President Trump’s feckless trade war is bludgeoning the bottom line of the Republican Party’s reliable rural base. But the party’s disregard for the economic interests of its own constituents goes well beyond barriers to Chinese markets.
Small towns and rural areas, along with some Rust Belt metros, are falling ever further behind booming urban dynamos — leaving many heavily Republican regions in a deepening morass of economic deterioration, joblessness, substance abuse and declining life expectancy. The lower-density places most Republicans call home produce barely half as much wealth as our biggest cities — and it’s showing.
Yet the travails of America’s struggling red regions, and practical ideas about might be done to alleviate them, are barely mentioned in right-leaning policy circles. For example, “The Once and Future Worker,” a widely discussed book by Oren Cass, a former economic policy adviser to Mitt Romney now at the Manhattan Institute, focuses on initiatives to expand employment and wages for American workers but largely neglects the changing geography of economic output and opportunity behind the woes of heartland workers.
Worse, the Republican Party under Mr. Trump has blundered into a positively anti-rural economic agenda, leaving the soybean fields littered with $20 bills for enterprising Democratic presidential hopefuls to pick up. The president’s nativist immigration agenda deprives farms and small factories of workers local economies can’t otherwise supply, while the administration’s latest budget proposal continues the Republican assault on the health care and social insurance programs rural populations increasingly rely on to survive.
To address the problem, we need to understand it. For decades, poorer areas had been converging economically with wealthier ones, but that stalled in the early 1980s as employment began to shift away from widely distributed agriculture and manufacturing jobs toward the service sector and high-skill “knowledge work” in the city-centered information economy.
Since then, inequalities in regional productivity and living standards have been widening. The declining capacity of smaller towns and cities to bounce back from job loss — whether because of recession, automation or offshoring — means that the regional economic gap grows wider with every downturn, “disruptive” technological advance or uptick in global economic integration.
As smaller towns lost population and viability as centers of commerce, the families of workers who remained in rural hamlets came to rely on trips to larger nearby towns and cities for their shopping, education and health care.
But then many of the factories supporting these regional hubs downsized, moved overseas or folded under competition from countries with cheaper labor. Assembly-line workers who lost jobs mostly shifted to lower-paid service jobs or dropped out of the work force. Crucially, the college-educated workers who ran these factories — the engineers, managers and lawyers — began to flee with their families to the opportunities in bigger cities, and took their money, civic energy and organizational know-how with them.
Some of these rural hubs are hanging on — thanks to immigration. The population of Marshalltown, Iowa, my childhood hometown, has remained steady for decades — but it is now nearly 30 percent Hispanic. This has sustained the largest employer, a meatpacking plant, and many auxiliary local businesses. However, this infusion of lower-skill immigrant labor means that Marshall County’s average household income is now lower in real terms than it was in 1978, when my family moved there.
Scholars at the Brookings Institution’s Hamilton Project have devised a county-level “Vitality Index” combining weighted measures of median household income, poverty, life expectancy, housing vacancy and rates of unemployment and prime-age employment from 1980 to 2016. They find that the fifth of the American population living in counties with the highest share of rural population suffer the lowest levels of vitality — by a long shot. Americans in these low-vitality counties are far more likely to live in poverty, suffer health problems, die early and lack a job. These places, it bears emphasizing, are overwhelmingly majority Republican.
So what can be done? Here are five ideas:
States with flagging economies and declining populations lack the tax base to finance the programs needed to maintain healthy economies. We should adopt fiscal measures to “equalize,” or share, national wealth, which are standard in other advanced countries. This would help prop-up state budgets and ensure the healthy functioning of our decentralized federal system.
Basic scientific research and infrastructure investments pay big, long-term economic dividends, yet they are underfunded. A network of federally chartered regional development banks could support weak local economies by issuing tax-favored bonds to finance infrastructure upgrades and promising Research and Development projects spearheaded by currently struggling state universities.
The Small Business Administration could be refitted to expand small firms that generate growth in exports and high-value-added sectors, as the economist Dani Rodrik has suggested, rather than simply supplying cheap credit to mom-and-pop shops that sustain, but don’t expand, local employment.
A new federal Office for Struggling Regions could facilitate interstate compacts and agreements to help attract firms to flagging local economies on terms that prevent the race-to-the-bottom tax-incentive bidding wars.
Granting states some authority to mint visas to meet their specific labor market needs would help dry up demand for undocumented workers, stave off depopulation, keep businesses in place, and fill in fiscal gaps.
Creative ideas like these have been notably absent in right-leaning policy circles. Conservatives who have come to embrace economic nationalism have misdiagnosed the problem, and therefore fail to see why bullying trade partners and indiscriminately cracking down on immigration won’t bring back jobs and increase wages. Worthwhile ideas, such as Oren Cass’s wage subsidy proposal, have limited potential outside a larger vision of restoring the economic health of struggling regions. We can’t subsidize wages if workers can’t find jobs.
On the left, the picture is brighter. The Brookings Institution has taken the lead in analyzing regional inequality and outlining an agenda to address it. But the reality of widening geographic disparities has been slow to penetrate Democratic politics and policymaking. Elizabeth Warren’s plan to protect family farms and check the market power of agribusiness giants takes rural woes seriously, but it’s a band-aid on a hemorrhage.
Politically, if Mr. Trump once again chooses divisive culture-war theatrics over an honest attempt to shore up the places that, for now, still prefer Republicans — probably a good bet — Democrats could flip rural House and Senate seats Republicans have long considered “safe.”
This mere possibility could even become likely if only Democratic primary contenders, now seeking favor in rural states, would finally spot the glittering opportunity that Republican misrule has laid at their feet.