The first page of today’s New York Times describes Columbia, SC as "an ideal listening post. According to a range of indicators assembled by Moody’s Economy.com — from job growth to change in household worth — this metropolitan area came closer than any other to being a microcosm of the nation over the last decade." What makes it typical?
The Carolinas may conjure thoughts of textile mills and tobacco fields, but Columbia has a diverse economy. The state is a major employer. So is the university, along with hospitals and banks. The Fort Jackson Army base employs 9,200 people. United Parcel Service has a regional hub here. Michelin operates a tire factory next door in Lexington County. The Computer Science Corporation develops software north of the city.
If that’s the mix that makes Columbia typical, it raises an interesting question about the current economic difficulties. The votaries of President Obama suggest that the troubles are primarily in the private sector. There was speculative excess and a lack of regulation that led to the crisis, and to a middle-class squeeze that has lasted several years. But what if part of the problem is that the public sector, and the service sector has grown too big to be supported by the rest of the economy? Note that only Michelin and the software company actually made something. And what if it is regulations in the use of land, in employment, in how to minimized the impact on the environment that, as much as anything, has caused America’s industrial and agricultural base to shrink?
Given the options, it is prudent to give Obama’s view a try. From his perspective, the problem is that the economic model America has developed since the 1980s is no longer functioning. But what if the problem is that the model we’ve had since the 1930s is the problem? After all, viewed from the perspective of the US as it appeared in 1929, in terms of regulatory bureaucracy, labor law, environmental law, the size of our manufacturing and agricultural sectors, etc., rather than from the perspective of those who wish for ever more laws and regulations, the changes Reagan made were minor. If the problem is that in the US to a certain degree, and in Europe to a greater degree, the modern social welfare state is not viable in the long term, it will be even harder to get out of the current mess than many suggest.