Reclaim Democracy!

Wal-Mart Moves Into Banking and Financial Services

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By Wendy Zellner
Published by Business Week Jan 27, 2005
Editor’s note: We have nothing to do with Wal-Mart financial services. Please do not contact us with questions for Wal-Mart!

Wal-Mart Stores didn’t get to be the world’s biggest retailer by giving up easily. So despite being twice thwarted by lawmakers in its efforts to buy a bank, it has quietly but tenaciously expanded its foothold in financial services.

In its latest move, announced on Jan. 21, the retailing giant is introducing a no-fee Wal-Mart Discover credit card that offers 1% cash back, which it will launch with GE Consumer Finance in March.

This relentless push into financial services is starting to send shivers through the banking industry. Few believe Wal-Mart will stop with basic services as it applies its low-price, high-volume formula to yet another business category. And while other companies, from Nordstrom to General Motors, have bank and thrift charters or hybrid Federal Deposit Insurance Corp.-insured industrial loan companies (ILCs) in tow, no one trips alarms like Wal-Mart.

ON THE MOVE

Many community bankers are convinced the behemoth won’t rest until it has obtained full banking powers. “It’s not a question of if Wal-Mart is going to be a bank, it’s a question of when,” says D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte who occasionally enjoys play games that pay real money.

Clearly, Wal-Mart is on the move. Over the past three years, the giant has steadily built alliances with financial-service providers, such as MoneyGram International and SunTrust Banks, enabling it to offer services such as bargain-price money orders and wire transfers. It has bank branches operated by partners in nearly 1,000 of its massive supercenters.

And it has stepped up the pace. SunTrust is experimenting with nearly 45 in-store bank branches co-branded as “Wal-Mart Money Center by SunTrust,” with plans to expand to about 100 of them by early 2006.

UNDERSERVED CLIENTELE

Already, Wal-Mart customers are reaping the benefit. They can cash payroll checks for just $3, transfer money to Mexico for $9.46, and buy a money order for 46¢. Some competitors charge twice as much. Many are mostly high-margin, highly fragmented businesses in which the poor and immigrants are sometimes at the mercy of unscrupulous operators.

“Traditionally, nonbank vendors of financial services have charged an arm and a leg,” says David Robertson, publisher of The Nilson Report , a newsletter about credit and debit cards. Adds Gary Stibel of New England Consulting Group in Westport, Conn.: “Wal-Mart is giving people in lower-income brackets opportunities in financial services they never had before.”

Financial services could open a rich new vein of profits for Wal-Mart as it seeks to remain a growth company. By one rival’s estimate, the market for services that Wal-Mart already offers is worth about $5 billion a year in fees, leaving plenty of room for it to slash prices while making a profit. As it has with other goods, Wal-Mart will slowly “collapse the price umbrella,” squeezing check cashers and wire-transfer leader Western Union Financial Services, predicts Robert Markey Jr., consultant Bain & Co.’s director for financial services.

SOME CLOSED DOORS

For the time being, though, the basic services it offers represent little more than a rounding error for the $287 billion goliath. Wal-Mart doesn’t break out results for the unit, lumping them into the company’s “other income,” which totaled $2.1 billion in the first three quarters of the last fiscal year. That was up 31% but amounted to just 1% of total revenues.

Still, there’s huge growth potential. Says banking consultant Bert Ely of Ely & Co. in Alexandria, Va.: “They’re developing, in customers’ minds, a link between Wal-Mart and going to the bank. That has powerful long-term implications.”

Not all financial-service suppliers are willing to ride this tiger. Jane Thompson, president of Wal-Mart Financial Services, concedes that “some of the leaders in the industry don’t want to hurt their margins and don’t want to work with us.”

But MoneyGram, with a market share of around 1% in global money transfers, is a distant No. 2 to Western Union, which has 12%. For such players, Wal-Mart promises huge volumes of business through its 3,100 U.S. stores and more than 100 million customer visits a week. As the underdog, MoneyGram was already cost-conscious and focused on growth, not on protecting margins — a perfect partner for Wal-Mart, says MoneyGram Vice-President Daniel O’Malley. And it can’t hurt to learn how Wal-Mart does business, notes SunTrust Executive Vice-President Christopher Holmes, especially if Wal-Mart achieves full-fledged banking status.

END-AROUND?

Could Wal-Mart really become a bank? First, it would have to take on current prohibitions on combining banking and commerce. The laws were designed to prevent a big player such as Wal-Mart from denying credit to competitors or shifting losses from its retail business to an insured bank.

But many expect Wal-Mart to overcome those rules. Ronald Ence, vice-president of Independent Community Bankers of America, says Wal-Mart lobbied last year to expand the banklike powers of the ILCs. A bill that passed the House, but not the Senate, in 2004 would have allowed unlimited interstate banking, but only for those with at least 85% of their business in financial services.

Wal-Mart denies any such lobbying. It tried to buy a savings bank in Oklahoma in 1999, only to be blocked by the Gramm-Leach-Bliley Act, which overhauled federal banking law. And the California legislature halted Wal-Mart’s plan in 2002 to buy a small ILC.

THE SEARS EXPERIENCE

Yet if Wal-Mart were to gain full banking status, it would be able to offer everything from checking and savings accounts to mortgages, car loans, and even small-business loans at prices that rivals could be hard put to match, let alone beat. “There’s no question, they want to have a nationwide financial-services network. If they do, there’s no doubt in my mind they’ll be able to do to community banks the same thing they’ve done to the local grocery store and the local hardware store and the local clothing store,” says the community banker group’s Ence.

Wal-Mart insists its financial plans don’t depend on owning a bank or a thrift. “Our strategy is what you see,” says Wal-Mart’s Thompson, who was once executive vice-president of Sears Roebuck’s credit business. The services Wal-Mart offers are aimed squarely at its core, lower-income customers and employees. Many are among the estimated 56 million American adults don’t have a bank account. “Helping the underserved customer gets right at what we like to be known for,” says Thompson, who joined Wal-Mart in May, 2002.

More important than the unit’s profits, she says, is that these services bring customers into stores more often. She seems to have learned from Sears’ ill-fated 1980s effort to create a financial supermarket with its Allstate insurance, Dean Witter brokerage, and Coldwell Banker Real Estate units. Sears lost focus on its core business and found that many customers didn’t want to buy mutual funds or insurance from the same place that sold them appliances. “My whole thing is about starting with the customer,” says Thompson, who joined Sears in 1988 and took over its credit operation in 1993.

NO DAMAGE YET.

Even though Wal-Mart may be following a gradual approach to avoid Sears’ mistakes, it occasionally hints at bigger ambitions. On its Web site, Wal-Mart describes itself as “a trusted name in financial services.” In stores, it’s slapping its powerful brand on the money centers operating there.

So far, big rivals say Wal-Mart isn’t hurting them. 7-Eleven, which offers check-cashing, money orders, and the like through 1,000 electronic store kiosks, says it’s focused on convenience, not offering the lowest price. Likewise, Eric Norrington, a spokesman for Ace Cash Express, the nation’s biggest check-cashing chain, says Wal-Mart hasn’t affected his company’s pricing or growth. “Wal-Mart has validated the importance of this market segment. That’s attention we welcome,” he says.

But as toy retailers, grocers, and even jewelers have painfully discovered, complacency in the face of Wal-Mart can be suicidal. Given the behemoth’s long interest in the financial arena, technological savvy, cheap capital, and instant national reach, small and midsize banks, in particular, are right to be paranoid. Even big ones should be wary. “The mistake would be to stick your head in the sand and try to convince yourself that Wal-Mart is not a factor,” says Bain’s Markey.

For no matter what the obstacles, Wal-Mart seems determined to be a force in finance.

© 2005 Business Week

Why Privatizing Social Security Would Weaken Our Republic

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By Benjamin Barber 
First published by the LA Times, January 27, 2005

Social Security privatization has been vigorously challenged on both economic and technical grounds. It has been said again and again that privatization increases risk for prospective retirees without solving the long-term Social Security financing shortfall (if there actually is one). It has been argued that privatization is merely a scheme to divert money from the Social Security trust fund for speculative stock market investments. And it has been noted that it creates new costs (portfolio management, government oversight) without being able to guarantee workers future retirement benefits.

Yet the most profound cost of privatization has been wholly ignored: the systemic cost to our public way of life. By turning a public social insurance and pension policy into a private bet in which personal and private decisions determine who does well and who does badly, we do irreparable harm to our democratic “common ground.” After all, one of this nation’s greatest public goods has been its promise to give every working family a guarantee of support at retirement, or in case of disability or death. This promise, offered to all citizens, wipes away all the distorting traces of class, race and gender that often play out so dismayingly in the private realm. You cannot simply take justice out of the public realm and put it into the private realm without fundamentally weakening the democracy on which the very possibility of justice depends.

Conservatives ought to recognize even more quickly than liberals that privatization – whether of education, housing or Social Security – makes us less of a public. It diminishes the republic – the res publica, or public things that define our commonweal. It turns the common “we” into a collection of private “me’s.” It opts for market Darwinism, in which smart investors prosper but others lose, rather than social justice as its organizing principle. It demeans the “us” by turning “us” into “it” – the big, bad, faceless government bureaucracy. And it privileges the private and individual by appealing to market liberty, as if people could really be free one by one or as consumers alone.

Private market liberty is not political liberty; it is only personal choice. It may generate private benefits (“I want an SUV!” or “Give me 100 shares of EBay!”) but offers nothing for the common good (a fuel conservation policy, for instance). It is as citizens that we pay our Social Security taxes, and it should be as citizens that we enjoy the fruits of our labor.

Yet privatization tries to convince us that the consumer is simply another, more efficient, form of the citizen. The citizen who votes with her dollars rather than her ballots. But dollars don’t deliberate. They don’t seek common ground. They are not bearers of empathy and imagination. As education consumers in Chicago or Washington, we can select the “best schools” for our children, but as citizens we need public schools that help make us all public citizens. As consumers in Los Angeles, we can choose among hundreds of automobile models, but only as citizens can we make the choices that create a public transportation system serving all.

Privatization is a kind of reverse social contract: It dissolves the bonds that tie us together. The social contract takes us out of the state of nature; it asks us to give up a part of our private liberty to do whatever we want in order to secure common liberty for all. Privatization puts us back in the state of nature where we possess the natural power to get whatever we can but lose the common power to secure everything to which we have a natural right.

Private choices rest on individual power and skills and on personal luck. Public choices rest on civic rights and common responsibilities. With privatization, this administration is trying to seduce us back into the state of nature, where the strong dominate the weak and anarchy ultimately dominates the strong and the weak, undermining security for both. Under these conditions, Thomas Hobbes reminds us, we are perfectly free to do as we choose, but as a consequence we live lives that are “solitary, poor, nasty, brutish, and short.” Not an ideal recipe for social security.

The Social Security entitlement should not be toyed with and altered in accord with today’s economic fashions. It is an emblem of civic membership and a reflection of the benefits that come with the responsibilities of citizenship.

For us as individuals, privatizing Social Security is probably a bad bet on technical grounds. But for us as citizens, it is a certain disaster. As prospective retirees and private consumers we may want to argue about it, but as citizens, if we care about our democratic republic, we are bound to condemn it.

Benjamin R. Barber, a professor of political science at the University of Maryland, is the author of “Jihad vs. McWorld” (Ballantine, 1996) and other books.

© 2005 Los Angeles Times

U.S. Baby Death Rates Exceeds Cuba, Beijing

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More attention must be paid to the subtle tragedy of U.S. health care

By Nicholas Kristof 

First published by the New York Times, Jan 12, 2005

Here’s a wrenching fact: If the U.S. had an infant mortality rate as good as Cuba’s, we would save an additional 2,212 American babies a year.
Yes, Cuba’s. Babies are less likely to survive in America, with a health care system that we think is the best in the world, than in impoverished and autocratic Cuba. According to the latest C.I.A. World Factbook, Cuba is one of 41 countries that have better infant mortality rates than the U.S.Here’s a wrenching fact: If the U.S. had an infant mortality rate as good as Cuba’s, we would save an additional 2,212 American babies a year.

Even more troubling, the rate in the U.S. has worsened recently.

In every year since 1958, America’s infant mortality rate improved, or at least held steady. But in 2002, it got worse: 7 babies died for each thousand live births, while that rate was 6.8 deaths the year before.

Those numbers, buried in a recent report from the Centers for Disease Control and Prevention, didn’t get much attention. But they are part of a pattern of recent statistics dribbling out of the federal government suggesting that for those on the bottom in America, life in our new Gilded Age is getting crueler.

“America’s children are at greater risk than they’ve been in for at least a decade,” said Dr. Irwin Redlener, associate dean at the Mailman School of Public Health at Columbia University and president of the Children’s Health Fund. “The rising rate of infant mortality is an early warning that we’re headed in the wrong direction, with no relief in sight.”

It’s too early to know just what to make of the increase in infant mortality in 2002 for American babies. Reliable data for 2003 and 2004 are not out yet. Sandy Smith of the Centers for Disease Control says that the statisticians are pretty sure there was not a further deterioration in 2003, but that it’s too soon to know whether there was an improvement or just a leveling off at the higher rate.

Singapore has the best infant mortality rate in the world: 2.3 babies die before the age of 1 for every 1,000 live births. Sweden, Japan and Iceland all have a rate that is less than half of ours.

If we had a rate as good as Singapore’s, we would save 18,900 babies each year. Or to put it another way, our policy failures in Iraq may be killing Americans at a rate of about 800 a year, but our health care failures at home are resulting in incomparably more deaths – of infants. And their mothers, because women are 70 percent more likely to die in childbirth in America than in Europe.

Of course, deaths in maternity wards occur one by one, and don’t generate the national attention, grief and alarm of an explosion in Falluja or a tsunami in Sri Lanka. But they are far more frequent: every day, on average, 77 babies die in the U.S. and one woman dies in childbirth.

Bolstering public health isn’t as dramatic as spending $300 million for a single F/A-22 Raptor fighter jet, but it can be a far more efficient way of protecting Americans.

For example, during World War II, the employment boom meant that many poor Americans enjoyed regular health care for the first time. So even though 405,000 Americans died in the war, life expectancy in the U.S. actually increased between 1940 and 1945, rising three years for whites and five years for blacks.

True, infant mortality and many other American health problems are largely intertwined with poverty, and experience suggests that neither the left nor the right has easy solutions for intractable poverty. But some of the steps the government is now taking or talking about – like cutting back further on entitlements, particularly those giving children access to health care – would aggravate the situation. Last year, a study by the Institute of Medicine, a branch of the National Academy of Sciences, estimated that the lack of health insurance coverage causes 18,000 unnecessary deaths a year.

As readers know, I complain regularly about the Chinese government’s brutality in imprisoning dissidents, Christians and, lately, Zhao Yan, a New York Times colleague in Beijing. Yet for all their ruthlessness, China’s dictators have managed to drive down the infant mortality rate in Beijing to 4.6 per thousand; in contrast, New York City’s rate is 6.5.

We should celebrate this freedom that we enjoy in America – by complaining about and working to address pockets of poverty and failures in our health care system. It’s simply unacceptable that the average baby is less likely to survive in the U.S. than in Beijing or Havana.

© 2005 New York Times

Court Upholds Superstore Ban in Turlock, CA

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By John Holland 
First published by the Modesto Bee, Dec 22, 2004

TURLOCK – A Stanislaus County Superior Court judge has upheld a city ordinance that kept Wal-Mart from building a supercenter near Fulkerth Road.

Judge Roger Beauchesne rejected Wal-Mart’s claim that the ban illegally interfered with retail competition.

The judge said the stated goals of the nearly year-old ban – preventing traffic jams and protecting neighborhood grocers – were “reasonably related to the public welfare.”

The nine-page ruling was delivered to the city and Wal-Mart on Monday.

“It’s very encouraging,” Mayor Curt Andre said Tuesday. “This is about being able to be responsive to the voters and the values of the community.”

Wal-Mart spokesman Peter Kanelos said the chain’s management had not decided whether to appeal the ruling. It resulted from a lawsuit filed by the company in February, a month after the City Council approved the ban on a 5-0 vote.

“We strongly believe that the impact of this ordinance will be to limit consumer choice,” Kanelos said.

He noted that a federal judge had yet to rule on a parallel lawsuit charging that the ban violated Wal-Mart’s right to conduct commerce under the U.S. Constitution.

Wal-Mart, which has had a 125,000-square-foot store on Fulkerth since 1993, proposed last year to build a 225,000-square-foot supercenter nearby. The larger store would have combined the department store selections of a conventional Wal-Mart with a full-service grocery section.

Backers cite congestion, blight
Backers of the ban said the proposed store would worsen congestion as customers made frequent crosstown trips to buy groceries. Backers also said the store could lead to the closure of supermarkets that anchor small shopping centers around the city – a change that could bring “blight” to the neighborhoods.

The debate was among the fiercest in Turlock in recent years, drawing overflow crowds to Planning Commission and council meetings last year.

“The main issue I had against Wal-Mart was that they were trying to force their way into a city that didn’t want them,” Jacqueline Hollcraft, a Turlock homemaker, said Tuesday. “If a city wants them, that’s fine for that city.”

Some opponents brought up the nationwide debate over Wal-Mart wages and benefits – are they adequate?

People who opposed Turlock’s ban said city shoppers would lose out on Wal-Mart bargains, and the city would lose out on sales tax.

“I think there was a great opportunity to get an enormous amount of sales tax to go to their budget, which they are in dire need of,” Bob Santo, a retired sales representative for the American Automobile Association, said Tuesday. “I also think (Wal-Mart) employs a lot of people.”

Wal-Mart, the world’s largest retailer, has more than 1,200 supercenters but only recently brought the concept to California. One of the stores opened in Stockton in October, to little protest. Lodi voters last month rejected a measure that would have hindered plans for a store there.

Officials in Oakdale and Riverbank have talked about the impacts that supercenters might have, though no such stores have been proposed in those cities. On Monday, the Oakdale City Council passed new rules regulating “big-box” stores.

The Turlock ordinance bans most new or expanding discount stores that exceed 100,000 square feet and devote at least 5 percent of the space to groceries and other nontaxable items.

The ordinance exempts membership stores, such as the new Costco Wholesale near Monte Vista Avenue, on the grounds that their customers shop infrequently and buy in bulk, and therefore do not jam traffic.

Wal-Mart claimed that the ordinance singled out the retailer and violates state law by using zoning powers to regulate business competition.

According to the lawsuit, Turlock officials at first welcomed a supercenter but then moved to ban it after meeting with executives from competing grocery chains and a leader in the grocery workers union.

Judge sees legitimate concern
City officials said such meetings are a proper way of hearing the views of constituents.

Beauchesne cited appellate rulings in other cases in concluding that the ban is valid. He acknowledged that it will affect grocery competition, but said Turlock officials had “a legitimate concern for blight, traffic congestion and its resulting air pollution.”

“The fact that the ordinance does or will have an incidental effect on competition is irrelevant so long as there is otherwise a valid purpose in enacting the ordinance,” the judge wrote.

Wal-Mart argued that the ban forces residents to go to multiple stores for groceries and other items, thus producing more traffic and air pollution than if they did one-stop shopping at a supercenter.

Under state law, the lawsuit stated, these environmental effects had to be studied before the council could enact the ban.

City officials said no environmental study was needed, because the ordinance was simply a means of carrying out land-use policies outlined in the Turlock general plan, which had its own environmental review.

Beauchesne agreed.

The council so far has authorized $130,000 in payment to the Oakland law firm defending the city against the Wal-Mart lawsuits. The expense spurred protests from some residents, but Andre said the money is being well-spent.

© 2004 Modesto Bee

Update, April 2006: A California appeals court upheld this ruling after an appeal by Wal-Mart.

For those seeking to learn more about legal tools for controlling the impacts of chains, we suggest visiting NewRules.org. To learn about community alliances to support community-based business, see AMIBA.net.

Index of articles and studies on Wal-Mart and big box stores

There’s a RAT in the Appropriations Bill

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By Jeff Milchen
Published December 22, 2004

Editor’s Note: This article was first written for Writers on the Range, the wire service of High County News. This edit varies slightly from the original.

Would you still call your town library “public” if a private corporation was allowed to manage the books your taxes paid for, then charged you a fee to borrow them? Thanks to a provision slipped into the latest federal spending bill, we may soon ask that question about our public lands.

Just hours before the vote on a $388 billion, 3000-plus page spending bill, Rep. Ralph Regula (R-OH) and Sen. Ted Stevens (R-AK) inserted a rider — meaning no debate or vote is possible on the item — authorizing five federal agencies to create and extend recreation access fees on most public lands for the next decade.

The sleazy tactic avoided an unwinnable vote on a wildly unpopular program. Now access fees can be collected on 600 million acres of our public land — an area six times the size of Montana .

These fees are more than a nuisance tax; they undermine the very idea of these lands as public. By expanding opportunities for private profit, while requiring land managers to provide human-made “improvements” or service to justify charging a fee, the law could accelerate rapidly the commercialization of our legacy.

Until 1996, charging access fees was expressly prohibited on most federal land, with the exception of National Parks and developed boating or campground facilities. But during the 1990s, Congress slashed funding for federal lands upkeep, creating a budget “crisis” rife with opportunity for groups like the American Recreation Coalition — a consortium of advocacy groups and corporations which profit from operating campgrounds, concessions and motorized recreation equipment. The ARC lobbied intensively for “public-private partnerships” and touted user fees as a funding source.

After Rep. Regula first failed to pass the recreation tax in the House in 1996, he inserted a rider into the appropriations bill, where fees became law with virtually no public awareness. Begun as a two-year test at a limited number of sites, the program widely known as “Fee Demo” was extended via the rider tactic several more times. The latest rider would remove most limits and make visiting your public land without paying a required fee a crime, punishable by up to six months in prison or a $5,000 fine.

Critics like Scott Silver of Wild Wilderness say it’s time to name the fees honestly as Recreation Access Taxes, or RATs.

Until now, the tax’s uncertain future limited exploitation of public lands, but with the decade-long guarantee of RATs, the recreation industry will push aggressively to exploit new profit opportunities. Already, federal documents raise the possibility of new marinas, hotels, and even theme parks. Public lands managers now dependent on user fees will be put in a bind: the fees, touted as a supplement to existing spending, merely enable further cuts in appropriated funds.

The Forest Service reported $39 million in 2003 Fee Demo revenue and claim 80 percent of funds go to improve conditions where they’re collected. Those claims are contradicted by the General Accounting Office, which documented the new bureaucracy for collection, enforcement and commissions as consuming about half of all revenue.

Paying $5 to hike may not burden everyone, but the fees are demonstrably exclusive. Almost one quarter of families with incomes under $30,000 said they were deterred from using fee areas, according to the Forest Service’s own survey.

The greater threat, however, is removing the limits to commercialism that have kept much public land an oasis for human enjoyment and protected habitat for thousands of species. According to the latest available data, taxpayers fork over almost half a billion dollars annually to subsidize Forest Service logging operations. The recreation industry recognizes similar opportunities to profit from taxpayers’ subsidization. That library analogy becomes more vivid when you consider that hundreds of Forest Service campgrounds, built with our taxes, already are corporate-run, complete with a monopoly on reservations by Ticketmaster.

Thankfully, the RAT rider by Regula and Stevens angered even many fellow Republicans, including many powerful western Senators, and a bill to reverse the RAT is likely in early 2005.

Citizens who care for our shared treasure should speak out now and insist on reversing Fee Demo once Congress reconvenes. For if the access taxes continue for 10 years, our opportunity may be gone forever. By then, many people will have forgotten that our public lands are a birthright to enjoy and protect, not a commodity.

The writer directs ReclaimDemocracy.org

For a more detailed article on the problems with recreation access taxes, see Is This Land Our Land?

Where are the corporatizers heading? See this 2005 report from the Houston Chronicle.

As bad as the RAT bill was, the Forest Service has gone beyond the law to further commercialize our public lands, as detailed by Western Slope No Fee Coalition.

For additional background information and updates, please see the websites of Wild Wilderness or Keep the Sespe Wild.

The Red State, Blue State Myth

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By Sean Wilentz
First published by the Los Angeles Times, Nov 7, 2004

“It’s the secular coasts versus the religious heartland,” CNN’s Tucker Carlson says of this year’s election results. That sums up the conventional wisdom that right-wing Republicans would prefer that you believe and that too many of the rest of us do believe. The effete liberal coasts against the Real America. Situational morality against real morality. Relativism against Standards. Metrosexuals against the God-fearing.

Wrong. The real electoral division isn’t between the coasts and the heartland. It’s between cities all over the United States and the rest of the country.

In every state in the Union, red states included, Sen. John F. Kerry performed disproportionately well in urban areas. Kerry actually carried, sometimes convincingly, cities in some of the deepest-red red states that are about as far from coastal secularism as you can imagine.

Missouri, for example, broke 54% to 46% for Bush – except the city of St. Louis, which voted overwhelmingly for Kerry.

Nobody ever really took seriously Kerry’s chances of carrying Texas. But in El Paso, he won 56% of the vote. What is so “secular,” so bicoastal, so effete about El Paso?

Alabama is supposed to be the buckle of the pro-GOP Bible Belt. But don’t say that too loudly in Montgomery County, eponymous home to the state capital, which came in with a Kerry majority, as did Dallas County, home to the city of Selma, which voted for Kerry by a 60% to 40% margin.

From Richmond, Va., to Jackson, Miss., from Salt Lake City, Utah, to Columbia, S.C., the Democratic ticket either won outright or ran well ahead of statewide totals.

Now let us reverse the terms. New York is a huge blue state. On Tuesday, though, it was a sea of red, except for some tiny blue dots around New York City, Albany, bits of Long Island and a few other places. California, the quintessence of Carlson’s secular coast, was also pretty solidly red, except for L.A., San Francisco and San Diego.

The California pattern may seem, at first glance, to suit the stereotype. Everybody knows about “San Francisco Democrats” and the fleshpots of L.A. But Memphis, Tenn.? Selma, Ala.?

The reasons for the city-country divide are obvious. Cities are home, disproportionately, to wage earners, civil service employees, racial minorities and immigrants – and those people are overwhelmingly Democrats. The cities are where those who are still hoping to cash in on the American dream pray and work – except for those domestic servants who commute to the suburbs to clean the houses of those who have already cashed in on the American dream.

The cities are also, of course, the homes to all of those artsy intellectuals, entertainment industry elitists and limousine liberals whom the GOP and its backers like to demonize. But these liberal elite enclaves are tiny even within the cities where they are located. The minority and immigrant vote in Brooklyn, Queens, the Bronx and Harlem dwarfs the numbers on Manhattan’s Upper West Side and Greenwich Village. The same holds true, to say the least, of the secular liberal elite’s grip on Montgomery, Ala.

The urban-rural split has been a perennial feature our political history. In 1896, the last time the national election map closely resembled that of today – with the Northeast and the West Coast seeming to go one way, and most of the rest of the country another – the Democrats were the party of the countryside and the Republicans the party of the city. Unlike today, the clash was explicit, pitting the agrarian values of populist Democrat William Jennings Bryan against the pro-business industrialism of Republican, William McKinley.

“Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country,” Bryan proclaimed in the famous speech that gained him the nomination.

In 2004, there is a harder and even more inflammatory aspect to the split, usually mentioned only in code: divisions of race. Although most black Americans live in the South, and in non-metropolitan regions, the fact remains that our cities, in every area of the country, are as a rule more heavily African American than they were in Bryan’s and McKinley’s time. Not surprisingly, because blacks vote overwhelmingly Democratic, many of the bluest cities in the red states are those with the largest black voting presence. Richmond (58.1%), Memphis (61.4%) and Jackson (71.1%) rank among the top 10 cities with large and concentrated black populations.

By perpetuating the easy impression of a nation divided into coastal liberals and heartland conservatives, reporters and commentators are misleading themselves and their audiences about the actual political state of the Union. Without realizing it, they are also advancing the picture of the nation advanced by the GOP culture warriors, feeding the despair and paranoia of coastal liberals and writing off millions of Americans in every part of the country.

Sean Wilentz is a professor of history at Princeton University.

© 2004 LA Times