From Ira Katzelson’s Fear Itself,
For even as industrialization was proceeding elsewhere, the South remained overwhelmingly rural and poor, with depleted land, a lquasi-feudal tenure system based on debt and fear, and many bankruptcies and foreclosures. The New Deal thus was a boon for a hardscrabble region that faced many barriers to economic development. These included a poorly educated and low-skilled white and black population, inferior roads, the outmigration of ambitious workers, a shortage of local investment capital, fewer native mineral resources than other regions, and a paucity of industrial research facilities. The South also experienced high freight rates, high tariffs, low commodity prices, and patterns of ownership that placed the control of financial, mining, manufacturing, transportation, and communications corporations mainly in the hands of northeastern capitalists, a pattern many southern commentators thought to be colonial in nature.
Some thoughts:
1. In my book with Nick Schulz, we emphasize that countries differ mostly in terms of intangible wealth. We focus on institutions (think of North Korea vs. South Korea). The main institutional difference that the South had was its Jim Crow laws. Were they enough to keep the region improverished?
2. Remember that there are many ways for regions to converge within the U.S. People can move to where incomes are higher. Capital can move to take advantage of cheaper labor. Why did these mechanisms not work? Again, race may have played a factor. Until after the second World War, the poorest part of the southern population, namely poor African Americans, was discouraged from moving north, because racism also existed in the north. By the same token, a large part of the southern labor supply that might otherwise have attracted northern capitalists to build factories was African American, and it would have been hard to find whites willing to work with blacks doing similar jobs or under black supervisors.
3. Divergence remains a feature of the American economy. Both within and across metropolitan areas, there are large income differences. Again, this poses the questioh of why there is not more movement of people to high-income locales and/or more movement of firms to low-wage areas.
4. Katzelson’s point is that politicians of the south actively sought redistribution, and this factored into their support for New Deal legislation.
5. Bryan Caplan offers a theory of coincidental advantages that may or may not be a convincing explanation for lack of convergence.
Why are many of the northern cities diverging?
A problem with “cheap labor” is sometimes it is inexpensive (cost competitive) and sometimes it is “cheap” (ineffectual and non-competitve at any available price.)
How much did Jim Crow, and the whole ecosystem of institutional racism around it, impede general human development in all groups?
How much do racism, mismanaged prohibition of drugs, the destructive effects of drugs, failures of education, etc. impede human development of everybody in the afflicted regions?
David Henderson points out that the post-Civil War south did converge. Also the original Great Migration, per wikipedia, took place from 1910-1930. The second is 1941-1970. Northern cities were racist, but relative to the Jim Crow south they were still preferable. There were laws in the Jim Crow south which prohibited recruiters from trying to separate blacks from their employers in an attempt to maintain oligopsony. Some recruiters broke the law anyway to recruit workers northward.
As of 1940, the divergence between North and South was still stark. The gap was closed more recently.
I would also look at health issues. Hookworm took off after the Civil War and was a huge drain on southern productivity. It wasn’t until almost 1920 when it was eradicated mostly.
I tried to googleave “parasites and climate” and was deluged with “parasites and climate change.” We have a lit of bored researchers.
No, we have a lot of researchers who want to get paid for researching their pet obsession. So they figure out a way to tack on whatever the fad of the day is. See also: nano-science, alternative energy, ‘which might lead to a cure for cancer’…
I would think that the South has not converged because of geographical differences in productivity caused by talent agglomerations and natural features.
As someone might say, the model where the price of labor converges assumes that everyone works in the GDP factory.
Looking at this a different way, why doesn’t the San Francisco Bay Area converge? Because talent agglomerations have positive feedback. Why hasn’t NYC converged? Because America’s biggest city offers a unique environment full of cultural amenities attractive to many people.
Maybe it’s because I live in the Bay Area, but I would think that many, many city-area differences are driven by factors like these.
If you want a technological explanation, you’d have to mention air conditioning. Large-scale manufacturing wasn’t really doable in the South (or anywhere else in the “hot world”) until air conditioning became widely available.
Right, although there were a series of stages to making the South more habitable to middle class white people who couldn’t afford to summer some place cool, such as the coming of electric fans. Most of Florida south of the Panhandle was pretty much uninhabitable in the summer by white people until late in the 19th Century, and wasn’t very pleasant until home air conditioning came along after WWII.
There were economic, political, psychological, and cultural effects of losing the Civil War that lasted a long time as well — see Southern literature such as Tennessee Williams plays.
For example, the North boomed immensely in 1865-1872 as the organizational skills developed during the Civil War were applied to big business. During the same era, the South was occupied by the North and much energy went into resisting the occupation, as well as simply recovering from the devastation and tending for the disabled.
People have mentioned my first thoughts: hookworm, aftereffects of the Civil War, airconditioning.
I’d just throw in one more: the South simply didn’t have a free labor market before the war. Slavery killed it. Most whites in the area who didn’t own slaves were yeoman farmers who didn’t participate in the market economy. So when the war ended, they had no economy to rebuild.
Another thing is the South went all in on cotton before the Civil War: the era of King Cotton. British industrialists figured a war was coming and a Northern blockade, so they started stockpiling cotton. Then, when the war started, the Confederacy bizarrely blockaded itself, making it illegal to export cotton. After awhile, they figured out that wasn’t a good idea, but by then the North had organized the long expected blockade. So, cotton farming was started up in places like Egypt, India, and Brazil to supply the missing Southern cotton.
After the War, the world had lots of cotton so prices were low. The South couldn’t get rich again off cotton.
Even apart from the post-bellum decline in the price of cotton, regional dependence on the production one big agricultural or extractive commodity (or a handful of them) is not a good recipe for social/economic development. See, for example, the Middle East.