Dynamic Duo: Budget Austerity & Bigotry

Anti-US protests continue to spread across the Muslim world, and Mitt Romney continues his campaign-long series of tacks to the right, remaining steadfast in his misleading condemnation of the Obama administration’s “sympathizing” with Egyptian embassy attackers.  Steve Klein, the promoter of the film that sparked the unrest, small-town insurance salesman, and founder of the right-wing (some say hate-mongering) group Courageous Christians United, is just the sort of “Republican base” voter that Mitt Romney is trying so desperately to win over.  And while some would contend that fiscal and social conservatives have an uneasy marriage in the GOP, I’m more interested here specifically in what budget austerity and bigotry might have to do with one another.  More than you might imagine, I would argue.

Over the course of the two parties’ national conventions, I have found myself in a number of conversations with fellow democrats who complain about two ostensibly irreconcilable characteristics of the Right.  On the one hand, it’s clear that Republicans, Libertarians, and Tea-Partiers share an ever-shrinking Big Tent, increasingly inhospitable towards a proliferating number of scapegoat groups, both foreign and domestic, including gays, poor Blacks, Hispanics, women, Muslims (terrorists!), public transit-goers (get a car!), Labor, the Northeast generally (Wall Street and, sporadically, New Hampshire excepted), France (wusses), China (currency manipulator!), and Russia (reprise!).  The result looks like a party of white males, increasingly out of sync with the modern world, and clinging to a kind of minority Apartheid rule through voter ID laws (ahem… South Carolina) and redistricting schemes (looking at you, Texas).

On the other hand, the GOP polls well in states like Alaska, Arizona, and Mississippi, where federal government spending outstrips tax dollars collected – despite party rhetoric castigating government for its profligacy and indebtedness.  By contrast, states like New York, Connecticut, Illinois, and California are solidly Democratic, and receive less than they contribute to the federal coffers in tax dollars.  On average, “Red States” receive more than 30 cents more per tax dollar from the feds than “Blue States.”  The phrase “We built it!” doesn’t accurately reflect, say, Alabama’s fiscal contribution to a federal highway, bridge or rail system; Alabamans can credibly claim to have paid for around 49% of it.

Imagine a scenario in which the North (and the West Coast for good measure) reneged, 150 years later, on its Civil War-era decision to insist on a union, and unilaterally kicked out all Red states.  The new Blue State Union (BSU) is more densely urbanized (and therefore more productive and energy efficient) than the Red State Confederacy (RSC), more supportive of public goods and services, hosts the lion’s share of the former nation’s top universities, and far outstrips the RSC in technology patents in innovation clusters like Silicon Valley and Route 128.  Under current spending patterns, the BSU would run a budget surplus, while the RSC, for all its austerity-loving budget hawks, would run a massive deficit.

So here’s the conundrum: if only Blue states have this powerful economic incentive to be exclusionary and kick out the Reds, why then is it the Red states where we witness the rise of out-group hostility?  While the answers to this question are probably as numerous as they are complex, the most powerful answer to my mind is an economic one.  When investment grows the size of the total economic pie, people are more willing to spend their own resources on it, knowing their own piece of it will grow, too.  Modern, urban, knowledge-based economies are the paragons of this scenario because their production growth increases with investment and depends to a large extent on public goods – e.g., spatial proximity that reduces transactions costs in intermediate goods, “thick” labor markets of the well-educated allowing less costly private sector scale-ups, and knowledge spillovers that produce greater innovation.

When investment doesn’t grow the collective pie as much, though (as in rural areas and sprawling suburbia), people are more likely to attempt to enlarge their allocations by redistributing the pie, taking pieces from others.  It might seem difficult to square the all-American virtue of self-sufficiency with the fact of taking more from society than you contribute to it.  But if you redraw the boundaries of your “society” by (just to take an example out of the hat) preventing tax-paying Mexican workers from becoming citizens, collecting social security, and getting health care, then what was manifestly an intentional social injustice starts to look – if you squint at it just right – like a unintentional trade surplus vis-à-vis Mexico.

So it shouldn’t be surprising to note that economies forced to undergo austerity measures, shrinking the size of the collective economic pies, experience rises in xenophobia, bigotry, and ethnic nationalism.  The Nazi party arose in a period of forced austerity (and resultant hyperinflation caused by the flight of gold for reparations) that wiped out German purchasing power, and spread during the consequent period of economic stagnation.  More recently, austerity measures in Greece have coincided with the rise of that country’s right-wing “Golden Dawn” party and an uptick in hate crimes against immigrants.  Far-right nationalist parties in EU countries as diverse as France, Spain, and the Netherlands have gained in popularity as fears of austerity measures have risen.

Golden Dawn

Golden Dawn supporters in Greece.

The difference in the case of the GOP is that its own politicians actually advocate the same “pro-growth” austerity measures that will so damage the life chances of their own constituents.  (The military is, of course, exempted, as it is needed to deal with the ever-expanding list of enemies.)  The GOP brand of economics, far more ideology than empirically-based social science, encourages us to “starve the cold” of stagnation – but when that fails, blame some shirker or some “enemy of freedom” somewhere.  And scapegoating is a slippery slope, inclined towards intolerance.

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September 13, 2012 · 7:23 am

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