As the Economy Turns

JUST 100 years ago, New England was still the heartland of US manufacturing. In mill towns from Pawtucket, R.I., to Lowell, Mass., to Manchester, N.H., thousands upon thousands of workers turned out textiles, shoes, and other goods.

Today those mills are mostly silent. Many stand empty, while others house TV stations, museums, condominiums, or high-tech firms.

Some 50 years ago, Kalamazoo, Mich., was a center of celery farming in the United States. Dutch farmers there did a land-office business raising the vegetable in the rich muck of the Kalamazoo River Valley. Little celery is grown there now: It's been decades since the ''Celery City'' moniker was applied to the area.

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Before and just after the Civil War, the marshes of coastal Georgia were a major rice-growing center. It's been almost a century since the crop was commercially viable there.

With job security and economic anxiety again much on the public mind - largely due to Pat Buchanan's maverick primary campaign - it's well to keep such examples in mind. They illustrate that economies are in constant evolution, and that the forces behind such evolution are both headstrong and complex.

In New England, 19th-century mill owners did not invest in new equipment - thus making factories obsolete and preventing productivity gains that could finance the higher wages workers demanded. Faced with outdated plant, the owners decided to cut their losses and head to the South, where wages were lower, unions weaker, and plant-construction cheaper. Decades later, such Massachusetts cities as Lowell, Lawrence, and New Bedford are still feeling the effects.

Kalamazoo's celery fields were overtaken by the year-round, less-stringy variety grown in new Sun Belt farms after World War II. But farmers were able to shift to other crops - including flowers - and southwestern Michigan's diverse economy replaced lost jobs with new ones.

Coastal Georgia's rice was replaced by new varieties grown in Louisiana, Arkansas, and Texas, where plantations were bigger and more productive. Today Georgia's coast is a winter-tourism center.

IN all cases, the country as a whole is better off for these changes: It gets cheaper textiles (although those Southern jobs are moving on in a repeat of New England's experience), better celery year-round, and profitable rice exports. Even so, the effects on those left behind were severe and often difficult.

So it is today. Large companies change, move, downsize, merge, are bought out, go bankrupt. Employees are often left with feelings of betrayal, abandonment, and resentment. Whole communities are affected.

The US, and indeed, much of the industrialized world, are going through a prolonged economic shift today that is as profound and unsettling as that wrought by the Industrial Revolution, which took millions of men and young women off farms and placed them in factories. The shift from agriculture to industry was not an easy one for individuals or society. But it was the result of a natural process, and any attempt to change it by government policy (and there have often been such attempts) was on a course for failure at the outset, and often resulted in exacerbating the problem it was meant to solve.

For example, during the early 19th century, farmers in the South and the newly opening Ohio River Valley became convinced that a national bank, with its regulation of interest rates and the supply of money, was preventing them from getting the credit they needed. They preferred small local and state banks. One of President Andrew Jackson's key platform planks was to dismantle the Bank of the United States, which he did. But the ensuing unregulated and weak banking system was prone to panics and collapses, stripping millions - especially the small farmers who opposed a central bank - of their savings and investments. Only the 20th-century recreation of a central bank, the Federal Reserve System, and stricter federal regulation put an end to the cycle.

Are corporate greed and foreign trade the causes of economic dislocations today, or is the picture more complicated? What should be done to equip people to cope with the new economic realities? We'll examine those questions next.

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