A Rural Triangulation

The Heartland has received quite a bit of national media attention in recent news cycles; and for a change, the focus has been more thoughtful, and the news, encouraging. Of course, we’ve also gotten our usual reporting of flaps in the ongoing Farm Bill kerfuffle, and another series of Census reports showing rural population loss. But we’ve also been given the three major media offerings discussed below. Triangulating the diverse forces each portrays could, at long last, portend a much more positive future for rural America.

This column is about The End of Big[i], The Fate of the States[ii], and the Washington Post coverage of the Senate Farm Bill’s “rural” definitions.

In The Fate of the States, Meredith Whitney, one of Wall Street’s most influential analysts, offers another broadside to established orthodoxy regarding our economic future. In 2007, while an analyst with Oppenheimer & Co., Whitney called the looming mortgage banking crisis, and suggested Citigroup would soon suspend its dividend. When all that happened, she became an instantaneous Wall Street celebrity. In 2010, appearing on 60 Minutes[iii], she warned of coming municipal bond defaults resulting from the financial crisis facing state and local governments, the result of that financial meltdown. Whitney paints a picture of “two” Americas, with economic prospects so different they could be two countries—one in perpetual decline, and the other experiencing sustained economic growth, household formation, infrastructure expansion, and innovation and entrepreneurial success. One geography is our U.S. coasts, and the other’s our central corridor—the American Heartland. Contrary to what most readers will assume, given the usual media portrayal of rural America, this seasoned Wall Street observer is convinced the next 25 or 30 years will be one of decline on our coasts, and economic prosperity in the “flyover” states.

She argues that the housing boom on the coasts masked the financial weakness of state and local finances in Arizona, Florida, Nevada, New York, California, and their neighbors, brought on by reckless spending, indebtedness, skyrocketing taxes and spreading unemployment. That bubble eventually burst. The “Central Corridor” states, which largely missed the boom years, are far less burdened with massive debt, pension obligations, and tax rates which discourage investment. While acknowledging there is still hope these trends could be reversed, she sees a perpetual cycle of over-taxation, pension failure, state and municipal bond crisis, and eventual decline in most essential public services on our nation’s coasts.

“A geographic sea change is occurring in the United States, with economic power shifting away from longtime coastal strongholds—states still hung-over from the housing bust—and toward the more ‘fiscally attractive’ central corridor. These so-called flyover states contributed 25% of U.S. GDP in 2011, up from 23% in 1999. A two-percentage-point increase may not sound like a lot, but it’s huge--$300 billion in GDP. With such a large head start in the recovery, the central corridor should continue to drive the U.S. economy for years and even decades to come.”[iv]

In The End of Big, published last month, author Nicco Mele discusses the role of mobile phones, the Internet, and social media in the declining relevance and authority of our nation’s major institutions, and the impact these forces will play in the future of American business, politics, and culture. Mele, the webmaster for Vermont Governor Howard Dean’s 2003–04 presidential campaign, revolutionized the use of social media in American politics, and went on to use those skills in the U.S. Senate race of a relatively unknown young Illinois legislator, Barack Obama. Now a futurist at EchoDitto, and a Harvard Kennedy School lecturer, Mele is a celebrated observer of the role of technology and social media in American life. He contends that the hierarchical institutions that have provided a bedrock foundation for western civilization are fraying, as their authority, autonomy, and relevance are challenged by the unmediated access citizens have to one another’s opinions, values, markets, and votes. As a result, organized religion, our nation’s two political parties, major corporations, institutions of higher learning, and the other icons of our American culture are being called into question, their relevance lessened.

A Wall Street Journal/NBC News national poll released last week[v] confirms this growing disaffection, echoing a slow but continuing decline in the American people’s trust of the framing institutions of American life.

Not surprisingly, Mele is cautious in his evaluation of all this. While these developments have already leveled major playing fields in favor of the individual, he offers a cautionary tale regarding ultimate impacts. While this “Radical Connectivity” brings new opportunities, it also brings risks. Once cherished institutions, the bastions of established wisdom and value, are now called into question. These technologies also are creating even “Bigger” technology organizations, perhaps too big “to be held accountable”—Facebook, Google, Twitter, etc. Recent national headlines certainly support this fear.

Challenges abound: As our two-party political system is further eroded, and government increasingly dysfunctional, can our republic continue to work? The voice of truly visionary new political leaders can be immediately heard, but so can that of the demagogue. Multinational corporations can now be challenged, but can basic regulations and business standards be enforced? How can the authenticity of blog, phone video, and tweeted “news” be checked, so that the media you use is accountable? Despite these concerns, this technology has enabled anyone, anywhere, to influence millions, and true innovation is not about technology, anyway; it is about a change in human behavior.

Finally, this past Sunday the Washington Post published an above-the-fold, front page article[vi] concerning the conundrum Ag Committees face in establishing Farm Bill rural targeting definitions. In refreshing contrast to past Post articles, reporter David A. Fahrenthold presented a reasoned and realistic assessment of the challenge. Rather than choosing an obviously embarrassing example of a small city eligible for USDA Rural Development funding, he points out that many of the current program targeting definitions were first written into federal law in the ‘30s and ‘40s, and never altered, but simply added to over time. He then asks the rather obvious question of why rural legislators would not prefer the most expansive definition of rural possible, to ensure the greatest potential advantage to the most rural citizens, particularly since USDA retains the statutory authority to prioritize targeting criteria within established eligibility pools, to assure smaller or more disadvantaged and/or underserved locales are served.

Fahrenthold closes his piece with the ironic news that another federal agency, the Consumer Financial Protection Bureau, will soon begin using its own definition of “rural,” based on a complicated measurement of urbanization and commuting patterns. In the state of Ohio, 44 of its 88 counties are normally considered “rural” for Census and state government purposes. The CFPB has only designated 20, significantly disadvantaging Ohio farmers in the counties which will lose the “rural” designation. The Senate’s new Farm Bill rural definition solves this dilemma—any place that has fewer than 50,000 residents, and isn’t adjacent to an urbanized area, will be considered “rural.”

Appropriately summed, these three examples are as hopeful a framing as rural America has gotten from the mainline media in some time: a Heartland advantaged by its more conservative banking, housing, and taxing decisions, re-shoring of advanced manufacturing, and an energy and renewables infrastructure unparalleled globally; acknowledgement that the historic advantages of density, scale, and depth that urban institutions and businesses hold offer less competitive advantage in “the new normal;” and an acknowledgment by a mainline media outlet that federal investment in Regional Rural Innovation may be at least as critical to America’s future as investments in urban places.

We are all experiencing “The End of Big” every day, and we know it. A sense of unease is warranted. However, there will be no going back. And, its rural benefits will be profound, further heralding the death of distance as a business disadvantage, and enabling rural entrepreneurs to globally compete, as never before.

The Heartland future in The Fate of States is a most welcome counterpoint to the standard depiction of flyover America. Furthermore, it reflects actual advantages, playing out daily in this geography.

The Post article thoughtfully treats the importance of finally allowing a “rural” definition which invites innovation in rural policy, enabling USDA Rural Development to build regional investment approaches which link integrated services, value chains, asset-based development plans and urban and rural investments to ensure that rural areas in the coming Heartland renaissance of which Whitney writes receive its full benefit, and optimally contribute to its arrival.

All in all, a good news cycle for the Heartland!

Chuck Fluharty is founder, President and CEO of the Rural Policy Research Institute (RUPRI), and a Research Professor in the Harry S Truman School of Public Affairs.