The South Is Rising (But Not Areas Republicans Need)

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(Bloomberg Opinion) -- Some Republicans may enjoy the "Trump Show" that dominates the news, but in state and local primary elections this spring, the needs of the base are clashing with the traditional ideologies put forth by the GOP. How can Republican gubernatorial candidates and state legislatures give their rural supporters the conservative ideology they demand and yet still deliver for them economically?

It's a question that will only become more pressing. After a nine-year economic expansion and with the national unemployment rate below 4 percent, conditions aren't likely to get much better than this. The best we can hope for is probably a few more years of an economy that feels like this before economic overheating leads the Federal Reserve to tighten monetary policy enough to kill the cycle.

Southern states are often seen as fortunate relative to their northern peers that are stuck with worse demographics and a hollowed-out manufacturing base, but state-level data masks significant divergences within many of those Southern states.

Georgia, Tennessee and Alabama show similar growth patterns at the county level. Georgia has 159 counties, but since 2010, 60 percent of its population growth has occurred in six metro Atlanta counties. Nearly half its counties lost population. Almost 80 percent of Tennessee's population growth since 2010 occurred in eight of its 95 counties — mostly around Nashville, with some growth in Chattanooga and Knoxville. Like in Georgia, almost half its counties lost population. And Alabama had the most imbalanced growth of all, with six of its 67 counties accounting for all of the state's population growth since 2010. Those six counties? Auburn University's, the University of Alabama's, a suburb of Birmingham, two Huntsville counties, and Baldwin County, which picks up the Gulf Coast.

In other words, growth in the South is incredibly unequal. Thriving midsize and large cities, college towns, and scenic places are growing, and just about everything else is stagnant. That poses a quandary for the Republican Party, which has increasingly relied on the voters in rural communities.

A prime example is health care. Rising costs to provide health care, combined with dwindling populations and economic bases, are a toxic combination for rural hospitals, causing many to close or shrink. States could expand Medicaid to help, which would be a huge help to rural communities. But Alabama, Georgia and Tennessee have not done so.

Herein lies the tension between ideology and reality. All three states have gubernatorial elections this year, and it will be interesting to see how Republicans handle the topic of health care in general election campaigning. In Georgia, the Democratic frontrunner, Stacey Abrams, has said that expanding Medicaid would be an economic development home run.

Another tension revolves around labor. Rural economies that are still heavily agricultural are often dependent on foreign workers for help. In the South, unlike California, this is a relatively recent development. The Republican Party's anti-immigration platform only goes so far in aging communities already struggling with labor shortages. If wages rise significantly, more businesses will decide to import what they need from abroad rather than produce it in the U.S. Rural agricultural communities may have to decide between more immigration and … dying out.

Rural development is difficult because so many pieces need to come together. Businesses want to be where workers are, and rural America has a dwindling labor force. Recruiting workers is hard when educational and health care facilities are lacking. Communities far from ports and highways lack access to the marketplace. To its credit, Georgia's legislature passed a bill to study ways of improving rural economies, but it's a long way from study to action. And in the meantime, support for development is not even unanimous: There have been rumblings from conservatives about whether red states should even want an expansion like Amazon's second headquarters, because of the political changes that it might usher in.

At some point, maybe when this economic expansion slips into a recession, rural voters are going to wonder why their leaders are delivering job growth only for cities. Expect Republican candidates to break with the national platform and be pragmatic.

©2018 Bloomberg L.P.

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