Reconstructing America

One of the gravest events in our history is the inner emigration taking place in the United States. During the last decade, Chicago lost 12 percent of its population, Baltimore 14 percent, Cleveland 24 percent, and St. Louis 28 percent. The proportion of taxpayers moving out was undoubtedly greater. During this period, Houston gained 24 percent, San Diego 25 percent, Phoenix 33 percent. A recent study by the Industrial Conference Board measured regional standards of living by examining cost-of-living and household income in eighteen metropolitan areas. By those measurements, residents of northeastern metropolitan areas had living standards 25 to 33 percent below those of their southern and western counterparts.

During the same period, some of the most important American industries have been failing badly. In 1979, US Steel lost almost one-half billion dollars. In 1980, the Ford Motor Company, Chrysler, and General Motors each have lost between $1.5 and $2 billion, International Harvester almost $500 million, and Firestone $100 million.

It is no coincidence that the cities under the greatest strain are tied to the industries in the most severe difficulty, particularly in the region extending today from Baltimore to St. Louis. Existing trends are likely to exacerbate rather than attenuate this situation with the result that another decade like the last one will divide the country into “have” and “have-not” regions with unpredictable but probably highly unpleasant consequences. As taxpayers leave older urban centers, the remaining tax base collapses inward, requiring higher taxes for a population that is unable to pay them and fewer services to people in increasing need of them. In these trends are the makings of social strife.

At the same time, our traditionally powerful industries, the industrial locomotives that drove this country for the last century, are in the throes of a similar self-eviscerating cycle. Harshly affected by foreign competition, unable to raise vast amounts of capital needed to modernize, they live from hand to mouth, not investing in the future in order to survive today. They are also affected by a deep structural shift not only in regional prosperity but, as Emma Rothschild recently pointed out in these pages,* in the basic nature of American work as well—the shift away from productive industry and toward consumer and retail services, notably “eating and drinking places” (including fast-food restaurants), and health and business services. As Ms. Rothschild wrote, these three industries together

accounted for more than 40 percent of the new private jobs created between 1973 and the summer of 1980. In that period their employment increased almost three times as fast as total private employment, and sixteen times as fast as employment in the goods-producing or industrial sector of the economy.

…The increase in employment in eating and drinking places since 1973 is greater than total employment in the automobile and steel industries combined. Total employment in the three industries is greater than total employment in an entire range of basic productive industries: construction, all machinery, all electric and electronic equipment,…

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