The urban-rural divide in this country is real and growing. The economic recovery from the Great Recession has been largely limited to a handful of metropolitan areas, especially the Boston-Washington corridor and the Pacific Coast. Cities like San Francisco, New York, and Boston continue to set records for housing costs, according to The Economist, while Riverside, Las Vegas, and Phoenix, among others, still haven’t recovered from the crash. Moreover, according to Scott Beyer of Forbes, rural parts of the country are losing population and jobs. As Vishaan Chakrabarti pointed out in his book A Country of Cities, in 2012 90 percent of the U.S. gross domestic product came from the three percent of the country inside metropolitan areas.
Moreover, according to Robert Leonard, resources within states are increasingly being directed to cities and state services are being centralized in them. This was certainly my experience growing up in Rutland, Vt., where it seemed like all the state’s money was spent on the Interstate 89 corridor between Burlington and Montpelier—to say nothing of now living in Boston, with the same spending complaints from rural Massachusetts. (Of course, I now appreciate that it may be a better use of state resources to spent $20 million rehabilitating a bridge between Boston and Cambridge that sees millions of trips a year as opposed to a bridge in Zoar, Mass., that sees a few hundred trips a year.)
Much worse for these places is the ongoing economic centralization of this country. Local businesses are absorbed by regional ones, which get bought by national ones, which get taken over by global ones. While supposedly delivering benefits from economic efficiency, this process limits innovation and competition while depriving communities of the benefits of ownership and exacerbating regional inequality.
Yet a glance at the writing on the rural-urban divide suggests that most of the people thinking about these things haven’t read their Santayana or even looked out the window recently. In Commonwealth magazine, Larry DiCara and Matt Waskiewicz suggested buying more food from Massachusetts’ farms, sending more urbanites to western Massachusetts as tourists, and establishing regular rail service between Boston and Springfield so people from the former can go live in the latter but continue to commute.
There’s nothing particularly bad about any of these ideas in and of themselves, but they have a glaring flaw as a solution to rural economic woes: They wouldn’t work. Vermont, upstate New York, northern New Hampshire, and Maine have been promoting themselves as tourism, agriculture, and bedroom communities for decades, to no avail (except coastal southern Maine, which is close enough to Boston to serve as a suburban bedroom community). The fact is, increases in agricultural productivity would mean that more purchases from in-state farms wouldn’t necessarily result in more jobs. Tourism-related jobs are seasonal, low-paying, and dead-end.
Becoming a suburb is a similar dead-end economic strategy: The impact of comparatively wealthy Boston renters and buyers on the Springfield market would likely be catastrophic for Springfield natives. According to Governing, in 2012, 61.2 percent of renting households paid more than 30 percent of their income in rent and are considered cost burdened. According to Zillow (and it must be remembered that their data comes from people using their service), the median home price in Springfield is $139,900 and the median rent is $1,325. In Boston, the median home price is around $670,000 and the rent is $2,800—and fewer households are considered cost burdened, according to Governing. Springfield becoming a suburb of Boston would just move Boston’s gentrification and displacement issues west.
Another idea was recently offered by Ross Douthat in his New York Times column, arguing that “We should treat liberal cities the way liberals treat corporate monopolies—not as growth enhancing assets, but as trusts that concentrate wealth and power and conspire against the public good.” Douthat advocates redistributing federal agencies, universities, non-profits, and businesses to the “poorer states and smaller cities that need revitalization” using a combination of confiscatory taxes with business credits. Unlike DiCara and Waskiewicz’s ideas, which were not bad in and of themselves, but would not produce the effect desired, Douthat’s could inadvertently lead to an economic death spiral.
If simply redistributing wealth and factories could make poor states wealthy and revive declining cities, one would expect it to have happened already. Poor, rural states have been heavily subsidized for decades, through agricultural-price supports, pork-barrel projects, military bases and other federal-works projects. But an economy is not simply a collection of discrete elements that can be rearranged at will, like furniture in a house. If that was the way things worked, the Soviet Union would still be around.
In Britain, central planners in the years after World War II thought along the same lines as Douthat. The Midlands city of Birmingham was a major industrial center, but it was more like Silicon Valley than Detroit. An ecosystem of small-industrial enterprises developed where new ones were constantly being started. Successful ones would, it is true, transplant themselves outside the city.
But after the war the planners looked at Birmingham’s 200-odd years of small business creation and forced businesses and people to move to poorer places and cities in need of revitalization. But all those small firms needed each other to survive. Birmingham was left dependent upon the automotive industry, which then collapsed in the 1970s.
To address the problem of the rural-urban divide, we have to understand what drives it. Why can some coastal cities seemingly do no wrong, while interior cities can’t seem to do anything right? Why do people and businesses pay huge amounts of money and endure massive tax bills, long commutes, a high cost of living, and the Yankees to crowd into the New York City area when they could move to places like Kansas—where land, taxes, food, and labor costs are cheap and the freeways empty?
Every New Urbanist has read Jane Jacobs’ The Death and Life of Great American Cities, but few have read the books she wrote afterwards: The Economy of Cities and Cities and the Wealth of Nations. In these two books she argued that the first cities did not simply grow out of early farming villages, but have unique economic characteristics of their own. According to Jacobs, the driving forces of a city economy are trade and a process she called import replacement, where goods imported into the city are first copied and then improved upon by entrepreneurs, who proceed to export to other cities and settlements in order to acquire more imports. The process also helps develop the symbiotic ecosystem of flexible small producers that makes starting entirely new enterprises possible. In Cities and the Wealth of Nations she explored the implications of city economies for national economies, concluding that cities and the regions they generate are the drivers of all national development.
(It’s important to note that import replacement is different from the mercantilist notion of import substitution. Import replacement is a process of a city economy that applies to all goods, even ones imported domestically, while import substitution is a policy imposed by national governments.)
Even if one is skeptical of the import-replacement theory, economists like Ed Glaeser have demonstrated that clustering and startup rates play a huge role in economic growth. Or just remember Chakrabarti’s statistic: 90 percent of U.S. GDP comes from the three percent of land in metros. According to the American Enterprise Institute, in 2015 New York had a larger economy than Canada and the 20 largest metros produced twice the GDP of Japan.
What this means, according to Jacobs, is that rural places and regions experience real economic growth only insofar as they are connected to city economies. The distance doesn’t matter—farmers in Massachusetts can send their produce to restaurants in Boston or supermarkets in China. Cut off from city economies, a rural place will eventually decline into subsistence agriculture, losing the memory of many technologies. Then comes near hunter-gatherer status as subsistence exhausts the soil and results in bringing marginal land into production.
Even when connected to city economies, rural places can become economically unbalanced if they are outside city regions. Jacobs wrote that import replacement in cities “unleashes five great economic forces of expansion: city markets for new and different imports; abruptly increased city jobs; technology for increasing rural production and productivity; transplanted city work; city-generated capital.” But these can affect rural places separately and with catastrophic results. Changes in city markets can leave rural communities producing commodities no one wants; increases in city jobs can just depopulate rural places; increased productivity can result in massive unemployment; the arrival of transplanted businesses from cities can make rural places overly dependent upon one type of work; and city capital transferred to rural areas can subsidize them, but only for as long as the subsidies can be maintained.
All these forces are at work across the country today. Young people able to go to college leave because they can’t get jobs at home. Often there are just one or two factories left and people anxiously watch the news for signs of the future while local farmers meet with their member of Congress about price supports for their crops. To make matters worse, cities already are not producing enough work for their own residents, much less enough companies that can transplant their work. More worryingly, new business creation is at a 40-year low, according to CNN, which could indicate that time is running short, even for currently successful cities.
The best way to save rural places is to reactivate our cities, not destroy them.