2007 was a good year for rural America. Driven by "bumper crops, strong demand, and high prices" in commodity markets, farmers across the United States enjoyed an "exceptional year". Strong conditions continued into the first half of 2008, spurring farmers to increase "purchases of capital equipment and household consumption," and fueling "double-digit percentage gains in cropland values," in many areas of the nation.
Unfortunately for rural America, these boom times appear to be drawing to a close. Over the past few months, prices for wheat, soybeans, corn, and other commodities have come back to earth, while input costs have soared. According to the Fargo Forum, the USDA calculates that expenses faced by farmers "increased half as much in just the past year as they rose in the previous 15 years combined," leaving farmers "hard-pressed to make money next year even if they enjoy good yields". This has left many farmers concerned that farm country may be facing a repeat of the lean times faced during the farm crisis of the late 70's and early 80's. One long-time farmer, Harlan Meyer of Davenport, Iowa, expressed his reservations about the situation to the AP, stating that,
"I guess you could say there's an awful lot of concern in the rural communities and with some of the city people... I would think there would be a lot of cautiousness among farmers because most of the people can remember the '80s and I would think there's probably a lot of cautious people now on spending a lot of money."
While rural communities may be facing tougher economic times in the face of a bursting commodity bubble, it appears that their banks will be able to meet such challenges from a position of relative strength. According to Reuters, banks throughout rural America "are not freezing credit to customers like large money center banks, offering a bright spot in an otherwise gloomy economy". Such banks have "largely steered clear of the subprime housing loans," have "low to no exposure," to credit derivative instruments, and are able to draw on a strong base of deposits to continue to provide loans. Those loans will also be made at far better terms than those seen during the farm crisis, with banks today offering farmers "interest rates that are one-third or one-half of what they were in the late 1970s."
While conditions may have some ways to go to match the bleak days of the farm crisis, some legislators are already expressing concern about access to credit in farm country. This week, Sen. John Thune of South Dakota called for a hearing to explore the impact of the credit crisis on rural America. While rural banks may be in relatively sound health, it appears that those same banks are, according to the AP, requiring "more collateral and higher interest rates," for loans, and are, in the words of a Texas A&M economist, "turning conservative". However, the AP also notes that even in the face of such tightening, lending will continue, as "the industry's traditional lenders — independent commercial banks — are on more solid financial footing than the country's largest investment banks and commercial banks".
Talk of bailing out US automakers has dominated the news recently, and we all know that means Michigan. Michigan is home to roughly a quarter of the country's auto manufacturing jobs, and the industry is in rapid decline there and in Ohio, but the state of automaking employment in the rest of the country may surprise you.
The economies of Michigan, Alabama, Ohio, Indiana, and Missouri are the most highly dependent on auto manufacturing. While Michigan and Ohio have lost more than 43,000 auto jobs since 2001, Indiana actually added almost 3000 over the same time period and Alabama more than doubled its auto industry, adding 8600 jobs.
In fact, the rest of the nation aside from Ohio held about the same number of automobile manufacturing jobs in 2001 as the state of Michigan. While Michigan has shed more than 35% of its employment in the industry, the rest of the country actually held its own over the same period.
One major caveat - this source of BLS data is only current through the end of 2007, so it doesn't quantify the effects of the recent credit market implosion. What it does show is a strong decentralizing trend in the auto manufacturing industry.
Looking at average annual pay, the small vehicle sector in Minnesota leads the way - jobs there average over $100,000. At well over $90k per job in Michigan, you can see what the rapid decline in automaking has contributed to the evisceration of the state economy. In the top four highest paying states - where workers make more than $90,000 on average per year - automakers have cut more than one third of the jobs in those states since 2001.
So while the failures of major automakers would send ripples throughout the North American industrial economy, what we are really contemplating here is doling out support for the declining states of Michigan and Ohio.
Working on a construction crew back in college with a few workers each from Mexico and Guatemala, I was amazed at the animosity between the two groups. They would joke, not good-naturedly, about how much cheaper the prostitutes were in the neighboring country or how stupid the other's politicians were. I traveled in Central America a few years later and found the same thing.
This great article from earlier in this week's LA Times shows the economic and cultural effects of these nationalist tensions in the U.S. It chronicles how immigrants from El Salvador have to assimilate to the existing Mexican power structure in Los Angeles for jobs. Since the dominant Latin culture in LA is Mexican, and there is a strong nationalistic bias in some communities, El Salvadorians are changing their accents and even adopting their cuisine and mores to fit in.
The reverse is true in other cities. When one of the Mexican construction workers I knew flew out to D.C., he entered a taqueria in the Adams-Morgan area. Upon hearing his accent, the cashier from another Central American country promptly said, "The Mexicans eat over there." Looks like you better choose your adopted city carefully if you're a Central American immigrant.
North Dakota is not a state known for supporting Democratic candidates in Presidential elections. In the the past 80 years, it has only backed the Democrat three times- Franklin D. Roosevelt in 1932 and 1936, and Lyndon B. Johnson in 1964.
Notably, these three elections mark the three largest popular vote landslides by Democrats during that period of time. In 1932, FDR won nationally by a margin of 18%, in 1936 he won by 24%, and in 1964, LBJ defeated Barry Goldwater nationally by 22%. No other Democratic presidential candidate has run up a double digit margin during that period, with FDR coming closest in 1940, winning by 9.9%. (And, it should be noted, losing North Dakota.)
This year, however, North Dakota may be in play. While President Bush won the state in 2004, 63% to 35% over John Kerry, the most recent polls of the state, by Research 2000 and the Fargo Forum, place the 2008 race in a dead heat.
This may be a reflection of a wider trend in rural areas. A survey of rural voters in 13 battleground states released in late October by the Center for Rural Strategies, showed Sen. Obama and Sen. McCain tied among rural voters. In September, similar polling by the center had shown McCain with a 10 point lead among rural voters. According to Reuters, in 2004, President Bush "won rural districts nationwide by 19 points."
If the recent 2008 polling proves accurate, Tuesday night may be an unhappy evening for McCain supporters, with Sen. Obama facing the possibility of winning by a healthy margin, potentially bringing rural states such as North Dakota along for the ride.
A new study from Maplight.org, a "nonpartisan, nonprofit research group illuminating the connection between money and politics," reports that "U.S. House members raised $700 million in campaign funds," during the 2005-2007 time period, with 79%, or $551 million of that amount coming from outside the district of the House member running for office.
According to Maplight, around 21% of campaign contributions to U.S. House members originated in Washington, D.C., with Virginia, California, New York, and Texas rounding out the top five source locations for contributions. The reports states that the majority of campaign funds not only came from out of district, but out of state sources as well:
About two-thirds of House members, 274 out of 421 (65%), raised half or more of their funds from out-of-state. Ninety-two House members (22%) raised 70% or more of their funds from out-of-state. Eight House members raised 90% or more of their funds from out-of-state. The average percentage of funds each Representative raised from out-of-state is 56.7%, and the median percentage is 56.1%.
It should be noted that the Maplight report only looks at donations of over $200, the point above which the donor must be identified to the Federal Elections Committee. Much has been made of the move, particularly by the Obama campaign, towards utilizing a base of small donations, under this $200 dollar threshold. Estimates place somewhere between one quarter and one half of Sen. Obama's $600 million of campaign contributions in this class.
This potential move towards smaller donations does not appear to have had as much of an impact on Congressional races. According to the Campaign Finance Institute, registered candidates for the U.S. House raised $447 million in the first four months of 2008, with "less than 10% of this total [arriving] in amounts of $200 or less." This, states the CFI, marks little or no change from prior years.
Back when the media was more obsessed with the state of global warming than the state of global lending, the environmental movement appeared completely ascendant. But with economic concerns in both Europe and North America on rise, their premier issue of global warming seems to be losing some of its political cache.
A good account of what’s happening both in Canada and Europe can be found in the green blog, Breakthrough. There’s even some advanced thinking here about the need to make something like a “carbon tax” a spur to economic growth. On target for the most part, Greens seem to have a problem thinking about the economy. Like John McCain, it’s not their strong point.
These shifts in popular concerns, as well as the real estate downturn, create an odd atmosphere for the kind of restrictive legislation discussed in Wendell Cox’s timely article. Still there remains a great temptation – justified or not by the facts – to use global warming as a means of imposing the perennial anti-suburban agenda of some planners, large urban developers, smart growth advocates and urbanists.
Perhaps it is a good strategy for density advocates to push their case now when it all seems so theoretical and builders are still walking around in shock. It may take years to absorb vacant condo towers as well as newly foreclosed single family houses. Only when the economy turns around will the conflict over what actually is greenest – as well as most market friendly – intensify again.
Politicians from both parties, while on the campaign trail, often argue that they will work to make a college education accessible and affordable to all Americans. Very rarely will one hear calls for "better quality" of education at our colleges and universities, with such debates seemingly being restricted to our K-12 educational system. An opinion piece in the Chronicle of Higher Education claims, however, that many of our institutes of higher learning are failing to meet the challenge of providing a good return on investment for those attending their institutions.
In his piece, education consultant Marty Nemko argues that "college is a wise choice for far fewer people than are currently encouraged to consider it," and that colleges and universities need to be held accountable for their "defective products: students who drop out or graduate with far too little benefit for the time and money spent."
Nemko points out that over 40 percent of students who enter four-year institutions do not graduate in six years, and cites the "killer statistic," that,
"Among high-school students who graduated in the bottom 40 percent of their classes, and whose first institutions were four-year colleges, two-thirds had not earned diplomas eight and a half years later."
Nemko also takes issue with the quality of education received by those who do graduate, stating that "50 percent of college seniors scored below "proficient" levels on a test," requiring them to perform basic tasks, and that "the percentage of college graduates deemed proficient in prose literacy has actually declined from 40 to 31 percent in the past decade."
Many young people, Nemko argues, should look to other routes of career development and education, such as apprenticeships and other vocational training.
Other options do exist, even in the face of a difficult economy. Around the nation, there are communities reporting a need for more skilled workers, requiring training not necessarily linked to gaining a bachelors degree. Manufacturers in northeast Wisconsin face a shortage of new workers, with one company president noting that the local technical school, Northeast Wisconsin Technical College,
"had 40 job openings posted for CNC technicians. They graduated seven people. In mechanical design, they had 85 job postings and graduated nine people. In electro-mechanical technology they had 75 job openings and graduated four people."
Austin, MN, faces a shortage of maintenance mechanics. According to one local technical instructor,
"If we can’t get more [people] interested in two-year college educations and jobs that require a specialized skill like industrial maintenance mechanics or carpentry and electricians, we’re going be in a deep world of hurt in about five years when all these people retire and we can’t produce goods we need to produce."
Communities around the nation will need to find ways to meet such shortages, and build their productive economies. Failure to do so may lead to a loss of potential economic growth. According to the technical instructor, in the face of shortages of skilled workers, "companies may back off on the expansion or growth. Or they may end up relocating to a place where they can find these employees." Convincing young people that there are other good career options outside the four year degree path will be among the many challenges faced in building our nation's economic future.
A new report released today by the Organization for Economic Co-operation and Development (OECD) says that income inequality between the rich and poor has grown in three quarters of OECD nations over the past twenty years. The report, "Growing Unequal?", states that the gap between the rich and middle class in the United States has also grown.
According to the OECD report,
"The United States is the country with the highest inequality level and poverty rate across the OECD, Mexico and Turkey excepted. Since 2000, income inequality has increased rapidly, continuing a long-term trend that goes back to the 1970s."
As this inequality has risen, rich households "have been leaving both middle and poorer income groups behind." According to the 30 nation report, "this has happened in many countries, but nowhere has this trend been so stark as in the United States."
Commenting on the report, Business Week notes that such increases may pose a threat to "the 'American Dream' of social mobility," with the OECD report noting that social mobility "is lowest in countries with high inequality such as the United States".
Facing a potentially deep economic downturn, the middle and lower classes may be in for rough times. Economist Anthony Atkinson, interviewed by Business Week noted that while much of the growth in inequality has taken place during a time of economic expansion, "If a rising tide didn't lift all boats, how will they be affected by an ebbing tide?" As newgeography.com Executive Editor Joel Kotkin noted earlier today, the survival of the "American aspirational model" may be on the line.
Check out this video short produced by Imaginary Forces for the Lexus L Studio. The short features New Geography Executive Editor Joel Kotkin discussing the impact of human migration throughout history and how migration is changing for the future.
Even before the Wall Street meltdown, the New York area was going through its own de-clustering. No it hasn't - and probably never will - become a multi polar area in the style of Los Angeles, Houston or Phoenix, but the trend to deconcentrate jobs has been inexorable over the last thirty years, according to a new report by our friends at the Center for an Urban Future.
The report states:
"In 1975, New York City accounted for 53.1 percent of all private sector jobs in the 17-county metro region. But by 2005, the five boroughs’ share was just 47.2. Most of the ci ty’s losses occurred in Manhattan, which had 33.9 percent of the region’s private sector jobs in 1975 but only 28.8 percent in 2005."
None of this is particularly worrisome in that the shrinkage of the city's jobs slowed considerably in the past decade up to 2005. The whole region showed some growth. But what happens now with an estimated 150,000 or more jobs expected to be wiped out due to the financial crisis? This may prove the biggest crisis faced by the city since the "Ford to City: Drop Dead" days of the 1970s.
Both the Giuliani and the Bloomberg legacies surely will now be tested.