“This is how it feels to be sold out by your country:” Economic hardship and politics in Indiana

The rise of Donald Trump should inject a dose of humility
into those of us who practice political science or political journalism (I
plead guilty on both counts). With a few honorable exceptions, we didn’t
predict what was coming, and we couldn’t believe the evidence of our own senses
as it was happening. The simple truth is that we didn’t understand our
country—or its politics—as well as we thought we did.

In part, this was a conceptual error. We conflated the rise
of partisan polarization—a genuine and increasingly important phenomenon—with
increasing distance between the parties on a left-right ideological continuum.

We were not alone: so did the Republican Party leadership,
which assumed that their rank-and-file voters were furious about their elected
officials’ failure to deliver smaller government, big cuts in annual spending
and marginal tax rates, reductions in Social Security and Medicare outlays, and
effective resistance to the Obama administration’s social liberalism. Along
came Mr. Trump, who proved that a plurality of the Republican electorate didn’t
much care about the classic Reagan-era agenda because it no longer addressed
their fears and met their needs.

The larger error was empirical, not conceptual: we
underestimated the extent of the mounting frustration in the large parts of the
country left behind since the end of the 20th century, when incomes
began to stagnate well before the Great Recession and a slow recovery made
matters worse. “Flyover country” describes more than the travel patterns of
bi-coastal elites; it depicts the mindset as well, along the lines of Saul
Steinberg’s famous New Yorker cover.

This is where first-rate journalism can help. Journalism as
“scoop”—getting the story first—is decreasingly important. But in an era of
information overload, journalism that helps us understand what’s going on has
become essential. It goes where we don’t have time to go, and it makes us
confront abstractions and statistics as lived realities.

Eli Saslow’s recent Washington
article on the announced closure of a
United Technology manufacturing
plant and the loss of 800 good
jobs in Huntington, Indiana is a perfect example. Saslow tells the story
through the eyes of one of these workers, Chris Setser, who has worked at the
plant for 13 years. He is facing the loss, not only of a job, but also of the
stable and decent life it has provided for his family. His 16-year old daughter
is afraid she won’t be able to attend college. His 10-year old son is worried
that the family will have to follow the plant to its new location in Mexico.

Right before our eyes, we can see a lifelong Democrat
morphing into a Trump supporter. “Life always evens out” has been Mr. Setser’s
mantra. Now he’s not so sure. “Pretty soon there won’t be anything left,” he
says. “We’ll all be flipping burgers.” His wife objects: Does that means we
just turn the country over to “the guy that yells the loudest”? He retorts:
“They’re throwing our work back in our face. China is doing better. Even Mexico
is doing better. Don’t you want someone to go kick ass?”

This is more than an anecdote. During the past decade, Mr.
Saslow reports, Indiana has lost 60,000 middle-class jobs and has replaced them
with low-paying jobs in health care, hospitality, and fast food. The state’s
median household income has fallen by $4700—almost nine percent—since 2005, and
the gap between middle-income households and top earners has soared.

Against this backdrop, it is hardly surprising that workers
in the Huntington plant are responding to the impending closure with vehement
outbursts against corporations and their wealthy managers. “It’s pure greed,”
said one. “They wanted to add another six feet to their yachts,” added another. And more
broadly, “This is how it feels to be sold out by your country.”

It’s hard to disagree with their assessment. United
Technologies Corporation is a highly profitable firm that has raised its
dividend by nearly nine percent annually in recent years. The division of the
corporation in which the Huntington Plant is situated has done particularly
well, with profits of $2.9 billion on sales of $16.7 billion in 2015. Moreover,
UTC’s Indiana operations have received millions of dollars in taxpayer subsidies
in recent years, much of it to keep the plants operating in the state.

No wonder Indiana’s conservative Republican Senator Dan
Coats termed the plant closings and relocations “disgraceful,” adding “I think
that’s very unfair . . . we were there giving you the support you said you
needed in order to keep this plant here.”

There is another side to the story, of course. In the wake
of the Washington Post article, I
read all of UTC’s press releases about this episode and spoke with three senior
representatives of the corporation. To justify its decision, UTC points to the
continuing migration of its competitors to Mexico, ongoing cost and pricing
pressures driven, in part, by “new regulatory requirements,” and the
opportunity to make more effective use of existing infrastructure and supply
chains across the southern border. The corporation also emphasizes its
commitment to the wellbeing of workers in plants selected for closing,
including severance pay, medical insurance continuation, and its Employee
Scholar program that pays employees’ college tuition, fees, and book costs for
up to four years. And finally, UTC will not avail itself of tax breaks to which
it is legally entitled and will repay, incentives it received to remain in the
United States.

When I pushed for additional details on cost pressures
stemming from regulation and other factors, however, I received only a
reiteration of what was included in the press releases. I was given no reason
to believe that the Indiana plants were unprofitable or in imminent danger of
becoming so.

This episode points to a larger truth: Corporate America
stands at the proverbial fork in the road. Justified as preserving
competitiveness, its decisions have generated a political backlash in both
political parties. Continuing down this road will undercut whatever remains of
the support for tax, trade, and immigration policies that corporate leaders
have long advocated. Corporate leaders must strike a better balance between
maximizing shareholder value for the short-term and maintaining the political
environment they need to operate successfully in the long run.

During his confirmation hearings in 1953, Charles Wilson,
the president of General Motors who had been nominated to serve as Secretary of
Defense, professed his long-held belief that “What was good for the country was
good for General Motors, and vice versa.” Although intellectuals mocked this
statement, it contained a substantial truth about the economy of the post-war
era. It is harder today to offer this assertion with a straight face, because
there is more evidence suggesting that what’s good for corporate managers and
highly educated professions may not be good for the full range of U.S.
corporate stakeholders.

We have reached a dangerous moment. If American workers come
to believe that what’s good for corporations is bad for them, today’s turbulent
populism will look like a walk in the park. Corporate leaders will come to
regret that they failed to act with far-sighted statesmanship while they had
the opportunity.