• Oren Levin-Waldman

Polarization in the U.S.: A Tale of Two Economies

It has been commonplace to assume that the increased polarization in the nation is ideological, and on a certain level it is. But the polarization mostly results from what can be called a tale of two economies. Blue state economies are not the same as red state economies, and yet, policymakers, the chattering class, and other elites, who are primarily in blue states have little understanding of these differences. Because of this lack of understanding there is a deep divide.

Red states take policy proposals from these elites as attempts to tell them what to do. Worse, these proposals are presented as what is good for them. As an example, in red states where there is much more mining activity than in blue states, green energy proposals that assume the elimination of fossil fuels simply don’t go over too well. The imperative for green energy just isn’t that strong in red states. Moreover, for workers in the mining industry, they have good paying jobs, and the idea of making solar panels earning considerably less is not that appealing. And yet, these may be good jobs for blue state economies.

Red state economies still have remnants of what many blue state economies used to have, i.e., manufacturing bases. While the consequences of globalization are everywhere, they are more pronounced in blue state economies. In blue state economies there are more skilled and well-paid workers at the top of the distribution and more poorly skilled and poorly paid workers at the bottom. In red state economies, there is less dispersion between the top and the bottom, and more in the middle. Which is to say, red state economies still have a middle class that blue state economies no longer appear to have.

On the contrary, blue state economies have over the last four decades seen a dwindling of the middle class. In blue states there is greater income inequality than in red states. In red states there is more of a middle class, and particularly a blue-collar middle class. In blue states, there are more people with at least college, graduate and/or professional degrees at the top, and more people with less than a high school education at the bottom. In red states there are more high school graduates and people with associate's degrees.

Already we can see that more educated professionals/managers who are members of the elite live in blue states, and in many cases, they have what they believe are answers to the nation’s problems. But their answers to problems which they may assume to be the same in red states are out of touch with the nature of red states.

Those in blue states typically believe that the answer to rising income inequality is higher taxes on the wealthy to pay for programs that will be of benefit to the poor. Clearly there are poor people in red states, but they may not be the dependent poor to the degree that they are in blue states; rather they are the working poor who could benefit tremendously from wage increases in an economy not attempting to stifle growth.

Because the dispersion between the top and bottom is not that great in red states, those in red states don’t see the same need for redistributive policies as those in blue states may. In fact, because the wealthy aren’t concentrated in red states, they may not see greater taxation on the wealthy as a help to anybody. Instead, they see such statements as gimmicks for greater taxation that will only fall on the shoulders of the middle class.

If red state economies are perceived as providing greater opportunities, especially for skilled blue-collar workers, ordinary workers may not see the need for the same level of public spending that those in blue states see the need for. To the extent that those in red states favor smaller government it may have more to do with the nature of their respective economies than with ideology. In fact, it may be fair to say that it is ultimately economics that drives ideology.

At the same time, there may be a real anxiety among those in red states that may not be found in blue states. That is, workers are fearful that it is only a matter of time until their economies go the way of blue state economies. This can truly drive their politics. Politicians who talk about ways to boost wages and attract industries, or even bring back manufacturing, are more likely to gain traction than those who simply talk about more public spending.

Differences between blue states and red states have very little to do with liberal vs. conservative or Democrat v. Republican, but are a tale of two economies. By not understanding these economic differences as the source of polarization in the U.S. we greatly miss the point. It is true that one is more likely to find a commitment to woke politics in blue states than in red states, but woke politics is nothing more than a diversion from the economic problems that plague the nation.

Still, by not recognizing the relationship between economics and politics, and even political ideology, we only exacerbate the polarization. So deep is the polarization that one can conceivably see the country splitting into two separate nations driven by their own politics. One might recall that as much as the American Civil War was driven by slavery and whether it would be allowed to continue in newly admitted states to the union, it too was fundamentally about two very different economies.

The southern economy was an agrarian plantation economy very similar to the feudalistic order in old Europe. The northern economy was a commercial one at the beginning of an industrial revolution requiring wage labor. From the North’s perspective, a national industrial economy required wage labor and for that reason slavery had to be ended. For a plantation economy, wage labor would have been too expensive.

Obviously there are differences, but the nation finds itself in a similar position. Red state economies have not been ravaged by globalism to quite the same extent as blue state economies. The policies promoted by those in blue states are not seen as marks of progress. From the perspective of the red states, the elites of blue states are viewed as attempting to hasten the process of Schumpeter’s creative destruction. Although the model is often hailed as progress in capitalist markets because the old and obsolete are replaced by the new and technologically advanced, it also leaves much destruction in its wake, which is typically borne by ordinary workers.

It is only when the elites can begin to address the needs of ordinary workers that there might be a chance to finally end the polarization. But to date, the elites have only dismissed ordinary workers as nothing but “deplorables.”

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