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2020-06-25 Fifth Column
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The rioters and the rentiers
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[Spectator] It was inevitable that the wave of destructive rioting and looting that has swept through cities that are almost all governed by progressive Democrats, triggered initially by outrage over the sickening death in police custody of George Floyd, would be compared to the American urban riots of earlier generations. But the parallels miss profound differences in the underlying economic and social dynamics.
The Detroit and Newark riots of 1967 and the Los Angeles riot of 1992, for example, took place in cities suffering from the effects of deindustrialization. Los Angeles is not often thought of as a major manufacturing center, but Southern California had a flourishing aerospace industry that went into decline following the Cold War. The children and grandchildren of prosperous industrial workers found themselves stranded in urban regions whose economies shriveled as manufacturing shut down or moved elsewhere.
The violent riots that have taken place in cities like New York are quite different. Most of the cities that are being trashed by opportunistic looters, leftist radicals and criminal gangs lost significant manufacturing long ago. Some of them, like Washington, DC, were never industrial centers. These post-industrial cities are centers of finance like New York, tech like San Francisco, or government like Washington, not centers of physical production, most of which in the 21st century takes place on cheap land on the outskirts of cities or in rural areas.
The economy of America’s major hub cities is based not on profits from the sale of manufactured goods, but on economic rents of various kinds. Interest payments flow to financiers on Wall Street. Royalties for the use of intellectual properties flow to Silicon Valley tech firms and individual tech tycoons. Similar royalties flow to the Hollywood-based entertainment industry. Social media platforms like Facebook and Twitter and search engines like Google derive quasi-rents from their near-monopolies of online advertisements.
These three industries — Wall Street, Silicon Valley and Hollywood — provide the donor base for the Democratic party, a political machine that has virtually unchecked one-party control of most larger cities in the United States. Industries that make physical products and engage in physical services — national manufacturing, oil and gas, agribusiness, logistics — tend to contribute to the Republican party.
The political economy of America’s progressive Democratic cities is an extreme version of the very trickle-down economics that Democrats like to denounce. Financial rents and intellectual property payments flow from around the US and the world to billionaires and firms in New York, San Francisco, Los Angeles and other ’blue’ cities. Some of the rents that go to the Democratic rich are then shared as payoffs to constituencies that get out the vote for Democratic machine politicians, of which the most important are the public-sector employee and teachers’ unions. Urban police unions, whose members are heavily working class and often conservative, sometimes have a tense relationship with left-liberal Democratic machines.
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Posted by M. Murcek 2020-06-25 00:00||
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Posted by Bright Pebbles 2020-06-25 05:27||
2020-06-25 05:27||
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