The Rural Development Dilemma

Evidence that much of rural America is once again falling behind metropolitan areas socially and economically has mounted throughout the 1980s. As the evidence has emerged, a long-overdue discussion of policy issues and options for rural development has begun, advancing now from identification of the problems to questions about what has to be done. The principal stumbling blocks for a comprehensive rural development policy continue to be outmoded assumptions regarding rural America and its relationship to both farming and the rest of the U.S. economy and society. The identification of rural America's ills and development of a coherent public policy to correct them have proven to be much more difficult than anticipated.

Progress has been hampered by at least five factors: (1) an unrealistic, often romantic view of a bucolic rural economy and society; (2) serious limitations to existing social and economic data on sparsely populated areas; (3) the treatment of rural America as a geographical entity unconnected to the larger U.S. economy and society; (4) a perception that many rural areas do not have viable political solutions; and (5) the absence of a unified rural constituency and the presence of a formidable opposition to renovated and new rural development programs.

We will examine each of these factors in turn. The development of good public policy requires an accurate appraisal of problems and a clear understanding of program goals. Perhaps the first factor presents the most difficult hurdle, since it involves popular cultural perceptions.

Flawed views of rural America

At least two false assumptions have guided rural public policy. The first is a pervasive tendency to associate rural economies and community well-being with farming. The second is that with the possible exception of farmers, rural people are faring relatively well.

Nationally, a half-century ago, farming was the dominant economic activity for many rural economies, and the family was the primary type of social organization of production. Hence it was reasonable to assume that the well-being of family farms directly influenced the well-being of rural communities. However, the intervening fifty years have witnessed a major transformation of rural society.

During this period rural America generally experienced a transition from dependence upon natural resource extraction (such as agriculture, mining, forestry, and fishing) to reliance on economic enterprises in secondary and tertiary activities, including the manufacture of nondurable goods, the provision of services, and government. In 1984 rural employment was distributed as follows: manufacturing, 40 percent; services and trade, 16.5 percent; government, 13 percent; farming, 9 percent; and mining, about 5.5 percent. Moreover, for the same year, farm families reported that more than 60 percent of their net family income came from off-farm jobs.

The 617 agriculturally dependent counties in the United States now account for less than 7 percent of the national rural population. By the late 1980s, then, the old axiom that farm well-being, and by inference farm programs, determine rural well-being was no longer useful. Certainly some rural economies continue to depend on farming, but this is the exception rather than the rule.

The second popular misperception—that rural America on the whole is doing relatively well—has been empirically grounded on reports of rural population growth. Between 1973 and 1983, the populations of nonmetropolitan counties grew at a faster rate than those of metropolitan counties. Social scientists proclaimed that this demographic turn-around signified a rural renaissance. The most common explanation was that the population had a desire to live in rural areas and that this demographic anomaly was a result of these people acting on their residential preferences by migrating to rural areas. Those rural areas having recreational and retirement amenities and/or the presence of universities experienced relatively rapid growth (and continue to do so). However, most of the population growth was due to a combination of residential mobility and natural population growth. The former was simply a part of the post-World War II process of suburbanization, and not migration.

The retention of population growth among nonmetropolitan counties was a result primarily of a lack of job opportunities in metropolitan areas during the 1970s, which counteracted the historical rural-to-urban migration pattern. We now know that during the period 1973-1983 nonmetropolitan counties dependent upon natural resource and manufacturing industries were hard hit by loss of jobs.

The year 1973 was also significant statistically, since it was at that time that the brief six-year period (1968-1973) of a narrowing of per-capita income differences between metropolitan and nonmetropolitan areas ended. Since 1973, and during the period of rural population growth, per-capita income differences have continued to expand.

The overly optimistic interpretation of rural well-being was important for contributing to a dismissal of concerns about the vitality and well-being of rural areas. After all, it was reasoned, if rural populations were growing, they must be prospering. The public-policy consequence was the justification of a minimalist rural development policy in the 1980s. During the 1980s, public programs for rural areas were cut dramatically, and the U.S. Department of Agriculture (USDA) and the land grant universities pulled back from research and extension efforts focused on community development. This withdrawal occurred simultaneously with the recession of the early 1980s; not surprisingly, the consequences were devastating for most rural economies.

It was the financial crisis in farming during the mid-1980s which, ironically, provided the need for a revised rural development policy. Since part of the problem was the assumption that farm well-being determines rural community well-being, the reintroduction of rural development in the context of a farm crisis had the effect of reaffirming this assumption.

A change in policy assumptions is a difficult process to effect. The public still appears to associate farming with rural well-being, and to believe that the farm programs of the past fifty years have helped farm families. In fact, the evidence is that these programs have facilitated the decline in the number of family farms.

Despite empirical evidence to the contrary, these outmoded assumptions about farming and rural areas are still resilient. Recent Senate discussions concerning rural development have been punctuated by comments from influential senators who view the drought relief effort of 1988 as a rural development effort. And a powerful farm organization testified before the Joint Economic Committee of Congress that an extra $40 billion in farm programs would kick-start the rural economy. The continued use of this assumption by farm groups has been called a cynical effort to maintain their lucrative farm entitlements.

Limited data base

The second factor inhibiting the development of rural policy is an inadequate database. Professional rural social scientists repeatedly decry the inadequacy of data on rural well-being. There is a considerable knowledge gap about both the specific conditions of rural people and the effectiveness of past government programs for rural areas.

The knowledge gap about rural community life has not significantly narrowed since the classic community case studies of the 1930-1950 period were conducted. It is paradoxical that during the 1980s—when federal policy was shifting toward decentralized planning and toward greater participation by state and local governments—research on the ability of local societies to act on their own behalf to promote economic development was virtually eliminated by the land grant colleges of agriculture.

The third factor preventing a broader policy dialogue on rural development is the narrow scope in which the problem is defined. Rural interest groups, academics, and policymakers continue to treat rural development as a territorial or sectoral phenomenon. This focus has tended to preclude placement of rural economic and social problems in the context of regional, national, or even international political economies. The interconnectedness of rural issues with policy issues in other arenas has thus been overlooked.

A quick examination of rural problems reveals a remarkable similarity with those of the inner cities. Both populations are being left behind in the economic expansion of the 1980s, and for many of the same reasons. Each of these geographic areas has similar problems with education and health services and, increasingly, in areas of social pathologies—particularly violent crimes and crimes against property.

Lack of viable solutions

The fourth hurdle is that it is often assumed that rural economic problems are not the result of failures of the markets—for both capital and information—but of a clear competitive disadvantage in most markets. Coupled with this is the notion that government, especially the federal government, is part of the problem and not part of the solution. From this perspective it is concluded that the primary way of fostering economic development is through the operation of free markets, and since such market mechanisms have not fostered the type of economic development necessary for a viable rural economic sector, and government is not able to induce such development, those areas that are left behind are simply the unfortunate by-products of national economic adjustment. To the extent that this ideological perspective directs rural development policy, we can expect only more of the minimalist policies of the past several decades.

No powerful constituency

The development of a comprehensive rural development program lacks a unified constituency while facing considerable organized opposition. There are no politically powerful interest groups promoting rural development, with the notable exception of the National Rural Electric Cooperative Association. Chief among the opponents are farm organizations and agricultural commodity groups who view rural development as a threat to their agricultural entitlements. However, rural development should be attractive to farm organizations, given the dependence of farm families on viable off-farm economic opportunities. Since local taxes are often raised from property taxes, further deterioration of the nonfarm sector will likely lead to an increase in those local property taxes. The more hearty the local nonfarm economy, the less the local tax burden will fall upon fanners.

Relatively passive opponents of rural development have been the Department of Agriculture and the land grant universities. Their opposition has taken the form of neglect. They define their mission as primarily to assist commercial agriculture, and in so doing believe they help all rural people. In other words, most key USDA administrators and deans of colleges of agriculture still accept the myth that farming determines rural well-being.

At this time, the USDA does not have a clear mission statement on rural development. However, this view of its mission may change over the next decade as the nonfarm public's concerns over food safety issues and pollution of the environment by agricultural chemicals, as well as the plight of rural people, press upon USDA the idea that its mission is much more than just farm production.

A possible source of support for rural development might be current concern with agricultural trade at the General Agreement on Tariffs and Trade (GATT) negotiations. It is increasingly apparent that concern for the negative consequences of reduced trade barriers for rural communities is a major obstacle to GATT agreements. It is reasonable to assume that national rural development programs that account for the possible high cost of transition to lower trade barriers will be a necessary part of any future broad-based agreement.

Rural development in the United States is possible. A wide range of public policy analysts have provided economic and social rationales for rural economic development. Each has argued that there is a role for all levels of government in the development and execution of a public policy.

Comprehensive rural policy?

For a comprehensive rural development policy to emerge, each of the five hurdles discussed above will have to be addressed. In particular, the public and Congress will have to accept that while farming and other extractive industries primarily occur in rural areas, these are no longer the industries that dominate the rural economy nationally. While no single industry dominates that economy, many rural economies are dependent upon single industries. Furthermore, the public and policymakers should learn to view rural problems (as well as those of the inner cities) as structural rather than cyclical. The current restructuring of rural economies presents opportunities as well as difficulties. These changes could severely constrain the range of options, but they will not close out all options.

A new approach to rural policy seems to be emerging. The trend is to assign rural economic development to rural communities and the states, and social policy (especially for education and health care) to the federal and state governments. Such decentralization of the locus of policy initiative can have positive results. However, the decentralization of planning is less a consequence of truly believing that local societies can direct their own economic development than a realization that the shotgun social programs of the past have been expensive and inefficient, and have often bypassed local political bases.

Many, if not most, rural communities lack the ability and the resources to foster their own economic development. This does not mean that there is not a great deal of potential for new rural economic activity. Rather, economic development will require a cooperative effort by all levels of government. Local governments must initiate a broad-based review of existing human, natural, and capital resources. This review should be done in cooperation with development professionals available from the states and the land grant universities. Once a plan has been democratically agreed upon, it can be implemented and monitored, with the cooperation of state governments and the financial support of the federal government. Infrastructure development and maintenance should be the primary responsibility of state governments in cooperation with local governments.

While the economic development of local resources should occur at the local level, the provision of education and health care ought to be part of a national economic development policy. Neither rural America nor the inner cities have the capital and human resources to provide an adequate education or offer minimal health care. Given the considerable proportion of the U.S. population living in rural areas and the inner cities, it is detrimental to long-term economic development to neglect this generally ignored portion of the labor force.

To date, legislative activity to create a comprehensive rural development policy by renovating old policies, developing new missions for existing public institutions, and initiating new programs has fallen short. The Congress appears to be on the verge of considering a major rural development bill; but given the budget deficit and the lack of a clear strategy for an omnibus approach to rural education, employment, and health needs, it is unlikely that this initiative will immediately ameliorate the identified problems. Rural development should be seen as part of a long-term national strategy to greatly upgrade our human resources while providing employment opportunities and basic services. Unfortunately, neither Congress nor the general public appears to be willing to make such a long-term national commitment.