The Backbone of America
On a billboard in Minnesota it reads “Agriculture: The Backbone of America”. Seeing as how this billboard was positioned at the edge of cornfields stretching for miles and miles along Interstate 90, it struck me as apropos. In states like Minnesota, South Dakota, and Iowa agriculture drives the economy. But is it truly the backbone of America? What about small business? Or auto manufacturers? Is the modern U.S. economy offering something different? The sign along the road in Minnesota got me thinking about this subject and I’d like to share some thoughts.
In the Farm Belt, defined by Wikipedia as Indiana, Illinois, Iowa, Missouri, Nebraska and Kansas, agriculture is vital to the economy. Several other states produce significant quantities of corn and other agricultural products. These include our billboard state of Minnesota, South Dakota, Wisconsin, and Ohio, among others. I drove through all of these states last week and YES, agriculture may be the backbone of this region of America. I am not an expert, but the fields and towns along the way looked healthy, not desolate, and the general activity in these communities was evident. It should be noted that prices for agricultural products are lower due to the impact of tariffs (soybeans, pork and cattle have been hit the hardest, I believe), but America’s farms and farmers are working and resilient. They have real backbone for sure.
But what about the rest of the country? I googled “backbone of America” and discovered a gaggle of other claims about what comprises our backbone. The most common “backbone” reference was to small business. According to the U.S. Small Business Administration (USSBA) currently under the direction of Administrator Linda McMahon of WWF fame, 99.9% of all businesses in the U.S. are “small businesses”. FYI, the USSBA defines small business as companies with less than 500 employees. We often hear the refrain “small business is our backbone”, and more jobs are created by small businesses than other sources (large corporations, government entities, etc.), according to USSBA statistics. A former U.S. President referred to small business this way: “this is as American as apple pie. Small businesses are the backbone of our economy. They are central to our identity as a nation”.
In 1953 during Congressional testimony Charles Wilson offered another perspective: “As goes GM, so goes America”. While Wilson clearly was stressing the importance of automobile manufacturing for America, the broader manufacturing base has laid claim to being our backbone for many years. There is some truth in Wilson’s generalization. In the online publication Real Clear Politics, in 2014 Jay Timmons stated that manufacturing was the “backbone of US economic growth”. Slightly different in connotation because he emphasizes growth, Timmons cites American innovation and our capital markets as natural advantages, as part of our backbone.
Another article in Investopedia published on Valentine’s Day this year highlights the five industries serving as the backbone of growth: health care, technology, construction, retail, and non-durable manufacturing. This broader set of industries is dominated by larger companies, and the economist would tell you that they combine innovation, capital investment, and large amounts of human resources to grow our economy. And growth is a good thing, whether we call it our backbone or not.
So is the billboard right? Or President Obama? Or Charles Wilson? Or is it something altogether different? I would argue that many forces drive economic growth and your perspective depends upon where you live and how you make a living. Nothing is wrong with any of these “backbone beliefs”. What we must recognize is that the source of strength in our economy changes regionally and over time. Thus our backbone is based on regional influences and we live in a very large nation with diverse natural and human resources amidst ever-changing demand from consumers. All are important to the overall GNP, what we might call the overall American Economic Pie. And whether you prefer apple, banana cream, or peach pie does not matter. It doesn’t take a strong backbone to agree with me that we all need to cheer for an economic pie that is expanding.
One of my favorite quotes comes to mind:
“You can accomplish anything if you don’t care who gets the credit”
(Source Uncertain. Often attributed to Edwin Everett Hale or an unknown Jesuit priest)
Happy Autumn!
Ralph McDevittSeptember 20, 2019
Any opinions are those of Ralph McDevitt and not necessarily those of Raymond James.
