Financial History Issue 114 (Summer 2015) | Page 19
SIXTH
DAKOTA
By Robert E. Wright
Standard maps clearly show two Dakotas, North and South, nestled snuggly
betwixt Minnesota and Iowa on the east,
Montana and Wyoming on the west,
Manitoba and Saskatchewan to the north
and Nebraska to the south. But in terms
of political economy, it is more accurate
to think about six Dakotas: North and
South, East and West, and Euroamerican
and Native. Many Americans consider the
Dakotas mere “flyover country,” an inconvenience when jetting between Boston
and Seattle, but otherwise safely ignored.
Careful analysis of the six Dakotas, however, can help us to better understand the
national economy’s potential, as well as
its limitations. Understanding the sixth
Dakota, the Indian one, is perhaps most
important of all.
North Dakota is the emerging fossil
fuel energy giant, the offspring of new
Test inflation of a balloon at Raven Industries
in Sioux Falls, South Dakota, 1963.
“fracking” technology and (sometimes)
high oil prices. South Dakota, by contrast,
has hardly any energy deposits at all. Its
Black Hills were once filled with gold
(now mostly mined) and other heavy metals and hard rocks (such as amblygonite,
bentonite, lepidolite, tungsten and uranium). The Minneapolis Federal Reserve
confirms what every South Dakotan
knows: that the Mount Rushmore state
receives no direct benefit from the Bakken
oil fields. They are simply too far away (the
Northern Plains are even more vast than
they are flat), and of course South Dakota
cannot tax energy companies operating in
North Dakota.
Despite a dearth of fossil fuels, South
Dakota’s economy does not lag far behind
that of its northern neighbor. Per capita
income in North Dakota is higher than
in South Dakota, but its lead is largely
eaten up by the astronomical cost of living in its boom towns. In February 2014,
the Associated Press reported that rents
in the town of Williston, North Dakota,
far exceeded those in New York City and
Los Angeles. For example, 700 square
foot, one bedroom apartments rented for
$2,400 in Williston, compared to about
$1,500 in New York and Boston and about
$1,400 in L.A. South Dakota’s per capita
income, by contrast, is above the national
average, but its cost of living is below it.
In March 2015, North Dakota’s unemployment rate was 3.1%, the second lowest
in the country, and South Dakota’s was
not far behind, the nation’s fourth lowest
at just 3.5%. If energy prices remain low,
though, North Dakota’s unemployment
rate will continue to increase (it was up .4
from March 2014), but South Dakota’s will
probably remain about the same (it was
unchanged from March 2014) despite an
increase in the state’s minimum wage in
January 2015. That is because South Dakota’s economy is based on entrepreneurship.
Agriculture remains relatively important to the state but still represents only
7% of GDP. Farmers and ranchers, at least
those who want to stay in business, are
consummate innovators. Agricultural processing, construction, finance, healthcare,
higher education, light manufacturing,
trade (retail and wholesale) and tourism
www.MoAF.org | Summer 2015 | FINANCIAL HISTORY 17