Wednesday, November 9, 2016

What if Politics Can't Deliver What Americans Voted For?

While I don't agree with it, part of the purpose of the electoral college is to prevent "tyranny of the majority" and to make sure that a President takes into account a strong, unified minority. That seems to have happened with this election.

While we are still waiting for more data, my first take on this is that the much wider margins in rural voters was a key point. I am sure we have all read far too many articles about how rural voters feel ignored and that policy isn't responding to them.

If you can excuse my strong language, while the feeling is obviously real, this is complete bullshit. As long as I've been conscious of politics we've been deluged with articles about real Americans. Small town citizens have been shown as the quintessential American for most of my life; though I think this has begun to change over the past few years. The Federal governments spends at least as much on rural citizens as it does on urban ones; though the exact ratios depend on if you only count direct subsidies, which according to some analyses are slightly lower for rural citizens, or if you also count the siting of Federal facilities, such as prisons and military bases, whose sites are often chosen partly for consideration of the jobs they bring.

Now, this doesn't change the fact that rural areas are suffering, both in absolute and comparative terms. I've written before about slow income and job growth in rural areas and there is a great deal of evidence that rural areas have been growing slower than urban areas and losing relative, and in recent years, absolute population.

While I ultimately have to agree with Chris Dillow that we have to hope that Trump succeeds in helping these areas to recover and grow, angry people are likely to stay mobilized and vote against progressive reform, I don't believe that there is any real chance of his policies succeeding.

But not just his policies, I don't think there are any policies that would help rural areas catch up to urban. Clinton had numerous policies that would help rural communities and constituencies that they particularly care about, like veterans. It would have helped if the press had covered actual issues and policies, but it is notable that Obama has tried to do a lot for these communities as well. But the new policies proposed seem far too minor to close the gap, and the policies that have been enacted obviously haven't done the job.

To me, the deeper issue is that there is no political solution to their relative decline. Something I gathered from my MBA courses is that the advantages to density, human capital, and diversity are becoming much more powerful forces in modern society. A modern business needs a diverse set of specialists to succeed, it needs an accounting group that can use a modern ERP system that can interface with major vendors, it needs people that can properly use CRM systems, management that can integrate all of this additional information, and IT personnel that can keep it all running. In an urban environment a small business has a decent shot at cobbling this together through a combination of outsourcing and strategic hires. 

However, there just aren't that many urban professionals that want to move to rural areas. It doesn't help that most of these rural areas or small towns have businesses that attempt to specialize in the low cost sections of the market. Back when I was looking for a job I would see insanely low wage posting week after week asking for someone with good educational credentials and experience to come work in these areas, it didn't look to me like many of these ever got filled. While there are a lot of young graduates looking for work, the problem is that most of these small businesses needed someone that could function as the entire department themselves, this required someone with experience. And someone with experience would only move for a huge premium, like what my wife sees when she looks at rural medical jobs paying 2 to 3 times the salary of what we can make in a metro area.

So, the bottom line to my mind is that the problem rural areas are facing is due to changing economies of scale and to competitive pressures changing businesses from being organized around production to being organized around processing information.* My fear is that Trump's policies will fail, likely making the situation worse, and that Trump's supporters will simply become further enraged by the political system's inability to restore what they feel the natural order is. 

What happens after this I don't know. I don't think there is any set of policies that can win over Trump's supporters because I don't think there is any set of policies that will work or even seem plausible to them. But it seems difficult to get urban and inner ring suburban voters to turn out in the necessary numbers to win elections against united white, rural opposition. My only small consolation is that myself, and most of my friends and relatives, are well off enough to be sheltered by the direct negative consequences of this election. But I worry a great deal of what happens over the next several years.

*This needs some explanation. Basically, my view is that with capital so abundant there are too many concentrations of capital able to produce goods chasing too little demand. What distinguishes businesses is their ability to process, and act on, information. So no matter how good of a product you make and how hard your work force works it isn't worth anything if you can't gather, analyze, and act on timely market information. And that process relies on people that just don't want to live in rural areas.

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