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Sunday, May 29, 2024
Alabama and the Global Economy
By Dr. Steven Taylor @ 8:06 am

There are two pieces on the Mobile Register’s op/ed page this moring that create an interest study in contrasts, and underscore two different visions of the state of Alabama and its future.

One, Alabama needs foreign investors like EADS is aimed specifically at oppossing a provision in a bill pending in Congress that would block the building of European-owned an aircraft assembly plant in Mobile, the other, CAFTA accord won’t be good for Alabama, in oppossed to the Central America Free Trade Agreement, on the basis that it will damage Alabama’s poultry and textile industries.

The first striking fact is that both are about globalization and its impact on Alabama, economically and politically. However, what especailly struck me is that the first piece is making an argument about the need to increase the number of investment in this state based on industry, while the second is concerned about textile and agricultural jobs–i.e., one is forward-looking, the other’s gaze is stuck in the rear-view mirror.

I wholly understand that people lose their jobs as the economy evolves, but it is also true they can gain them as well–often better ones, if a given local economy properly adapts. And while I recognize that these two op/ed’s and their subject material are not presented as an either/or proposition, it does strikes me that there are two clear streams of thought in this state. One is profoundly conservative, i.e., what we have had is good, and should be preserved and if part of what that is is textile plants and chicken farms, then that is what we should keep. Another is more progressive, which is that we, as a state, ought to be promoting industrial investment. However, given the general small-”c” conservatism (and traditionalism) in the state, coupled with the fact that agricultural interests are politically strong, we tend to find the former position being more powerful than the latter. (The fact that we are unwilling to maintain adequate public education, which is a disuasive force for outside investment, is another issue, but one that re-inforces the situation).

The irony is that with globalization, Alabama, like many Southern states, is positioned to use its own comparative advantage to attract investment. That advantage is relatively cheap labor and a relatively low cost of living/doing business, but with a population that at least has a basic education. One may, for example, be able to take a textile mill to Honduras, but one cannot build a Hyundai plant there (at least not with great ease). In plainer terms: if a company needs a place to build a manufacturing facility in a First World situation to tap into the US market, then Alabama is a potentially great place to go, as it is far cheaper than building a plant in, say, Detroit, because the cost of land, labor and so forth are cheaper here than in Michigan. As such, the government of our state should be working hard to promote such investment in our state.

Let’s face facts: a job at a manufacturing plant pays better and helps out the local economy (i.e., helps create more jobs) than does a job at the t-shirt plant or the chicken farm.

The forces that many decry as taking those t-shirt jobs out of Alabama are the same economic forces, in a general sense, that brought Hyundai (and its numerous plants factories) to Montgomery and the surrounding area. That is to say, lower trade barriers in a global economy mixed with the specific comparative advantage of Alabama vis-a-vis other locations.

The supreme irony (to me) of the Hyundai move to Alabama is that the substantial economic boon that the plant and its associated businesses have brought to the area are from a company that is based in a country that up and until recently was considered part of the Third World. That should help put Alabama’s general economy into context and make plain that our future shouldn’t be vested in textiles and poultry.


  • el
  • pt
    1. These things are always so complicated. The tshirts that are being made in China are made largely with cotton imported from the United States. Not that that should make the unemployed former tshirt maker feel better, but as you said, the US and global economies are evolving, just as they have for the past century. There are no simple answers, and there’s no avoiding some people getting hurt.

      Comment by Harry — Sunday, May 29, 2024 @ 11:01 am

    2. Discussions about a changing economy in Alabama always make me think of the bole weevil. Those that are against a changing economy need look no further than the bole weevil. Southern Alabama was heavy cotton country until the bole weevil force Alabama farmers to try new crops. A lot of farmers tried peanuts and made better profit than they did on cotton. If economic changes are so bad why do we have a statue dedicated to the bole weevil?

      Comment by adam — Tuesday, July 19, 2024 @ 10:02 am

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