Monday, August 29, 2011

A Brief Tangent On Economics

The woes of rural America are unseen and unheard in our recent economic badness. It's exceptionally common to see much tooth-gnashing over, say, the fate of Detroit or some other metropolitan area. The country part of the country is ignored. This is a bad thing.

Consider this tidbit from ABC. I would think this would have been big news, but I only discovered it by accident.

Rural America now accounts for just 16 percent of the nation's population, the lowest ever.

The latest 2010 census numbers hint at an emerging America where, by midcentury, city boundaries become indistinct and rural areas grow ever less relevant. Many communities could shrink to virtual ghost towns as they shutter businesses and close down schools, demographers say.

More metro areas are booming into sprawling megalopolises. Barring fresh investment that could bring jobs, however, large swaths of the Great Plains and Appalachia, along with parts of Arkansas, Mississippi and North Texas, could face significant population declines.

These places posted some of the biggest losses over the past decade as young adults left and the people who stayed got older, moving past childbearing years...

While rural America shrinks, larger U.S. metro areas have enjoyed double-digit percentage gains in population over the past several decades. Since 2000, metros grew overall by 11 percent with the biggest gains in suburbs or small- or medium-sized cities. In fact, of the 10 fastest-growing places, all were small cities incorporated into the suburbs of expanding metro areas, mostly in California, Arizona and Texas...

He and other demographers believe that rural areas will remain viable, although many will be swallowed up by booming metropolitan areas and linked into sprawling megalopolises. Far-flung rural counties boasting vacation and outdoor recreation also will continue as popular destination points for young couples, retirees and empty nesters.

Lang said he hoped the growing convergence of major metro areas — and smaller towns in between — will promote better regional planning and cooperation rather than leading to individual cities acting as rivals for new investment. He said such collaboration might mean development of more roads or regional high-speed rail, or new approaches to water and energy conservation in the Mountain West.

I consider this important and not just because I live in a rural area. Personally, I feel that the consolidation of people and resources in the "megalopolises" envisioned in the article is a bad idea and has already shown to be such. Let me admit that I'm no economist and my points on this are largely borne from anecdotes.

When I see people move from the small town to the big city, it is often for a single reason: jobs. I must question how realistic this is when I see the urban unemployment numbers as being so high. However, a certain inertia sets in when this move is made, and the person is highly unlikely to move back. They then find themselves in a lower-paying job than they would have had if they hadn't left. This could be in absolute or simply practical terms, as earning a couple of dollars more an hour won't mean much in an urban environment with twice the cost of living as a rural area.

With so much surplus labor on the market in a limited area, the social services, including the school systems get stretched to the breaking point, which means that there must be corresponding taxes to keep up. These will often be sales taxes which means that the poor will be paying them as well. In addition, so many people crammed into an area (many of whom lack means) will lead to the generation of underground economies and other criminal activities that take advantage of those new opportunities.

None of this even touches the problems of moral and ethical breakdowns when everyone's motivation is materialism, but it's there, too.

The surplusage of labor and other ancillary industries that accompany population migration will permit major companies (such as manufacturing) to thrive for a time. Eventually, though, all of this catches up. Either the taxes, the educational system, the criminal element, or all of these things make for an untenable economic environment. Just ask Detroit.

Looking at all this, it seems to me that fixing it will require the dispersal of cities. All of this excess population competing for resources all in one place can't go on. It's like the watering hole in the Sahara where the weaker animals just die off because they can't get a place at the table. They have to be moved out to where there isn't as much competition and resources are more plentiful. Rural areas might not have the jobs, but we do have land and space.

That collective groan you just heard were the people reading this who rolled their eyes saying, "More distributist nonsense." Just hear me out.

People could at least be trained in some measure of self-sufficiency. Growing their food, working the land, etc. are all things that could be done without people starving or getting trapped in a cycle of dependence upon government assistance. Would it be so mad if schools were teaching this kind of thing these days? On top of that, the one thing we're always going to need is food. Developing the agricultural economy from the ground up (no pun intended) without the drag of corporate interference could be a net gain for everyone. Rural America is where we get our commodities from. Since those are the things we really can't afford to run out of, we should nourish those places.

Moving a step farther down the line, most people probably know the concept of enterprise zones, mostly from back when Jack Kemp was a big name in American politics. Basically, it's tax and regulatory breaks designed to spur economic development in ostensibly undesirable locations. I'm not aware of any federal effort to push this in a rural area. Despite the prevalence of USDA loans and similar mechanisms, I don't think anyone has pushed this. I ask that any reader who knows otherwise to correct me, please. It seems to me that a concerted state and federal effort should be made to disperse the congestion of the cities through mechanisms like this. This would mean property and capital in the hands of masses of locations rather than a few, which hopefully brings a mitigation of the negative factors mentioned above.

As an aside, I think the standard line about rural areas being impractical for job creation because of an "unskilled/uneducated work force" has gotten a bit tired. Most of the stories we see coming out of urban school systems and training programs aren't recording stellar results. What is there is an aging workforce with lots of experience, but one would assume that isn't going to last forever.

The added benefit in all this and why I think it would work has to do somewhat with the nature of rural life itself. Rural areas remain communities and don't suffer from the same personal alienation that is more common in urban life. I've lived in larger cities. Most people don't really know each other and are therefore less apt to appreciate and or care for the common problems of their neighbors. In a setting where everyone know most everyone, this is impossible. Rural areas would therefore appear to offer a bit of a clean slate for economic growth in that many of the symptoms of decay are stifled or at least mitigated to a great extent. Sure, we have meth labs, abusive parents, and other problems that everyone else has, but the lack of population keeps a natural cap on these activities. These areas should be in a position to absorb additional population without greatly contributing to these factors. One would hope that this community life would serve as an early warning system for when capacity is being reached and the problems reach an unacceptable level.

I'm trying to leave the spiritual element out of this for right now. Living closer to the land, relying on God for one's sustenance, being freer from the distractions of materialism, among other things are also contributing factors to why all this would work. However, people are even less likely to listen to those than the other insane ideas I've floated thus far.

Taking all this into account, I think I should close by admitting I don't see any of these things happening. On a local level, cities aren't about to give up their political clout, even if it would make some of their other problems better. Individual politicians aren't about to allow their influence to be diluted even if it would benefit the common good. Look no further than the steps being taken by our own feds. Whether it's the new restrictions on agriculture or the new health care reform law, there are affirmative steps being taken to kill rural areas. And why not? It's easier to control people when they are all in the same place. Brave New World sort of comes to mind.

By the way, for those wanting more information on the problems confronting rural agriculture and rural health care, please look here (which doesn't even address the regulatory scheme being directed against farming) and here (which should scare everyone since it means dead people in rural areas and surges to metropolitan hospitals that can't be absorbed).


haskovec said...

Well as someone who did the rural to urban move, I don't think you are completely right here. It isn't a matter of a couple of dollars an hour, there is just no opportunity where I grew up. I couldn't be a software engineer in my town of 1700 at the time that I left, and then money I make now would be insanely high for where I grew up so it isn't even the same lifestyle. I know people in my class who are still living there and scraping by in poverty (though they have college degrees). The only real viable there there is to at least commute 35 miles to the nearest city of about 100,000 people and work there, and that city is pretty limited when it comes to software development. If I were to stay there I would be doing a generic IT job instead of the creative job that I am doing.

As for the food stuff I am totally down with everyone doing a little homesteading regardless of where you live. Even if you just plant a couple of fruit trees to supplement a little bit of your food. I am currently trying to grow Figs, Strawberries and raspberries on my .17 acre urban lot. About to put in some more trees as well at least 1 or 2 which will be fruit trees.

Throwback said...

I think you are the exception for this. Software engineering is far more specialized than most of my (again just anecdotal) experience with this phenomenon. I don't think that every place can be all things to all people. I do think it's reasonable to say that the bulk of migrations to larger cities are not for the type of work that you're doing, though.

That being said, I think you sort of back up my point on another issue. Your classmates with degrees are in your hometown in poverty. This is not uncommon and lends credence to my speculation on why larger businesses will not relocate to rural areas. Despite what the ABC article or anyone else says, this idea of rural areas lacking some kind of skilled/educated workforce like that of urban areas seems false. Maybe companies aren't doing their homework. Maybe it's something else. The workforce excuse just doesn't explain it.

haskovec said...

I think I remember reading something a couple of years ago about some IT companies relocating either to North or South Dakota (I don't remember which). Part of the reason for it was they could hire employees at half the cost of say a larger city doing that kind of work, and since the cost of living was so low the employees there although the salary would sound small for someone in the city were living very well.

I think something else to consider is all these businesses need to do business so they are going to meetings, trying to sell, etc. Most of the other companies and people they would need to meet with live in the city. They need access to airports to fly for business, so if you are at a small regional airport travel gets much more difficult. I think there are a lot of different factors for why it doesn't make business sense in many cases to do some things in a rural area. That being said I am sure there is plenty of untapped talent in those areas that could be a great asset, the idea is matching the right kind of business that is suited for a rural area with it.

Throwback said...

True, but the amount of face-to-face dealings is declining as well. Between email, conference calls, skype,, and whatever else there is, you can work around this.