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Killing the City Won’t Save the Small Town

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 [1], while Riverside, Las Vegas, and Phoenix, among others, still haven’t recovered from the crash. Moreover, according to Scott Beyer of Forbes [2], 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 [3], 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 [4] 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 [5], 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 [6], 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 [7] 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 [8], 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.

Matthew M. Robare is a freelance journalist based in Boston.

This article was supported by a grant from the Richard H. Driehaus Foundation.

12 Comments (Open | Close)

12 Comments To "Killing the City Won’t Save the Small Town"

#1 Comment By Cererean On June 23, 2017 @ 12:54 pm

I wonder how trade deals factor into this? If a company that would have transplanted part of its business to Kansas instead transplants it to Mexico, then Kansas loses out. A similar effect would be at work with supply regions, as well.

#2 Comment By Brandon On June 23, 2017 @ 7:18 pm

So would one fix be to drastically upzone cities so that rents can fall and more people can move to them?

I feel like in this scenario the end game would be a hollowing out of the country side like in Japan, and given the way the electoral college functions a furthering of rural-urban confrontation in our politics?

#3 Comment By Rambler89 On June 24, 2017 @ 4:03 am

Here as always, when New Urbanists want to make the cities look good, they include the suburbs in the “metro” to make for good economic numbers, and contrast them with the rural regions. When they want to make the suburbs look bad (always with respect to the shallow entertainment that passes in the cities for culture), they lump them with the rural regions. They have to: most of the healthy and durable growth is in the suburbs, and New Urbanism is all about killing the suburbs to save the cities.

#4 Comment By polistra On June 24, 2017 @ 12:23 pm

One observation: The category of “Rural” is too broad.

Tiny towns less than 1000 population have NEVER held up, even before mechanized agriculture and cars and so on. They always died faster than they grew.

But towns in the 1K-50K range used to hold their own, even in the mechanized era. They started dying in 1970, simultaneous with the move toward globalism and financialism and totalitarian central government.

When the only skill that matters is manipulating stock values, only cities that attract manipulators can survive.

#5 Comment By JLF On June 25, 2017 @ 12:16 am

Relying upon “free markets” to be self correcting is like turning the steering wheel loose in a spin to let the car correct itself.

#6 Comment By philadelphialawyer On June 25, 2017 @ 2:01 pm

“…”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.”

Not so sure about that. Bostonian gentrifiers moving to Springfield move actually alleviate to some exttent “displacement issues” in the Boston area. And gentrifiers moving to Springfield would do more than merely crate “displacement issues” in Springfield. That would also mean more tax dollars, to pay for civic needs and ammenities. And it would bring in more money to the community generally..stores and restaurants and yoga studios and so on. It would mean an upper middle class that could subsidize to some degree social services for the poor.

Not seeing, at all, why Springfield remaining a city of almost exclusively poor people is such a great thing.

#7 Comment By Jen On June 25, 2017 @ 4:31 pm

Wow, you really missed the boat on what drives the divide. People endure the downsides of city living because they want culture and amenities. Living somewhere quiet and cheap may be okay for awhile, but it gets boring, especially if you’re a youngster.

#8 Comment By Dan Green On June 26, 2017 @ 3:41 pm

All these articles concerning our reduced standard of living are very interesting for those of us old enough to have experienced post WW 2 demand for goods and services. Then several recessions some mild some more extreme. My generation also experienced so called globalization that was introduced not as globalization but as the encouragement of trade treaties, then globalization offering inexpensive labor for multinationals with no benefit cost. Now we experience like taking a drug the side effects.

#9 Comment By elyseea On June 26, 2017 @ 6:05 pm

First rate – thank you. We will not enhance our economy or improve the lives of people in either the rural areas or the city areas by seeing them as locked into a zero sum competition. To the degree that our politics requires, and therefore fosters, rural resentment, we contribute to the disinclination of rural people to think smartly about themselves and their economic futures.

#10 Comment By bt On June 26, 2017 @ 8:00 pm

“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”

Something was alluded to in this piece that deserves more attention: mergers, buy-outs, consolidation and monopolies.

These are some of the biggest reasons why small towns have imploded and so many of the new jobs are subsistence McJobs.

When companies can buy the competition, there’s no need for innovation. And by using their market power they can crush new competitors, and if the crushing fails, they simply buy them out.

For example, local banks have largely disappeared, as one back after another got swallowed. When the local bank is gone, the mid-level jobs go, and the local focus goes away. All the profits and jobs become concentrated in some Central City somewhere. And I just love how people want to blame that on Dodd-Frank – the horse had already left the barn on that one.

These are issues the Federal Government stopped caring about during the Reagan years. Because for a certain sort of person, the free market can never make mistakes and must ever never be regulated.

#11 Comment By Heyseed On June 26, 2017 @ 8:08 pm

We have agricultural subsidies because steady grocery prices are good politics. Our political class noticed a century ago that social and political upheavals tended to be associated with food shortages. Our ag subsidy regime is calculated to produce a cheap and plentiful food supply. While urban politicians like to complain about the cost of such subsidies for the benefit of their city constituents, it’s unlikely that they would voluntarily give up the power which such subsidies give the (urban-dominated) federal government over rural communities.

#12 Comment By EngineerScotty On June 27, 2017 @ 7:56 pm

The demise of the American small town started not too long after several decades of city-killing (some of it intentional) motivated, in large part, by animus to blacks.

As you sow, so shall you reap.