Wednesday, June 1, 2016

Trump’s Industrial Belt Appeal. By Joel Kotkin.

Trump’s Industrial Belt Appeal. By Joel Kotkin. Real Clear Politics, June 1, 2016.

Kotkin:

In his still improbable path to the White House, Donald Trump has an opening, right through the middle of the country. From the Appalachians to the Rockies, much of the American heartland is experiencing a steady decline in its fortunes, with growing fears about its prospects in a Democratic-dominated future. This could prove the road to victory for Trump.

The media like to explain Trump’s appeal by focusing on the racial and nationalistic sentiments of his primarily white supporters in places like the Midwest and in small towns. Perhaps more determinative are the mounting economic challenges facing voters in that part of the country. Much of this has to do with an industrial structure facing growing challenges from a high dollar, decreasing commodity prices and a pending tsunami of environmental regulation.

Unlike the Democrats’ coastal strongholds, which depend increasingly on such professions as media, software, finance, and high-end business services, the middle swath of the country depends far more on manufacturing, resource extraction, and agriculture. All these so-called “tangible” industries are facing serious declines, which in a close election could swing some critical states such as Ohio, Colorado, Wisconsin, Indiana, Michigan, and Iowa into the Republican column. Seven of the 10 most manufacturing-dependent metro areas in America are in the Midwest battleground states. Another lies in yet another purple state, North Carolina.

Economic Slowdown in Mid-America

When President Obama ran for re-election in 2012, the tangible economy was on a roll. Super-charged by the federal bailout, the car industry was roaring back, restoring jobs and confidence in the country’s midsection. The president was even described by The Washington Post as a “man on a mission” to save American manufacturing. And the two states then with the fastest declines in unemployment since the onset of the Great Recession—Ohio and Michigan—are in the Midwest.

At the same time, Obama benefited from the resurgence of domestic oil and gas production that   stimulated growth in steel, heavy equipment, and industrial sector employment. This fortunate confluence was fortuitous for the Democrats, who carried most of the states outside the South buoyed by this nascent industrial rebirth. Good times in coal country helped the president in parts of Virginia; the energy boom helped lock up Colorado for him.

Hillary Clinton likely will not enjoy a similar tailwind this year. Manufacturing indexes have tended downward over the past year, and the energy sector has been in full-scale retreat. This not only impacts oil patch bastions Texas, Louisiana, and Oklahoma, which are unlikely to vote Democratic anyway, but also the battlegrounds states Pennsylvania and Ohio. Agricultural economies in the midsection are also reeling.

Clinton will argue that job growth is on the rise nearly everywhere, but more than half of the increase has come in low-wage sectors such as retail and food service, which is one key reason for persistently weak income growth.

The damage is not yet universal, but can be seen clearly in many areas. Many Rust Belt and Appalachian regions are once again hemorrhaging residents. In a recent survey of metropolitan economies for Forbes, economist Michael Shires and I traced the job growth in communities across the country. The bottom 10 among the 70 largest metropolitan areas reads like a stroll down Rust Belt Lane: Hartford, Conn., Milwaukee, Detroit, Albany, N.Y., Newport News, Va., Birmingham, Ala., Cleveland, Newark, N.J., Pittsburgh, Buffalo and -- in last place -- Rochester, once one of the beacons of industrial innovation in the country and now part of New York’s upstate disaster area.

Last year, amid some decent employment growth nationally, almost all these areas suffered sub-1 percent job declines after enjoying growth rates well above that in previous years. More grievously affected are a host of smaller communities, many of them in the Midwest and industrial Northeast, several already seeing negative job growth. At the bottom of the list are places like Johnstown, Pa., and Elmira, N.Y., where the Democrats’ “hope and change” promise has failed to reverse dismal local economies.

Enter Trump 

Throughout his divisive campaign, Donald Trump has fattened up on these voters, winning by landslides in places like upstate New York, central and western Pennsylvania, the industrial suburbs of Detroit, northern Indiana and the resource-dependent parts of Colorado. In hard-hit Erie County, N.Y., home to Buffalo, Trump won two-thirds of the primary vote.

Also appealing to similar populist sentiment, Bernie Sanders has won some of the same areas, often decisively. For his part, Trump’s only serious Rust Belt setbacks occurred in Ohio (where John Kasich ran as a virtual favorite son candidate), Iowa (where evangelicals still wield outsized influence) and Minnesota, which is arguably the most post-industrial of the central states. Recent announcements by such large companies as Ford and United Technologies  to move jobs to Mexico have reinforced Trump's appeal.

Trump’s support, as Nate Silver has shown, is not comprised only of knuckle-dragging Neanderthals. On average, they earn above-average incomes and boast education levels that also exceed the national average. Some are professionals and merchants on Main Street, who acutely ride the ups and downs of the tangible economy. These voters may also be susceptible to rants about Mexican “rapists” and certainly would not favor a massive incursion of Muslim refugees. But their primary concerns are economic, not social. If they really favored regressive social policies, Ted Cruz was their man.

The trajectory of the Democratic race—as well as that of the economy—could help Trump expand his appeal to such voters. Hillary Clinton once tended to be supportive of industrial and energy development; her State Department gave tacit approval to the Keystone XL Pipeline. Now, under pressure from Bernie Sanders’ left-wing legions, she has backed away from support for this organized-labor-backed project. The divisions between the public sector unions and those in the industrial sector could boost Trump’s turnout in states where manufacturing and energy still matter.

To make matters more difficult, Clinton may be saddled at the convention with a ban on fracking. This stance warms the hearts of bicoastal enviros, but is unpopular in large parts of the nation’s heartland. Likewise, the Obama administration’s all-out assault on fossil fuels has already cost Clinton any shot at formerly Democratic-leaning West Virginia, and is likely to hurt her across the Appalachian belt, which includes portions of Pennsylvania, North Carolina, Virginia and Ohio. Even if oil and gas prices rise, the Obama proposals for higher taxes and regulation of energy seem destined to slow any recovery in this high-paying, largely blue-collar industry.

In addition, Trump is showing unanticipated strength in several key states dependent on coal-fired electricity. He’s currently running even with Clinton in Ohio and Pennsylvania, both of which twice went for Obama. This should be enough to keep Clinton’s advisers, who are planning to deploy massive resources to these states, awake at night.     

In this respect, Clinton faces a difficult situation. Ever more dependent on her party’s post-industrial urban core, she will be hard-pressed to moderate her stance on environmental issues.     Her predecessor and her husband were able to finesse this ground by feinting toward the moderate middle in campaign years, but such ideological contortionism is getting harder to pull off.

Megabuck donors like San Francisco’s Tom Steyer are committed to forcing Clinton to embrace   progressive green orthodoxy. This will leave many mid-America workers and businesspeople feeling abandoned and, thus, potentially more receptive to Trump’s pitch. Ultimately, suggests historian Michael Lind, Trump could presage the transformation of the GOP into a middle-class populist party, with a strong Midwestern as well as Southern base, while the Democrats rest their hopes on an unlikely coalition of the coastal gentry, the hyper-educated, minorities, and the poor.

So far, the crass New York billionaire has played brilliantly on middle-American resentments, many of them well-founded. He promises repeatedly to cut a “better deal” for them. If he can convincingly make his case, Donald Trump also might yet close the most successful real estate deal of his lifetime: occupancy of the White House.