“This is how it feels to be sold out by your country:” Economic hardship and politics in Indiana
By Bill Galston
The rise of Donald Trump should inject a dose of humility into those of us who practice political science or political journalism (I plead guilty on both counts). With a few honorable exceptions, we didn’t predict what was coming, and we couldn’t believe the evidence of our own senses as it was happening. The simple truth is that we didn’t understand our country — or its politics — as well as we thought we did.
In part, this was a conceptual error. We conflated the rise of partisan polarization — a genuine and increasingly important phenomenon — with increasing distance between the parties on a left-right ideological continuum.
We were not alone: so did the Republican Party leadership, which assumed that their rank-and-file voters were furious about their elected officials’ failure to deliver smaller government, big cuts in annual spending and marginal tax rates, reductions in Social Security and Medicare outlays, and effective resistance to the Obama administration’s social liberalism. Along came Mr. Trump, who proved that a plurality of the Republican electorate didn’t much care about the classic Reagan-era agenda because it no longer addressed their fears and met their needs.
“Right before our eyes, we can see a lifelong Democrat morphing into a Trump supporter. ‘Life always evens out’ has been Mr. Setser’s mantra. Now he’s not so sure. ‘Pretty soon there won’t be anything left,’ he says.”
The larger error was empirical, not conceptual: we underestimated the extent of the mounting frustration in the large parts of the country left behind since the end of the 20th century, when incomes began to stagnate well before the Great Recession and a slow recovery made matters worse. “Flyover country” describes more than the travel patterns of bi-coastal elites; it depicts the mindset as well, along the lines of Saul Steinberg’s famous New Yorker cover.
This is where first-rate journalism can help. Journalism as “scoop” — getting the story first — is decreasingly important. But in an era of information overload, journalism that helps us understand what’s going on has become essential. It goes where we don’t have time to go, and it makes us confront abstractions and statistics as lived realities.
Eli Saslow’s recent Washington Post article on the announced closure of a United Technology manufacturing plant and the loss of 800 good jobs in Huntington, Indiana is a perfect example. Saslow tells the story through the eyes of one of these workers, Chris Setser, who has worked at the plant for 13 years. He is facing the loss, not only of a job, but also of the stable and decent life it has provided for his family. His 16-year old daughter is afraid she won’t be able to attend college. His 10-year old son is worried that the family will have to follow the plant to its new location in Mexico.
Right before our eyes, we can see a lifelong Democrat morphing into a Trump supporter. “Life always evens out” has been Mr. Setser’s mantra. Now he’s not so sure. “Pretty soon there won’t be anything left,” he says. “We’ll all be flipping burgers.” His wife objects: Does that means we just turn the country over to “the guy that yells the loudest”? He retorts: “They’re throwing our work back in our face. China is doing better. Even Mexico is doing better. Don’t you want someone to go kick ass?”
“‘It’s pure greed,’ said one. ‘They wanted to add another six feet to their yachts,’ added another. And more broadly, ‘This is how it feels to be sold out by your country.’”
This is more than an anecdote. During the past decade, Mr. Saslow reports, Indiana has lost 60,000 middle-class jobs and has replaced them with low-paying jobs in health care, hospitality, and fast food. The state’s median household income has fallen by $4700 — almost nine percent — since 2005, and the gap between middle-income households and top earners has soared.
Against this backdrop, it is hardly surprising that workers in the Huntington plant are responding to the impending closure with vehement outbursts against corporations and their wealthy managers. “It’s pure greed,” said one. “They wanted to add another six feet to their yachts,” added another. And more broadly, “This is how it feels to be sold out by your country.”
It’s hard to disagree with their assessment. United Technologies Corporation is a highly profitable firm that has raised its dividend by nearly nine percent annually in recent years. The division of the corporation in which the Huntington Plant is situated has done particularly well, with profits of $2.9 billion on sales of $16.7 billion in 2015. Moreover, UTC’s Indiana operations have received millions of dollars in taxpayer subsidies in recent years, much of it to keep the plants operating in the state.
No wonder Indiana’s conservative Republican Senator Dan Coats termed the plant closings and relocations “disgraceful,” adding “I think that’s very unfair . . . we were there giving you the support you said you needed in order to keep this plant here.”
There is another side to the story, of course. In the wake of the Washington Post article, I read all of UTC’s press releases about this episode and spoke with three senior representatives of the corporation. To justify its decision, UTC points to the continuing migration of its competitors to Mexico, ongoing cost and pricing pressures driven, in part, by “new regulatory requirements,” and the opportunity to make more effective use of existing infrastructure and supply chains across the southern border. The corporation also emphasizes its commitment to the wellbeing of workers in plants selected for closing, including severance pay, medical insurance continuation, and its Employee Scholar program that pays employees’ college tuition, fees, and book costs for up to four years. And finally, UTC will not avail itself of tax breaks to which it is legally entitled and will repay, incentives it received to remain in the United States.
“If American workers come to believe that what’s good for corporations is bad for them, today’s turbulent populism will look like a walk in the park.”
When I pushed for additional details on cost pressures stemming from regulation and other factors, however, I received only a reiteration of what was included in the press releases. I was given no reason to believe that the Indiana plants were unprofitable or in imminent danger of becoming so.
This episode points to a larger truth: Corporate America stands at the proverbial fork in the road. Justified as preserving competitiveness, its decisions have generated a political backlash in both political parties. Continuing down this road will undercut whatever remains of the support for tax, trade, and immigration policies that corporate leaders have long advocated. Corporate leaders must strike a better balance between maximizing shareholder value for the short-term and maintaining the political environment they need to operate successfully in the long run.
During his confirmation hearings in 1953, Charles Wilson, the president of General Motors who had been nominated to serve as Secretary of Defense, professed his long-held belief that “What was good for the country was good for General Motors, and vice versa.” Although intellectuals mocked this statement, it contained a substantial truth about the economy of the post-war era. It is harder today to offer this assertion with a straight face, because there is more evidence suggesting that what’s good for corporate managers and highly educated professions may not be good for the full range of U.S. corporate stakeholders.
We have reached a dangerous moment. If American workers come to believe that what’s good for corporations is bad for them, today’s turbulent populism will look like a walk in the park. Corporate leaders will come to regret that they failed to act with far-sighted statesmanship while they had the opportunity.
This post originally appeared on brookings.edu.