Our southern agenda has meant cannibalizing other parts of our platform, like gun control, gay marriage, and other sorts of 'values' issues. This has delivered us DLC Democrats like Hillary Clinton, who are using far-right issues like flag burning to build support. This strategy is clearly unsustainable as the South continues to become more conservative and the rest of the country moves in the other direction.
People move out West because they like the freedom it offers - and recently they have been doing so in droves. Many of these people are victims of outsourcing, and have adapted by moving from the cities out to where the jobs are. They understand the downsides of free markets very well, having lived through it themselves, but they aren't particularly interested in political activism - they're just trying to make a living for themselves.
If we need to dive to the center - as the laws of politics sometimes dictate we do - this is the center we want. The economic center is more popular and less destructive than the cultural center which is important to the South - the most free markets could do is to make your life uncomfortable, while relaxing gun control could literally kill you. And honestly, when people like Clinton (and even Dean) pander to the hardcore redneck crowd, what they mostly accomplish is making themselves look silly.
This is a particularly opportune time to siphon off the free-market vote because of the massive deficit. Ever since Reagan's "starve the beast" policies, designed to reduce the size of government by cutting taxes, Democrats have been working on the spending side to cover Republicans' cuts. But now that Democrats are completely out of power, the Republicans have nobody to lean on, and now we see the result. All this shows is that we've really had a free market policy for the last 25 years - and now it's time to take credit for it.
This is the business of politics - the horse trading, figuring out what you're willing to give up for what, and how to get the most out of your political capital. The DLC says that we have to give some things up in order to win elections, but they haven't really tried very hard. Like many of the Democratic politicians of the South, they are Republicans lite that will more likely become fodder for Republican propaganda (think Zell Miller) than come up with any truly innovative ideas. It's time we moved to a new breed of politician.