The Macroeconomics of White Rural Rage

Excellent column in NY Times by Nobel Laureate Paul Krugman.

{{ This process and its effects are laid out in devastating, terrifying and baffling detail in “White Rural Rage: The Threat to American Democracy,” a new book by Tom Schaller and Paul Waldman. I say “devastating” because the hardship of rural Americans is real, “terrifying” because the political backlash to this hardship poses a clear and present danger to our democracy and “baffling” because at some level I still don’t get the politics.

Technology is the main driver of rural decline, Schaller and Waldman argue. Indeed, American farms produce more than five times as much as they did 75 years ago, but the agricultural work force declined by about two-thirds over the same period, thanks to machinery, improved seeds, fertilizers and pesticides. Coal production has been falling recently, but thanks partly to technologies like mountaintop removal, coal mining as a way of life largely disappeared long ago, with the number of miners falling 80 percent even as production roughly doubled.

So shouldn’t we aid these communities? We do. Federal programs — Social Security, Medicare, Medicaid and more — are available to all Americans but are disproportionately financed from taxes paid by affluent urban areas. As a result, there are huge de facto transfers of money from rich, urban states like New Jersey to poor, relatively rural states like West Virginia. }}

Of course, giving poor, rural whites subsidized Medicare benefits isn’t going to help, if they turn around and buy the Medicare Advantage scam with the 15% skim to insurers and the resulting lower reimbursements to the doctors and hospitals in their town. That’s leading to rural hospitals closing their doors.

Lyndon Johnson described this phenomenon in the early 1960’s and it’s provided a successful investment thesis over, at least, the past forty years.

“If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”

No one ever lost money betting on the racism, ignorance and innumeracy of the American people.

Note: The comments to this article are excellent where a few enterprising souls describe how they managed to lift themselves from their rural purgatory, much to the disdain of their neighbors.

As I write this, the evening news reports that conservatives in Congress want to cut funding for rural high-speed Internet, with funding ending in April. America has long celebrated ignorance and innumeracy. It’s a birthright in some parts of the country.