South Carolina, Welcome to the Union

What’s surprising about the Republican primary in South Carolina is how unsurprising it is that no one is talking about trade deficits or jobs going overseas or the need to look after ourselves first. Four years ago, this kind of talk was a central component of Pat Buchanan’s campaign, which fused cultural conservatism and economic populism into a heady mix of pitchfork carrying, and eight years ago it was fundamental both to Buchanan’s insurgency and to Ross Perot’s third-party candidacy. You might have thought that South Carolina, a state that has never fully reconciled itself to being part of the United States, would be an excellent place to inveigh against the way we’re all becoming more and more part of the world.

The reason we’re not hearing anything like this is not simply because both George W. Bush and John McCain appear to be relatively firm supporters of free trade. It’s also because it’s talk that won’t fly in South Carolina, which has become fully integrated into the global economy, in both directions (exporting goods, and importing capital). South Carolina’s populism has become almost entirely cultural, which is perhaps the reason that questions like why the state should continue to fly the Confederate flag seem so important to South Carolinians. If things don’t feel exactly right in Charleston, you know you can’t blame the Germans or the Mexicans. But you can still blame the people who don’t understand just why the existence of seditious slave-owning states is anything worth commemorating.

I exaggerate, of course. (Not about the seditious slave-owning states, but about the economy.) South Carolina is still home to Roger Milliken, the virulent opponent of labor unions and the country’s most fervent (and generous) supporter of economic nationalism, and Milliken certainly has not given up hope that this whole free-trade thing can still be stopped in its tracks. But South Carolina is also a state that depends on free trade for a significant percentage of its growth in jobs and state income. It has come a long way since it was nearly a single-product state, with that product being the textiles that Milliken and his competitors made.

Between 1987 and 1996, for instance, South Carolina’s exports grew better than 380 percent. Exports of goods still only account for 5 to 7 percent of the state’s annual gross product, but they’re responsible for a higher percentage of job growth in recent years, and those jobs–since they’re in manufacturing–tend to be slightly higher paying. Textiles rank only fifth on the list of goods South Carolina exports, while “electronic equipment” is at the top. And while the single biggest importer of South Carolina products is Canada, Mexico’s imports have skyrocketed since the passage of NAFTA.

The traffic goes both ways, too. South Carolina has become an important destination for foreign companies looking to set up foreign subsidiaries, and over the past two decades, the rate of employment at foreign companies has increased three times as fast as employment elsewhere. (Of course, to be fair, the foreign subsidiary number was beginning from a much smaller base.) Close to 10 percent of the South Carolina workforce works for foreign companies, and better than 60 percent of those jobs are in manufacturing. To put it simply, the picture of good manufacturing jobs heading abroad, chasing low wages, just doesn’t fit what’s happening in South Carolina.

The thing of it is, though, that while all of this information is important and interesting, I’m not sure it’s really that shocking anymore than all the stories last month about how New Hampshire has reinvented itself as a high-tech paradise were. South Carolina’s unemployment rate is about 4.3 percent, close to the national average. Its poverty rate is around the national average. Among the states, it ranks 26th in population, 26th in exports, and 28th in gross state product. The point is that what’s happened in South Carolina in the 1990s has happened, if not everywhere else, then in most other places. There remain significant regional differences. But the increased fluidity of  capital–which brought BMW to South Carolina, Daimler to Alabama–and the gradual dissolution of trade barriers have created the conditions for almost any state economy to thrive. South Carolina, microcosm of the Union: Who woulda thunk it?