Wednesday, April 04, 2018

Krugman on Trumpland

Krugman's column on the problems in "Trumpland" contains one typo that hasn't been fixed yet, I think (either that or I am reading the sentence wrong), but he notes the big picture regarding income disparity between the US poorer regional areas and the urban rich:
Mississippi isn’t an isolated case. As a new paper by Austin, Glaeser and Summers documents, regional convergence in per-capita incomes has stopped dead. And the relative economic decline of lagging regions has been accompanied by growing social problems: a rising share of prime-aged men not working, rising mortality, high levels of opioid consumption.

An aside: One implication of these developments is that William Julius Wilson was right. Wilson famously argued that the social ills of the nonwhite inner-city poor had their origin not in some mysterious flaws of African-American culture but in economic factors — specifically, the disappearance of good blue-collar jobs. Sure enough, when rural whites faced a similar loss of economic opportunity, they experienced a similar social unraveling.

So what is the matter with Trumpland?

For the most part I’m in agreement with Berkeley’s Enrico Moretti, whose 2012 book, “The New Geography of Jobs,” is must reading for anyone trying to understand the state of America. Moretti argues that structural changes in the economy have favored industries that employ highly educated workers — and that these industries do best in locations where there are already a lot of these workers. As a result, these regions are experiencing a virtuous circle of growth: Their knowledge-intensive industries prosper, drawing in even more educated workers, which reinforces their advantage.

While these structural factors are surely the main story, however, I think we have to acknowledge the role of self-destructive politics.

That new Austin et al. paper makes the case for a national policy of aiding lagging regions. But we already have programs that would aid these regions — but which they won’t accept. Many of the states that have refused to expand Medicaid, even though the federal government would foot the great bulk of the bill — and would create jobs in the process — are also among America’s poorest.

Or consider how some states, like Kansas and Oklahoma — both of which were relatively affluent in the 1970s, but have now fallen far behind — have gone in for radical tax cuts, and ended up savaging their education systems. External forces have put them in a hole, but they’re digging it deeper.
Speaking of education cuts, I have been very surprised to read how poorly some US States do pay their teachers:
In fact, the amount teachers make can vary greatly by state. According to the Bureau of Labor Statistics, the lowest 10 percent of high school teachers earn less than $38,180 and the highest 10 percent earn more than $92,920. 

And look where the lowest paid teachers are:

1. Oklahoma
Annual mean wage: $42,460
2. Mississippi
Annual mean wage: $43,950
3. South Dakota
Annual mean wage: $44,210
4. North Carolina
Annual mean wage: $45,220
5. West Virginia
Annual mean wage: $45,240

Yes, it all aligns with the argument that the American Right has become obsessed with policy prescriptions that are shooting themselves in the foot.   

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