The Deep South, Conservative Economic Policy Across All States, Wisconsin Most of All.

I’ve been trying to get a mental, political economy map of where the Republican Party and conservative movement are these days.  Several things that were present but hazy in the past have become much clearer since Governor Walker’s overreach in Wisconsin.  These include:

Jobs: Conservatives don’t really have a job plan.   There’s the cut the budget during a fragile recovery plan, which Goldman is predicting will take a serious slice out of growth. But even more generally, their view of why we have high unemployment is strange.

Last year we reached out and talked about the economy with 30 conservative economists (part 1, part 2) and I got the sense that they had a Ayn Rand Groundhog Day version of the recovery: every month, the productive leaders of the economy peek their head out from their hole checking the field for the shadow of the unproductive parasite class and politicians looking to leech off them; the proper role for government is to clear the field of parasites and leave tax and cash goodies to help bring them out of their hole and into the economy.

Public Sector: I associate Wisconsin Republicans with Tommy Thompson. I had several moderate conservative friends (RINOs, I suppose) from Madison who campaigned for Thompson, and he struck me as a good Republican. He wanted to reform welfare, but in doing so spend just as much if not a little-bit more, in order to do it right. He didn’t want to “reform” welfare as code for slashing it.

Walker wants to attack public unions. He told someone he believed to be David Koch that as Reagan brought down the Soviets by being tough with the air traffic controller unions, this is their moment to be tough and show the enemies of conservatism who is in charge. He even pulls out a picture of Reagan to show his staff to remind them what the stakes are.  Walker and the conservative movement’s approach approach is all about portraying teachers and public workers as, in Rush Limbaugh’s phrase, “parasites” when compared to Tommy Thompson.

I haven’t found anyone making the case that the public sector workers in Wisconsin are overpaid. Andrew Biggs of AEI, who watches public sector compensation closely replicates data and research done by EPI concludes: “At the end of the day, I just don’t think we can make any final conclusions on state/local pay [in Wisconsin] because so much of the data, particularly on the benefits end, is still too loosey-goosey. There’s just more work to be done.” Mind you, that’s the strongest attack by a conservative wonk using the data I can find: it’s too tough to tell one way or the other. Given that the teacher’s unions are willing to take a hit on benefits, their position is actually to the right than AEI’s.

Relations With the Corporate Sector: As many have noted, Walker is worried about a budget crisis, but also slashing corporate taxes. Ryan McNeely (whose new blog is a must-add for policy fans) noted something similar about Christie’s budget: “What the budget represents in a blunt shift to perennial conservative priorities like school choice and tax cuts rather than a fundamental shift in the overall size of the budget.” This isn’t about shrinking the budget or a government you can drown in a bathtub, this is about shifting the priorities of the budget away from public work and towards gifts for corporations.

I’ve noticed all these in isolation but haven’t been able to put them together into a whole. Ed Kilgore just wrote a great piece for the New Republic that puts it into a narrative: This is about taking the smokestack-chasing model of growth of the 3rd world and combining it with the Moonlight and Magnolias Deep South model of development:

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….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….

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….

So what is at stake in Wisconsin, and across the country, is not just the pay and benefits of public employees, or their collective bargaining rights, or the specific programs facing the budgetary knife. We are contesting whether Americans who are not “job creators,” by virtue of wealth, should be considered anything more than cannon fodder in an endless war between states—and countries—over who can attract the most capital by slashing the most regulations. In this sense, standing up to Scott Walker is a truly worthy fight.

I encourage you to read the whole thing. It’s a really stark vision of the role of the state in the economy, and really brings home the idea of a third world America. What’s your take?

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22 Responses to The Deep South, Conservative Economic Policy Across All States, Wisconsin Most of All.

  1. I agree conservatives are evil. It kinda sucks though that busting the public sector unions and reducing corporate tax rates are good policy. Also, you should clean up the dissonance in the post: the alternative jobs plan IS corporate welfare.

    A way out of this partisan bickering is to give them reduced corporate taxes and the public sector unions (but not corporate welfare) in exchange for a good social safety net. Hell, you could even convince them that its their idea to make progressive reforms to UI, EITC, social security and so on.

  2. Southwerk says:

    I really appreciate you recommending McNeely’s blog. It has some good stuff in it. I’ve told you before how much you guys impress me. I still think that. Best Wishes! James Pilant

  3. Nancy Tepper says:

    I’m not sure why the link to the Ed Kilgore article at TNR didn’t show up in your post, but here it is:

  4. Phil G says:

    “A way out of this partisan bickering is to give them reduced corporate taxes and the public sector unions (but not corporate welfare) in exchange for a good social safety net. Hell, you could even convince them that its their idea to make progressive reforms to UI, EITC, social security and so on.”

    This might be true of an earlier breed of politician. I don’t know that it is true today. Any kind of compromise is bad for politicians in general, because it resolves something. Resolution relaxes conflict, and conflict motivates voters. The major countervailing reason to resolve anything is to benefit your donors, but even then, it’s a trade-off. It is conflict and uncertainty that motivates voters, especially in the conflict-centric narratives of the GOP.

    That probably sounds brutally cynical, but I think it follows from the way we select for politicians, particularly powerful ones. A politician’s success is measured by how well he motivates voters, not how well he administers the country; the job offers frustrations to public servants and the promise of easy living to epicureans.

    I’d love to read an analysis of our political system from someone who knows something about mechanism design. There is a lot of rot in our public policy, but perhaps the most dangerous rot exists in the way we deliberate and decide on public policy, and in the incentives of the deliberators.

  5. Mike Easterly says:

    Bingo, Mike K. Take a listen to the Arthur Laffer interview at and count the number of times he says “based upon work effort” and (my favorite) “these people.”

    (The interview is also fascinating in and of itself. His basic argument was that everything was just fine up to and including 2006–he went so far as to say that housing prices at the time were rational–when all “the producers” realized that the Democrats were going to be elected and just panicked. I’m not joking.)

  6. Mike Easterly says:

    P.S. You might want to clarify that “Haley” is SC Gov. Nikki Haley. At first I thought it was Haley Barbour.

  7. Mike says:

    Crap! I did forget the link. Thanks for posting it, now updated.

  8. AzadA says:

    It’s amazing how pernicious bad economic development ideology can be; but the fact is that economics department’s largely don’t do much engagement on it, outside of “development theory.” The remnant of it, regional science, isn’t a major part of many programs. It’s remains a decent part of urban planning programs, but even there, as it’s applied by states and municipalities, is mostly marketing and boosterism.

    But like T.C. rights, these low hanging fruit have disappeared, you’re not going to have the midwest undercutting the south on worker wages, because the types of textile jobs that the south won from the midwest have largely been lost to the U.S.

    When you have no idea it’s easy to hand-wave at Hayak, because real solutions are much harder.

  9. All true, but you can’t refute a theology.

    Worse than that, the greater the faith, the greater the merit, so the greatest merit comes from belief in things that are manifestly not so.

    Blessed be the Market, the righteous Judge.

  10. Junius Ponds says:

    I don’t think you can say the governor is “worried about a budget crisis” if he’s slashing corporate taxes. “Aware of a budget crisis”, certainly. “Delighting in a budget crisis”, perhaps.

  11. chris says:

    I’d say that it’s too bad the Republicans haven’t noticed this model *doesn’t work* and the blue states are better off… except that the banana republic model *does* work, for the aristocrats. It only doesn’t work for the commoners.

    So I guess it’s too bad the Republican *base* hasn’t noticed that the banana republic model doesn’t work for the commoners… or else they all think they’re going to be plumber-aristocrats or something.

  12. Stokes says:

    Kilgore is right. Its a good article and its pretty comprehensive except it doesn’t go into details about why the the Walker vision/Moonlight & Magnolias policy doesn’t work.

    We here in South Carolina are the beneficiaries of the anti-union political and labor environment that Scott Walter wants so badly to implement in Wisconsin. In fact the Republicans have dominated this state for decades and “right to work” is firmly established in law and practice. No unions, no collective bargaining. Even Labor day is not a holiday (but Confederate Veterans day is–its coming up in May!)

    The result? We have a higher unemployment rate than Wisconsin, we have educational achievement scores consistently ranked in the bottom five of all the states, and what’s more, the South Carolina state deficit is somewhere around 250% larger than Wisconsin’s deficit on a per capita basis. All this in a state where the governor(s) past and present brag about the business friendly environment, no unions and low wages. Despite Boeing (last year), BMW (more than a dozen years ago) setting up large scale operations in the state, the economy is a disaster here. Teacher’s salaries are about 30-40% lower than unionized states such as New Jersey, Pennsylvania, and yes, Wisconsin. Cost of living is quite high as well–although housing costs are a bit lower (10-20%) than the above states (and real estate here has been declining since 2007, same as elsewhere). Property crime is increasing rather dramatically. So is violent crime. |And its not just statistics. Drive around suburban boulevards surrounding downtown Charleston and you will glimpse people walking along in clothing that are verging on rags. Having lived in 5 states (north, south and far west) in the past three decades due due to job changes, I have to say after almost a decade in SC, conditions are scary. If this is what the idealized Republican future looks like, the country is in real trouble.

    • Sandi says:

      Stokes is right. I moved to NC in 1973, worked briefly for Clark Equipment Co., after they heard the ‘right to starve” siren song here. The “educated work force” they were promised, weren’t. The first year they had to scrap tons of parts that were so poorly made they’d never pass inspection. The new workers didn’t know a micrometer from an odometer. Within a few years, Clark had been bought out and disappeared.
      What Kilgore calls “moonlight and magnolias”, I always called, “plantation mentality”. The south went from an agricultural aristocracy, based on slavery, to a mechanized textile economy based on nearly slave labor, with the “boss man” living in a mansion that overlooked the mill village. They thought because the mill owner provided housing and a school (of sorts), they were taken care of. I fear the native southerners have Stockholm Syndrome; they really believe their “masters” are looking out for their best interest. It would be sad, if it weren’t so terrifying.

  13. Pingback: Walker’s Budget Proposal: Completing the Blueprint for Republican Governance « Chasing Fat Tails

  14. GaryGuanine says:

    I think your description of their policies is correct, but I think the analysis of the motivations is a bit too charitable. It seems there are two options: (i) they’re pursuing policies that end up looting the country because they believe it will put the resources in the hands of the “productive” people and benefit society, or (ii) they’re pursuing policies that end up looting the country because they want the loot.

    You obviously can’t tell what’s in people’s minds, so maybe it’s pointless, but I feel like “buying” the philosophical argument — not in the sense of buying the content of the argument, but buying the idea that they’re motivated by a good faith belief in a philosophy (however bad faith that philosophy is) — just turns the debate away from “they’re looting the country!” to “well, the best way to allocate resources is this way, and we have professors X, Y, and Z who have illustrated that . . . blah blah blah” as they respond with “but wait, we have professors A, B, and C, who’ve shown that . . . blah blah blah.” And when the philosophical argument is over, it doesn’t matter because the country’s already been looted.

    (I don’t know much economics, but I know law, and I sincerely believe that conservative legal “philosophy” is just a smoke screen to keep liberal professors busy swatting at flies instead of pointing out to The People: “Look, they’re looting the country!” See, e.g., the torture debate; cf. “agnotology.”)

  15. Mark T says:

    My view is that states in the North midwest has been made keenly aware of the negative effects of union demands for retiree and healthcare benefits because of the collapse of GM and Chrysler and many related businesses.

    WI has the fourth highest tax burden among the states. I think that is a major factor.

    I think that a large number of likely voters have learned to distinguish between a progressive approach toward private sector exploitation and a rent seeking approach toward taxpayers. The average taxpayer cannot be said to be exploiting teachers.

    I think that Walker was always out there as anti union. His party rolled in the past election. Feingold out, Ryan a national thought leader, Republican domination of the state elections. One may not like it but at some point the evidence mounts up and you have to say, this is what “the people” want. (I don’t think those nationwide polls are relevant on state specific issues; if properly structured they will have at least one third of the sample coming from CA, NY and IL. They will have more government workers in the sample than Wisconsin citizens, more union members in the sample than Wisconsin citizens etc.)

    • I would go further than some and say that even if the voters were in favor of ending collective bargaining and busting public sector unions (which polls show emphatically that they are not), that it would still be unacceptable to do so. Trade union rights are a basic individual right, albeit not under the Constitution, but under the U.N. Declaration of Human Rights.

      At any rate, if majorities are still opposing the ending of collective bargaining for state workers after the extraordinary wave of propaganda against the public sector in recent years, then one could only imagine the level of support they would receive if we still had anything like the fairness doctrine.

      • I’m so old, I remember when a Republican president put the power and prestige of the US behind the idea that membership in a free and independent trade union, one capable of standing up to entrenched power and negotiating better conditions for its members, was an inalienable human right.

        But that was in Poland.

    • Tim says:

      “My view is that states in the North midwest has been made keenly aware of the negative effects of union demands for retiree and healthcare benefits because of the collapse of GM and Chrysler and many related businesses.”

      Well, first, “demands for healthcare benefits” skirts the simple truth- that all healthcare plans are increasing in cost, either increasing the total cost for each worker (with healthcare), or “forcing larger contributions” from employees. Which essentially means a pay cut. Thus it is silly to blame workers for wanting the same healthcare they have had without having to take pay cuts. It’s systematic of a larger problem that has absolutely nothing to do with unions.

      Secondly, retiree benefits largely become unfunded because of the desire to push payments further into the future, usually under some rosy scenario of growth, instead of trying to deal with compensation in the present. Also, pensions are deferred compensation- you pay someone lower in the immediate, and in exchange you pay them after they have finished working. It isn’t some extra benefit- it is simply a different form of payment for the services you already render.

      Now, if you’re saying that is the perspective of the average voter I could understand the perspective more, as it is sort of a brute force zero nuance kind of “understanding”.

  16. Tony Wikrent says:

    Much of modern American conservatism is a resurrection of the ideas of the Confederacy. The parallels in economic policies are particularly appalling. For example, see Chapters 8 and 9 in James McPherson’s BATTLE CRY OF FREEDOM.

    I discuss other parallels to the Civil War in “The Conservative Tradition of Attacking Teachers and Education” at

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