A Weak Case for the Middle Class Embracing Globalization

Reuters’s David Rohde writes about Bowling Green, Kentucky, and how it’s doing well by embracing globalization. But it’s a pretty weak argument.

First, the dumb-question-as-headline thing, which is a pet peeve:

Can Confucius save America’s middle class?

No, Confucius can’t save America’s middle class. Nor can the Confucius Institute, which has started up a program at Western Kentucky University.

And the column just doesn’t make much of a case for the broader implication of the headline. We’re told that Bowling Green is “reinventing itself” by opening up to the world, including by welcoming the Confucius Institute’s night classes that teach local businesspeople Chinese. Bowling Green had better hope they don’t learn “How much can you save me on labor costs?” The Confucius Institute is wholly financed and run by the Chinese government after all, which is awfully aggressive about protecting and projecting its economic interests. We’re also told that nineteen countries have made investments in the city, but we get no information on whether they’re opening 7-Elevens or research labs.

We also learn an auto-parts firm is bringing 280 jobs. That’s great, but it’s unclear what it has to do with Confucius Institutes or, for that matter, with anything Bowling Green is doing. Same here:

Even the town’s old economy hallmark - the GM plant that is the world’s only producer of Corvettes - is expanding. Fruit of the Loom, which is headquartered here, is slowly growing as well.

These Chamber of Commerce-type numbers are fine, but how do all these datapoints relate to each other?

Rohde reports that Bowling Green “boasts a growing number of jobs and a lower unemployment rate - 7.9% — than the national average of 9.1%.” But surely one of the major reasons for its low unemployment is the presence of a large state college in a relatively small town. It’s great that Bowling Green has WKU and its 21,000 students, but not every town can have one of those. As The Wall Street Journal reported a couple of years ago, unemployment rates tend to be lower in college towns, which “have long been considered recession-resistant.”

But the college aspect of Bowling Green’s economy is almost an afterthought here:

The city defies traditional labels and limits. Neither Rust Belt nor rural, it has diversified from an economy dependent on Corvette sales to mix of services, technology and light manufacturing

If you’ve got a town of 100,000 (actually 120,000, with 58,000 in the city proper), and a school with 21,000 students, education is your dominant industry. WKU is far and away Bowling Green’s biggest employer, with two-and-a-half times as many employees as the next biggest employer, which is a health-care company, and ten times what GM employs building Corvettes.

The bottom line: Bowling Green is doing a bit better than average because it’s a small place with a big government-financed university, which not only directly employs thousands but also creates ancillary jobs.

If Confucius Institutes and the like have any impact at all, it’s surely on the margins.
This column doesn’t show that those kinds of things have had a significant impact at all, much less that they might save America’s middle class.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum. Tags: , , , ,