The Washington Post's Steven Pearlstein Apparently Flummoxed by Why the Rustbelt Rusted


In an otherwise relatively sensible column about the effect of the process of creative destruction on the currently slow growth in the U.S. job market, Washington Post economics columnist Steven Pearlstein makes this odd observation:

I'd also offer a geographic hypothesis. For years, much of the growth in the nation revolved around the movement of people and business from the Rustbelt to the Sunbelt. Before long, a self-reinforcing dynamic took hold where growth begot more growth. As big corporations moved work from Pennsylvania and Ohio, entrepreneurs saw the opportunity to provide the new factories with everything from parts to catering services. Small contractors sprang up to build houses for the employees of all those new ventures, followed by other firms to provide restaurant meals and yoga instruction to all the new inhabitants. Only when the bubble burst did it become clear that all that growth-induced growth had gotten way ahead of itself. The entrepreneurial activity, along with the explosive job growth, came to a sudden halt.

Pearlstein does not appear to wonder why so many companies decamped from the North to the South. People just all of the sudden got a hankering for more sunshine and warmer temperatures? I would like to suggest an explanation in just three words: Right to work.

See maps below as suggestive evidence.

Why the Rustbelt rusted?
Before the crisis - Not a perfect correlation, but suggestive.

Pearlstein does later opine:

My guess is that the great Sunbelt migration is now ending. There are early signs that the next phase of growth will come in some of the older cities of the north, where wages and prices have been beaten down, along with much of the entrepreneurial instinct.

Maybe. Of course, if the the National Labor Relations Board manages to impose the same failed employment policies that so helped the Rustbelt rust, then I predict that we can look forward to faster creative destruction and more offshoring.