Krugman's Rural Despair Misses the Mark

I have a great deal of respect for Paul Krugman, but his March 18th New York Times piece, “Getting Real About Rural America” badly missed the mark. Like fellow Times analyst, Eduardo Porter, Krugman begins with the premise that “nobody knows how to fix rural America.”  In point of fact, a consensus has begun to emerge about a range of strategies that work in rural communities, based on economic revitalization success stories from the Midwest to Central Appalachia, where I live.  And we don’t just know what works; it’s also increasingly clear what doesn’t, including specific policies and strategies that are crushing the people and the economies of the countryside.  Here then are four challenges to Mr Krugman and the many other analysts wondering aloud what the heck is wrong with us folks in the boonies.

First, while the economic and social problems of rural America are indeed real, they’ve become the default narrative for city-dwelling commentators and experts, overshadowing tangible progress and effective solutions.  In Appalachia for instance, the poverty rate has been cut in half since the launch of Great Society programs in the early 1960’s, and the number of “distressed” counties has dropped from 295 to about 90 (Appalachian Regional Commission).  This improvement, even as three out of every four coal jobs have been lost.  Nationwide, according to USDA’s Economic Research Service, rural unemployment rates dropped from 10.3% in 2010 to 4.4% in 2017, during which time 650,000 net new jobs were created.  And while too many young people continue to leave, 2017 actually saw a net increase in population for rural counties.  Broadly speaking then, things are getting better across many parts of rural America, albeit much too slowly and sporadically. 

Second, things are getting better in large part because, well, some people do know how to fix things in rural areas.  Like Brandon Dennison in southern West Virginia, whose Coalfield Development Corporation is successfully putting miners and others back to work with comprehensive, hands-on training in solar installation, deconstruction and sustainable farming. Or Bren Smith, whose ecologically restorative vertical ocean farming system is being adopted by fisherman along the east coast.  Or the folks at We Own It, whose work to reform and open up the leadership of Rural Electric Cooperatives has begun to redeploy some of the $3 trillion in assets REC’s hold to better serve their members and communities. Or the innovators at Windustry, who for more than a decade have been helping farmers, public schools and rural communities increase their stake in community wind power, part of the larger wind industry on course to pay nearly a billion dollars annually to rural landowners by 2030 (Presidential Climate Action Program).   

Brandon, Bren and hundreds of others like them, are catalyzing new and better approaches to local economic development in rural communities across the US, usually with meager outside investment from the public or private sector.  Jobs are being created.  Local wealth is being developed.  Ecosystems are being reimagined as community assets, rather than a source from which to extract and export wealth.

Third, as bottom up strategies emerge and mature across rural America, they frequently must confront a lack of sustained investment along with contemptibly bad federal policies that restrain or undermine them.  The sense one gets from reading Krugman’s piece is that, like the former East Germany, extraordinary sums of money have been spent in rural communities with little to show in return.  The reality however is very different.  An analysis by the W.K. Kellogg Foundation revealed that between 1994 and 2001, the feds actually spent between two and five times more, per person, on community and economic development in urban versus rural areas, a disparity that has changed little to the present day.  And it’s no better in private philanthropy, where a 2011 Economic Research Service report showed that rural communities garnered less than six percent of foundation grants, even though one fifth of the population lives there.  Bottom line: There are plenty of effective initiatives in rural communities, but a paucity of capital to support them.

It’s not just a lack of direct investment in rural areas.  Even more destructive are long standing trends in federal policy that promote wealth extraction, economic concentration and undermining of the local economic base.  In an outstanding article in Washington Monthly, Claire Kelloway describes how extreme levels of market consolidation have resulted from the lack of anti-trust enforcement and the weakening of laws to combat monopolies.  This of course is an enormous problem for the country as a whole, but in rural regions, it is destroying farmers and sucking the life out of small towns. As Kelloway points out, “Farmers are caught between monopolized sellers and buyers.  They must pay ever higher prices to the giants who dominate the market for the supplies they need, like seed and fertilizer.  At the same time, they must accept ever lower prices from the giant agribusiness that buy the stuff they sell, like crops and livestock.” 

When three companies control well over half of the global seed market, and four enormous packers account for 85% of the meat that comes to US markets (USDA), farmers are like serfs, with falling incomes and astronomical debts.  And it isn’t just food monopolies.  Thousands of community banks – the engine of lending in rural communities – have closed or been bought up by regional megabanks, further eroding the base of local capital.  The obeisance of elected officials and the courts to monopolists, the enormous subsidies expended to lure huge, cash-rich corporations to small towns, and the accelerating privatization of public spaces, lands and functions ensure that building strong, self-reliant rural economies is a rare and heroic task.

My fourth and last challenge is simply this: That Mr Krugman broaden his sources and stop relying on assessments from people who neither live in nor understand rural America.  Talk to the folks at the Center for Rural Affairs or the Institute for Agriculture and Trade Policy, or the practitioners at Coastal Enterprises, the Mountain Association for Community Economic Development or the Federation of Rural Cooperatives.  Or me.  What you’ll quickly learn is that rural America is neither a monolith nor a region ‘left behind’ by the dynamic folks in the big cities.  Rather, it’s the place from where most of the food, fiber and energy upon which we all depend originates.  And it is home to hundreds of innovators, problem solvers and entrepreneurs who do know how to make things better.  They just need real investment, and an end to wealth extraction facilitated by federal policy and an endless stream of bad advice.

Read it here on the Stansbury Forum.