The American Divergence

America is splitting into two diverging economic cultures. Cities of a million people date back two thousand years and the dominance of the urban center over the country is not a new trend. Urban culture is being redefined by the advent of the knowledge worker. The role and importance of rural America is changing as redefined by the new urban wealth, dominance and viewpoint of the knowledge worker.

The old America of previous economic engines; resource extraction – mining, energy, forestry, fishing, agriculture and 20th century manufacturing are being muscled aside by the new titans and new majority. Technology has allowed all old industries to modernize and reduce the amount of workforce. Agriculture is the most extreme with the American food basket producing enough to feed Americans and 22% more for export with only 1.9% of the workforce (this volume results in .7% of national GDP). Robots, hi-tech machines and computer technology have aided manufacturing to reduce its work force also. With the reduced size of the workforce in the old economic engines, the societal directions become increasingly under the direction of the urban knowledge dweller. (For comparison, US gross agriculture revenues are 246 B, WalMart $ 288 B and Exxon $ 270 B)

A secondary force, as a result of American economic success and global supremacy, is also reducing the power and role of the old economic engines in America. Changing economics have altered the American production and consumption balance. The strong US dollar means the US finds it harder to export goods and easier to import goods – a two edged sword for manufacturing based in the continental US. Free trade promotion thru NAFTA, GATT, Favored nation status for countries like China have done their share to promote more imports of finished goods for the US economy. US companies have invested overseas to produce goods for both US markets and foreign markets.

A US company that moves its manufacturing offshore still retains its “knowledge workers” in the US, but not its production personnel. The employees retained in the US are college-educated staff for management, finance, marketing, administration, accounting, R&D and other office functions. The brains stay here and the brawn is located in a low cost economy offshore.

To the urban knowledge worker the world looks different. Life is good. Pay is great and benefits are good. Education has stimulated awareness and knowledge about the environment. Time off has generated demand for recreation areas, travel and playgrounds. The urban dweller yearns and looks forward to the playground of rural America. (Obviously there are many low paying service jobs in urban areas, but these workers are not driving the redefinition of US culture; they just try to survive in an expensive urban setting.)

The urban IT worker lives in a very gentile world. The work environment is clean and neat. Many work in what are called “campuses”. This is an orderly and clean world where things are done “right”. Gardens and greenbelt adorn modern buildings in both government and private urban settings. Tax revenues are available in urban centers to implement progressive social, economic and environmental policies.

These urban IT dwellers find it increasingly hard to understand and tolerate the old world economy. Mines, cutting forests, tilling the land for farms, damming rivers make little sense to a Microsoft campus dweller or someone raised in Silicon Valley, Hollywood, Wall St corridors or the Boston’s collegial world.

There are many knowledge workers – education institutions; health care; hi-tech, bio-tech, professionals; financial; management and consultant companies, entertainment, government management types, researchers. Education, computer, information, travel, working with idea and information are all characteristics shared by knowledge workers. These people are very distant, maybe even a generation distant from the old life. Less and less people know how to fix a flat tire on a bicycle, plant a vegetable garden, can food for the cellar or butcher a chicken. Urban workers are more and more removed from what seems a dirty, grubby world.

A perverse economic spiral plays out in rural America. Farmers, loggers, miners and other resource workers of rural America work hard as all Americans do to send their children to college to get ahead in a competitive world. The best job opportunities for college graduates are in the growing job markets of the cities. The majority of educated children have no desire to return with their college education to run the family farm. On the flipside, Ted Turner, Charles Schwab and others of the super wealthy urban class can afford to buy up farms and forest in rural areas for playgrounds. Ted Turner alone owns 110,000 acres of land in Montana and administers it grandly as a private park, replete with his own biologists. The wealth of the cities at least returns to allow the retirement and exit of the family that sent their children off to college.

Those urbanites less wealthy than Ted Turner may simply be able to afford a second home, a cabin or vacation time in rural America.

It is little wonder that two different mentalities are developing between rural and urban dwellers. Their economic fortunes are quite different and life is seen through a different prism. The economy and employment that sustained rural America are shrinking and in some cases dying. Employment is booming, population increasing and housing prices are skyrocketing in urban America. In many cases, the replacement industry in rural America is a service industry to care for the leisure needs of urban knowledge workers that are wealthy enough to recreate in rural areas.

Farmers still have enough economic clout in the US Congress to maintain billions in annual subsidies. Studies have shown that these subsidies equal 50% of the profitability of US farmers. There are significant pressures on farm subsidies from those that desire to reduce the federal deficit and global World Trade Organization pressures. It is very likely in coming decades that farm subsidies will erode and foreign food products imports will increase. Farmers will seek mechanization and other methods to reduce labor. Meanwhile industries like high tech, biotech, financial services and professional services that are the engines of urban economies will continue to grow. The gap between urban and rural pay scales will widen and the new jobs will continue to be in the cities.

What will be the disparities in another two decades? How will the evolving attitudes conflict and congeal in the two Americas?

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