Per Capita Income in the South as % of the Nat'l Avg, 1932-2002

[Beet]

Since 1932, there have been two major re-alignments both controlled by the South. The first brought in the "g socialist assholes in New York and Illinois who 'abused the South' ". The second brought in the baby-loving conservative saviours of the South. Now let us take a look at how the South fared economically compared to the rest of the nation during the periods defined by the two realignments so far. I present:

Per Capita Income in 11 Southern states as Percentage of the National Average, 1932-2002:
Key: State Name- 1932 (1968) {2002}

Florida- 79.3% (91.5% or +12.3) {95.7% or +4.2}
Georgia- 50.0% (81.4% or +31.4) {93.1% or +11.7}
Alabama - 40.5% (70.9% or +30.4) {81.2% or +10.3}
Mississippi- 31.8% (61.9% or +30.1) {72.3% or +10.4}
Louisiana- 60.3% (77.4% or +17.1) {82.2% or +4.8}
Arkansas- 39.3% (67.9% or +28.6) {76.0% or +8.1}
Texas- 66.5% (87.5% or +21.0) {92.3% or +4.8}
South Carolina- 39.8% (72.4% or +32.6) {82.1% or +9.7}
North Carolina- 46.8% (77.6% or +30.8 ) {89.6% or +12.0}
Tennessee- 49.5% (77.2% or +27.7) {89.4% or +12.2}
Virginia- 71.0% (91.6% or +20.6) {106.4% or +14.8}

Average 1932-68: +25.7 or +0.71% per year.
Average 1968-2002: +9.4 or +0.27% per year.

Source: http://www.usc.edu/schools/sppd/research/casden/research/data_folder/us_pcinc.pdf

[Richard]

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

[Beet]

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

Farmers actually earn quite a bit nowadays. But you are missing the whole point.

Here is the data for the "Southeast BEA region", dividing 1932-80 and post 1980.

51.5% (85.6% or +34.1) {89.8% or +4.2}

Average 1932-80: +0.71% per year.
Average 1980-2002: +0.19% per year.

The difference is even more dramatic for those who feel the true realignment was 1980.

[Frodo]

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

Farmers actually earn quite a bit nowadays. But you are missing the whole point.

Here is the data for the "Southeast BEA region", dividing 1932-80 and post 1980.

51.5% (85.6% or +34.1) {89.8% or +4.2}

Average 1932-80: +0.71% per year.
Average 1980-2002: +0.19% per year.

The difference is even more dramatic for those who feel the true realignment was 1980.

it's true that per capita income increased more when Democrats reigned supreme in the South, but you are comparing apples and oranges -the time period you are talking about when Democrats ruled the South lasts a span of nearly fifty years from 1932 to 1980 (the year the South truly realigned itself); the Republicans have been in power for less than half as long.  for a more accurate reading, let's view these samples again a generation from now, then we will see from which political party the South really benefits more...or whether there is really no discernible difference.     

[Beet]

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

Farmers actually earn quite a bit nowadays. But you are missing the whole point.

Here is the data for the "Southeast BEA region", dividing 1932-80 and post 1980.

51.5% (85.6% or +34.1) {89.8% or +4.2}

Average 1932-80: +0.71% per year.
Average 1980-2002: +0.19% per year.

The difference is even more dramatic for those who feel the true realignment was 1980.

it's true that per capita income increased more when Democrats reigned supreme in the South, but you are comparing apples and oranges -the time period you are talking about when Democrats ruled the South lasts a span of nearly fifty years from 1932 to 1980; the Republicans have been in power for less than half as long.  for a more accurate reading, let's view these samples again a generation from now, then we will see from which political party the South really benefits more...or whether there is really no discernible difference.     

That is why I calculated the data for the per year average. Plus, after 34 years since the end of the New Deal coalition presidentially and 22 years since the Reagan revolution respectively, one would expect that some sort of inference can be made. Had the South (based on BEA region) continued to improve its relative position after 1980 at the same rate as it had during the New Deal period (0.71% a year), the South would have been no poorer in the year 2000 than the national average.

[The Duke]

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

Farmers actually earn quite a bit nowadays. But you are missing the whole point.

Here is the data for the "Southeast BEA region", dividing 1932-80 and post 1980.

51.5% (85.6% or +34.1) {89.8% or +4.2}

Average 1932-80: +0.71% per year.
Average 1980-2002: +0.19% per year.

The difference is even more dramatic for those who feel the true realignment was 1980.

There was a lot going on in the south from '32-'80 aside from ideological stuff that contributes to that.  The south was agrarian, rural, and segregated at the start of the period with the higher growth.  Most of that growth is due to the arrival of industry and electricity and the like in the '30s, the emergence of real urban centers (Atlanta, New Orleans) with real industry and the end of segregation and the beginnings of including a large portion of what was untapped human capital in the '60s and '70s.

Its also true that countries that are developed tend to grow more slowly than countries that are just developing industry, so the period of the New Dealers is already predisposed to having the kind of growth we only associate with emerging markets during the 1980-2002 period.

There is one serious surprise here: Florida.  Florida has a great economy today, but its growth over the measured period in the last 20 years is not so great.  Perhaps this is because much of Florida's wealth is in savings, not spending, and so gets missed by GDP measurements, but I expected Florida to have the highest growth of the states mentioned, instead they have the lowest.

[○∙◄☻¥tπ[╪AV┼cVê└]

Here's 1945, so you can see how FDR did

Florida 92.8% (+13.5%)
Georgia 71.1% (+21.1%)
Alabama 63.4% (+ 22.9%)
Mississippi 50.8% (+19.0%)
Louisiana  71.2% (+ 10.9%)
Arkansas 59.8% (+20.5%)
Texas 85.5% (+19.0%)
South Carolina 60.9% (+21.1%)
North Carolina 66.5% (+19.7%)
Tennessee 73.7% (+ 24.2%)
Virginia 76.8% (+ 5.8%)

[opebo]

Clearly the South was saved from generations of poverty by the Democratic party and redistributive Keynesian economic policy.

However, working class hubris is an amazingly powerful force.  The minute a worker isn't living at subsistence level, he becomes convinced that his own talents and 'hard work' bootstrapped him, and he proceeds to vote Republican to punish those lower than himself.  Particularly if they're of a different race.

[The Duke]

One other point, in 1932 things were at rick bottom.  In 1980, things were bad but they weren't depression bad.  So simply getting back to normal would require a huge increase in per capita wealth if you're starting in 1932, so that inflates the gain during the 1932 to 19?? number.

[opebo]

One other point, in 1932 things were at rick bottom.  In 1980, things were bad but they weren't depression bad.  So simply getting back to normal would require a huge increase in per capita wealth if you're starting in 1932, so that inflates the gain during the 1932 to 19?? number.

Actually the economic condition of the working class wasn't all that great during the Roaring Twenties (the high point prior to the low of 1932), though the difference was they could subsist.  That period was analogous to the last 10-15 years - fortunes made, yes, but workers lost income or were static.

The interesting political point here is that apparently workers have to fall below subsistence level to vote in their economic interest.

By the way, thanks to Beet for this fascinating thread, and for finding those statistics.

[Beet]

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

Farmers actually earn quite a bit nowadays. But you are missing the whole point.

Here is the data for the "Southeast BEA region", dividing 1932-80 and post 1980.

51.5% (85.6% or +34.1) {89.8% or +4.2}

Average 1932-80: +0.71% per year.
Average 1980-2002: +0.19% per year.

The difference is even more dramatic for those who feel the true realignment was 1980.

There was a lot going on in the south from '32-'80 aside from ideological stuff that contributes to that.  The south was agrarian, rural, and segregated at the start of the period with the higher growth.  Most of that growth is due to the arrival of industry and electricity and the like in the '30s, the emergence of real urban centers (Atlanta, New Orleans) with real industry and the end of segregation and the beginnings of including a large portion of what was untapped human capital in the '60s and '70s.

Yes, and a lot of the things that contributed to things such as rural electrification, industrialization in the South, and the end of segregation with the need for movement away from the old agrarian structure based on black labor, was brought about by a combination of progressive economic policies. Whereas the South should have industrialized after the Civil War, the 70 years after the Civil War left it relatively poorer than when it had begun. The "free market" somehow did not help the South to industrialize... but the government in this case did.

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That is true, the idea of "convergence" has something to do with it, I agree that it helped the South's relative growth. Just look at how the poorest states relatively improved more than say Virginia. But not all developing countries converge... sub-saharan African countries have had lower growth rates than the OECD since 1980. And unless you think per capita income in the South was only around 15% of that of the national average in the 1880s, the South similarly did not appear to "converge" from 1865-1930. Why? In 1932, the South's per capita GDP was only 51.5% of that of the nation as a whole, and just 35% of that of the "Mideast" region (the one that includes New York, Pennsylvania). It's pretty clear that no major convergence happened up till 1932 during the reign of 'lassiez-faire' economics, but after 1932 there was a pretty big convergence. The difference almost certainly is due to the old-fashioned notion of a capital injection into the South provided by the New Deal and subsequent programs.

I used 1932 as a base year because it was the year before the beginning of the New Deal. The Depression at rock bottom then should not matter because we are measuing relative differences, and there's no evidence that the Depression caused more relative damage in the South than the industrial Northeast or the Plains regions that were being hit by the farm recession and dust bowl. The Per Capita data for 1929, the business cycle peak, shows that the South's income was about 52.5% of the national average at that time, about the same as 1932.

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Retirees who move to Florida contribute to the denominator of the per capita GDP, but not to the numerator since they are not producing anything. Eliminate the retirees and you might find something similiar to Virginia.

[Nym90]

Wow. You've done a lot of research and some wonderfully insightful analysis on this, Beet. Fantastic job.

[Beet]

Wow. You've done a lot of research and some wonderfully insightful analysis on this, Beet. Fantastic job.

I only wish I could vote for you in the senatorial election!

What jfern found is pretty interesting too... basically that most of the Southern gain happened during the period of active government investment in the 1930s and during WW2.

[Erc]

And the USSR's economy was the fastest growing during the 1930's.

And China's economy is the fastest growing now.


Why?  Because they sucked before.  Not because they are under good leadership or anything.


The South's economy was still pretty much shot until World War II, despite some industrialization in the late 19th/early 20th centuries.

With war production, and after getting reintegrated into the country in the 40's through 70's, the vastly undertapped economy of the South boomed until it reached a level roughly on par with that of the United States as a whole...and once you start getting near that point, of course you slow down.

Lesson of the day:

Correlation Does Not Prove Causation.

Ice Cream Sales Do Not Cause Shark Attacks.

[Filuwaúrdjan]

Great stuff Beet

[The Duke]

One other point, in 1932 things were at rick bottom.  In 1980, things were bad but they weren't depression bad.  So simply getting back to normal would require a huge increase in per capita wealth if you're starting in 1932, so that inflates the gain during the 1932 to 19?? number.

Actually the economic condition of the working class wasn't all that great during the Roaring Twenties (the high point prior to the low of 1932), though the difference was they could subsist.  That period was analogous to the last 10-15 years - fortunes made, yes, but workers lost income or were static.

The interesting political point here is that apparently workers have to fall below subsistence level to vote in their economic interest.

By the way, thanks to Beet for this fascinating thread, and for finding those statistics.

Per capita GDP doesn't measure distribution.  Only averages.

AMAZING!!!!!!!!1111  It is just AMAZING that farmers earn so much less than a high-paid actuary living in New York City.

Farmers actually earn quite a bit nowadays. But you are missing the whole point.

Here is the data for the "Southeast BEA region", dividing 1932-80 and post 1980.

51.5% (85.6% or +34.1) {89.8% or +4.2}

Average 1932-80: +0.71% per year.
Average 1980-2002: +0.19% per year.

The difference is even more dramatic for those who feel the true realignment was 1980.

There was a lot going on in the south from '32-'80 aside from ideological stuff that contributes to that.  The south was agrarian, rural, and segregated at the start of the period with the higher growth.  Most of that growth is due to the arrival of industry and electricity and the like in the '30s, the emergence of real urban centers (Atlanta, New Orleans) with real industry and the end of segregation and the beginnings of including a large portion of what was untapped human capital in the '60s and '70s.

Yes, and a lot of the things that contributed to things such as rural electrification, industrialization in the South, and the end of segregation with the need for movement away from the old agrarian structure based on black labor, was brought about by a combination of progressive economic policies. Whereas the South should have industrialized after the Civil War, the 70 years after the Civil War left it relatively poorer than when it had begun. The "free market" somehow did not help the South to industrialize... but the government in this case did.

Here's the trouble with what you're saying.

Your thesis is that New Deal policies are good because the south grew faster relative to toehr time periods during the New Deal, thus showing how the New Deal can bring prosperity to all.

My thesis is that the south experienced cultural, population, and technological developments that were uniwue to the south at this, but had already happenned in other regions, and this explains why the relative growth existed.

Look at you data, and you'll see that my thesis is a much more logical conclusion.  Your data shows that the south grew much faster than other regions, yet the New Deal was not a regional program.  If the results we see are specific to New Deal policies, you would not expect to see the south grow wealthier relative to other regions, you would expect it to grow wealthier with other regions as the nation as a whole grew wealthier.  You would not expect to see such a dramatic regional bias in these numbers, since public works were going on all around the coutnry.  The New Deal, and subsequent infrastructure programs like the Interstate Highway system, did not have the regional bias they would have to have to produce the results you show.  Instead, we should look for other, region specific causes.  The emergence of major urban centers, the abolition of Jim Crow, electricity reaching the south (which wasn't all because of the New Deal), etc are all good region specific reasons for what happenned.

I actually like infrastructure investment as an economic policy, but I don't think we should simplify everything down so much and act like this was THE reason something happenned when economics is about more than just government policy.

[Nym90]

I agree that the New Deal certainly wasn't the only, or maybe wasn't even the most major, cause of the South economic revitalization. It's impossible to tell exactly what caused it; all events have many causes, some of which are unknown or not well understood.

You can't determine cause and effect without having a completely randomly chosen control group and test group, and in the real world you can never get a completely random sample for either, nor can you perfectly control all outside influences other than the stimulus you are testing the effects of.

That being said, considering how socialistic the New Deal was comparitively speaking, it certainly didn't bring about the doom and gloom that many predict for much milder proposals today, and as was predicted by many of FDR's political opponents at the time of their enaction. Again, the reasons for that can and should be debated, but the results are what they are.

[Beet]

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To be clear, by no means is this meant to be some sort of social-scientifically valid test. There is no first difference regression for the impact of federal infrastructure spending on state growth over time across states. Such a test could be run, but it has not been done here. I am not trying to say that x was THE reason for y. I do not have the time to do that.

However, I do feel as an informal hypothesis which is supported (I think) by the data presented, that the New Deal and WWII policies played an important and perhaps decisive role in "jump-starting" the industrialization of the South. The South as a region was distinct nationally because it was a lower income, mostly agrarian region with a large population.

There is no reason to expect that, in light of these differences, the government-active policies of the 30s and 40s would affect every region equally. If you build federal highways over a region already crisscrossed with railroads, then the economy has simply switched transportation from one mode to another. But if you build the same highways in a region that had had mostly unpaved roads before, you have a much bigger change. Creating industrial jobs, mandating minimum labor standards, and programs to help the poor in an industrial region mired by depression would only be restoring the living standards had existed before, backed by legal strictures. But doing the same thing in a non-industrial economy is creating something new. If we assume that New Deal and WWII programs improved infrastructure, it would be giving the South something unique and lasting that the North had already had previously.

You feel that the south experienced cultural, population and technological developments (electricity, urbanization, end of Jim Crow) that led to industrialization... but that does not explain why these things happened when they did. In the 1800s, the North industrialized but the South did not. In the 1920s, the North electrified but the South did not. There is no reason to expect that the South would have suddenly changed in 1930 when it had not before if you totally ignore the New Deal.

For example, there is no reason that more people moving into the state would raise per capita GDP. Instead they would tend to depress wages, lowering living standards. What is more likely is that after infrastructure developed, companies moved in to invest, and later on people moved into new areas voluntarily because that was where there were jobs. My hypothesis is that companies will not invest where there is no infrastructure, and by creating the infrastructure, the New Deal helped jump-start later private investment in the South. To take a modern example, a reason why many multinational companies choose to invest in China instead of India is due to India's lack of infrastructure.

[The Duke]

I think its a stretch to say that Jim Crow was abolished as a result of the New Deal.

[Beet]

I think its a stretch to say that Jim Crow was abolished as a result of the New Deal.

Obviously that was later in the 60s. However the Warren Court was mostly FDR, Truman, Eisenhower (who never would have been prez if not for the ND) appointees

[True Federalist (진정한 연방 주의자)]

In the 1800s, the North industrialized but the South did not. In the 1920s, the North electrified but the South did not. There is no reason to expect that the South would have suddenly changed in 1930 when it had not before if you totally ignore the New Deal.

Pre-Civil War, slave labor agriculture provided the highest returns on capital in the South.  The economic dislocations caused by the Civil War exacerbated the problem as most of the South’s capital was destroyed by either war damage or abolition.  It was further retarded by the sharecropping system and segregation which encouraged those who left rural areas to leave the south altogether.  Rural electrification was a problem in both the north and the south prior to the REA which helped to jump-start the process.

[The Duke]

Beet,

Its pretty obvious what you're doing.  You are trying to make the claim, albeit indirectly and shrewdly, that southerners vote against their own economic interests by showing the south do better in one economic indicator under Democrats versus Republicans, and that therefore Democratic economics are better.  You never say this explicitly, but its clearly your intent.

When someone points out that there were other more important factors not related to economic policy, you switch your comparison to a period before the initial post referred to (Post Civil War, pre-depression).  Yet you seem incapable of acknowledging the basic facts.

Historic forces beyond government control were the single biggest factor in the transformation of the south.  Civil Rights was not New Deal economics, neither was urbanization.  Electrification was accelerated, but not caused by the New Deal.  Government can influence, but not control the economy.  They did not cause these historic forces and more than the policymakers of 1769 could claim the invention of the steam engine as a result of their policies.

I like some of the New Deal, I dislike other parts.  I like rural electrification programs, but I'm not going to pretend it was the cause for what happenned.  You now back off you initial thesis, that the difference between '32-'68 and '80-'02 is the economic policies and that conservatives should shudder before the truth, because someone points out that its bogus, now saying that well, maybe other factors were involved after all.  But if you admit you can't isolate the intended variable, why pretend that that variable causes the different outcomes in 1932 verus 1980?

The whole point of your excercise is that the New Deal is better than Supply Side, but if you admit that the variables you intend to isolate haven't been isolated, and that other factors were involved and perhaps were even more responsible for all this than econ policy, why even start the thread?  The thesis is destroyed anyway.

[opebo]

in 1932 verus 1980?
The whole point of your excercise is that the New Deal is better than Supply Side, but if you admit that the variables you intend to isolate haven't been isolated, and that other factors were involved and perhaps were even more responsible for all this than econ policy, why even start the thread?  The thesis is destroyed anyway.

There are always other variables involved in economics and it will never be possible to islolate them.  However, it is clear from a theoretical viewpoint that 'supply side' economic policy would not direct resources to underprivaledged regions and populations in the way the New Deal did.  Said resources would go into the pockets of the top 1%, to be spent on mansions, yachts, and security services - as was the case prior to 1932. 

Is it just a coincidence that the working class was extremely near to subsistence level throughout the period prior to the New Deal, was raised well obove that during the period from the New deal to the 1970's, and is now returning to subsistence level?

[Beet]

Beet,

Its pretty obvious what you're doing.  You are trying to make the claim, albeit indirectly and shrewdly, that southerners vote against their own economic interests by showing the south do better in one economic indicator under Democrats versus Republicans, and that therefore Democratic economics are better.  You never say this explicitly, but its clearly your intent.

Yes, that's what I think with regards to the development of underprivledged areas, and I don't think I've tried to hide that. But that's not my sole intent in posting this either. I am also trying to make a claim about the role of government at a certain point in industrialization. So, back to the actual arguments...

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I brought up the 1865-1930 period because you claimed that there were urbanization and electrification factors driven by technology that led to the South's growth from the 1930s-80s, and especially 1932-45. But, since the North urbanized in the late 1800's and electrified largely by the end of the 1920s (though maybe not 100%), while the South did not, the question is left why the sudden change in the 1930s?

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Firstly, the civil rights issue is separate. As jfern's data showed, most of the South's exceptional growth during this period took place in the 1930s and 1940s, predating the end of most Jim Crow laws in the 1950s and 60s. This is not to say the end of Jim Crow did not help change the South, but I never claimed that the end of Jim Crow equalled New Deal economics. My focus is on the economic factors at work, primarily the changes that took place in the 1930s and 40s (in which WWII and the resulting defense industries may have been an even bigger factor than the New Deal). I do not claim these to be the sole factors in the Souths' development, only very important ones.

Turning aside Jim Crow and segregation, the problem with your analysis is that urbanization, to which you attribute the change in the South, was not invented in 1930. Nor was electrification. Nor was the industrial economy. Nor was the infrastructure which the North had and the South did not. If there had been some amazing invention in 1930 that applied only to the South, you would have an argument. There was not. As it is, the cloest thing that resembles the type of argument you mean is the mass production of the air conditioner, which began in the 1950s. This would work as an alternative hypothesis to government spending, except that the air conditioner was mass produced two decades too late to explain the growth prior to the 1950s.

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[/quote]

The point of my exercise was to say that for this particular instance, government spending was better than supply side, yes. I think there's quite a bit of empirical evidence in favor.

Edit: After re-reading your post, one more point. With regard to the '80-'02 comparison, I did change my perception a bit after jfern posted his data. For example, it shows that Tennessee went from 49.5% of the national average in 1932 to 73% in 1945, but only went to 77% by 1968. The South continued to improve after 1945, but at a slower rate. This leads me to feel just as strongly though that the New Deal and WWII established the basic groundwork for later private investment in the South.