THE SELLING OF THE SOUTH
While housing, slum clearance and CBD redevelopment dominates Big City ED after 1930, it hardly touches the South. The South will be affected by NIRA, the Housing Act and certainly war production worker housing—and later urban renewal. But our task here is to demonstrate that southern postwar ED follows a different path from northern Big Cities. Largely on its own, the South through uncoordinated individual state programs pursues a region-wide “industry attraction” strategy with an anti-colonial bent, a strategy that started early in the 1920s and was subsequently delicately labeled “selling of the South”—a phrase coined by James A. Cobb.
The post-Civil War South always flirted, not without reason, with the “colonial” metaphor. Our ED history acceptance of a post-Civil War northern/midwestern economic–political hegemony is congruent with that metaphor. FDR’s Second Reconstruction, the Depression/war years reset of agricultural–export–plantation politics/ economy, and the turbulence of social and demographic change commencing with the Southern Diaspora, and by the mid-1950s including a Civil Rights Movement, suggest a region in considerable transition. Federal economic policy “did not ensure regional deliverance from the inequities and unbalanced development of [Redeemer-era] old industrial regime. Just as the vestiges of the biracial society cling like Spanish moss to the urban South, traditional industrial patterns based on a rural, colonial economy linger on” (Goldfield, 1982, p. 184).
The postwar realization that agriculture was its past meant an unrestrained southern commitment to industrialization by any means. Robbing firms from the colonial North was preferred, and logical—à la Willie Sutton, that’s where industry was located. As far as many in the South perceived, the Second War Between the States had already started: the North had launched the Second Reconstruction and the North brought unionization into the South. The South was going to “catch up”. However, modernization and industrialization would be on southern terms, incorporated in ways and to the degree that maximized traditional southern values and way of life. Bluntly, American economic development was evolving along regional lines, with each region defining economic development in its own terms and self-perceived context. Within that context, selling of the South was one, among several, southern economic development strategies pursued in the postwar era.
Cobb’s selling post-World War II paradigm encapsulates four distinct (yet interrelated) strategies:
- promotion and business climate;
- reaction to unionization;
- policy area capacity-building (improving education through integration); and
- critical infrastructure (highways, government administration and schools).
It is not Cobb’s fault that, over the years, the paradigm has been folded into the first of his strategies and has almost completely ignored the last two. The title of his book, The Selling of the South (Cobb, 1993a), may have unwittingly played into this.
Selling through Promotion and Business Climate
BAWI and the industrial development bond (IDB) approach captured headlines and congressional and Policy World attention, and it dominates the selling of the South paradigm. This is a bit misleading. As Cobb notes, many southern states (North Carolina, for example) did not approve an IDB; and, other than the East Central States (and Louisiana), most southern states did not base their attraction strategy on the IDB. Incentives and business climate, expressed chiefly through promotional materials and advertising, were their chief weapons. The latter strategy may have been the more disruptive. Non-southern states were taken aback by the systematic packaging of business climate, incentives, cost reductions and promotional materials shoved in resident firms’ faces by southern state recruitment drives. Recruiting expeditions by southern governors seemed as threatening as Lee’s 1863 northern invasion. Resentment and fear fed into BAWI.
[Southern] industrial development promotions of the late 1930s were of modest scope and debatable effect, but a major southern-initiated explosion of such programs came after World War II and especially after 1950. (Wright, 1986, p. 257)
The National Planning Association’s Committee of the South concurs, commenting:
a new wave of industrial expansion swept the entire nation after World War II … both new expansions and old plant facilities have been required. This has had special significance in the South for a new industrial region can attract a “new” plant when the total capacity in an industry is expanding. (McLaughlin and Robeck, 1949, p. 14)
Intensive southern promotion dates from after World War II and continues unabated through the 1960s: “By the mid-1960s five of the seven most active exemptors of taxes were in the South” (Morgan and Hackbart, 1974, pp. 200–205); the other two were Vermont and Rhode Island. Alabama, Mississippi and Louisiana led the way, offering ten-year exemptions on both state and local taxes. South Carolina and Kentucky followed with five-year moratoriums (Cobb, 1993a, p. 48).
By the 1960s Cobb suggests the initial recruitment/promotion programs had crystallized into professional, multi-faceted, hard-hitting, state-led attraction strategies widespread through the South. Northern states responded by developing their own professional attraction programs, but mostly by turning IDB-like initiatives into business-retention programs. The southern promotional invasion of the North produced a serious, simultaneous counter-reaction that institutionalized and raised the policy priority of northern economic development. The more importance afforded to a policy area, the more media attention it attracts.
Southern municipalities launched their own recruitment/attraction efforts with development corporations and chambers in the lead. Communities of all sizes, especially small and rural communities, were heavily involved. One study of the South’s 13 states identified nearly 1900 communities with at least one active EDO. Chambers were far and away the most common, but 450 communities were identified with local governmental development corporations. This is much less frequent in the North where chambers and redevelopment/housing agencies dominate. Cobb asserts that the larger cities did most of the corporate advertising (1993a, pp. 94–5).
Meaningful variations among the southern states were evident. The data, admittedly not normalized, suggest that:
- Virginia, Louisiana and Mississippi had fewer municipal level corporations (i.e. state government was the preferred governmental EDO).
- Alabama, Texas, Oklahoma, Florida, Louisiana. Mississippi, South Carolina and Kentucky relied almost entirely on chambers of commerce not local development corporations.
- Arkansas, North Carolina and Virginia exhibited the highest rates of local development corporation use (Conway, 1966).
- Cobb asserts that Arkansas had the most “plant hungry” communities (1993a, p. 82). The numerical predominance of chambers suggests they were the dominant players in postwar southern municipal-level economic development.
Southern attraction budgets increased and recruitment techniques moved from the amateurish to the sophisticated (rifled targeting often based on sector and industry analysis, case management, customized marketing/incentive offers, and direct business to business recruitment). Media placements were an important attraction tool. In 1964 a report of corporate advertising by 31 states found that southern states’ advertising expenditures were 170 percent of the national average; six southern states were in the top ten (Florida, Mississippi, Arkansas, North Carolina, Kentucky and Tennessee); and all southern states that reported were in the top 13.5 Entities similar to today’s site selectors were also common.
Southern states incorporated the governor directly into the attraction campaign. Indeed, it is likely that the rise in power and role of state governors may be an important reason for the increased southern attraction strategy. Many southern governors saw business attraction as a quite useful, even necessary, plank in their election platform, and seem very sensitive to the popularity a successful firm relocation could achieve (“industrial prospecting” it was called at the time). Also, working together in the newly formed Southern Governors’ Conference, southern governors coordinated joint activities to remove “impediments” to manufacturing relocation to the South. The South, minus Generals Lee and Jackson, was indeed invading the North.
Right to Work
For those living under a rock for the last 70-plus years, right to work laws prohibit union security agreements. A union security agreement, originally recognized by the NLRB (1935), is a collective bargaining agreement between employers and labor unions requiring all workers covered by the contract to be a member of the union before being hired by the company. Such agreements usually require the employer to collect union dues from the worker through paycheck deduction. Right to work legislation prohibits union security agreements, and has had the effect of seriously weakening union organizing and willingness of individuals to join a union. Prohibition of union security agreements permits “free riders”—i.e. workers who effectively enjoy the benefits obtained by a union without being a member of a union.
Right to work legislation can be thought of partly as a reaction to Roosevelt’s Second Reconstruction and associated union efforts to organize southern industry. Also, war production firms were, often as not, large union-organized plants that significantly increased rates of southern unionism. Texas, with a large war defense industry, developed an aggressive right to work movement. Also, the minimum wage war was still in full bloom and right to work legislation constituted another form of resistance to New Deal intrusions. Southern traditionalist and Privatist cultures, reacting to these perceived threats, created an amalgam composed of culture, anti-union, pro-business, anti-race, anti-federal government with more than a dash of anti-communism tossed in for good measure. The motivation behind 1940s’ right to work laws is arguably less economic than cultural, social and political. The roots supporting this legislation lie much deeper than simple microeconomic cost efficiencies and business climate.
Nevertheless, there is no disputing right to work laws played an important role and continue to exert a strong impact on state business climate.
The right to work “movement” commenced in 1943 Florida. By 1944 Florida and Arkansas had passed constitutional amendments prohibiting union security agreements, and they accordingly became the first two “right to work” states. These two constitutional amendments conflicted with federal law and their legality was always in doubt. They were tossed out by the courts and the NLRB. The Texan right to work movement, led by Vance Muse and his Christian American Association, was saturated with hardcore anti-race and anti-communist rhetoric. The Texas House of Representatives approved right to work legislation in 1945, but it was defeated in the State Senate.
In the spring of 1947, however, the dam burst; 11 additional states (Arizona, Texas, Georgia, Iowa, Nebraska, New Hampshire, North Carolina, North Dakota, South Dakota, Tennessee and Virginia) approved right to work legislation. The inspiration for this steroidal diffusion was the expected passage of the Taft–Hartley Act by the soon-to-be-seated 1948 Republican-led Congress. There is some disagreement whether early state approvals were the tail or the dog for the inclusion of Section 14b in the Taft–Hartley Act. In 1948 Congress approved the legislation. Section 14b of Taft– Hartley permits a state to pass legislation eliminating the union shop and union security agreements, thereby permitting states to become right to work states. In 1953 and 1954 Alabama, Mississippi and South Carolina adopted right to work legislation, thereby creating a “solid South” right to work region. In addition, Nevada (1951), Utah (1955), Kansas (1958), Wyoming (1963), Idaho (1986), Oklahoma (2001), Indiana (2012), Michigan (2013) and Wisconsin (2015) have passed right to work legislation. In 2016 there are 25 right to work states. No state has repealed its right to work legislation at the time of writing. Despite its southern and Taft–Hartley roots, right to work is now nationwide and integrated into the fabric of contemporary economic development practice and strategy.
The actual effects of right to work on both southern industrialization and retarding union membership are likely to have been minimal, or at least not measurable—despite the equally stubborn reality that southern economic developers really believed they had a positive effect in their attraction efforts. It is not hard to find examples of definitive and well-constructed studies which prove either side. Right to work laws likely signify to mobile firms the presence of factors favorable to cost minimization. Cobb concludes, with some logic, that right to work “sent an unsubtle … message to new industry that the state in question offered a climate in which unionization of a new plant, if not impossible, was unlikely” (1993a, p. 102).
Ron W. Coan 