Lessons From New England
By Robert J. Samuelson
Wednesday, July 21, 2004; Page A19
In some ways, the Democrats' selection of Boston for their convention couldn't have been worse. If you're trying to shed the liberal label -- to appeal to the middle -- then you don't pick a famously liberal state, especially when it's your candidate's home. But in other ways, Boston is perfect. Not only is New England the crucible for some of the nation's proudest political ideals, it has also experienced a spectacular economic renaissance. What New England has achieved economically is precisely what Democrats aspire to do politically.
Only 30 years ago New England seemed an economic relic. It was long on tradition and short on vitality. Abandoned shoe and textile factories abounded. From 1948 to 1973, these industries lost two-thirds of their jobs. In the 1970s New England's unemployment regularly exceeded the national average. "In 1980, Boston was a declining city in a middle-income metropolitan area in a cold state," writes Harvard economist Edward Glaeser. Since 1920 it had lost 26 percent of its population. The region seemed quaint -- and stagnant.
No more. In May New England's unemployment rate was 4.8 percent; the national rate was 5.6 percent. The Federal Reserve Bank of Boston reports more good news: In the first quarter New England's exports rose 19 percent, compared with 13 percent for the nation. Real estate markets are also booming, and not just around Boston. From 2001 to 2003 median home prices rose 34 percent in New Haven/Meriden, Conn. (to $225,000), 26 percent in Portland, Maine (to $199,000), 48 percent in Providence, R.I. (to $233,000) and 66 percent in Worcester, Mass. (to $253,000). Sure, there are qualifications. Urban and rural poverty remain. Low unemployment partly reflects an older population (older people have lower jobless rates).
Still, New England has reinvented itself and, significantly, has done so repeatedly. In the early 1700s, Boston was the largest colonial port. New England thrived by shipping fish, meat and wood products to the South and the Caribbean. But by the early 1800s, New York was the leading port, and settlers were moving west to more fertile lands. So New England merchants and sailors shifted to whaling and adapted to the new geography of trade. More trade was going through New York, but "Boston shipyards were providing the boats, Boston merchants owned these ships and its sailors operated them," writes Glaeser.
More important, New England became the citadel of manufacturing. Economic historian Peter Temin of the Massachusetts Institute of Technology reports that in 1860, New England provided 75 percent of the nation's cotton textiles. But it wasn't just cloth and shoes. In 1855, Samuel Colt opened an armory in Hartford, Conn., to make pistols. Factories churned out clocks, machine tools and locomotives. From 1830 to 1880 much of the population moved from farms to cities. Temin likens the transformation "to the Asian 'miracles' of Korea and Taiwan in the half-century since World War II."
The latest makeover involves high-technology industries and services: computers, finance, health care, education and consulting. Fidelity, the largest mutual fund group, is headquartered in Boston. Novartis, the Swiss drug company, plans to spend about $4 billion over a decade on its new laboratory in Cambridge, Mass.
Underlying New England's resilience are two constants. First is the central role of investment capital. New England's wealthy have successfully used profits from old industries to create new ones. The earliest investors in textile mills were shipping merchants. After World War II, the aggressive use of venture capital provided seed money for new computer and high-tech firms.
Second is the importance of workers' skills (what economists call "human capital"). Boston's merchants and sailors survived New York's rise because their skills -- doing the hard work of organizing trade and sailing those ships -- were needed. The same is true now. In 2000, says Glaeser, Boston had the highest share of college graduates among adults of all but six other metropolitan areas of more than 200,000 people. This pool of well-educated workers creates new businesses and staffs companies that require high skill levels.
For Democrats, New England's economic experience could be a political parable. It offers an encouraging metaphor and instructive message. The metaphor is redemption. People, regions, companies -- and political parties -- can come back. There are second, third and fourth chances. The message is that you have to adapt. New England has thrived because it both respected its traditions and altered them. It changed with shifting demands.
Democrats face a comparable political challenge. A party whose soul has been in domestic programs must reassure voters that it can cope with foreign threats -- and must also make its domestic proposals sound plausible. Democrats have got to project a plan for the future and not just a yearning for the past. They'll sound stale if they simply offer the political equivalents of a return to shoes and textiles.
© 2004 The Washington Post Company
(Chitose Suzuki -- AP)