Greed Flows South
One of the constants of American history is that greed tends to flow south—to the American South, that is. Since the days of slavery, work has been exploited, devalued, and dishonored there, while ownership has reaped rewards that might otherwise have gone to labor. That basic description of the slave economy, alas, can fairly be applied to our national economy today. According to a January study by the Bureau of Labor Statistics, the share of Americans’ income paid out in salaries and wages declined from 70 percent in 1947 to 54 percent last year, while the share resulting from ownership rose from 30 percent to 46 percent.
The fundamental redistribution of the past 80 years reflects the weakening of New Deal reforms and the evisceration of unions, but also the adoption of economic policies rooted in the South. Even once slavery was officially abolished at the end of the Civil War, the ensuing Jim Crow/sharecropping economy reinforced the South’s status as the home of dirt cheap labor enjoying minimal legal protections. As early as the 1880s, textile manufacturers began relocating their mills from New England and other Northern states to the South, for the sole reason that work came a lot cheaper there. And in the century and a half since, Southern labor standards have dragged down workers’ incomes in every part of the nation.
The moneybags of Wall Street and Silicon Valley are moving to Texas and Florida, America’s most reactionary major states.
Today, though, we’re seeing a new manifestation of this flight to the South. America’s centimillionaires and -billionaires are now either moving or threatening to move there, in some cases to escape the higher tax regimes of Northern blue states, in other cases just because gluttony loves company. It hasn’t required the threat of a wealth tax to produce the current billionaire distemper; the same cries of injured ego can currently be heard when New York Mayor Zohran Mamdani proposes a 2 percent hike to the highest tax bracket in Gotham, or when an income tax for millionaires is instituted in Washington state. But as the gap between the economic and social policies of Northern blue states and Southern red ones has grown, The Wall Street Journal’s Friday “Mansion” section is chockablock with money-porn photos of the new mansions of relocating moguls springing up on Florida’s private islands and enclaves, where seldom is heard a discouraging word about ostentation. There’s a Zuckerberg here and a Ken Griffin there. The Washington Post reports that “Wells Fargo is relocating its wealth management headquarters from San Francisco to West Palm Beach.”
People move south, of course, for all kinds of reasons, and for a long time, those migrants were chiefly Northeastern and Midwestern retirees in flight from cold winters. During the past half-century, Northern migrants actually helped make three Southern states a good deal bluer. North Carolina’s Research Triangle, with its growing number of academics and postindustrial businesses, moved that state into the politically purple column, while a somewhat kindred effect in Atlanta had a similar effect on Georgia. The expansion of the D.C. suburbs and exurbs into Virginia has turned that state blue, or at least turquoise.
But the moneybags of Wall Street and Silicon Valley aren’t moving to Georgia, North Carolina, or Virginia. They’re moving to Texas and Florida, which have established themselves as America’s most reactionary major states. Virginia, North Carolina, and Georgia, by contrast, have all inched toward Northern norms. What draws the Big Bucks to Florida and Texas is their neo-Confederate resistance to any form of economic egalitarianism.
For a long time, many of America’s corporate leaders relied on that Southern opposition to worker power and income to boost the share of their companies’ incomes going to profits and investors. Even before the Big Three automakers were threatened by foreign competition, they shuttered their car factories in California (which in decades past had the most of any state but Michigan) and began opening them in the South. All those foreign competitors that opened factories in the U.S. also located them in the South. Indeed, as I noted in these pages 11 years ago, a study by the Boston Consulting Group exulted in the fact that new factories in Mississippi would actually have lower wage standards, when the productivity differences were factored in, than new factories in China. In an interview for that article, the chief staffer to a board member at Airbus confirmed that assessment. “When we go abroad, we have the high-value work, the research and development, done in Germany,” he said. “The workers who assemble the parts in the Airbus factory in Tianjin, China, produce 3 to 5 percent of the total value. But given the 6-to-1 productivity advantage that the United States has over China, it’s cheaper to do the final assembly in the U.S.”
Those Southern-state wage levels brought down Northern-state wage levels, too. When everyday-low-wages Walmart expanded from Arkansas to points north, it reduced wages across the nation’s retail sector. Northern Republicans, freed from the constraints of GOP moderates who’d fled the party and of large numbers of union members in their states or districts, began codifying what previously had been Southern labor standards, with Wisconsin, Indiana, and Michigan all enacting “right to work” laws under Republican rule. (Michigan has since repealed that law once Democrats regained their Lansing majorities.) The UAW’s remarkable success in organizing Volkswagen’s factory in Chattanooga in 2024 marked the first instance (after countless attempts) in decades to raise Southern workers’ wages closer to Northern standards rather than depressing Northern workers’ down to Southern, but it will take a lot more such successes to make that a trend.
But none of these factors sufficed to persuade our billionaires to consider, and in some case actualize, moving to the South themselves. What we’re seeing today is almost entirely of recent vintage. In blue states, where decisive elements of the working class (and even much of the middle class) have become not just a class-in-itself but also a class-for-itself, political movements to reverse the upward redistribution of wealth of the past 45 years have mobilized. They advocate for such reforms as establishing state-funded child care, to be paid by taxing a modest share of the income, and now wealth, of the very rich. This poses a far greater challenge to the egos of the very rich than it does to how much they might actually purchase with their practically infinite money, but nonetheless has prompted the Musks and the Zuckerbergs and the Lutnicks to move to Southern climes where their will and whims can go unchallenged by state governments or their new neighbors.
All that said, most of the very rich are likely to stay put: Studies have shown that tax rates play a far smaller role in such decisions than the editorials in The Wall Street Journal would have us believe. (Rupert Murdoch still splits his time between New York and California.) But celebrations of inequality always have a certain cachet for the very rich, and in America, right up to the present day, such celebrations are native to the South.
The post Greed Flows South appeared first on The American Prospect.