The Second War Between the States: The Ships Collide–Along with Everything Else

The Second War Between the States: The Ships Collide

 

In May 1976 Business Week devoted a special issue entitled “the second war between the states“[i]. The article rang out like a fire bell in the night. Regional competition surfaced to the top of America’s 1976 policy agenda. The first impulse was to place blame on who started the fire. Thoughtful observers, with a few years of hindsight, knew the problem was more complex than the so-called “southern branch recruitment strategy”–which by then was forty years long in the tooth. In the best of traditions, we shot first, and thought later. The problem for our history, however, is the first irrational shots became engrained in our professional and Policy World legacy.

How Economic Development Became Ground Zero

In the midst of the fiscal turmoil, a 1970 Times article by Kevin Phillips popularized an alleged Nixonian “southern strategy” (Phillips, 1969) that resulted in his presidential victory (somewhat dubious in that Nixon lost the majority of the south’s 1968 electoral votes to George Wallace). The southern strategy rested on conservative Republican Sunbelt voters. Impetus behind the southern strategy was a repudiation of the Great Society (and the Civil Rights Movement) (Boyd, 1970). On its face, economic development was not a central player. Nevertheless, the 1972 landslide results (70% of Deep South vote for Nixon, victory in every state but Massachusetts) proved Phillips more right than wrong–although Democrats retained control of Congress. The political rise of the South was a punch to Northern noses.

 

Business Week devoted a special issue entitled “The Second War between the States.” May 1976[ii] The article rang out like a fire bell in the night. The first impulse was to place blame on who started the fire. Southern competition surfaced to the top of America’s 1976 policy agenda. Thoughtful observers, with a few years of hindsight, knew the problem was more complex than the so-called “southern branch recruitment strategy”—which by then was 40 years long in the tooth. In the best of traditions, we shot first and thought later. The problem for our history, however, is the first irrational shots became engrained in our professional and Policy World legacy. In the process, Big City fiscal collapse, suburban growth, and Big City policy system change all became “smushed”, along with allegations of southern piracy (with federal help) into ED’s institutional memory.

 

<b>How Economic Development Became Ground Zero

If regional change meant the rise of the West that was one thing. If it meant the rise of the South, that was quite another. Regional change was perceived, albeit incorrectly, as mostly Southern aggression: a new Civil War fought not with bullets but with tax abatements, IRBs, right to work laws, and state and local incentive deals that lured highly visible automotive firms from the North and Midwest to the South. Arguably the opening salvo in this new North-South war was 1976 New Stanton PA Volkswagen Plant bidding war—probably the first public/media “bidding for firms with tax abatements”.

 

Pennsylvania competed for site location with two sites in neighboring Ohio. Pennsylvania “won”. The state bidding war culminated in the largest incentive package America had ever seen: $71 million (1970 dollars) tax abatement, highway, rail improvements and assorted (some say sordid) business incentives. Volkswagen invested nearly $250 million to produce the Volkswagen Rabbit C, but simultaneously Volkswagen also purchased an American Motors plant in South Charleston, West Virginia, and an auto air conditioning plant in Fort Worth Texas—each with state incentives. The Southern plants captured the media attention and notoriety. The South somehow had won the bidding war. Ironically, by 1984 all three plants were either sold or closed. In 2016 the New Stanton plant sits closed and empty.

 

Only a scant year later Honda, in 1977, commenced a successful negotiation for a massive incentive deal to build a motorcycle plant in Marysville Ohio. That was the opening salvo in what would later be called the post-1980 “Auto Alley”, stretching from Great Lakes to the Gulf of Mexico (Kilner & Rubenstein, 2010). In any case, in both instances the incentive war was initiated by foreign companies and states competing for foreign direct investment (FDI). The blame for bidding wars was placed on the doorstep of the rising and aggressive South by Northern politicians (Moynihan, 1977), Policy World and media. Highly publicized works by Kirkpatrick Sale’s popular 1975 book (Sale, 1975) timed perfectly with the politically tumultuous post-Watergate years. A Policy World flurry of books, proclaimed the existence of regional change and regional competition (Goodman, 1979).

 

Who’s to Blame?

The widely-quoted, somewhat sensational Last Entrepreneurs in particular, cemented the image of anti-union Southern states peddling tax abatements and just about every other ED subsidy to foot-loose greedy capitalist firms. Goodman argued that southern states “are selling not merely climate or regional culture, but an ever-expanding package of tax breaks, subsidized job training, public financing, and an anti-labor, anti-environmental control climate. In this war for manufacturing, Southern states were labeled as “the last entrepreneurs“–a euphemism for a pirate. With the exception of the last two incentives, however, the same could be said for northern and Midwestern states as well. The reality was an arms race had started long before the actual fight began.

 

In these pre-Deindustrialization years southern states were perceived as the cause for the “increasingly virulent plague of plant closings in the industrial Northeast and Midwest” (Goodman, 1979, p. Backcover). While not without its ideological and pro-labor baggage, the Last Entrepreneurs conveyed a dynamic that had developed after the Second War: state/local governments, regardless of the region, were engaged in a deadly serious competition for migrating business—each for their own reasons. But something had changed. Economic development always attacked for its “deal-making”, incentives, bidding wars and inter-jurisdictional competition. It had always been so, of course, but these nefarious activities were no longer confined to the municipal level. The states were now involved—in a very big way. And the competition captured heavy duty media and Policy World attention.

 

The numbers were numbing, and the alleged implications so dear to the future—and to the fate of political officials and career economic developers. When confined to municipalities, deal-making and incentives were tied to the urban competitive hierarchy; much less so when deal-making shifted to states. Within the profession, the importance—and the status—of deal-makers changed the character, priority and tone of economic development policy. If in the past, retention as a strategy held a slightly greater priority, in these years it began its all-too-rapid descent into a sideshow. Capturing big foreign companies was a matter of public prestige—and any loss public shame wrapped with the ribbon on irresponsible bidding wars.

 

To make matters even more complicated (and persuasive) the Federal government, controlled by “Sunbelt” Presidents (Johnson, Nixon) and southern Congressional committee chairs had feed Federal funds in huge amounts to game changing new industries such as space travel and national defense (ACIR, 1977). A raft of serious policy and analytic literature documented the seriousness and impact of federal funds in the rise of the Sunbelt (Perry & Watkins, 1977). These works described a political-economic-social zero sum game in which a negligent North was upstaged by the cagey Southern country bumpkin (Editorial, 1976). The task, from the Northern and Midwestern perspective, was to cut off the spigot of federal spending to the South and reroute it to the North and Midwest, to the central cities.

 

Federal tax and spending policies are causing a massive flow of wealth from the Northeast and Midwest to the fast-growing Southern and Western regions of the nation …. The states at the receiving end of high federal outlays also tend to be those that tax their own citizens least for state and local government services. On the other hand the balance of payment situation generally is adverse in the Northeast and Midwest, where population is stagnant or declining, where unemployment is the most severe, where relative personal income is falling and where the heaviest state and local tax burdens imposed. (Editorial, 1976)

 

The region-building war production initiatives and the heritage of military installations and defense spending that followed after the war were critical to the South. Cape Canaveral and the Space Industry. Federal grants in aid formulas overall were transformative. Make no mistake, federal spending had played a major role in the southern economic transformation. But it also might be noted that no one has counted the benefits set by hegemonic, Eastern, Big City corporations, their Pittsburgh Plus pricing et al., and its effects on the more “colonial” regions of the nation. There are two sides to every coin.

 

Economic development had now become politicized, openly politicized, and the politicians assumed leadership in the initial phases of the second war. The solution to the problem of federal spending, not surprisingly, federal spending. While economic development was the alleged cause of the Second War, the real underlying tension was the North/Midwestern fear that irreversible regional economic change was in process and had to be curtailed or reversed. This demanded resources they did not have. The South (and West) sought the same to protect their new-found growth machine. The battleground of the second war would not only be the deal-making for mobile industry, but would also involve policy and funding found only in the Oval office and halls of Congress or bureaucracy.

 

Hitherto the North had been in undisputed economic ascendency. By 1976, with its central cities ‘hitting the bottom”, it was likely the North/Midwest’s hegemony was threatened. The time had come to fight back. Viewed from the other side of the Mason-Dixon fence, the “worm had turned”. The two-century pattern of Northern economic, and oft-times political dominance was visibly changing in the South’s favor. That regional change also included a sort of “coming out” of the West as well, however, was noticed, but the rise of the South was truly galling—and unforgiveable—demanding special treatment. One may wonder if there was something else going on as well as simple regional change?

 

Was the Second War Between the States was a war between the “two ships” of economic development?

 

Washington-Regional Economic Development Advocacy Policy

Early, in 1973, the New England Congressional Caucus formed. As described by Rep. Silvio Conte (R. Conn) the reason for its formation was that “the region has been repeatedly unfairly treated on key economic interests like oil imports, rail freight rates, and defense contracts“; Rep. James Burke (D. Mass) wanted the focus to be “the ailing textile, shoe and electronics industry (Route 128)”. Banks and fuel oil firms funded a research organization, the New England Economic Research Office[iii]. At that point, middle Atlantic/Midwestern states, not yet organizationally joined together. The 1976 battles of New Stanton and Business Week, however, tipped the scale. In June, 1976 seven Governors (New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts and Vermont) founded the Coalition of Northeastern Governors. The spirit of the Coalition expressed by Pennsylvania’s Governor Sharp: “It was largely tax dollars from our urban states that built the Tennessee Valley Authority. Now we find the lower cost of TVA power used against us to attract our industries“[iv]

 

In the same year, 1976, the Northeast-Midwest Congressional Coalition” began life as a caucus in the House of Representatives (eighteen states). In the following year, the Northeast-Midwest Institute was formed. Cobb reports that “by February 1979 twelve coalitions had launched efforts to redirect federal monies to the Northeast and Midwest. Their first visible success was adjustment of the CDBG formulas to “direct more monies into northern cities and created the Urban Development Action Grant Program (UDAGs) to aid the nation’s most severely distressed urban areas.” (Cobb, 1993, pp. 198-200) “It was the proliferation of regional interest coalitions in the North that led southern political and economic leaders to decide it was they who needed to be organized” argued Cobb.

 

Not so quick. The South it seems had actually united before the Northeast Governor’s Coalition. As early as December 1971 (two years before the New England Congressional Congress) nine southern governors signed into agreement the Southern Growth Policies Board (SGPB–presently thirteen states); in 1973 its staff and research functions were located in the Research Triangle. To be fair SGPB initiatives and tone were defensive, policy analytical and internally focused. Yet southern Congressional leadership through careful attention to detail reshaped Great Society, and federal ED programs to increase funds into southern geographies. Over the seventies and subsequent decades, SGPB developed a southern “set of facts”, research and policy–as the Northeast-Midwest Institute did for the North and Midwest. Regional political and economic conflict was now very real and settled in to stay. In 1978 Jimmy Carter tried to moderate the regional division with a White House Conference on “Balanced National Growth and Economic Development“. At that conference a panel on “Sunbelt-Frostbelt” included two important contenders, Daniel Patrick Moynihan and Governor George Busbee (Georgia) chair of SGPB. Each pleaded their respective cases.

 

Below the Fold: The Perfect Storm crashes into States and Municipalities?

All this “fussing n’ feuding”, herds and quivers—and the threat of decline—brings out the economic developer in us. There is no single “cause” clearly associated with the raft of EDOs that were formed or reformed during the Seventies; it varies to be sure, especially in the timing, but multiple dynamics seem to be in play. Hierarchical competition, both urban and metro and now regional change and competition are obvious stimulants, but so is the decline in manufacturing and the rise of technology gazelles (see below). The arrival of foreign investors (FDI), notably absent in the Fifties and even Sixties, stirred up juices within each jurisdictional economic base. The collapse of Big Cities and their policy systems on top of continued suburbanization, neighborhood change and the onslaught of the baby boomers, and the shift away from UR to other ED strategies/tools/programs all entered into the nexus to form or to rejigger ones EDO and ED policy/strategy.

 

Research/survey by Humphrey, Erickson and Ottensmeyer (Humphrey et al. E. &., 1989) found that some 60% of “Local Industrial Development Groups” (LIDG) [not equivalent to our EDO which is considerably broader, including chambers, authorities or CDCs for example) were established in the 1975-1985 period—and that two-thirds were located in “northern industrial states” such as NY, PA, MI, and Ohio (Humphrey et al., 1989) do confirm significant formation of local EDOs in our hegemonic Big City states and assert factors such as the 1973 oil embargo, global competition, and “accelerated industrial restructuring of the 1970’s and 1980’s” were responsible. A survey of their CEOs found that the reasons for LIDG incorporation were (1) coping with unemployment, (2) competing effectively with other places, (3) and taking advantage of state and federal ED programs (Humphrey & Erickson, 1993, pp. 111-2).  A literature concerning formation of EDOs developed in the middle-late 1980’s after Bluestone and Harrison’s crucial work on deindustrialization suggests Big City states formed EDOs mostly in response to changes in their jurisdictional economic bases. We saw evidence of this in our 1950’s discussion regarding Massachusetts’ municipal level reaction to textile mill closings.

 

But wide-spread creation and restructuring of EDOs characterized the Seventies. Three distinct patterns emerged. States rejiggered their EDOs and added more arrows to their quivers. Attraction, incentives and deal-making captured the headlines, but TIF usage increased, and IDBs and retention programs proliferated. At the local level counties entered slowly into ED, particularly in West and South. More prominent was the turn to municipal government EDOs, which like the states were reformed and reorganized, empowered with new tools and programs. Attraction and retention remained pillars of local ED policy/strategy, but experimentation and an appreciation for the rise of technology was also apparent. Business retention, in particular, required states and locals develop similar tools and techniques to counter alleged advantages and incentives offered by the recruiting-attracting jurisdiction.

For example, Pennsylvania leaped ahead of New York by five years by approving in 1967 its “Economic Development Financing Law” empowering municipalities, counties and townships to establish economic development authorities. These authorities “construct, improve and maintain industrial, specialized, or commercial development projects for the elimination or prevention of blight … borrow money and issue bonds … exempting the property and securities of such authorities from taxation [tax abatement]”[v]. Pennsylvania’s Mid-Atlantic pioneering entrance into the arms race prompted New York, five years later, to reform its state programs and EDOs. In nearly every state, Big City or small city EDOs are being formed or reorganized. The ED landscape, both structural and policy, was clearly in flux.

 

EDOs developed similar incentive and business climate packages. We do not lack for examples. Consider, a case, The Millers Falls Company in Greenfield (rural western) Massachusetts as relayed to us by Robert Goodman (Goodman, 1979, pp. 62-4). Since 1868 Millers Falls Company made hand tools in the small town of Greenfield Massachusetts. In the Fifties it employed 1300 workers, one of the largest manufacturers in Western Massachusetts. Bought by Ingersoll Rand in 1962, 1976 employment declined by nearly fifty per cent and the company announced it was looking at sites in North Carolina and nearby Connecticut. Governor Dukakis got in his limo and dropped in to town. The company president decried the Massachusetts high taxes/wages so Dukakis jaw-boned the union, which after three months negotiation accepted lower wage/benefits. The local union organizer summarized the deal as ‘We feel we submitted to extortion …The company says you submit or we throw you out and turn this town into a ghost town”. ‘The state offered $285,000 in state money to secure another $775,000 from EDA to prepare a new building site.

 

Meanwhile Deerfield, an adjacent town offered the company thirty acres, ten more than the company was asking for. Deerfield also agreed to use its tax-exempt status (IDB) to help Millers Falls raise a million dollars at low interest to pay for part of a new $3.7 million plant. ‘We decided to give the Sunbelt a run for its money’ said … (the) chairman of Deerfield’s industrial development commission (Goodman, 1979, p. 64). So the company moved from the city of Greenfield to the town of Deerfield with a pretty robust incentive package in hand. The company, however, relocated to New Jersey in 1982 as part of a leveraged buyout. The original Greenfield site is now a “Museum of Industrial Heritage”. To our best knowledge, there was never a proposal from a southern state or jurisdiction to the firm. Yet in the minds of the participants, they were competing with the South.

 

Cobb presents data suggesting that by the middle 1970’s “if the southern states had once provided more financial support for such [industrial development promotion] programs than did states elsewhere, their competitors had all but caught up by the early 1970’s. In fact, Pennsylvania’s per capita investment in development was more than 6.5 times the southern and national average. The southern states maintained only a slight edge in the percentage of the total state budget devoted to industrial promotion (Cobb, 1993, pp. 199-200).

 

Shifting Sectors

 

The flurry of southern and suburban migration of businesses masqueraded plant closing during the 1970’s. The tendency of mature profit cycle companies sectors to disperse to lower-cost geographies, however, was again “discovered” during the seventies, mostly by Policy World economists. Loss of jobs, plant closedowns were quickly linked with several not-so-new emerging agglomerations that made their appearance in the Policy World debate that raged during the Seventies. Called the Great Reindustrialization Debate, it was mostly included the (business and social science) Policy World, unions, and corporate management. Political leaders also kept a watchful eye.

Seeds of many paradigmatic strategies that characterize 21^st Century Contemporary Economic Development were sowed in these years. We will discuss the Great Reindustrialization Debate in more detail in Chapter 19. In this section the history isolates two sectors as deserving special attention. These sectors served as the backdrop to much of the Great Reindustrialization debate. First, a “new” southern/Midwestern auto alley incrementally developed; second, a “technology” industry, distinct from manufacturing, appeared almost out of nowhere.

The Auto Alley was fueled by Japanese and European foreign direct investment (FDI). The emergence of the Auto Alley disrupted the already troubled traditional American auto industry, and it injected foreign competition into American domestic auto production— a competition that badly hurt American industry. New auto agglomerations in the South soon became a significant element of regional change and added to the perception the South was “stealing” much-needed manufacturing from Big City states. The shift of auto-related production to the southern alley, combined with the weakness of American auto manufacturers, was, of course, a major factor in the catastrophic decline of Great Lakes and Michigan’s jurisdictional economic bases—creating the infamous “Rust Bowl” (Klier and Rubenstein, 2013).

The southern Auto Alley also became linked to Big Three (American) downsizing due to lost sales to foreign competition. Detroit simply could not produce competitive high-quality vehicles attractive to consumers. That corporate weakness triggered new discussion within auto manufacturing that permeated university business management departments—spreading its application across many other sectors as well. Productivity, corporate management strategy, and worker management joined entered into the Great Reindustrialization Debate as well.

 

Two emerging sectors deserve special attention. First, a “new” Auto Alley (increasing southern manufacturing employment), and the second, a “technology” industry, distinct from manufacturing. Auto alley was a foreign direct investment (FDI) by Japanese and European car manufacturers. The effects of a new low-cost domestic competitor disrupted the already troubled traditional American auto alley found difficult with which to compete. New agglomerations in the South became a significant element in regional change and the perception that the South was “stealing” much-needed manufacturing from Big City states. The shift of auto-related production to the Alley, combined with the weakness of American auto manufacturers is, of course, a major factor in the catastrophic decline of Great Lakes and Michigan’s jurisdictional economic bases—creating the infamous “Rust Bowl” (Klier & Rubenstein, 2013). The appearance of a southern auto alley soon linked with Big Three downsizing due to lost sales and Detroit’s inability to produce competitive high quality vehicles attractive to consumers. That unleashed discussion within corporate manufacturing across many sectors. They joined in the Great Reindustrialization Debate as well.

 

 

Auto Alley and Regional Change

Sunbelt auto alley expansion was driven by investment decisions made by foreign automakers.[vi] Internal auto industry dynamics, microeconomic costs and production efficiencies—and corporate strategy—were incorporated into foreign automakers’ location decisions. Consequently, there were many factors that entered into a location decision—not just the ED deal-jockeying described below. Foreign manufacturers arrived at America’s shores not because of recruitment or ED attraction, but for their own reasons. Japanese auto manufacturers and parts suppliers had embraced new techniques such as just-in-time (JIT), new process technologies (statistical process controls-batch processing) and logistical/distribution innovations—which seriously affected their search for American locational assets.

 

Japanese manufacturers, long protected by high tariffs that shielded them from foreign competition, were confronted with the 1973 expiration of the Brenton Woods trade agreements (upon which postwar global trade revolved). From that point on “floating” currency rates became the key single factor driving global trade and comparative advantage as import/export ceased its reliance on the gold standard. In the case of Japanese auto manufacturers that could no longer compete behind high tariffs so they “innovated” and developed a new business model based on low costs, cutting-edge process, composites materials, production efficiencies, and decentralized management/team-decision-making. Floating currency rates drove their decision to establish production facilities in high demand markets such as the USA, but they required a low-cost business climate (Howes, 1993, pp. 61-2) to accommodate their business model. Low-cost American locations had a compelling advantage in attracting these facilities.

 

Our tale of Auto Alley expansion starts with Honda’s 1977 first USA investment in Marysville, Ohio–not usually thought of as a Sunbelt state. The Marysville plant was initially intended to assemble 60000 motorcycles, but in 1980 Honda purchased adjacent land and by 1982 an automobile assembly plant was in production also. By 1990 Honda sold 800,000 Accords in the USA–half were from Marysville. The 1982 assembly plant was followed by a series of additional Honda investments in Ohio (all with tax and other incentives) so that by 1990 Honda had invested over $2 billion and hired over 8,000 worker-associates in Ohio automotive-related facilities (Marvel & Shkurti, 1993, pp. 52-3).

 

The traditional Great Lakes auto alley evolved during the 1920’s from a highly agglomerated oligopolistic automotive complex (Markusen, 1985, pp. 163-75) around Detroit, its northern suburban counties, across the bridge to Windsor Canada to Toronto, and following Interstate Route 90 thru Cleveland, Buffalo and all the way to Syracuse NY. The Big Three subsequently decentralized automotive assembly/parts production to regional hubs in key market areas: San Francisco, Los Angeles, Dallas, Atlanta, St. Louis, Kansas City, New York-New Jersey-Baltimore, and Springfield Massachusetts (Markusen, 1985, p. 170). The core “traditional auto alley” was less OEM assembly plants than a huge automobile parts and automobile-related plant nexus that remained heavily concentrated with the Great Lakes auto complex. The Marysville Honda facility marked the abrupt and remarkably rapid inauguration of a second “Auto Alley”.

 

Prompted not only by internal industry transformation, but also by threats of American protectionism, and unfavorable currency imbalances, Japanese auto makers (and one Subaru facility) quickly poured new investment into the south-central states. The new Auto Alley concentrated along Route I-65 (Indiana thru Alabama) and I-75 (Michigan to Georgia) with an East-West dimension–a series or “rungs” along I-20, I-40, I-64, I-70 and I-80. By 1979, the U.S. had 55 assembly plants, 34 were in the (new) Auto Alley.

 

The seven southern states of Alabama, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee together had 7 percent of transportation sector employment in 1972. Thirty years later the region’s share had grown to 16 percent…. The number of assembly plants in the South increased from 5 to 13 between 1979 and 2008. In addition, 67 percent of all parts plants in the South were opened between 1980 and 2006, compared with only 40 percent in the rest of the United States (Klier & Rubenstein, 2008, p. 3)

 

By 2008, the number of assembly plants in the new Auto Alley had increased to 43; elsewhere their number declined to seven. During the 1950’s, three quarters of all parts were made in, or near, Michigan, whereas the state (in 2008) retained only one quarter. The new Auto Alley even after a three-decade run shows no sign of abating (Platzer &Harrison, 2009, pp. 5, Table 2).

 

The 1980’s Auto Alley expansion was viewed by many as one more example of the “usual” southern piracy through incentives, promotion, a cheap nonunion workforce, community college business assistance programs and business climate advantages (right to work, low taxes, pro-business). Attraction to the Auto Alley by foreign investors certainly was affected by these factors, especially right to work. The aggressive role of southern governors in promotion also frequently created an edge. Governor Lamar Alexander’s Tennessee was a prime example of a state attraction effort that successfully landed in 1986 a General Motors-Saturn plant facility at Spring Hill. That decision, however generated intense competition between states: New York allegedly put a $1.2 billion package into play; 18 states competed. That Asian automakers/parts plants intended to be nonunion from the get-go provided a prohibitive advantage to right to work states.

Lest we appear as an apologist for southern behavior, I argue, as does Stuart Rosenfeld, that foreign automakers were only one of many industry sectors investing in the South at this time (Rosenfeld, 1992, p. 70, Tables 6–8). FDI was a cornerstone of the post-1960 southern manufacturing renaissance. Great Britain (not a competitor in Auto Alley), for example, in 1989 owned most southern foreign-owned facilities; the Federal Republic of Germany was second. Canada and France combined owned more southern manufacturing facilities than third place Japan—the chief Auto Alley foreign investor. During the 1980s Japanese-owned plants in Southern Growth Policies Board States increased from 63 to 359, an annual compound growth rate of 21 percent.

 

 

The Rise of the Sunbelt and the Consternation of the Snowbelt

 

The fact that the Sunbelt rose and the Snowbelt entered into a socio-economic funk has been well documented and a commonplace by 2013. So our purpose, as always in this historical treatment of our profession, is not to provide additional superfluous documentation and reiteration. The reader is referred to the footnote below for some literature that will provide description and statistical evidence regarding the movement of people and jobs that occurred over a thirty to forty year period[1]. Indeed, the most dramatic periods of Sunbelt growth lie after the seventies. Our purpose in this section is to introduce the concept of regional change, to explain why such regional change did become evident to observers during the 1970’s and to assess how it impacted the profession during the decade of the seventies.

 

In so doing we want to briefly outline the less appreciated fact that regional change had been in the making for some time and, as we discovered in our analysis thus far, Sunbelt is not a monolithic phenomenon. Sunbelt also exhibits a variety of forms, some subtle, others more dramatic. In describing the acknowledgement during the 1970’s of the Sunbelt’s rise, we hope to set a framework to understand how economic development during the 1970’s was affected. The reader should not try to carry the subsequent post 1980 transformations into our 1970’s discussions. To the greatest extent possible we are trying to see how folks perceived this long-term trend during this limited span of time. Needless to say, we shall carry forward this dynamic in our analysis of the future.

 

First, as should be obvious from the preceding section, regional change during the seventies rang out like the fire bell in the middle of the night. And the first impulse was to place the blame on who started the fire. That is why the Second War Between the States started. Thoughtful observers, most with a few years of hindsight, knew the problem was more complex that a “southern strategy”, a conservative political resurgence, and aggressive southern recruitment–which by now was well over forty years in action. The fixation on the South, after all, did not explain California, Phoenix, and Silicon Valley and frankly did not get at what was going on in southern states like Texas and Florida (or even Atlanta for that matter). So, in the best of traditions, we shot first and began to think and take aim a bit later.

 

Regional change is a euphemism for several, simultaneous and overlapping, dynamic forces and trends–each of which had geographical implications. Population mobility, age cohort, i.e. generational change, immigration, deindustrialization (next to be discussed), and a shift in the sectoral composition of the overall American economy (away from manufacturing toward service and government sectors) were the core elements behind regional change. In this maelstrom the search for whom to blame for any “bad moons arising” seems rather futile, but, human nature, politics and academia being what they are, somebody had to be blamed.

 

Even blame-fixing (which, by the way, turned on its head is called policy-making) was hard to do because these trends were generational and played out over decades. Understanding and greater comprehension of these forces increased over time as the decades wore on–until they reached the point where the forces themselves had largely played out and hindsight is possible. Day to day, year to year economic development policy-making, however, had to cope with partial awareness, a need to simplify complex interactions, and the reality of emotional/ideologically-laced confrontation of perceived winners and losers.

 

The value of appreciating the composition and impact of regional change in our historical depiction of the economic development profession lies in considerable measure to our sense of how economic development policy-making operates in a long-term environment characterized by serious change and transition to a new order. Policy makers do not have the luxury to wait these changes out; they must respond in virtual time. The attribution of blame is the fixed point by which policy solutions are devised. Attribution of blame reflects a whole host of emotions, philosophies, perceived future fate, and whether one is winning or losing at the moment (as well as other factors such as globalism and affluence). Over the five decades, or more, that regional changes play out, attribution of blame and policy-making will itself evolve and leave a considerable impact on the theory and practice of economic development. One of these forces-trends, deindustrialization, had impacts so fundamental to economic development, that we have decided to isolate it and discuss it separately in the next section.

 

Why did the regions shift so dramatically? The first and second answers, during the 1970’s, were unequivocally: the Federal Government had done it and capitalist corporations were controlling its and local government policy-making process. How? Through grants-in-aid, World War II Defense Department budgets, massive investment in infrastructure, and the subsidization of innovative, creative new industries like space. This blame it on the Federal government syndrome had already been the preferred explanation for suburbanization (highways, mortgages, etc.) and as regional change rolled out the easy response was “there they go again”. The disruptive role of the Federal government was a key variable and logically, having been the cause of the disruption, it was the responsibility of the Federal government to fix what it had broken. Secondly, political scientists and sociologists (and a few economists for good measure) declared jihad and entered into an ideological war. They tossed into the equation the role of capitalism and profit-seeking corporations and linked it to economic development policy and policy-making. Urban policy-making, economic development and empowerment of minorities/low income individuals/neighborhoods would eventually come to require a recast of capitalism itself–into a neo-liberal state for instance and a breakup of the corporate control of local policy-making. In the later stages of this debate, the concepts of culture and social class, as in creative class, entrepreneurs and big sorts will emerge.

 

Economists, on the other hand, during this decade stayed at home. Economists, who did not lack for ideology either, were more inclined to look at the “changing national and regional economies”. They would identify sectoral trends, global impacts and changing firm microeconomic trends. Something called the “regional economic base” would in due course emerge and enter into the policy analysis picture. Many would turn toward a body of literature loosely termed agglomeration economics. Also economists would grapple with the sources and nature of economic growth and decline (call it creative destruction if you will) and conduct internal discussions on the role of labor and innovation as pillars of growth. They debated a possible rejection of convergence or reversion to the mean as an inevitable end point of any period of growth. The Keynesian role of government would also evolve. In the later stages of regional change, globalism and mega regions would enter the fray, as if not being able to solve things locally it is best to enlarge analysis to include everything and anything going on in the entire planet.

 

All of these disciplinal evolutions (and more) would certainly reshape the theory and over time affect the practice of economic development. These last few paragraphs, however, are more than an introductory overview to the impacts of regional change.  More critically, this introduction constitutes our big picture as to how we view and value the underlying impact of the constellation of trends and forces  which we define as regional change on economic development. Regional change plays more of a role than mere geographic shifts. Our basic position remains that the big picture changes, subsumed under our rubric of regional change, are the fire under the pot, the energy source underlying the next thirty year evolution of economic development. As will become evident, however, the decade by decade story of regional change is much more tied to specific geographies, is fickle from one decade to the next, and to a large degree ignores or is grossly divorced from our big picture.

 

In our decade by decade-based discussion and description of regional change we will no longer talk about Sunbelt and Snowbelt. These are artificial concepts which were used in the seventies and somewhat in the eighties. Instead, we will break down these macro regions into geographies like “the new South”, the “old South”, “the Great Lakes”, the Plains states, the North East and Midwest, the Mountain States and the Southwest. Each of these regions is a simplification to be sure and they mask their own internal variations. But they do suit our more general descriptive purposes and do permit some level of order and understanding with the admitted price of some distortion. Importantly, our discussion of regional change allows us to now include jurisdictions which by virtue of their growth in these decades, we have not really discussed or commented upon thus far.

As to elaboration of our component elements included within our notion of regional change we are much less concerned with detailing how flow or which came first or even which is more important at any particular time. Rather, we see the component trends as combining to create a natural flow of people and job movements–a Gulf Stream or a highway flowing across time and geography. The massiveness of all these demographic, social and economic movements dwarfs specific political or economic development actions or programs. They are, for the most part, reacting to the underlying flows as they are felt and perceived. Firms, workers, people, and jobs are making decisions based on their assessment of what is best for them. Economic development activities facilitate, augment, target, or try to limit or block these millions of micro-decisions.

 

The Second War Between the States: The Ships Collide

 

In May 1976 Business Week devoted a special issue entitled “the second war between the states”[2]. In retrospect the publication became the symbolic acknowledgement of a dynamic that had been ever more intrusive and apparent for the better part of the previous decade. Obscured by Vietnam, civil rights, assassinations and riots, the Great Society and even Watergate, the issue of regional competition (as distinguished from regional change) surfaced to upper levels of America’s 1976 policy agenda. But as we already know, states and communities having already been engaged in regional competition, 1976 represented an escalation of what had been a restrained struggle into an open war.

 

But there was much more to this war than simple unfair competition for jobs and industries between states. Certainly, the escalation to war reflected the realities associated with the rise of the Sunbelt (regional demographic change) which will be discussed shortly. Regional demographic and population change shattered the previous “balance of power” in our national-regional system. Hitherto the North had been in undisputed economic ascendency. By 1976, with its central cities ‘hitting the bottom”, it was unlikely the North/Northeast was still Hegemon of the nation’s regions. The time had come to fight back and maintain its dominance. Viewed from the other side of the Mason-Dixon fence, the “worm had turned”. The two century old pattern of Northern economic, and oft-times political dominance was changing in the South’s favor. But, regional change also included a sort of “coming out” of the West as well as shift in the North-South relationship.

 

To some degree, however, the second war between the states was also a war between the two streams of the economic development profession. At the theoretical level, the war both acknowledged the not so silent struggle between the Privatist and communitarian philosophies, but it also reflected a change in the goals desired by the two wings of the profession. The 1976 era Privatist wing, dominated as it was by the economically depressed South and the newly emerged suburban majority had been focused of growth. The Northern communitarian Progressivism, on the other hand, had previously been focused on inclusion of immigrant minorities into an urban industrial age. In the last thirty years, it had tempered this inclusion focus into a modernization of obsolete urban and industrial infrastructures and an upgrading of industrial logistics. Only very recently had the implications of an irreversible suburbanization raised the question of maintaining the primacy of Northern central cities.

 

Changes arising from the sixties and seventies dramatically altered the relative strength of the communitarian-Progressive wing of the profession. In 1968 the Progressives had been driven from the Presidency (though it had strengthened its position in both the 91st Congress House and Senate). The loss of the Presidency had raised the specter of a diminished Federal role in cities and economic development and a Progressive consensus which had more or less dominated the policy agenda since New Deal days. The Federal government had proven to be the godfather, the sugar-daddy of the communitarian-Progressive-central city wing of the profession. Nixon, a Californian and a Republican did not seem to fit the traditional mold.

 

In a 1970 Times article Kevin Phillips popularized the notion of a Nixonian “southern strategy”[3]. In fact, Phillips contended that Nixon’s victory was the result of his “southern strategy” (which was actually somewhat dubious in that Nixon had lost the majority of the south’s 1968 electoral votes to George Wallace). The southern strategy rested on the increase of conservative Republican voters in the Sun Belt. More importantly the impetus behind the southern strategy was a very negative reaction to the Progressive Great Society (and the Civil Rights Movement as well) which drew in Northern and Midwestern suburbanites (and more than one-third of the black vote) as well. In the confusing mélange of the decade’s events, it was relatively easy for those threatened to characterize Nixon as more southern than he actually was.

 

Nevertheless, the 1972 landslide results (70% of the popular vote in the Deep South and Nixon victory in every state but Massachusetts) proved Phillips more right than wrong. (although Democrats retained control of Congress). The political and economic rise of the South was a punch to Northern faces–especially in light of the civil rights struggle of the past two decades[4]. If regional change meant the rise of the West that was one thing. If it meant the rise of the South, that was quite another.

 

However moderate the Nixon Thermidor had been, Nixon was never considered a true Progressive. His New Federalism tempered and rolled back elements of the Great Society (Model Cities, for instance, ended in 1974) and a new intergovernmental grants-in-aid system had ruptured the Progressive grant spigot which had bypassed the states and funneled funds directly to the central cities. In its place were block grants, revenue sharing which went through the states. The central cities fiscally shuddered (for many reasons well beyond Federal grants-in-aid) and in 1975, New York City went broke (and would eventually be placed into the trustworthy hands of Felix Rohytn and the “Big Mac”. Nixon’s successor, Republican Gerald Ford refused Federal assistance and as the newspaper headline called it “New York City: Drop Dead!” The Republicans had turned their back on the core Progressive constituency, the central city. Political war had blended with economic war and economic development was caught at its intersection.

 

The need for an aggressive Federal role was accentuated in the communitarian-Progressive-central city oriented mind because of a slow conscious recognition that the goals of central city economic development had shifted yet again. Inclusion, this time in terms of black minorities and black residential geographies rather than immigrants, was balanced and linked with growth and jobs (and, of course equality and justice). The issue wasn’t retaining jobs; it was creating taxable jobs in central city, but especially in the depressed, bomb-shelled geographies where industry and few others dared to tread. As provocative as it may seem, central cities had become the Mississippi’s of the North and Midwest. In a ghetto funeral, the only thing from the ghetto was “the body and the hole”.

 

This was the backdrop to the 1976 opening salvo of the Second War Between the States. The “second war between the states” was how participants at the time perceived and labeled the effects of regional change, political power shifts, deindustrialization and advanced suburbanization. Regional change was perceived, albeit incorrectly defined, as Southern aggression: a new Civil War fought not with bullets but with tax abatements, right to work laws, and state and local incentive deals that lured highly visible automotive firms from the North and Midwest to the South.

 

Ironically, arguably the opening salvo in this new North-South war was the 1976 New Stanton PA Volkswagen Plant bidding war in which Pennsylvania competed for site location with two sites in neighboring Ohio. Pennsylvania “won”. The state bidding war culminated in the largest incentive package America had ever seen to that point: $71 million (1970 dollars) in tax abatement, highway and rail improvements and assorted (some say a sordid) business incentives. Volkswagen invested nearly $250 million at the site to produce the Volkswagen Rabbit C–but simultaneously Volkswagen also purchased an American Motors plant in South Charleston, West Virginia, and an auto air conditioning plant in Fort Worth Texas–with state incentives. The Southern plants captured the media attention and notoriety. By 1984 all three plants were either sold or closed. In 2012 the New Stanton plant is still closed and empty.

 

In hindsight, New Stanton’s bidding war should more correctly be blamed on deindustrialization more than Southern aggression. It would be only a scant year later when Honda, in 1977, would start negotiating, very successfully as it turned out, a massive incentive deal to construct and build a motorcycle plant in Marysville Ohio. This was the opening salvo in what would later be called the post-1980 “Auto Alley” which would stretch from the Great Lakes to the Gulf of Mexico[5]. We shall discuss this topic more fully in a subsequent chapter. In any case, in both instances the incentive war was initiated by foreign companies and states competing for foreign direct investment (FDI).

 

At the time, however, the loss of manufacturing in the Midwest and Northeast, some of which was moving to the South and West, generated both an offensive and defensive economic development bidding war between the states. The blame for this was largely placed on the doorstep of the rising and aggressive South by Northern politicians, intellectuals and the media. Highly publicized works by Kirkpatrick Sale’s popular 1975 book[6] timed perfectly with the politically tumultuous post Watergate years in which the so-called “Southern strategy” was now very real.

 

A much more strident and mean-spirited polemic, The Last Entrepreneurs by Robert Goodman[7] cemented the image of anti-union Southern states peddling tax abatements and just about every other form of economic development subsidy to foot-loose greedy capitalist firms. While not without its ideological and pro-labor baggage, the Last Entrepreneurs did convey a fundamental aspect that had quickly emerged from the Second War: that states/local governments (and economic development) were

 

… engaged in a deadly serious competition for migrating business. The produce

they are selling is not merely climate or regional culture, but an ever-expanding

package of tax breaks, subsidized job training, public financing, and an anti-labor,

anti-environmental control climate.[8]

 

The alleged culprit were Southern states whose state and local governments had prodded the other states into this deadly serious competition for migrating business and who were responsible for the “increasingly virulent plague of plant closings in the industrial Northeast and Midwest”[9] In this perceived war for manufacturing facilities, the Southern states were labeled as “the last entrepreneurs”[10]–a euphemism for a pirate.

 

To make matters even more complicated and persuasive, the Federal government, controlled as it was by “Sunbelt” Presidents (Johnson and Nixon, and the soon to be Carter and Ronald Reagan) and Southern Congressional committee chairs had feed Federal funds in huge numbers to innovative game changing new industries such as space travel and national defense. David Perry’s, Rise of the Sunbelt Cities, and ACIR’s impactful 1977 “Measuring the Fiscal Blood Pressure of the States 1964-1975” and the National Journal’s “The North’s Loss is the Sunbelt’s Gain”[11] set the tone for who did what to whom. These works described a sort of political-economic-social zero sum game in which a negligent North was upstaged by the cagey Southern country bumpkin. The National Journal said it best by concluding that:

 

… Federal tax and spending policies are causing a massive flow of wealth from the Northeast and Midwest to the fast-growing Southern and Western regions of the nation …. The states at the receiving end of high federal outlays also tend to be those that tax their own citizens least for state and local government services. On the other hand the balance of payment situation generally is adverse in the Northeast and Midwest, where population is stagnant or declining, where unemployment is the most severe, where relative personal income is falling and where the heaviest state and local tax burdens imposed.[12]

 

Aside from the fact this summary could have been printed in 2006 as opposed to 1976, the atmosphere conveyed by this “war” slammed into local economic development and the economic development profession. The effects of this atmosphere on both were massive and long-standing. To be sure, as we shall discuss shortly, the academic community would enter into more sophisticated conversations, but not the rank and file economic developer. Economic development strategies (business retention, business recruitment and attraction, and business climate), in particular, were reshaped and even redefined during this 1970-1990 period. Moreover, economic development became infused with a culture of “deal-making”, incentives, bidding wars and inter-jurisdictional competition with winners and losers. Hugely expensive and controversial, the interrelationship of economic developers became intertwined with aggressive mayors-city managers-county executives and governors. Whatever its merits the transformations intensified the prominence and seeming importance of the profession.

 

The politicization of economic development has been a constant, if unspoken, issue and tension throughout our history. The second war between the states did nothing but further weaken the autonomy of the profession and many of its professionals from politics. The two seem bound at the hip. This is most obvious at the state EDO level which, from this point on to the present, seems closely identified with gubernatorial activism. True, as a Patchwork Profession, many elements of the profession seem quite apart from politics. Yet, the reality that considerable portions of the profession are entirely dependent upon governmental, especially Federal funding (the specialized EDOs such as WIA, SBA, NIST, HUD and even the Treasury Department) seem especially vulnerable to shifts in political power and philosophy. The trend toward politicization clearly shifted into overdrive as a consequence of the 1976 (to the present) second war between the states.

 

Economic development (as a public policy) is inescapably government-rooted. Even its privatist stream had, by 1976, evolved into closer relationships with local governments and state EDOs. When times are tough, government cannot stand idle and let others lead and the provision of private resources to public-related purposes is difficult to sustain over time. Both dynamics combine to create a sort of convergence around governmental processes and leadership. The second War Between the States with its deal-making, incentive-mongering, and shameless state-led recruitment recasts a very confusing. blurred line between the two wings of the profession.

 

In philosophy, as well as spirit, we will later argue that the second war corresponded to principles associated with the long-standing Sam Bass Warner-style privatism. But the second War Between the States was principally a war among governments and state governments at that. Philosophically, as we shall see in our discussion of the following decades, the communitarian-Progressive-central city (recast regional) wing of the profession will in later years also adopt the essential, paradoxically privatist approach, using the same strategies and tools popularized in the

Second War between the States. Strangely, and in a dysfunctional manner, the two streams of the profession seemed to have blended and blurred as each use the same tools and strategies to accomplish quite different goals derived from vastly different philosophies on how economic development should be conducted and who economic development should benefit.

 

As to the subsequent evolution of the second war between the states, it unleashed an intensifying use of the attraction and recruitment strategies and tools formerly pioneered and honed by the privatist-business focused-first stream. In a real sense the North and Northeast made a decision that if they couldn’t beat them, they would join them. This dramatic reversal in approach did capstone a flood of state legislation across the nation, a flood which had commenced during the decade previous to the onslaught of the war. The reality was an arms race had started long before the actual fight began.

 

It will be a safe bet that the Second War Between the States will not generate as many books or movies as the First War. Nevertheless, the Second War does not lack for either drama or complexities and it too is a page-turner. In this section of the chapter we will focus on the political aspects of the Second War. Economic development was going to be the principal battlefield of that war and New Stanton was the Fort Sumter. All hell broke loose after that. In retrospect there were many issues raised by the Second War but at the time, the primary reason cited by the media and the Northern politicians for the “revolting” position they were in was the past spending by the federal government.

 

The politicians were, for the most part supported by mainstream political science and even economist discipline. This is because federal spending did play a role in the revival of the south. As we have outlined in previous chapters, and will outline in future ones as well, the active role of the federal government has instigated economic, political and structural change. Urban renewal (housing and slum removal) were clearly legitimized and financed by the federal government. The abatement of federal taxes was the chief benefit underlying the IDB. The FDR minimum wage “war” hugely impacted the South as did World War II industrial mobilization.

 

But the South arguably has gotten at least its fair share, probably more from federal instigation–whether it wanted it or not. The impact of the TVA and the ARC on the southern economy and economic development has been discussed. The region-building Defense Department initiatives during World War II (such as Oakridge, Tennessee and steel mills in Birmingham) and the heritage of military installations and defense spending that followed after the war were critical to the South. Cape Canaveral and the Space Industry will be discussed in the following section. The federal grants in aid formulas overall were helpful to the South. Make no mistake, federal government spending had played a major role in the southern economic transformation.

 

Federal spending may have strongly affected regional economic and population change, but it had little to do directly with the Second War between the States. The Second War between the States was an economic development war, affected principally by the divergent approaches to economic development (and contrasting value-goal systems) practiced by the various regions, states and communities[13].

 

But economic development had now become politicized, openly politicized, and the politicians assumed leadership in the initial phases of this struggle. The problem they focused upon to remedy and fight the Second War was, not surprisingly, federal spending. Federal spending had been not redistributive, but discriminatory and had unfairly favored the South over the North.

The task, from the Northern and Midwestern perspective, was to cut off the spigot of federal spending to the South and reroute it to the North and Midwest, to the central cities preferably.  The South’s mission was to either to provide evidence to contradict the Northern assertions or find a way to preserve the core flow of federal funds so they were not disadvantaged. That all this had little to do with deal-making, customized worker training, tax abatements, or aggressive industrial recruitment only demonstrated that while economic development was the alleged cause of the Second War, the real underlying tension was the North/Midwestern fear that irreversible regional economic change was in process and had to be curtailed or reversed. In any case, the next battleground would be the halls and voting-decision-making chambers of Washington DC.

 

Earlier, in 1973, the New England Congressional Caucus had been formed. As described by Rep. Silvio Conte (R. Conn) the reason for its formation was that “the region has been repeatedly unfairly treated on key economic interests like oil imports, rail freight rates, and defense contracts”; Rep. James Burke (D. Mass) wanted the focus to be “the ailing textile, shoe and electronics industry (Route 128)”. Banks and fuel oil firms funded separately a research organization, the New England Economic Research Office.[14] At that point, however, middle Atlantic but especially Midwestern states and their delegations were not yet sufficiently focused on the issue to join in battle. The 1976 battles of New Stanton and Business Week, however, tipped the scale toward action. In June, 1976 seven Governors (New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts and Vermont) formed the Coalition of Northeastern Governors. The spirit of the Coalition was expressed by Pennsylvania’s Governor Sharp: “It was largely tax dollars from our urban states that built the Tennessee Valley Authority. Now we find the lower cost of TVA power used against us to attract our industries”[15]

 

In the same year, 1976, the Northeast-Midwest Congressional Coalition” began life as a caucus in the House of Representatives from Northeastern and Midwestern states” [16](eighteen states were members). In the following year the Northeast-Midwest Institute was formed (and continues to the present day). By 1979, Cobb reports that “by February 1979 twelve coalitions had launched efforts to redirect federal monies to the Northeast and Midwest. Their first visible success was adjustment of the CDBG formulas to “direct more monies into northern cities and created the Urban Development Action Grant Program (UDAGs) to aid the nation’s most severely distressed urban areas.”[17] CUED played a significant role in the behind the scene lobbying for UDAG[18].

 

Economic developers were involved in this Second War. After all over the previous decade an economic development arms race had already occurred. The economic development tools employed by the northern and Midwestern jurisdictions and states were perhaps surprisingly much the same structural-type and tools used in urban renewal. During this period, however, the tools were redeployed to pursue a micro-economic specific firm cost-cutting strategy as opposed to a physical and infrastructure modernization strategy of urban renewal. In many states a new Quasi EDO-form was created by state legislation and various combinations of these tools were entrusted into the new organizational form. For example, the Curmudgeon served (in a later period) as CEO in a New York state legislated, county-level, Quasi EDO created in 1972 as a response to the perception of post-1970 job and population loss and the threat of Southern competition.

 

The tools at his disposal were eminent domain, bond-issuance, and tax abatement and the structure/governance of his EDO was essentially that of a 1950’s style redevelopment agency. His EDO, however, was engaged in a cost-cutting for specific, targeted firms primarily for business retention, but also attraction[19]. Eventually New York State would allow more than 150 jurisdictions to create these types of Quasi EDOs, called the Industrial Development Agency. The carryover of tools and structures from an earlier era characterized by vastly different strategies of urban renewal, infrastructure and development/redevelopment into a new era of firm-specific microeconomic business retention and attraction is quite remarkable. It raises the question of which is more central to economic development: strategies or tools? This is a topic to which we shall return.

 

Pennsylvania was ahead of New York by at least five years. Approving in 1967 its “Economic Development Financing Law” which empowered municipalities, counties and townships to establish economic development authorities. These authorities “construct, improve and maintain industrial, specialized, or commercial development projects for the elimination or prevention of blight … borrow money and issue bonds … exempting the property and securities of such authorities from taxation (this is authorization of tax abatement)”[20]. Pennsylvania’s pioneering (for the Mid Atlantic) entrance into the arms race raises yet another interesting possibility: that New York was as much protecting itself from southern state competition as Pennsylvania’s.

 

A typical Mid-Atlantic EDO created in this period, therefore, could simultaneously pursue a retention, attraction and a small business strategy, and if sophisticated and properly empowered an infrastructure and real estate development strategy as well. It could over time evolve several nested subsidiary non-profits for specialized programs and strategies. These were among the first true examples of our current multifunction EDOs which populate our database for this monograph.

 

All this “fussing n’ feuding” between states unleashed a dynamic of its own which would continue in its own fashion in the following decades. It is one more layer of economic development piled upon previous layers. In these years, we can see that an aggressive, or perceived aggression caused by recruitment campaigns by other EDOs in turn generates a counter-business retention strategy among target communities and states. It is probably safe to suggest that business retention, the flip side of the recruitment strategy, is in the seventies a defensive strategy at best–a strategy to preserve and retain existing assets that are under attack. The business retention strategy forces a jurisdiction and the state in which it resides to develop similar tools and techniques so to counter alleged advantages and incentives offered by the recruiting-attracting jurisdiction. States, despite their general aversion to this type of warfare, respond in partnership with the threatened jurisdiction.

 

Over time, everybody, all EDOs wind up as standard fare offering as identical packages of incentives and business climate advantages as they can. In so doing, they may well generate opposition and disgust from interest groups and policy actors who reside in the threatened region. We do not lack for examples of this genre. Consider, a case, The Millers Falls Company in Greenfield (rural western) Massachusetts as relayed to us by Robert Goodman in the Last Entrepreneurs[21]. By way of background, Millers Falls Company made hand tools in the small town of Greenfield Massachusetts since 1868. In the fifties it employed 1300 workers one of the largest manufacturers in the entire of Western Massachusetts. Bought by Ingersoll Rand in 1962 by 1976 employment had declined by nearly fifty per cent. In 1976 the company announced it was looking at sites in North Carolina and nearby Connecticut.

 

The announcement brought a quick visit by Massachusetts Governor Michael Dukakis.

The company president explained that property taxes and wages were higher in              Massachusetts….The state helped persuade the union at Millers Falls to negotiate new

wage and benefit conditions [reluctantly and under considerable pressure over three

months of intense confrontation] and offered $285,000 in state money to secure another

$775,000 from …EDA to prepare a new building site. Meanwhile Deerfield, an

adjacent town offered the company thirty acres, ten more than the company itself

was asking for. The town (Deerfield) also agreed to use its tax-exempt status to help

Millers Falls raise a million dollars at low interest to pay for part of a new $3.7 million

Plant. ‘We decided to give the Sunbelt a run for its money’ said … (the) chairman of

Deerfield’s industrial development commission. [The local union organizer summarized

the deal as] ‘We feel we submitted to extortion…The company says you submit or we

throw you out and turn this town into a ghost town’[22].

 

So in 1976 the company moved from the city of Greenfield to the town of Deerfield (a sort of suburb) with a pretty robust incentive package in hand. The company was relocated to New Jersey in 1982 as part of a leveraged buyout. The original Greenfield site is now a “Museum of our Industrial Heritage”. The scars and bad feelings left by this now forgotten economic development project, repeated constantly throughout the Northeast and Midwest in the decades previous and following, constitute the heritage and the baggage which the practice and the theory of economic development must carry. It is here we can see the volatile tempers of unions, the emptiness of central cities competing with their suburbs, the state as an active party in business retention, the mobility of capital and corporate finance–and unemployed manufacturing workers now on social security. To our best knowledge, there was never a proposal from a southern state or jurisdiction to the firm.

 

To complicate these sad complexities even more from Cobb’s (and presumably the Southern) perspective all these northern state and local Quasi EDOs and their incentive deals looked pretty much like an acceleration of northern/Midwestern “promotional efforts”. Cobb presents data that suggest that by the middle 1970’s “if the southern states had once provided more financial support for such (industrial development promotion) programs than did states elsewhere, their competitors had all but caught up by the early 1970’s. In fact, Pennsylvania’s per capita investment in development was more than 6.5 times the southern and national average. The southern states maintained only a slight edge in the percentage of the total state budget devoted to industrial promotion[23]. If so, this suggests that the previous decade’s economic development arms race between the states was quite meaningful both to the northern and Midwestern economic development and to the evolution of the profession. The escalation of the arms race into an actual Second War, however, pushed economic development as a profession into struggles on a scale more extensive than a mere Hobbesian state-by-state promotional war. The real goal of the Second War was not to curtail or even defend against the so-called southern strategies of economic development, but to capture and use the federal government and convert it as the catalyst and financier of northern and Midwestern central city revival.

 

The southern states replied in kind. The privatist stream of economic development, almost by definition, minimized the use of government. Yes, government had a role, economic development was inescapably linked to government, and the Anti-Federalist-privatist stream was not averse to accessing the powers and resources which only government could provide. But the government of choice for the Anti-Federalist-privatist stream was local and state. The quest for federal involvement is a less traveled path for the private stream. Even as it tapped federal largesse, the Anti-Federalists exercised power through the decentralized Congressional committee system rather than the Presidency.

 

Not so for the Progressive-communitarian stream. Their Federalist roots once again were made manifest. Still, even the Anti-Federalists had to admit that federal spending had played a major role in their centuries-long hope to overcome industrial backwardness. Now that the South for the first time ever was catching up with northern industrialism, ironically by seizing   first advantage in the transition of the industrial economy into the service sector-driven economy, southern states were not disposed to surrender whatever benefits flowed from the federal government. They fought back. The ironic reality of the regional debate that ensued constituted an almost complete upside down inversion of boosterism–a historically dominant orientation of economic development. Indeed, Abbott comments that:

 

The rhetoric of such debate, of course, reverses traditional American boosterism, with

each side painting its failures and economic problems in the brightest colors. Where

the historic measuring rod of urban boosterism was population growth, the standard

of comparison in the sunbelt funding argument has been reduced to the question of

relative per capita income and wealth among the states.[24]

 

“Yet it was the proliferation of regional interest coalitions in the North that led southern political and economic leaders to decide it was they who needed to be organized” argued Cobb.[25]. Yet, it was as early as December 1971 (two years before the New England Congressional Congress) that nine southern governors signed into agreement the Southern Growth Policies Board (SGPB) (presently thirteen states) and in 1973 located its staff and research functions in the Research Triangle.[26] Needless to say, the timing of the SGPB and the formation of the first major northern coalition is all wrong if we agree with Cobb’s argument. The northern counterpart to SGPB, the Northeast-Midwest Institute was not formed until 1977. Fairness would strongly suggest that, whatever the ideological proclivities of the Anti-Federalist-privatist stream which were so lovingly described in our previous paragraph, its members were not unmindful of federal power and resources. However, to be equally fair the SGPB initiatives and tone was very much defensive (which is logical in that they had a measure of influence over the President and key Congressional committees at the time[27]). The southern Congressional leadership had through careful attention to detail reshaped many Progressive-Communitarian Great Society programs to increase the flow of funds into southern geographies. They were much less disposed to create programs from scratch than to manipulate Progressive programs.

 

In any case, the SGPB did over the seventies and subsequent decades construct and present a southern “set of facts”, research and policy direction–as the Northeast-Midwest Institute did for the North and Midwest. Regional political and economic conflict was now very real and settled in to stay. In 1978 Jimmy Carter tried to moderate the regional division with a White House Conference on “Balanced National Growth and Economic Development”. In that conference a panel on “Sunbelt-Frostbelt” included two important contenders, Daniel Patrick Moynihan and Governor George Busbee (Georgia) chair of SGPB. Each pleaded their respective cases[28].

New South Emerges:

 

The South and the North were now locked in battle in the Second War Between the States. Triggered more, in our view, by political (and some historic-cultural) factors, this war deeply involved economic development as its main battleground. In a deeper sense, the economic and political hegemony of the North and Midwestern states was also threatened and for the first time these states seriously worried that power, economic and political, was shifting away from them. Previously, much of the nation had been basic materials colonies and consumer outlets for the manufacturing plants of the Hegemon. In the 1970’s it all seemed up for grabs.

 

Our treatment thus far of the South has emphasized its poverty, backwardness, racial disparities, and its lack of industrial might. We have emphasized the effects of the First and Second Great Migrations and the outlines of the two decade long civil rights movement. Indeed, we have argued that backwardness and poverty, during the Great Depression, really launched the reality of textile wars and an aggressive southern economic development branch recruitment strategy–and the Northern/ Midwestern reaction to it. This is a description of “the old South”. Alongside the old South is a South we have only marginally talked about. This is “a new South” which creates the Research Triangle, customized worker training, the IDB and professionalized business recruitment practices. By the 1970’s, for reasons we will discuss, the existence of a New South had finally penetrated the Northern and Midwestern consciousness.

 

The new South was the first stop on our “regional change highway” and arguably[29] the New South had been quietly emerging for quite some time. From an economic development perspective, Cobb states the case for an insurgent New South appearing in the 1970’s

 

Prior to World War II the South’s courtship of competitive, low-wage labor-intensive

industries had not produced the accumulation of investment capital, consumer buying

power and skilled labor necessary for the region’s economy to reach ‘take off’ point of

rapid, self-sustaining growth. On the other hand, the region’s long-term commitment to

conservative government, low taxes, and promanagement labor policies had nonetheless

made it ripe for such growth. All that was lacking was the sharp external stimulus usually

necessary for takeoff. In the case of the South, the triggering impulse may have been the

large military allocations and technology innovations accompanying World War II. In the

postwar decades more and more investors turned southward in response to lower operating

costs, burgeoning markets nurtured by increased federal expenditures, and a favorable

business climate sustained by continued popular and governmental support for industrial

development.[30]

 

In effect, Cobb makes the argument that the New South’s rise was based on a new economic development strategy: state business climate. State and municipal strengths had long been associated with recruitment, marketing, promotion and attraction programs. But the business climate strategy rests ultimately on one added ingredient to this: a perceived reality independent of marketing and advertising. Businesses didn’t need to be told or marketed; they could figure out themselves the business climate and make their own judgments about it. They didn’t need to be recruited. Firms made normal business decisions and that led them to at least consider southern locations. As the years rolled on, the South won more and more of these normal business decisions.

 

The cutting edge state in the New South was Florida. Cobb makes the case, and we agree, that Florida, in microcosm, captured many of the New South’s characteristics and lead the region in capturing jobs and people before other southern state’s did. Florida did have natural advantages of beaches and weather (Florida summers???[31]) but it also survived the civil rights era with a reputation as being “only moderately racist” with “respectable conservative politics”, access to a abundant low cost workforce,  and an easy place to attract both workers and firms. As to establish its bona fides in business climate, Florida was literally the first state to enact right to work laws in 1943 (and again legally in 1947).

 

Florida and Cape Canaveral launched the first space flight of Mercury Project (Freedom Seven-Alan Shepard) in 1961, followed by John Glenn in 1962. What is less known is that the site launched its first rocket in 1950 and in 1959 the first successful launching of an ICBM took place.[32] Not only all this good stuff, but during the 1960s Florida captured the first time social security and pensions of Northern residents seeking a warm retirement. Tourism followed[33], so did Disney World which opened in 1971. As Florida gathered steam, residents, jobs pensions and tourist dollars during the fifties and sixties, it almost single-handedly created favorable growth statistics in the early 1970’s for the entire southern region. In any event, Florida personified the non-manufacturing, service and government sector character of the New South. Also worth comment is the importance of the Tourism Strategy, which became Florida’s top industry sector after World War II.

 

The other southern states did not enjoy such obvious natural advantages plus they suffered from a more difficult civil rights image, not to mention historical stereotypes that had to be overcome. But several of the events of the 1970’s reflected well on the South and changed to a certain degree the perception of the South by outsiders. All things considered Watergate was a plus for the South’s image. The “good old boy” Sam Ervin and also Howard Baker performed well and responsibly and George Wallace and Lester Maddox had given way to Jimmy Carter, Fred Thompson (of Law and Order fame) and Reuben Askew[34]. Country music was in as were the Walton’s–and Larry Hagman’s Dallas began in 1978. Equally important was that the North (shall we say the Union) was at its lowest ebb. Cities as just related were “hitting bottom”, fiscal basket cases wracked by busing riots and Northern white backlash. The cornerstone of Northern and Midwestern economic prosperity, factories and industrialization, was as we shall shortly discuss in noticeable decline. The North was not feeling especially cocky at the moment and the reality of regional change hinted at the possibility that the Southern renaissance could stay around for a bit.

 

From an economic development perspective, South Carolina’s resurgence in this period is especially interesting.              The South’s, now almost two decade old, promotional and attraction campaigns bore unexpected fruit. Aside from the almost inconceivable shock that someone with any intelligence at all would actually be influenced by this advertising blather, the South overall was claiming that 50% of all foreign direct investment (FDI) was going to Southern states.

 

At the end of 1972, foreign firms had invested more than $5 billion in the South and

within two years that number had risen to $8 billion. By 1978 many (southern) states

were attracting as much as $1 billion annually, with South Carolina, North Carolina and

Virginia leading the way in numbers of plants, and petroleum-rich Louisiana ahead in

terms of aggregate value of foreign investments.[35]

 

Cobb reports that the English, West Germans and Japanese were particularly aggressive, the former building fifty-seven plants ($1.25 billion) half of which were in the Carolinas. South Carolina captured way more than its fair share of all this foreign investment–in fact by the end of the seventies, 40% of South Carolina’s annual business investment came from foreign firms. There was more West German investment in South Carolina than any other location in the world.[36]

 

In South Carolina’s case the active public-private partnership of the State, its EDO and local communities combined with “the same red carpet, kid glove treatment afforded all industrial prospects by southern states”[37] seemed particularly effective. Spartanburg South Carolina (population at the time about 50,000) the beneficiary of a local developer’s campaign to recruit foreign industry, lured one $200 million West German textile plant which in a few years became the fourth largest polyester plant in the nation. By the mid 1970’s Spartanburg had landed twenty-four foreign firms (4,000 employees). Population and tax base increases resulting from these investments were dramatic.[38]

 

As to why the South benefited so much from FDI a number of reasons can be cited. Rather than fight quotas and import restrictions, developing on-site capacity seemed reasonable–especially when low cost, right to work, southern labor could be employed. The business climate strategy mentioned earlier also was impactful in foreign decision-making. The impact of FDI did not go unnoticed in the North. In February 1976 the New York Times issued a six article series on the South and its glowing economic success, population gains, and life-style advantages.[39] The reason, however, the NYT cited for all this southern prosperity was not FDI or Florida or southern business climate, but federal government spending.

 

In summary, the seventies witnessed a dramatic reversal in the perception and, to some degree the reality, of the southern economy and way of life. It was just a beginning, but a very threatening and controversial movement toward convergence of the two dominant regions in the United States. We turn to Cobb once again for a fair and well written sense of perspective of the South as we approached the 1980’s:

 

The Sunbelt ballyhoo of the late 1970’s suggested that the realization of Henry Grady’s

dreams might at last be close at hand. Like Grady’s New South, however, the Sunbelt

South retained its ties to a past characterized not only by bright hopes but by recurrent

disappointments. Thus, it remained to be seen whether the region could actually reach

the nation’s economic mainstream in the 1980’s and in so doing, make prosperity a

permanent feature of a new ‘southern’ way of life.[40]

 

Initial Speculation on the Dynamic of Pre-1980 Western Population Growth

 

All this description in the previous section was backdrop to the mid-1970’s discovery of the regional change and the rise of the sunbelt. Up to that point, the economic development paradigms and certainly media and political attention had been Eastern focused. This focus centered upon an economically and politically dominant Northeast and Midwest regional hegemony and a dependent, (and in the case of the South, economically depressed) colony-like South and West. These paradigms were not challenged and in flux; they would evolve in the next decade. But from our brief review of the foundations of the New South and the emerging West, we may be surprised to discover that removed from sight, these geographies had been growing for some time-certainly since World War II. Their growth was neither an accident nor a premeditated result of federal spending, but much more a simple continuation of the now age-old “go West young man” syndrome. And also to our surprise, economic development has a history west of the Mississippi. And its own distinctive style resulting from its political cultures and distinctive economic bases. Indeed, by the seventies, the West had conjured up its own version of suburbanization and cowboy style urban renewal. Up to this point, Western economic development, in particular, largely incorporated trends and tools developed from the Eastern paradigms–but in the eighties, they too would lead. Economic development would include in its arsenal, its quiver, a distinctly Western-centric tool: another three letter tool, TIF.

As an after-concluding thought to our initial take on regional change and economic development, the Curmudgeon would introduce the reader to a rather simplistic, yet interesting quasi-concept: the generational migration. There are essentially two components underlying this quasi-concept, and an observation. First, the observation is the commonly accepted belief that America has always been uniquely favored by a wide expanse, literally a continent, into which people can pour to discover new opportunities, make a new start in life, and to enjoy one’s golden years in retirement. In particular, the search for a job or even a career has been very closely linked to geographic mobility. “Go West Young Person” (forgive use as we make Horace Greeley’s 19th century observation politically correct) launched a generation of farmers into the American West–and it has been thus ever since (as well as before the observation).

 

The first component of our generational migration quasi-concept is age cohort. Demographers group us into age clusters on the straightforward notion that those of a similar age proceed through life experiencing a common set of dynamics and forces, shared experiences and events and so forth. We attach names to these age cohorts. The Curmudgeon is an early baby boomer who by definition possesses the vaguest notion of what it is like to be a Gen Y, Gen X or Millennial. These age cohorts are twenty year groupings–which, by the way is much too long a time span. Ten years is much more real[41] it is perhaps important to note that our discussion of regional change coincides with the dispersal of the first baby boomers.

 

We might also add that “the greatest generation” almost certainly constituted the bulk of the early post-war entrants into the Western states in search of defense jobs and were the proud recipients of military orders to Western and Southern military bases. Young Rosie the Riveters occupied the workbenches at Huntsville (AL) Arsenal or Tennessee’s Oak Ridge. The greatest generation were engineers as were the “Traitorous Eight” who left Shockley Lab to form Fairchild Semiconductor in 1958 Silicon Valley or who assembled DEC’s Route 128 mini computers. The generation preceding the greatest generation fueled the post-war Florida retirement boom. Age cohorts trickle their members into the highways and byways each year, some years more than others, and their effects on job markets and regional workforces, as well as their cultural and political proclivities, can be very important factors in both economic development/workforce planning and practice.

 

The second component to generational migration is that it is the late teens and early twenties that are the period of one’s life that one moves the most. While numerically most members of any age cohort are likely to stay within the same county in which they were born, if they were to move, these young folk are going to do it before they are thirty or thirty-five. Inter-regional migrants are more likely to be pre-thirtyish and this too has meaning to economic developers (and planners).

 

We will return to our quasi concept at later points in our story. But we inject that concept in our discussion of the seventies because generation migration in this period may be making impacts of note. Bill Bishop, and his important book, The Big Sort[42], pinpoints the turning point in our national residential sorting out as observable for the first time in 1976. In that year, the previous 1948-1976 pattern of residence and voting began to shift rather dramatically. It is at that time (1976) that “the country began segregating”[43]. Thirty years later, if he is correct, that segregation had enormous effect, not only on our voting patterns, but on the types of communities which grow and decline, and our preferences for different goals and approaches to economic development.

 

Several aspects of the generational migration might seem interesting to explore in subsequent chapters. First, in our mind, generational migration is often associated with leaving home to go to college or even graduate school. This prompts an individual’s break from home and family and places that individual in a career path that can be affected by the degree and the opportunities generated in or nearby the college and its placement office-internships. Faculty networks are important in graduate school. This close association of generational migration with higher education can go a long way to explain research which demonstrates, apparently consistently, a strong relationship between higher education and mobility[44].

 

Another aspect is the factors which affect the generational return to one’s home stomping grounds. One fascinating article, for instance, traces the propensity to return to home or adapt to the new community by both whites and blacks in the Second Great Migration in Cincinnati and Indianapolis. Southern whites, probably expectedly, had higher rates of return, but only in Indianapolis, but not Cincinnati. The latter migrants departed from more desperate economies in the South and are hesitant to go back.[45] In addition, the more conventional concern for generational mobility in the retirement years could be helpful to an economic developer[46]. Finally, the oft-neglected concern with those who stay behind would seem to suggest interesting paths of potential economic development ideas.

 

We would also add that in the late 1990’s onward, Richard Florida[47] would “discover” the “creative class” of young college pho pho’s whom he felt could revitalize the fortunes and economies of certain “hot” central cities and college towns–as well as be the font of never-ending innovation, Starbucks, Wi-Fi locations, and creativity. Both Bishop and Florida (and others), we believe, are commenting upon the implications and byproducts of generational migration. From both, new strategies and tools of economic development will result in later chapters. We will return to Bishop and the Big Sort argument at a later point. In any case, in 1976, mid point in our current discussion of regional change, the effects of phase one baby boomer migration–with all that implies for voting, lifestyle and economic development is in process of being unleashed[48]

 

 

 

[1] Summary literature on regional change and rise of Sunbelt and decline of Snowbelt. ACIR

[2] Business Week, May 17, 1976, No. 2432, pp.92-114.

[3] James Boyd, “Nixon’s Southern strategy ‘It’s All in the Charts’, New York Times, May 17, 1970.  A year earlier Kevin Phillips had written the controversial, The Emerging Republican Majority (New York, Arlington House,1 969)

[4] And after that followed the Watergate, impeachment and Nixon resignation followed by the rise of a new                 political class: the Nixon haters. The Curmudgeon was a member of that class, part of the baby boom cohort            which were voting for the first time in this period. 1972-1976 was a period of generational change, population     mobility, economic transformation and political change, plus Vietnam–all coming together at once.

 

 

[5] Thomas H. Klier and James M. Rubenstein,” The Changing Geography of North American Motor Vehicle Production” in  special issue (Global Restructuring and the Auto Industry) of Cambridge Journal of Regions, Economy and Society, Vol.. 3, Issue 3, November 2010; also “Collaborative Regionalism and Foreign Direct Investment: the case of the Southeast automotive core and the ‘new domestics'”, Economic Development Quarterly, Vol. 26, 2012, pp. 199-219.

[6] Kirkpatrick Sale, Power Shift: the Rise of the Southern Rim and its Challenge to the Eastern Establishment (NY, Random House, 1975) and later Robert Goodman, “The Last Entrepreneurs: America’s Regional Wars for Jobs and Dollars” (Boston, South End Press, 1979) were typical of a genre that defined the second war between the states as a war of southern (and conservative) aggression. Perhaps the classic presentation was by Senator D. P. Moynihan, “The federal government and the economy of New York State”, Congressional Record-Senate, June 27, 1977, pp. S1082-S10833.

[7] Robert Goodman, The Last Entrepreneurs: America’s Regional Wars for Jobs and Dollars (Boston, South End Press, 1979). Goodman was an “acclaimed” urban planner whose After the Planners was quite influential.

[8] IBID., back cover

[9] IBID, back cover statement by William Winpisinger, International Association of Machinists.

[10] Knowing the future as we do, it is interesting that at this point “entrepreneur” is negatively perceived–Southern entrepreneurial states were felt to be “pirates”. Ten years later, entrepreneurial states (mostly Northern, we might add, will be perceived as the new wave of economic development practice.  See our chapter on the 1980 and the section on “Entrepreneurial States”.

[11] David Perry and Alfred Watkins, Rise of the Sunbelt Cities, (Ed), Beverly Hills, Sage Publications, 1977); and ACIR’s impactful 1977 “Measuring the Fiscal Blood Pressure of the States 1964-1975” (ACIR, 1977); and the National Journal’s “The North’s Loss is the Sunbelt’s Gain”[11] National Journal, June 26 1976, pp. 878-89).

[12] National Journal, op. cit., p. 878.

[13] We do not lack for sources which detailed the role of federal spending and southern economic resurgence. Kirkpatrick Sale’s and Robert Goodman and the New York Times, National Journal, Business Week were partisans from the Northern perspective. The South did not lack for its defenders and we shall discuss them more fully in the narrative above. For more reasonable treatments of the issue see ACIR and Cobb’s Selling of the South, pp. 193-197.

[14] Nashua Telegraph, February 23, 1973, p.5.

[15] New York Times, January 9, 1977, p.41.

[16] History and Mission of the Northeast-Midwest Institute, p. 1.

[17] Cobb, op. cit., p. 198.

[18] See history of CUED. We shall discuss UDAGs in more detail in a later section.

[19] The primary tools of the EDO were bond issuance, eminent domain and tax abatement. It would                 subsequently add non-profit, nested, subsidiary corporations for RLFs. The former are the tools used by Quasi                EDOs for urban renewal but in the post-70’s atmosphere the tools were primarily adjusted to issue taxable and          tax exempt bonds coupled with tax abatement and PILOT agreements to finance existing and new firms               (manufacturing and commercial) location and expansion. The bonds were non-recourse to the EDO and were         primarily vehicles which allowed the EDO to pursue an aggressive business retention program by sidestepping         the State’s constitution’s gift provision.

[20] Pennsylvania Economic Development Financing Law of 1967

[21] Robert Goodman, The Last Entrepreneurs, op. cit.pp.62-64

[22] IBID. p. 62-64

[23] Cobb, op. cit, pp. 199-200. Cobb’s Figure 10 on p.200 is perhaps suggestive, but not definitive. The data was derived from Michael Franklin Digby’s Ph.D. dissertation ” State Government and Economic Development: An Analysis and Evaluation of the Virginia Industrial Development Program (Ph.D. dissertation, University of Virginia, 1976), p. 91-92.

[24] Carl Abbott, The New Urban America: Growth and Politics in Sunbelt Cities (Chapel Hill, NC, University of North Carolina Press, 1981), p. 6.

[25] IBID. p. 200.

[26] The Ford Foundation provided a challenge grant which was matched by several private donors. See Cobb, p.201. The membership grew through the seventies and had reached twelve by 1978. By way of clarification, the Southern Economic Development Council (located at time of publication in Atlanta), the partner of AEDC, has no formal relationship with the Southern Growth Policies Board. They are two separate organizations.

[27] It is also worth note that the Democrats controlled Congress at this time, but the movement of the South to the Republican Party, mostly a post-Carter phenomenon, lay in the future. Powerful southern democrats such as Wilbur Mills and Jamie Whitten and notable others were in key positions at this time. Southern influence in the Senate was arguably even stronger than the House.

[28] Cobb, op. cit. p. 202.

[29] Both Cobb and Woodward make the case describing the very early years of the New South’s invention as does Abbott and Bernard L. Weinstein and Robert R. Firestine, Regional Growth and Decline in the United States: The Rise of the Sunbelt and the Decline of the Northeast (New York, Praeger, 1978); E. Blaine Liner and Lawrence K. Lynch (eds), The Economics of Southern Growth (Durham, N.C., Seeman Printing, 1977)

[30] Cobb, op. cit., p. 179.

[31] Willis Carrier is credited in 1902 with inventing the air conditioner and the invention finally penetrated not only business but residential use in the postwar period. Like the elevator (actually the elevator brake by Elisha Otis in 1853) which made Daniel Burnham and the City Beautiful possible, air conditioning made the New South possible.

[32] The site was chosen we are told for scientific reasons, not political, in that something called linear velocity is greatest the closer one is to the equator and somehow the site also permits maximum benefit derived from the earth’s rotation. Adjacent to the ocean also permitted any mistakes to sink out of sight without hurting anyone. The Houston Space Center may well have been an LBJ decision, but it appears Cape Canaveral was a decision made on its merits by the U.S. military.

[33] Tracy Revels, Sunshine Paradise: A History of Florida Tourism (Florida History and Culture Series, 2011)

[34] See Cobb, op. cit., pp. 182-186. Cobb also on p.188 reports that the South’s (a) per capita income rose 500% between 1955-1975, versus 300% nationwide; (b) South’s median family incomes between 1965-1975 rose 50% and the nation, 33%;

[35] Cobb, op. cit., p. 188-189.

[36] IBID, p. 189.

[37] IBID. p. 190

[38] IBID. p. 192.

[39] IBID. p. 193 citing New York Times, February 9-13, 1976, p. 1.

[40] Cobb, op. cit., p. 208.

[41] The Curmudgeon has very little in common with a fifty year old spoiled-brat baby boomer that wasn’t even born when President Kennedy was assassinated. The Curmudgeon was a sophomore in high school. Some of these inconsequential souls were born after the Beetles conducted their American tour–they also missed Woodstock.

 

[42] Bill Bishop, The Big Sort: Why the Clustering of Like-Minded America is Tearing Us Apart (Boston, Houghton-Mifflin, 2009).

[43] IBID. p. 9 and elsewhere in his book.

[44] Enrico Moretti, The New Geography of Jobs, and a slew of subsequent articles such as “Jobs Beckon, but how to get to them?” Wall Street Journal, April 14, 2013.

[45] Alexander J. Trent, “They’re Never Here More Than a Year”: Return Migration in the Southern Exodus, 1940-1970, Journal of Social History, vol. 38, No. 3, p, 653.

[46] Mark Fagan and Charles F. Longino Jr., “Migrating Retirees: A Source for Economic Development, Economic Development Quarterly, Vol. 7, No. 1, February, 1993, p. 98.

[47] Richard Florida, The Creative Class,

[48] The first wave of baby-boomers is in 1976 twenty-thirty years of age. The Curmudgeon, age 28, born in    Salem     Massachusetts, is living and working (part-time Assistant to the City Manager) in Kirksville, Missouri.

[i] Business Week, May 17, 1976, No. 2432, pp.92-114.

[ii].<em>Business Week, May 17, 1976, no. 2432, pp. 92–114.

[iii] Nashua Telegraph, February 23, 1973, p.5.

[iv] New York Times, January 9, 1977, p.41.

[v] Pennsylvania Economic Development Financing Law of 1967

[vi].<em> “Collaborative Regionalism and Foreign Direct Investment: The Case of the Southeast Automotive Core and the ‘New Domestics,’” Economic Development Quarterly, vol. 26 (2012), pp. 199-219.