Michael Lind: What Will America Build Next?

Michael Lind: What Will America Build Next?

The following has been excerpted from Land Of Promise: An Economic History Of The United States, a new book by author and New America Foundation co-founder Michael Lind.
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The history of the productive apparatus is a history of revolutions. So is the history of transportation from the mailcoach to the airplane. . . .This process of Creative Destruction is the essential fact about capitalism.
—Joseph A. Schumpeter, 1942

We believe that this country will not be a permanently good place for any of us to live in unless we make it a reasonably good place for all of us to live in.
—Theodore Roosevelt, 1912

In the early twenty-first century, Paterson, New Jersey, is a troubled city in a troubled country. The city that traces its origins back to Alexander Hamilton’s Society for Establishing Useful Manufactures (SUM) has lost most of its manufacturing businesses to other countries. Like other cities in America’s deindustrialized Rust Belt, Paterson has been plagued for decades by poverty, crime, and urban decay. Like other northern industrial cities, Paterson became a home of black migrants from the South just as many manufacturing jobs that provided ladders to middle-class status were disappearing. National shifts in demography are reflected in Paterson, where a majority in the city now consists of Latino immigrants and their descendants. Immigration has helped to revitalize the city, to some degree. But levels of poverty, illiteracy, and illegitimacy are high.

About twenty miles south of Paterson in Elizabeth, New Jersey, is something called Foreign Trade Zone 49. FTZ 49, established in 1979, is one of hundreds of special business districts created in recent years in the United States that provide special customs treatment for companies engaged in international trade. Operated by the Port Authority of New York and New Jersey, FTZ 49 is one of the largest contiguous foreign trade zones in the country. Its 3,587 acres include 2,075 acres in the Port Newark/Elizabeth Port Authority Marine Terminal; 41-acre Global Marine Terminal and 145-acre Port Authority Auto Marine Terminal, both in Jersey City/Bayonne; 125-acre Industrial Park at Elizabeth; 53-acre Greenville Industrial Park in Jersey City; a 23-acre site in Bayonne; a 40-acre tank farm and fuel-distribution system at Newark Liberty International Airport; a 407-acre industrial site in South Kearny; 316 acres in Port Reading Business Park in Woodbridge and Carteret; 115 acres in the I-Port 12 industrial park in Carteret; 72 acres in Port Elizabeth Business Park in Elizabeth; and 176 acres in the I-Port 440 industrial park in Perth Amboy.

FTZ 49 sponsors industries involved in manufacturing, pharmaceuticals, petroleum products, and special chemicals and hosts companies that include motor-vehicle importers and an importer of frozen-orange-juice concentrate. The industrial park is connected to world commerce by Newark Liberty International Airport and the ExpressRail Intermodal Rail System, with dedicated facilities at major container terminals in Elizabeth and Staten Island. Nearly ten thousand workers are directly employed at FTZ 49, while the multiplier effects of its economic activity create a far greater amount of indirect employment in the area and the nation.3

FTZ 49 is Alexander Hamilton’s SUM reborn. Power is provided by electricity rather than by water, and the products include many that did not exist when the United States was founded. Ingredients are brought in and products taken out by trucks, trains, and planes, not by boats and wagons. The purpose of American economic policy in the twenty-first century is no longer to catch up with industrial Britain, but to allow the United States to participate in high-value-added global supply chains in a world of transnational production, without sacrificing strategic industries. But the project of creative collaboration between government and private enterprise to ensure that America remains a land of promise is no different today than it was on that fateful day of July 10, 1778, when General Washington and Colonel Hamilton, enjoying a respite from war, admired the thundering falls of the Passaic and imagined what America might be.

The story of the American economy can be summarized in a paragraph. When the United States won its independence and organized its Constitution, the world’s economy was still the preindustrial economy that had existed for millennia since the invention of agriculture—an economy in which human and animal muscle provided most of the power, supplemented where possible by the force of windmills and water mills, in which the burning of wood and other biomass provided heat and light, and in which passengers and freight were most efficiently moved by water. Within decades of the Founding, America began to be transformed by the industrial revolution, which has radiated outward from workshops and laboratories in three waves—the first industrial revolution based on steam and telegraphy, the second industrial revolution based on electric and oil motors, and the third industrial revolution based on computers. Each wave of technological innovation has destabilized existing economic, social, and political arrangements, forcing Americans to adapt by creating, in effect, a series of new republics while keeping, for the sake of continuity, the old name of the United States of America and the old federal Constitution of 1787, with formal and much more important informal amendments.

American history shows a recurrent pattern: a thirty-to forty-year time lag between technology-driven economic change and the modernization of political and legal structures to deal with its consequences. During this period of misalignment, such as the 1830s through the 1860s, the 1890s through the 1930s, and the 1970s through the 2000s, the institutions of the economy and the polity drift further and further apart. Nostalgic Jeffersonian politicians like Andrew Jackson, William Jennings Bryan, and Ronald Reagan who idealize a smaller-scale past often win wide support in these eras of drift and stagnation. Finally, after three or four decades of misalignment between economy and polity, there is a crisis—the Civil War, the Great Depression, the Great Recession. The crisis provides an opportunity for reformers to reconstruct the economy and political system in an attempt to realize perennial American democratic and liberal ideals in forms adapted to the new technological era. The Hamiltonian tradition enjoys a revival, in light of the urgent need for large-scale, ambitious programs of national development based on collaboration rather than conflict between government and private enterprise.

If American history is any guide, the cycle of Jeffersonian nostalgia and partial regression that began with Carter and Reagan will give way at some point to a neo-Hamiltonian era of nation building—or, to be more precise, nation rebuilding. Eventually, however, the next political-economic order will be obsolete. As long as technological progress continues to transform the way we work and live, the economy and the polity inevitably will become misaligned again, challenging new generations of reformers.

Excerpt from Land of Promise by Mike Lind, published with permission by HarperCollins.