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Weekend columnists

RED STATES AND BLUE COLLARS
By Chrystia Freeland

Financial Times (UK)
August 4, 2007

http://www.ft.com/cms/s/b1cd3bfc-4223-11dc-8328-0000779fd2ac.html

At a private dinner in Manhattan this summer, the chief executive of a big U.S. company astonished his guests by declaring that America needed an industrial policy. It wasn't his business that needed the boost, he assured us -- his company would be as comfortable manufacturing in Guangzhou as in Detroit, he insisted; and that is probably true -- no, it was America itself that needed some protection against the tides of globalization and technological change. Otherwise, he warned, cities such as New York and San Francisco would still flourish, but the likes of Cleveland would fall into decline.

I assure you this conversation was conducted in English, not French, and -- because he told us so -- I can report that the pro-industrial policy CEO has never voted for a Democrat in his life. So why should a Republican corporate boss whose company has been a big winner from globalization sound like a European socialist? I think his remark is part of a wider concern among pro-business centrists in this country that while the forces of globalization and technological innovation have made the whole world richer, they may also be changing America in worrying ways.

It is certainly not news that in the rich developed world there are fewer of the secure, blue-collar manufacturing jobs that were such a staple of America's post-war prosperity -- but the shift has been particularly pronounced over the past 25 years. As Harvard economist Larry Katz points out, in 1960, 35 per cent of all non-college-educated American men worked in manufacturing. In 1980, that figure had barely budged to 34 per cent. But by 2006 it had fallen to 15 per cent.

In recent years, that transformation has been cast into high relief by the super-affluence of the financial and technology wizards of ideas-based cities such as New York and San Francisco. Underscoring the buzz around this subject, a paper by two other Harvard economists, Edward Glaeser and Giacomo Ponzetto, speculates that improving communication technology is one of the important forces widening the gap between the New Yorks and the Detroits.

"Increasing access to global markets is nothing but a boon to those people and cities producing new ideas," Prof Glaeser argues. "The death of distance may have meant that Japan was able to do a lot of damage to Detroit, but access to the yen carry trade has done nothing but good for bright minds in New York hedge funds."

Even those cities that benefit from the new economic order, the paper finds, experience a social change: "as communication costs decline and the size of the innovative sector increases, within-city inequality increases."

As an economic and business fact, this rise of the knowledge worker and decline of the working stiff is a familiar trend. But I wonder whether America has fully processed the socio-political implications of this shift. The values of the "ordinary" people of the heartland are, after all, central to what many Americans believe is best about their country.

Writer Thomas Frank dissects this national iconography in his book *What's the Matter with Kansas?* He argues that in the Bush era the Republicans successfully labelled themselves "the choice of the plain people, the grassroots Americans who inhabited the place we know as 'the heartland,' a region of humility, guilelessness, and, above all, stout yeoman virtue." By contrast, Democrats were portrayed as the party of a liberal élite, "sophisticated, wealthy, and materialistic," whose tastes and consumer preferences were essentially arrogant and foreign.

Frank's point is that the red state/blue state stereotypes are a right-wing caricature, though he concedes that part of their power lies in the fact that "the narrative does contain a grain of truth." Yet in America today, the exalted "plain people" are on the losing side of global economic forces, while the derided coastal latte drinkers are the winners.

The cultural implications struck me on a recent trip home to northern Alberta. Thanks to the surge in commodity prices, particularly oil, booming Alberta is one of the rare places in North America with more highly paid, blue-collar jobs than there are workers to do them.

One consequence is that the premium on brains versus brawn is much smaller than in most other places on the continent. Thus, despite Alberta's excellent public education system, 30 per cent of students drop out early, compared with 25 per cent for Canada as a whole.

And while Alberta's captains of industry make the standard CEO pitch for more and better local education, they are as keen on hard-working tradesmen as they are on academic stars. As Charlie Fischer, an Alberta oilman, put it in a 2005 speech: "It is not always the people with the highest grades that make the greatest contributions." University education, he argued, was not always better than "a rewarding and financially comparable career in the trades. Currently in Fort McMurray, a journeyman electrician makes about $100,000 a year."

Having grown up as a puny, mechanically-inept, geeky girl in this very masculine blue-collar paradise, I certainly understand its downsides. But there is also a rough egalitarianism to places like Alberta, where having the best grades in maths and English doesn't automatically mean you will have the highest-paying job when you graduate. Maybe this is part of what that CEO who worries about Cleveland fears America stands to lose.

--Chrystia Freeland is the FT's U.S. managing editor.

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