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With High Unemployment, Carolinas Reel from Economic Crisis

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As we broadcast from Raleigh, we look at how the economic crisis has impacted the Carolinas with Chris Kromm, executive director of the Institute for Southern Studies and a writer for the blog “Facing South.” South Carolina has the second highest unemployment rate in the nation at 11 percent, just ahead of North Carolina. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Here, the Carolinas have been particularly hard hit by the economic crisis. South Carolina has the second-highest unemployment rate in the nation at 11 percent. North Carolina is just behind at ten percent, 10.7 percent.

Despite the high unemployment rate in South Carolina, the state’s governor, Republican Mark Sanford, has refused to spend $700 million in stimulus funds, education and public safety. Instead, he wants to use the money to pay down the state’s debt.

The governor’s decision has infuriated many in the state, including fellow Republicans. Senate Finance Committee Chair Hugh Leatherman, a Republican, recently said, quote, “If my house is burning down, I don’t get in my car and drive to the bank to pay off the mortgage. I put out the fire. I think that’s where we are in the state of South Carolina today. We need to put out the fire,” he said.

Well, to talk more about the region’s economy and other issues, we’re joined by Chris Kromm, executive director of the Institute for Southern Studies and a writer for the blog “Facing South.”

Welcome to Democracy Now! What about the economy here in the Carolinas, how it relates to the overall global economic meltdown, Chris?

CHRIS KROMM: Well, W.E.B. Du Bois once said that as goes the South, so goes the nation. I certainly hope that’s not true when it comes to unemployment and job losses. The fact is the Carolinas and the South have been absolutely devastated. We’ve seen the labor market absolutely collapse. Every day in North Carolina, 600 people are losing their jobs, a net loss of jobs. And what you’re finding — now, remember, these are communities that, for ten years, they’ve been hammered in manufacturing, the furniture industry based in North Carolina completely lost.

What we’re now finding in these communities, these are people in the banking industry who are losing their jobs. I just talked to a guy in Gastonia out in western North Carolina. He had worked for a textile firm for the longest time, for about twenty years. He lost his job there, somehow got a job at a bank. He just lost his job at the bank working for Bank of America.

And you’re seeing that it’s a region that, especially in these times of economic crisis, this is where issues like the lack of unions in the South become such an issue, because workers suddenly find themselves without the protections that workers in other parts of the country have, in terms of severance and benefits when they lose those jobs. So you have this massive dislocation in a part of the country where people don’t have much of a safety net. And that adds up to a huge crisis.

JUAN GONZALEZ: And Chris, you mentioned Bank of America. Most people aren’t aware that it’s headquartered in North Carolina, and the impact on the state of this huge financial institution that grew so rapidly in the past few decades being sort of at the center of this enormous collapse.

CHRIS KROMM: Well, I think few people know that outside of Wall Street, North Carolina is the second-biggest banking center in the country and one of the biggest in the world. And that’s why also you saw in the big taxpayer-sponsored bailouts of the banks that North Carolina, outside of Wall Street, received the most bailout money. The Bank of America, which subsumed Merrill Lynch, and then also Wachovia, which fell under Wells Fargo. So these are huge. Banking industry and finance is huge in this state, and this is a state that traditionally about 20 percent of workers worked in manufacturing, but increasingly it’s been around service and banking.

And so, that’s why you had an already fragile economy totally decimated by the changes in the global manufacturing, people being displaced, now it’s also found itself uniquely vulnerable to the fact that many people depend on finance. And again, this is an industry — obviously, finance industry isn’t unionized much of anywhere, but particularly in a place like North Carolina, where it prides itself on having a business-friendly climate, a low tax rate, lax laws on the environment and other regulations. This is where you find a state that’s uniquely in danger when it’s facing massive dislocations and layoffs. The state safety net just isn’t there. Programs are always on the chopping block.

And also, in a place like South Carolina, where you have — the school system has been the target of countless documentaries. It’s been called the “corridor of shame” in some parts of South Carolina. The same situation, where — that’s where it’s particularly galling to people in these states, when you find the governors playing politics with the recession and even saying they may decline federal stimulus funds that clearly the people in those states need.

JUAN GONZALEZ: And your state has also, obviously for years, been known as a military-friendly state, and the presence of military bases there has a huge impact on the economy. And with the continuing wars in Iraq and Afghanistan, has that been one of the few bright sides, in terms of employment opportunities for the state?

CHRIS KROMM: Yeah, well, as much as you can say that depending on the military for your economy is a bright side. That was interesting. In the latest round of base realignment, most of the parts of the country lost in those proposals that were made about closing down military bases. The South was actually the place that came out ahead. We were supposed to gain jobs from having a growth in military bases, military contracts. Even people who go into service are disproportionately from the South. About 56 percent of the troops are based in the South.

So we really are the heart of the military-industrial complex in this country. And that’s why — but it puts the state in a very difficult situation. Our governor says that we’re the most military-friendly state. She wants to draw in more military contracts here, expand the base of the military. But what happens when you have a national movement, like you have in the United States, of people questioning the role of the military internationally? And that brings into question whether or not the defense budget is — is there going to be cuts? What’s it going to mean for military contracting? And that means that people’s lives are at risk. And that’s the downside of a state becoming dependant on military spending for economic growth.

AMY GOODMAN: Blackwater here, Chris, was born here, right, is now known as Xe, and you’ve been covering it at the Institute for Southern Studies.

CHRIS KROMM: Yeah, exactly. Well, you know, that’s one of the pieces. Traditionally, North Carolina was a place that we had bases. This is where you put the troops, they’re based, or we had military contractors. Now we have weapons systems. Now it’s the private — the security forces. And, of course, Blackwater has become infamous, as synonymous with the military contracting in the security industry and its scandals. They’re, you know, target of several lawsuits. They had to change their name, which is always a sign that they’re in some sort of legal trouble. Now it’s Xe.

And what’s interesting is, you know, they still have a presence. What people don’t understand is they think that because of all the scandals and the lawsuits that their role has declined. And I think what we’re finding through our research is that they still have a very strong presence, very strong foothold in the contracting, government contracting. There’s some growing evidence they may be involved in Africa. And I think this is going to be another hotspot for people to be watching.

But even as you see places like Blackwater decline, it seems like there’s always other companies to jump into their place. Another company we’re following is Titan in Virginia, which is emerging as another one of the big security firms. And it is interesting that it’s not just the government presence in the military that’s big in the South, but it’s also the private military industry, which has found a very strong toehold in the South and makes a lot of people dependent on that for the economy.

AMY GOODMAN: What about extraordinary rendition and these private jets that fly, we believe now, thousands of people to places where they are tortured, what, like Aero Technologies, based here in North Carolina?

CHRIS KROMM: Yeah, based out of the Smithfield Air Force, a small airport. You would hardly even know it was there if you walked by. You know, I’ve been there a few times. But yeah, there’s the pilots who were accused by the German government and others of being involved in these extraordinary renditions. They live right next to this airport. They all have alternative identities, so it’s kind of hard to find them.

But yeah, clearly, and this is another way in which — it’s just kind of part of the fabric in many communities in the South, that the military is just part of it. And I think that’s — what people don’t quite understand is, people sometimes assume that Southerners just have a more conservative bent and embrace the military. I think it has more to do with the fact that many of them depend on the military. I know I have lots of relatives who are in the service or are connected to it somehow, and it’s just part of the way of life here. And I think that’s what people have to understand. And until you give people economic alternatives, ’til you find a way out for these Southern states being so dependent on the military, that’s where you’re going to find these situations where these states seem to embrace the foreign policy agenda, where I think in reality they don’t.

JUAN GONZALEZ: Chris, I’d like to ask you about another issue in terms of energy policy. In South Carolina, regulators recently approved an application by South Carolina Electric & Gas to build two new nuclear plants. The whole issue of nuclear power and how the South is dealing with it compared to other parts of the country?

CHRIS KROMM: Yeah. Well, clearly, there’s a whole movement to have a nuclear revival, and its home is right here in the South. As you know, nuclear power pretty much stalled out after 1979. We just had the thirtieth anniversary of Three Mile Island. And we just did a big investigation into some of the lessons of Three Mile Island. Some of the evidence, we found two whistleblowers in Asheville, North Carolina, who were there on the scene right after TMI meltdown happened. And they shared their story for the first time about how they believe the government’s story about what happened there was incorrect.

But what’s most important about that is that seemingly the government hasn’t learned its lessons from Three Mile Island about whether or not nuclear power can be safe. And that has a lot of people in the South worried. Where are the plants that are being proposed for the nuclear revival — are in South Carolina, they’re in Georgia, they’re in Florida, and there’s also talk even long down the road, places like North Carolina and other parts of the Deep South. So this really is the home of the nuclear revival.

But what are the issues here? One is, they still haven’t found a good way to store the nuclear waste, and that really raises a big issue for people. A lot of the questions about what happens if there is a disaster at these plants. And we just wrote today about a new study that came out here in North Carolina about the extraordinary cost. One thing people don’t really know a lot about the stimulus was the billions of dollars in loan guarantees that have been put aside for the nuclear power industry that are part of that stimulus — this is taxpayer money — is being used to fund what a lot of people in a lot of communities believe is an untested and a somewhat dangerous form of energy to be turning to.

AMY GOODMAN: Finally, the Census here in the South, Chris, the significance of the 2010 Census?

CHRIS KROMM: Yeah. Well, this is going to be really big, because the South is the fastest-growing region in the country right now. It was really interesting, after the 2008 elections, a lot of people said the South is declining in their political influence. I think they’re not going to be saying the same thing after the 2010 Census, when it becomes clear the Southern states are rapidly growing. They’re set in the 2010 Census to gain up to seven to nine congressional seats and Electoral College votes.

But the key issue here also is that the South also has a disproportionate share of people who tend to get undercounted in the Census — African Americans, low-income communities. New immigrant communities are the fastest-growing population in the South. Military families. And this means that millions of dollars could be lost in Southern states if there’s an undercount.

But even if there is an undercount, the South is expected to dramatically grow. And what that’s going to open up is massive battles around redistricting, who gets represented, the future of the Voting Rights Act, guaranteed to protect the voting rights of African Americans and others. And there’s been huge Supreme Court decisions about that recently. But all these battles are going to get reopened. You probably remember the Texas legislators heading to the hills after the first round redistricting in 2000. I think you’re going to see that all over again, because this is going to be a huge battle about who gets represented in the politics of the South.

JUAN GONZALEZ: And Chris, I know Amy said “finally,” but one final question. The Employee Free Choice Act, the role of Southern — some Southern Democrats in getting this important legislation through, the number one priority for organized labor in America?

CHRIS KROMM: Yeah, I think Blanche Lincoln, the senator from Arkansas, her defection this week is a huge blow to the future of that act. What’s especially interesting, though, it’s in the South. And, of course, she comes from the state of Arkansas. She received over $50,000 in campaign contributions over the last five years from Tyson Foods and Wal-Mart, two of the companies that have the most OSHA violations and citations in the country. So it really wasn’t a surprise, in a way, that that was going to happen, but it does deal a severe blow. It takes the Democrats off of the sixty majority that they needed to get that through without facing a block.

And I think that’s especially important here in the South, because this is where you see the most egregious cases of employee intimidation, of workers being harassed. And we just had a historic union victory here in North Carolina at Smithfield Foods, where there were extraordinary tales of people — of the company hiring private security guards to follow workers home if they spoke out for the union, workers getting beaten by the private security guards. This is an issue that hits close to home for Southern workers. So I think it’s especially disconcerting to them to see that there is a faction of people in the Senate who are willing to turn their back on that cause and put the ability of workers to organize unions at risk.

AMY GOODMAN: Chris Kromm, I want to thank you for being with us on this whirlwind tour around the country. Juan, the lesson is never say “finally.” Chris Kromm is with the Institute for Southern Studies. He blogs there, as well. We’ll link to his website, as we broadcast here in Raleigh, North Carolina.

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