According to the Niskanen Center, New York City by itself produces more than 10 percent of the nation’s economic output in any given year. (Jeenah Moon/Bloomberg)
We have written about the serious and widening gap between rural and urban America. The red/blue divide is largely a rural/urban divide — even within states. As urban areas prosper, rural areas are depopulating, coping with an aging population and suffering from more health problems (including opioid addiction). If rural America was as rich, healthy and vital as the urban centers and their thriving suburbs, President Trump might not have been able to exploit this population with fear-mongering, racism and xenophobia.
If rural America recovers, could we get sustained growth above 3 percent? Increase the average lifespan? Diminish the audience for right-wing populism? Possibly, but in any event, fellow Americans are suffering and neither party is coming up with constructive solutions.
Fortunately, the indispensable Niskanen Center wants to look at this problem. “According to data from the Bureau of Economic Analysis, over half of total U.S. [gross domestic product] is produced by only 20 metropolitan areas,” Niskanen reports. “The New York metropolitan area alone accounts for over 10 percent of the nation’s output in any given year, and with only 6 percent of its population. America may remain the land of opportunity, but in way that has become increasingly concentrated in fewer and fewer locations.” There are few winning zip codes and many losing ones. “Once-vibrant regions across the United States are struggling with population decline, the collapse of industries, and shrinking tax bases.”
Niskanen’s new initiative rests on the hypothesis that “regionally concentrated distress is fundamentally a problem of arrested economic development.” Niskanen looks upon bidding wars between states for major employers as accelerating regional inequality (the richest zip codes get most of the new, major employers) and geared toward specific, one-off arrangements rather than endemic problems. A Moody economist argues that it is critical to “help struggling places get more economic development, help big firms find other places to invest other than megacities, and help stop crony capitalism.”
Likewise, an “Office of Struggling Regions” could “coordinate federal research and development dollars to second-tier universities in depressed parts of the country, and provide analysis of where non-cash marketing, financing and logistical support for local industries would be most useful.”
Other ideas include “opportunity zones” that allow “investors to defer and ultimately waive taxation on capital gains for new investments made within qualified distressed communities”; and making occupational licenses portable (or better yet, removing ones not necessitated by health and safety). There are other creative programs that can build on existing initiatives. For example, “Subsidized employment programs could target job-placements in regions with labor shortages. Self-Employment Assistance programs could link those moving-off of unemployment insurance into [Small Business Administration] mentorship programs. Regions suffering from an economic shock could become automatically eligible for reduced capital costs, and so forth.”
This largely unaddressed problem exemplifies the real-life consequences of partisan polarization.
Republicans who represent these distressed areas have gone protectionist (which actually hurts farmers), and have tried to mollify voters by playing to racial fears. In addition, while Trump ran as a populist, he’s governing like a oligarch, giving tax breaks to the rich and cutting discretionary programs that help the less wealthy. Republicans have utterly failed these voters, as we saw from their health-care proposals, each one inflicting more harm on rural, aging Americans than the one before. The ideas Trump does have — such as reviving coal — are economically illiterate, fruitless and aggravate climate change (which, by the way, is taking a big toll on many of these same rural, depressed areas).
Before Trump, Democrats weren’t always blamed for ignoring concerns specific to the Rust Belt. Now, they’ve learned the political price of ignoring this part of the country. However, mega-proposals such as the single-payer health plan of Sen. Bernie Sanders (I-Vt.) don’t address the regional divide or the underlying economic stagnation.
Who would be best suited to focus on this? Democrats from red states who know all too well the concerns of rural voters. It’s an ideal issue for South Bend, Ind., Mayor Pete Buttigieg, former representative Beto O’Rourke of Texas and, yes, former Georgia gubernatorial candidate Stacey Abrams. They also happen to be three of the more creative and least ideologically dogmatic Democrats around.
Whoever decides to champion the issue would soon recognize that good policy and good politics (highlighting how Trump has failed his most loyal voters) sometimes go together. They could also benefit from the policy work the Niskanen Center has begun.