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There
was once a time when you could put little symbols on a map of the
United
States
that told
you what kind of businesses and industries the different regions
were known for. You'd
see bank buildings in
New York
, oil wells
in
Texas
, insurance
company logos in
Connecticut
, and airplanes in
Seattle
.
And, of course, in
Midwest
states
like
Indiana
you'd put
smokestacks, for the factories that build everything from machine
tools to automobiles.
The fact that regions tended to specialize in some kind of good,
service, or trade produced more than a decorated map.
It also produced what economists refer to as regional
business cycles. Those
occur when individual states and regions of the country move
together, in separate directions, as the overall economy moves up
and down.
In the energy-shocked days of the late 1970's, for instance, the
same skyrocketing gas prices that sent car sales and the
Midwest
states'
economies south produced quite the opposite result in oil patch
states like
Texas
and
Louisiana
.
And the defense cutbacks of the early 1990's produced a deep
recession in southern
California
that was
much longer than what the rest of the country experienced.
But
a funny thing has happened to the economy in the new
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millennium.
Diversification in state economies everywhere has progressed to
the point where they are all beginning to resemble each other.
Regional business cycles are getting harder to find.
If you were to color the states on a national map according to
their economic performance in the last twelve months, it would look like
a piece of abstract art. Winners
and losers sit side by side in all parts of the country, with no general
pattern visible.
There's a glaring exception to that pattern, however.
It is the
Midwest
. Indiana and its neighbors
on all sides would all be shaded the same color on that map, and that
color would be the one that indicates poorest performance.
From
Wisconsin
to
Kentucky
, west to
Illinois
and east to
Ohio
forms a block
of states whose employment losses have been among the largest in the
nation. We're not the only
ones to feel pain, of course. But
in
New England
, the
southeast, and every other region of the country, states losing jobs are
flanked by others who have held their own.
Only in the
Midwest
is the picture
uniformly bad.
That
rings familiar to many of us who have spent our lives here.
Our specialization in manufacturing in general, and motor
vehicles in particular, has always produced close linkages
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between
Midwest
states' economic fortunes. But
why is our region following the older script, when the rest of the
country is on a different page?
Looking at the 2001 recession more closely gives some insights, but
produces more puzzles as well. This
recession and recovery has clearly not produced a cycle in manufacturing
that resembles the first in, first out pattern so typical in the past.
Factory jobs were the first to be cut, beginning in mid-2000, and
at presently stand to be among the very last to rebound, if at all.
That's a finger pointed straight at the livelihoods of Indiana
and its neighbors.
But through it all, consumers never lost their taste for cars and
trucks. Indeed, the
recession year 2001 gave us the second best calendar year for light
vehicle production in industry history.
But the harsh reality is that what's been good for General Motors hasn't
been good enough for America lately, especially for Midwest states like
ours. Productivity gains and
the erosion of market share to foreign-owned rivals have two-timed the
tried and true recipe for sparking growth in the industrial heartland,
and exposed a gap in economic diversification between ourselves and the
rest of the country.
Patrick M. Barkey
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