Brad DeLong's Semi-Daily Journal (2004)

Actually, this was a very good article.

But she did fail to talk about that from the 1930s to about 1970 New England growth and relative income growth suffered significantly as
shoes and textiles moved south. New England suffered about 20-30 years of very poor economic performance until the late 1960s. by the late 1960s shoes and textiles had become such a small part of the New England economy they were no longer a drag. Moreover, technology became large enought in the New England economy that it could pull the rest of the economy along with it.

As the krugman articel points out, free trade has its costs and losers. New England was a loser in the middle of the century. The 50 year old textile mill foreman that lost his job never got a good job again even though his son/daughter
did get a good job in the tech industry.

but one thing that seems to be happening is that the speed of adjustment in the economy is accelerating. A secular change that use to take a quarter of a century to move through the system
seems to be happening in a decade now.

Concerning the postwar growth of the South, I'd also add that it has arguably played a major role, not only in the political decline of the old manufacturing belt, but in the erosion of the whole New Deal political-economic order. If the "North" benefited from providing higher-order manufactured goods and services to an expanding South, those benefits didn't exactly go to the same people; moreover, the industries that most got hurt--first by southern competition, then by global competition--were the old, unionized industries and oligopolies. The erosion of union power is, I think, a clear consequence of the erosion of trade barriers, both internal and global. A true free trader might say that union power and oligopoly alike were products of a brief moment in American history when workers and giant corporations could take advantage of structural rigidities that needed to be swept away. But the loss of union power is clearly a net loss for workers, and has played a critical role in the increasing economic inequalities that we've seen in recent years. This, too, is part of the trade issue; but not one that even liberal free-traders seem comfortable with addressing.

One issue I'd take with Postrel, if not with Michener's work [which I haven't yet had a chance to look at]: she claims that the bulk of the South's convergence occurred after 1960, and is attributable to institutional changes resulting from the civil rights era. The accompanying graph actually shows something very different: that southern convergence of product per worker on national norms began after 1940, and the that bulk of the convergence had occurred *by* 1960 [In this regard it parallels southern per capita income, which as Gavin Wright pointed out some years ago began taking off after 1940]. Southern PCI convergence actually *slows* after 1973. I'd argue as well that the institutional changes wrought by civil rights took a long time to make themselves felt; African-Americans didn't make their voting power felt until the late 1960s, and employment barriers in major southern industries remained strong well into the 1970s [See the important work of the historian Timothy Minchin on this point]. Southern convergence prior to the 1970s, I'd argue, was less the product of institutional change than of population and sectoral shifts, specifically the mass abandonment of the land after World War II and the mass migration of poor southerners out of the region altogether ["exporting poverty," as was said at the time]. That the convergence didn't quit altogether with the completion of those sectoral shifts, however, may have much to do with the civil rights movement, as Wright has been arguing of late in some interesting papers.

To my mind, the most important thing to notice is that the equalizing involved not just free movement of capital, but also labor. It would have been much harder to bring about if people had to, usually, stay in their state of birth except in special cases. The supporters of free movement of capital who care about equality at all should note this and at least think of some ways to deal with it. I'm not saying all don't note it, or even most, but at least most politicians who support free trade have no taste at all for free movement of labor.

One institutional change that assisted the South to improve economically, and that calls into question whether the United States was a free trade zone, was the pricing structure of the railroads. Moving material by rail cost less from Chicago to Atlanta, than vice versa. This was protested by Georgia governor Ellis Arnall. He cannily exaggerated the price differential in his statements. The railroads issued a rebuttal; however, when the railroads published the correct prices, everyone was made aware of the pricing imbalance.
Kevin Phillips has argued that great economic burdens were imposed on the post war South, in contrast to economic assistance to other post war foes, in _Wealth and Democracy_ page 32.

Postrel erases the crucial difference between the integration of the 19th century American economy and contemporary trade flows. During the period 1876 and 1940, a national government bound the states. Politicians could promise to adjust economic dislocations through currency (Populism) and national regulation (Progressivism, the New Deal). One might argue that the Northeast favored the Gold Standard in the 1890s because a tight money supply contained job loss to the South by discouraging the construction of new factories.

By contrast, the modern US CANNOT implement rules governing minimum wages, maximum hours, transportation rates, currency values in China. Tariffs and trade agreements are sole means of regulating our commerce with Beijing. Without an overarching system of government to cushion the blow, Americans naturally turn to the one available option: tariffs.

David -- how much of the post WW II divergence you talk about stemmed from an industrialization
of Ag. -- i.,e, the development of cotton picking machines. Prior to WW II southern ag needed a large supply of labor at planting and harvesting time that was not needed the rest of
the year. Once planting & harvesting cotton was mechanized, in the 1950s, the south no longer needed the excess labor
and this is what freed that labor to migrate north. In the first & second grade right after WW II I went to a school in the deep south that had vacation for 6 weeks in the spring, went back for 2 months in the middle of summer and let everyone out again at cotton harvesting time.
Even as a first grader I went out and picked cotton.

Interesting comments. The stage for rapid income growth for White households in the South from 1940 was set by the New Deal.

Imagine what both the New Deal programs from TVA on to the GI Bill meant for the South, and you have an understanding of what such government programs can mean for a region. Virginia Postrel would surely differ, but imagine the South without the TVA and you can see what a difference Roosevelt's New Deal made.

Maybe teh post-1940 rise is due in part to the large number of military bases in the South.

Good level of comments here. The only thing I would add is that, population wise, the South was far smaller in relation to the rest of the U.S.than is the U.S. in relation to China, India, Mexico, etc. Therefore the process of equalization is likely to take longer, and the dislocations in this country will be more severe.

If you look at Southern per-capita income relative to the Midwest, it actually starts rising after about 1900 until about 1920; then (due to the farm depression of the 1920s?) it falls again, and then starts rising again after the early 1930s.

So, while much of the South's ecoonmic progress took place post-World War II, the process actually started much earlier, before the Civil Rights movement of the 1960s.

Interestingly (and echoing a point that Anne made earlier with respect to TVA), Gavin Wright suggests that New Deal minimum wage laws may have helped spur the post-1930 gains by forcing Southern employers to abandon a low-wage, low-human capital business strategy (although many economists would probably disagree with this). Nonetheless, this could provide ammunition for those in favor of some sort of global labor standards.

The New Deal, however, wouldn't explain the 1900-1920 gains. Wasn't this the period when New England textile industry began its Southward migration?

Also, the drop-off in immigration during and after World War I might have played a role here, forcing Northern manufacturers to look for new sources of low-wage labor in the South. Between 1900 and 1930 there is an increase in migration out of the South into other areas of the country (it was almost zero before).

I've also encountered the theory that what caused the Southern economy to catch up with the North was the eradication of the Hookworm between the world wars. Unhealthy people don't make for productive workers. At the same time this idea also explains the great out migration that took place in the 1930's. Unhealthy people are not going anywhere.

Personally, I'm a bit sceptical, but there might be something there.

Wasn't there massive government investment in the South post-WW2?

"The New Deal, however, wouldn't explain the 1900-1920 gains. Wasn't this the period when New England textile industry began its Southward migration?

"Also, the drop-off in immigration during and after World War I might have played a role here, forcing Northern manufacturers to look for new sources of low-wage labor in the South. Between 1900 and 1930 there is an increase in migration out of the South into other areas of the country (it was almost zero before)."

No question, but that the process begins much before the New Deal because of the price differences in labor. But, we should not neglect the New Deal structural basis for gains and also the increasing Southern strength in the US Senate and the benefits that entailed. The fierce problem through the South was of course segregation.

They are wrong about 1880 because they are looking at several different wrong things:-

- Efficiency isn't enough, since that only affects new investment's productivity; the all up importance of the British economy was an accumulated lead that still had to be caught up.

- The British economy wasn't the only other player. Overtaking Britain wasn't enough to make the USA a pace setter, since Germany was taking on that role from about the 1880s.

The USA only became as significant as this makes out in the first decade of the 20th century - a generation later.