which rejects conflicting evidence, and insists on staying the course even when the result is failure.

Some of this wealth does come back — states like California and New York end up paying a net surplus of taxes to the federal government, just because of how much financial success they have, so states like Kansas or Louisiana end up receiving more tax money than they send in.  This does help balance out the forces of concentration to some degree.  And within each state, legislatures are generally aware of the need to balance rural and urban spending, so everybody who puts money in gets something back.  This is at the bottom of a lot of the deal-making that gets done at budget time.  So money does migrate back from the city to the country… but not enough.

And as economic opportunity has shifted cityward, poverty has been moving back out to the country.  For those who resent seeing an idle underclass being supported by government checks, the problem is now becoming easier to find in the trailer park instead of the ghetto.

In the countryside, most private investment is personal and highly visible: you see where your money went and who it’s benefiting.  Public investment tends to be modest in scale.  To pay taxes out into a nebulous governmental cloud, and see nothing impressive come back from it, can be viscerally painful for many.  So there’s a lot of anger at big spending governments.  But in the cities, where the benefits of public spending are not only impressively visible but essential to daily life, the rhetoric of tax cutting is not a promise of relief, it’s a threat.  It has to be opposed.  (Of course, even in the cities there are some who continue to believe in the small-government promise, but they will never be a majority.)

In the current climate, where the rural outlook has crystallized at the state level into an ideology which stifles the very investment that might restore economic growth, and country folk watch the coastal cities getting richer while they get poorer, it’s only natural that they see the money being taken from them by government as largely ending up in other hands.  But from the city point of view, when they look at the economic ruin left by the policies of low-tax ideologues, they are likely to just shake their heads and say, you did this to yourselves.  Many take the harsh attitude that conservative country people deserve no sympathy.

So I think our country would benefit from a policy shift toward encouraging a more uniform spread of investment, perhaps by raising city taxes while lowering rural ones, or alternatively by encouraging public actions which produce more real and visible economic benefits in rural areas, such as the electrification projects of the thirties.  (Our current policy of subsidizing large agribusinesses is a very poor substitute.)  We might not only be a bit more prosperous overall, but we’d get along much better.  This is how politics should work: producing compromises that may look funny on paper, but which allow both sides of a conflict to get the more important half of what they want.  Once that is achieved, people can be friendly neighbors again.

But there remains one more issue to address: a factor which drains money from both the country and the city.

That factor is the extreme concentration of wealth which has grown over the last several decades — the huge growth in the population of billionaires, and the vast hoards of cash and property accumulated by Wall Street banks.  Whereas the cities as a whole may put out more than they take in, that isn’t true of the investment banks: what they take in largely stays in, until they do something stupid and lose it, often in a way which bankrupts others in the process.  America’s six largest financial institutions have now accumulated assets equal to about a quarter of US GDP, in just eight years since their last crash — that’s how severe the wealth concentration problem has become.  This constant inflow of semi-inactive wealth acts as an invisible extra tax on everyone except the bankers who hold it, reducing growth and opportunity throughout all the parts of the economy which do actual productive work.  And the more the rest of the economy is drained, the more these funds get “invested” only in mergers and trades and gambling, rather than in productivity, which now pays less.  This creates a vicious cycle of stagnation: the less this wealth is used in ways that create jobs, the less working people will have available to spend, the less profitable investments in production become, and the more attractive the riskier but larger profits of socially worthless gambling become in comparison, until finally the gamblers’ luck runs out.

It may be that the single best thing we could do for the economic health of rural America would be to get some of that Wall Street wealth to spread out again, the way it used to.  We had this working pretty well in the past: all that’s really needed to restore a better balance is to bring back a higher capital gains tax.  This would balance the net inflow so that investors don’t end up owning a larger and larger share every decade of the total pie.  In addition, we should charge a tiny tax, like maybe a quarter of a percent, on each trade of stocks or bonds or commodities — just enough so that it no longer pays to buy and sell assets back and forth every other day as a way to eke out a short term profit from market fluctuations.  This would encourage long-term investment over speculation — the kind of investment which builds new wealth and creates jobs, rather than just enriching one speculator at the expense of another, like a poker game.  We need to recognize as a matter of national policy that productive investment is a social good, but speculative gambling is not.

So what’s stopping us?  Unfortunately, the lobbyists for Wall Street and for the worst of the billionaires have appropriated the rhetoric of rural self-reliance to create a philosophy in which low taxes are somehow supposed to be especially beneficial when applied to those who take in vast wealth without creating any.  People who profit from offshoring, corporate mergers, or derivatives trades laughably dub themselves “job creators”, and hire pundits and politicians to lie to everyone about how tax cuts for their greedy selves will somehow benefit the rest of us.  And because our political system now runs mainly on large donors’ campaign contributions, there are plenty of elected officials who sign right up to serve these parasites in every way they can, at our expense.  It is these bought politicians who have cut the capital gains tax, and who oppose a trading tax.

And unfortunately, it’s from rural America, where people naturally believe in the general idea of low taxes, that these lackeys of greed get the majority of their votes.  Some of them also benefit from urban areas where investment has failed and blight has set in, leaving many residents in a situation where, as in the country, they see little value coming back from the taxes they pay.

In states where such politicians hold power, there is probably no way to fix things from the outside.  It would certainly help to take certain federal measures to reduce the corrupting influence of campaign contributions, such as reversing or overruling the Citizens United decision, but ultimately the responsibility comes down to the voters in red states.  They need to find a way to separate honest representatives who stand up for constituents in their own communities, from crooked ones who promise tax relief to hard-working people but deliver it to billionaires instead.

In a way, the victory of Donald Trump over the existing conservative establishment is an encouraging sign.  He at least offered some reason to believe that his policies would bring benefits back to working people instead of to the billionaires that most of his primary competitors openly favored.  The list of his cabinet nominees may be a sign that those promises could be empty, but you can’t deny that red state voters are now starting to draw an important and necessary distinction.  Let’s hope that trend continues.

As for Trump himself, it remains to be seen what kind of policies he really intends to pursue.  He’s already made it clear that he didn’t really mean a lot of the things he said while campaigning, such as Hillary belonging in jail, so it’s anybody’s guess whether he will make a real effort to improve economic opportunity for the people who brought him to office, or will just be yet another champion of further enriching his fellow billionaires.  If he proves to be the latter, then he will become his own voters’ worst enemy.  Under such policies, any growth that remains available for working people is likely to be more concentrated than ever in the urban white collar professional class, where it will do middle America and rural communities the least possible good.


1 Comment »

  1. It may be that country vs city is not quite the correct axis to separate voting patterns along. David Goodhart proposes another distinction: “somewheres” vs “anywheres”. Anywheres are people whose job skills are usable regardless of where they choose to live. Most people who live in cities are anywheres. Somewheres are people whose livelihoods are tied to a particular place. “Kansas wheat farmer.” “West virginia coal miner.” “Detroit auto worker.” A lot of country folk are somewheres…. but so are urban people who work in heavy smokestack industry. Those mills and factories only get built every 50 years or so, and are very difficult to move.

    Notice the red hue on the map above in the rust belt area of Ohio and Michigan. The cities don’t stand out much — their blue smudges are quite subdued. Somewheres, apparently, are voting conservatively. It’s easy to see why, when you put it that way: because for them economic change is clearly a threat. Anywheres have fallback options but somewheres often don’t.

    Urban somewheres are not going to be viscerally opposed to big government. They’re not naturally going to find much common cause with farmers and ranchers. But they sure will turn against a government that plays an enabling role in destroying their livelihood, as ours has done these last forty or fifty years.

    So the urbanized Democratic party might never be able to appeal to rural voters, but they didn’t have to lose rust belt “somewheres”, and in theory they could win them back. But it looks like the party’s current strategy is to just wait for them to die off. There isn’t really any young generation of smokestack workers to worry about, after all.

    Comment by Supersonic Man — November 11, 2017 @ 8:56 am | Reply

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