We Need a Rural New Deal

Rethinking rural economic development to leverage public investment in order to broaden local ownership and control.

rural cooperative
Photo credit: United States Department of Agriculture via Wikimedia Commons.

COVID-19 is a combined health and economic crisis poised to further devastate rural communities already suffering severe economic stress. Already, rural health care systems are strained by the outbreak, and workers across the country are facing increasing precarity as the crisis unfolds.

The outbreak exposes an already uneven geography of development. Large swaths of rural America had already been left behind by our last economic recovery: 86 percent of U.S. counties that are in persistent poverty are rural. While the overall population living in distressed zip codes has declined since 2007, it has increased in rural areas. This “ruralization of distress” has taken a tremendous human toll. Rural counties have higher rates of premature death, with one in five getting worse. Rural residents also incur higher healthcare costs, and nonwhite rural residents face even greater health disparities.  

As we move into our new reality with the COVID-19 pandemic and its rippling economic effects, these disparities are on track to become even more stark. Clearly, we need new approaches to economic development to reverse these longstanding trends.

Fortunately, there is already a wide body of literature to draw from on rural revitalization. Two publications released late last year offer insights into the state of the field: Wealth Creation: A New Framework for Rural Economic and Community Development, by Shanna Ratner, a rural community development expert, and Rural Development Hubs, published by the Community Strategies Group (CSG) at the Aspen Institute. Both build upon the WealthWorks framework, an asset-based approach to economic development put forward by the Ford Foundation. Taken together, these works distill important insights from the last decade of piloting the WealthWorks approach.

Wealth Creation puts forward a vision for rural development that is focused on cultivating underutilized place-based assets and building greater connectivity to market opportunities. Ratner emphasizes the importance of moving beyond using the number of jobs created as a primary measure of economic success, to instead focus on cultivating the eight forms of capital: individual, intellectual, social, cultural, built, natural, political, and financial. It is by investing and cultivating these assets that rural geographies can develop wealth creation value chains; Ratner presents examples from affordable housing development to stream remediation.

The Rural Development Hubs report shifts the focus from overall framework to implementation. The report focuses on these intermediaries, defined as place-based organizations working across sectors and regions to “build inclusive wealth, increase local capacity and create opportunities for better livelihoods, health and well-being.” Using interviews with staff from 43 existing rural development hubs, the report articulates the defining criteria and key activities of hubs, identifying emerging best practices. Like Wealth Creation, the authors emphasize the importance of cultivating the eight forms of capital, as well as expanding local ownership of those assets. There is also an emphasis on inclusion, noting that hubs must “include low-income people, places and firms in the design of their efforts—and in the benefits.”

On the one hand, these publications point toward an opening in conversations about economic development. One of the most important elements of the WealthWorks framework is the explicit focus on local ownership and control. Neither publication shies away from the drivers of rural disinvestment, discussing the impact of financialization and absentee shareholder ownership, and histories of racial exclusion. With a focus on cultivating local assets rather than relying on attracting corporations, both publications use the language of systems change and “doing development differently.” 

However, the most transformational implication of the WealthWorks framework—democratizing ownership and control—is not fully carried over into its recommendations. The recommendations focus primarily on improving the funding landscape for intermediaries and capacity building for practitioners, both important actions, but on their own, insufficient. While both publications discuss the need to increase local ownership, questions of power and distribution are relatively absent, and there is a heavy focus on market-based approaches over public investment. This is a missed opportunity.

Rural community economic development practitioners can learn from the Green New Deal, the popular policy framework that addresses the climate crisis and rising inequality. Just as the original New Deal was in large part designed to address the dire challenges rural America faced in the 1930s—and led to everything from rural electrification to the Tennessee Valley Authority—similar large-scale investment can help revitalize rural economies. In particular, the legacies of democratic regional planning and robust public investment can help scale the strategies put forward in Wealth Creation and Rural Development Hubs.

Democratic Regional Planning

Both Wealth Creation and the Rural Development Hubs report emphasize an important point: revitalizing rural economies requires regional action. Rural and urban geographies are inextricably tied, be it through supply chains, watersheds, or commuting patterns. However, it is assumed that rural geographies’ planning capacity is insufficient, necessitating intermediaries like hubs to step in. While the Hubs report demonstrates that hubs can effectively fill this role, the New Deal provides another model. 

The Tennessee Valley Authority (TVA), created by New Deal legislation, persists to this day as the largest public power company in the U.S. But more than generating power, the TVA was established as a regional planning agency, charged with additional activities like flood control, supporting area agriculture, improving river navigability, and promoting economic development in its service area. It is important to note that the TVA was, and is, far from perfect; authors and organizers have documented how many of its aims around democratic participation were never realized and how exclusionary practices and land dispossession disproportionately impacted black communities. However, the TVA can open the political imaginations of what could be possible with regard to democratic regional planning should elements of community control and equity be baked into the design.

This reimagining is already taking place. The Detroit Democratic Socialists of America chapter launched a campaign to establish a Great Lakes Authority, which would “be a regional planning agency designed to funnel federal resources (under local control) to the Rust Belt.” The GLA could be the start of a system of new regional authorities across the U.S. to help scale and provide resourcing to existing organizing efforts. These bodies can work with rural development hubs to connect local efforts to regional plans and help to seed new ones. By combining democratic planning with public investment, planning agencies can help rectify gaps left by the market, respond quickly in times of crisis, and expand access to critical goods and services.

Public Investment to Democratize Ownership

Another innovative element of both publications is the focus on enterprise ownership. Wealth Creation includes an entire chapter on broad-based ownership models, and the Hubs report includes worker cooperatives, municipal enterprise, and other democratic forms of ownership in its list of examples and hub typology. However, the degree to which these entities are actually integrated into economic development seems left up to chance. One way to strengthen the WealthWorks approach is to leverage public investment to scale these ownership models so that democratic ownership is a central driver, not just a potential fringe benefit.

Public investment to catalyze democratic enterprise is also not unprecedented. The Rural Electrification Administration (REA), a flagship program of the New Deal, demonstrates this. The REA provided low- to no-interest loans for utilities to expand into rural areas. In practice, it turned out that private utilities still deemed establishing infrastructure in rural areas as unprofitable, which then led to the creation of rural electric co-ops and public utilities to fill the gaps in service.

Gaps in access are not just an artifact of the past; rural residents continue to face barriers to service. Internet access is an example. Despite 28 years of tax credits and incentives to telecommunications companies to expand into rural areas, one in four rural residents and one in three tribal jurisdiction residents lack access to high-speed broadband. Many communities are increasingly taking measures into their own hands and creating public and cooperatively owned broadband networks.

As the COVID-19 crisis progresses, it has become even more clear that broadband is a critical utility, necessary for telehealth and schooling as well as agricultural production and other essential functions. Public investment in municipally owned broadband networks can meet this growing need while ensuring long-term public benefit.

Democratic public ownership can unlock a new vision of what is possible in areas, including patient transportation to homecare to improving climate resiliency. New public enterprises can not only ensure equitable access to critical services for rural residents, but can also create opportunities for family-sustaining employment. In essence, this approach employs the principles of the value-chain approach, but through proactive investment rather than waiting for private enterprise or market conditions to shift to fill the gaps.

In addition to establishing new public enterprises, public investment can support worker and employee ownership. The federal government already provides employee ownership resources through the Small Business Administration and the U.S. Department of Agriculture, including the Rural Cooperative Development Grant program. In addition to expanding these existing programs, policies like a federal loan guarantee for worker ownership conversions; a Democratic Ownership Fund policy, which would require large companies to issue shares into worker-controlled funds; or a Right-to-Own policy, which would provide a right of first refusal to workers to purchase sites and companies that are being closed or sold, can leverage public investment to scale worker ownership.

Broadening ownership brings forward another critical tenet of rural revitalization: reparative action. Rural economies cannot be understood outside of a history of state violence, forced dispossession of Indigenous land, enslavement, and discrimination. Efforts to broaden ownership must contend with this legacy, or else they threaten to exacerbate gaps in ownership and wealth. Indeed, many rural development measures already have. For instance, there is extensive documentation on how discriminatory loan practices at the USDA have negatively impacted Black farmers. While the Pigford class action lawsuits in the 1990s and 2000s established a precedent for monetary recompense, the settlement amount is widely considered insufficient and many farmers have yet to receive payment. Any effort to broaden ownership would be incomplete without a concurrent program for reparations and dedicated resourcing for the Black, Indigenous, Latinx, and other communities that have experienced dispossession and discrimination.

New Directions for Rural Economic Development

As federal policymakers start to assemble elements of a COVID-19 crisis response and recovery package, rural geographies clearly cannot afford another round of business as usual. Both Wealth Creation and the Rural Development Hubs report outline a vision of rural revitalization that puts the well-being of local residents over corporate bottom lines. But just as the last decade of the WealthWorks approach speaks to the efficacy of these strategies, it also speaks to the fact that we need to accelerate our timeline for action. Instead of tinkering around the edges of existing grant programs, now is the time to think about bold new tools for investment. Rural community economic practitioners can join the coalition advocating for a Green New Deal, unlocking new tools and levers such as democratic regional planning and democratic enterprise development. Instead of relying on the existing architecture and institutions that make up our current system for economic development, we can instead advance new forms of democratic enterprise to stimulate rural reinvestment.

1 COMMENT

  1. I really enjoyed reading this article. It is informative and provoking. I am a WealthWorks model practitioner and I agree with your research. Ownership is one of the principles but we need to get deeper. I also do what is call regionalization and you call Democratic Regional Planning. I hope for more of this happening.
    I am also working with rural community and this is totally true in rural America, “Gaps in access are not just an artifact of the past; rural residents continue to face barriers to service. Internet access is an example. Despite 28 years of tax credits and incentives to telecommunications companies to expand into rural areas, one in four rural residents and one in three tribal jurisdiction residents lack access to high-speed broadband.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.