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The Origin of Populist Surges Everywhere, Part II

This post accompanies my Econtalk discussion with Russ Roberts on the rise of populism.

In July 2016, I wrote a post on Medium arguing that the decisive divide in politics in the United States and Europe was rural-versus-urban. With regard to the U.S. in particular, I wrote:

Cities vote Democrat. Rural areas vote Republican. Suburban decides the outcome.

So far as the 2016 U.S. presidential election was concerned, I was not mistaken:

https://www.washingtonpost.com/graphics/politics/2016-election/election-results-from-coast-to-coast/?tid=sm_tw

More here, here, here, here, and here.

In the past year there has also been increasing evidence that the rural-versus-urban trend in national politics is a global one, evidenced throughout Europe and elsewhere in the past decade including Thailand and Japan. For example, The Economist noted the following about the rise of France’s far-right National Front Party (or Front National— FN) prior to the presidential election there in April:

Perhaps the most striking aspect of the FN vote is the faultline it reveals between France’s cosmopolitan cities, at ease with globalisation, and its in-between places where farmland gives way to retail sprawl and a sense of neglect. Between 2006 and 2011, the number of jobs in 13 big French cities — Lyon, Marseille, Toulouse, Lille, Bordeaux, Nantes, Nice, Strasbourg, Rennes, Grenoble, Rouen, Montpellier and Toulon — increased on average by 5%. In France as a whole, jobs were lost. These dynamic cities seldom register strong support for the FN.

When France voted in May, FN Front National candidate Marine Le Pen won barely 10% of the vote in Paris as compared with 40% in rural places.

The Opiate Connection

Turning back to the U.S., the correlation between the rural-urban divide and the prevalence of opiate overdoses and suicide deaths to which I alluded in my July 2016 post turned out, distressingly, to be stronger in the election than I would have guessed. A December 2016 analysis of the data by a team at Penn State found that Trump exceeded pre-election expectations most in those counties — overwhelmingly rural — where “diseases of despair” are proportionately the highest.

http://aese.psu.edu/directory/smm67/Election16.pdf

What is striking to me about this finding is that Trump’s 2016 electoral over-delivery is additional to the substantial gains made by Republicans in these same place from 2004–2012 to which I alluded in my July 2016 post.

But that’s just the beginning. This month, Alan Krueger, one of the country’s leading economists, published an astonishing paper documenting the further connection between the opiate epidemic and the (previously) mysterious phenomenon of the decline in the U.S. labor force participation rate. This paper strengthened the connection between literal pain and economic exclusion — both evident drivers of populist surges. The following map can be compared directly to those I shared in my 2016 post:

Thanks to research by Nobel Laureate Angus Deaton and Anne Case, we already knew, before the election, that less-educated white males in the United States were experiencing an anomalous and horrific increase in mortality rates. That finding has a geographic dimension — and associated political implications — that have only come into focus in the past year, with the above-reference paper by Alan Krueger representing a significant contribution.

(By the way— as this other July 2016 Medium post of mine evidences — I do not now, nor did I then, underestimate the role played by outside actors in mining the endogenous trends I describe in this post for advantage in the 2016 U.S. presidential election, as elsewhere. That is a different, but closely-related story.)

Why Not Just Move?

There is no way to make sense of the origins of populist surges that have been brewing over the past twenty-or-so years without coming up with an answer to one key question: Given not only the extent of despair and exclusion experienced by people in those places that are driving populist surges but also the duration of these phenomena — spanning decades, not years — why wouldn’t people there do as people elsewhere have done throughout human history when opportunity has evaporated in a particular place: leave. Why remain in places where the economy is dying, where elsewhere — particularly in the largest cities in the United States as well as around the world — regional economies are booming?

The reason is obvious: moving to the big city is, for a growing number of rural residents, just not an option. The major factor is rent. The divergence between the value of real estate in rural places and that in the largest urban centers is vast and just keeps growing. This is among the reasons that physical mobility (as distinct from, but related to, economic mobility) within the United States is at a sixty-year low point.

https://www.census.gov/newsroom/blogs/random-samplings/2017/01/mover-rate.html?cid=17mover-rate

Where Have All the People Gone?

Slowing mobility coexists with a seemingly incompatible demographic fact: the long-term trend of population decline that has afflicted rural America for decades. A 2014 FDIC report summarized the facts:

Depopulation in rural counties can be seen throughout the United States. Between 1980 and 2010, the total number of U.S. residents increased by more than 36 percent to nearly 309 million.1 During that same 30-year period, more than half of all U.S. rural counties lost population. In fact, the rural counties that experienced outflows lost 14.8 percent of their population on average.

Population decline occurs simply because, while outward mobility from rural places is indeed slowing, inflows to rural places are slowing even more rapidly. If the increase in less-educated white male mortality documented by Deaton and Case has, as I expect, also been concentrated in rural places (ref. here), this may also be another U.S.-specific factor in the long-term decline in the population of rural places.

Again, however, this is overwhelmingly not just a U.S. phenomenon. If we exclude the African continent from consideration (an appropriate move from an analytical standpoint because the demographic trajectory of the African continent is completely different from any other part of the world — see e.g. United Nations projections here, then select “fertility rate” and pick any future time period) we find the following fact: the entirety of net population growth in the past decade is accounted for by the growth of the roughly five hundred cities in the world with populations over 1 million people. In other words, from a demographic standpoint (again, with the exception of the African continent), the entirety of the habitable surface of the earth is experiencing net population decline, with the exception of the relatively small areas covered by cities with over one million people.

The Last Piece of the Puzzle: Why Rich (Places) Get Richer

The foregoing still wouldn’t really make sense were it not for one additional, universal fact of economic life. On average, over time, rich (places) get richer. That rich people get richer follows from that.

In March of this year Joseph Parilla and Mark Muro of the Brookings Institution released an important study documenting the significant variation among metro areas in levels and rates of growth of productivity:

We observe massive variation [in productivity levels] across the U.S. economy [by metro region]. We estimate that U.S. labor productivity averaged $113,000 per worker in 2015. Yet, among the nation’s 382 metropolitan areas, that figure ranged from $299,000 per worker in Midland, TX to $38,000 per worker in we observe massive variation across the U.S. economy. Overall, the nation’s largest cities and regions tend to be the nation’s most productive areas.
https://www.brookings.edu/research/understanding-us-productivity-trends-from-the-bottom-up/

An important 2009 paper by Edward Glaeser and Matthew Resseger similarly found that

the connection between city size and productivity does not hold for less skilled metropolitan areas in the United States today. In the least well-educated third of metropolitan areas, there is virtually no connection between city size and productivity or income. In the most well-educated third of metropolitan areas, area population can explain 45 percent of the variation in per-worker productivity.

The most productive places are also the places where both the levels and the rates of growth of wages and property values are the highest. (See also here.) Ride the wave of wage growth and real estate appreciation as a worker and property owner in one of the largest cities in the United States, and you are on the path the prosperity. Miss both the big city wage- and real estate-waves and your prospects of catching them in the future are only getting worse as time goes on.

No wonder if people in rural places are, on average, getting increasingly frustrated.

The Trendline Proves (Once Again) To Be Bigger Than the Headline

Yes, there is agency in politics, and every place has its own circumstances. But Brexit, Donal Trump, Marine Le Pen are all symptoms — they are not the underlying cause…of much of anything that will endure.

Populist surges are everywhere, and everywhere they have much in common.

Follow me on Twitter (@auerswald).

My Econtalk discussion with Russ Roberts: The Rise of Populism.

My new book: The Code Economy: A Forty-Thousand-Year History.

My TEDx talk on the future of work: Eye Contact Can’t be Automated.