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MICHAEL BARONE: The Fall of the Midwest Economic Model – WSJ.com

August 16, 2011

OPINION AUGUST 16, 2011

The Fall of the Midwest Economic Model

In 1970, the future seemed to belong to Michigan’s example of big companies and big unions. Not anymore.

By MICHAEL BARONE

President Obama has kicked off a three-day bus tour of Minnesota, Iowa and Illinois, where the corn is high and at least some factories are spewing smoke. He’s holding town-hall meetings on the economy, putting the unemployed back to work and “growing wages for everyone.” He won these Midwestern states handily in 2008, but he’s not taking anything for granted these days. The Midwest is the region with the largest number of target states. The president’s latest Gallup job approval there is 39%, the same as the nation as a whole.

To understand the political economy of the Midwest, it helps to put it in historic perspective. Originally the Midwest’s economy was built on its farms, then later on its factories. The long farm-to-factory migration lasted from roughly 1890 to 1970. At the end of that period, when I was working on the first edition of “The Almanac of American Politics,” it seemed there were two models for the U.S. future. One was the Michigan model, which prevailed in the industrial Midwest and the factory towns of the Great Plains. The other was the Texas model, which prevailed in most of the South and Southwest.

The Michigan model was based on the Progressive/New Deal assumption that, after the transition from farm to factory, the best way to secure growth was through big companies and big labor unions.

The Big Three auto companies, economist John Kenneth Galbraith wrote, could create endless demand for their products through manipulative advertising and planned obsolescence. The United Auto Workers would ensure that productivity gains would be shared by workers and the assembly line would never be speeded up. In those days, 40% of Michigan voters lived in union (mostly UAW) households, the base vote of a liberal Democratic Party that pushed for ever larger governments at the local, state and federal levels. You found similar alignments in most Midwestern states.

via Michael Barone: The Fall of the Midwest Economic Model – WSJ.com.

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