Recession pummels South’s ‘miracle' economy

Growing income inequality "is a national story, but the South may show it most dramatically because they pushed the low-wage strategy most successfully," says Joseph Persky, an economist at the University of Illinois in Chicago, who has studied the economy of the South. He believes the region's low-wage, anti-union model won't survive as the economy moves away from traditional manufacturing industries. "[The South] can't compete with Mexico, let alone China."

Local conservatives paint a slightly different picture: In the past three decades, majority-black, Democratic counties such as Warren and Hancock have seen government share of county domestic product grow to more than 50 percent. That, they say, has suppressed enterprise and self-determination.

When a French perfume bottle-maker moved into Hancock County, says Sparta shopkeeper Mr. Hill, most job applications came from outside the county. Locals who got hired showed little interest in the work and tended not to last, he adds.

"There's work to be done here, but people don't want to do it," agrees Andrew Coard, who lived all over the world before settling in a turn-of-the-century farmhouse in tiny Jewell, Ga., and opening an antiques shop. Even with unemployment at historic highs in the area, Mr. Coard says he can't find anybody to drive 20 miles to fix up his property.

"The predominant white culture in the South has been strongly oriented towards creation of wealth, not so much redistribution of wealth, and [President] Obama's current policies are really a challenge to that whole idea," says Merle Black, a political science professor at Emory University in Atlanta. Conservatives here fear a Democratic Washington will use the recession to push greater regulation and taxes in the region.

That won't be easy. The South's most unpopular governor right now is North Carolina's Bev Perdue, a Democrat who faces 25 percent approval ratings after proposing $1.6 billion in new taxes to plug a budget gap. And none of the 23 states that voted to expand unemployment benefits during this recession are in the South.

Conservatives maintain their faith in the Southern model. The South's economy may be struggling now, but in the long-term, it is more likely to be successful, says Patrick Fleenor, chief economist at the conservative Tax Foundation in Washington.

"The way to fix this economy is to invest in human capital and encourage people to invest in themselves. The state can't fix the wage gap through income transfers," he says.

For Sparta resident David Smith, what's important is not how jobs are created but how soon. The retiree watches the streets from the porch of the old Drummer Hotel, now a low-income apartment complex. He sees crime up and too many residents idle. "I'm just glad I'm not out there having to look for a job," he says.

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