Two Economic Models for States

Walker also has an economic vision for his state—one which is common currency in the Republican Party today, but hitherto alien in a historically progressive, unionist Midwestern state like Wisconsin. It is based on a theory of economic growth that is not only anti-statist but aggressively pro-corporate: relentlessly focused on breaking the backs of unions; slashing worker compensation and benefits; and subsidizing businesses in order to attract capital from elsewhere and avoid its flight to even more benighted locales. Students of economic development will recognize it as the “smokestack-chasing” model of growth adopted by desperate developing countries around the world, which have attempted to use their low costs and poor living conditions as leverage in the global economy. And students of American economic history will recognize it as the “Moonlight and Magnolias” model of development, which is native to the Deep South.

[...]

Even before the arrival of Haley, this was the default model of economic growth in Southern states for decades—as the capital-starved, low-wage region concluded that the way it could compete economically with other states was to emphasize its comparative advantages: low costs, a large pool of relatively poor workers, “right to work” laws that discouraged unionization, and a small appetite for environmental or any other sort of regulation. So, like an eager Third-World country, the South sought to attract capital by touting and accentuating these attributes, rather than trying to build Silicon Valleys or seek broad-based improvements in the quality of life. Only during the last several decades, when Southern leaders like Arkansas’s Bill Clinton and North Carolina’s Jim Hunt called for economic strategies that revolved around improving public education and spawning home-grown industries was the hold of the “Moonlight and Magnolias” approach partially broken.

Interesting comparison between states that try to build up their economies with public programs that produce a strong and valuable workforce versus states that try to build up economies by reducing the value of the workforce, making it cheaper and more appealing to corporations.