The State and the Death of The Small Town

In 1800, only 5% of the American population lived in cities, yet by 2020 that proportion had flipped dramatically and now only 20% live outside of them. This is not a result of mere preference or expediency, but rather a long process of natural momentum accelerated by regulatory overreach. Vast increases in agricultural productivity and the expansion of industry placed far more opportunities in cities than before. The growth of power in the Federal and state government centralized resources and pushed local small businesses out of the market, leaving residents with no choice but to migrate. Cities receive far more amenities from the government while small towns must fight to even have their voices heard. Particularly in farming and finance, governmental favor towards large businesses is both strong and obvious, which leads to few employment options for those who can’t commute to a major city.

The number of farmers per acre of land drastically decreased after the beginning of the 1940s, but the number of farms per acre decreased at a far faster rate. Small-town banks and insurance agencies must bear similar loads of regulation as larger institutions, yet with far less resources. Larger businesses are far more effective at regulatory capture and thus they receive outsized benefits, making it almost impossible for smaller businesses to compete. Large farms receive access to much greater subsidies than family farms and are able to price others out and buy their land with only a minimal cost advantage from scale. Small banks, while the heart of many trust-based rural economies, are a nightmare for regulators as personal community relationships and more difficulty for personalized oversight present risks that undermine Federal control. While regulators love to rail against large businesses for the optics, their own regulatory requirements and desire for control empower larger businesses to drown their competitors. When smaller businesses are unable to compete, the lack of employers in small towns drives people to Metropolitan hubs.

It is natural that cities would receive more government funding than places with less population, but their visibility and cultural presence allow them to take far more funding than is proportional. Accidents of history make one town larger than the other, and government favors let the differences in development compound over time. Residents of cities receive public transportation and civic benefits that are far greater than what is found in most towns. Cities often receive federal grants, and are able to use both their success or failures to request more money. The difficult logistics of running a city do require more money from the state, but they typically receive a disproportionate amount of government investment as well. Proportional disparity in investment spending is a problem that grows itself, as the government enforces its own vision for the future through it. Even with no clear vision, the state will continue to push towards a future with extremely developed cities. Efforts at rural revitalization are often remedial at best, and are greatly underfunded when compared to their counterparts in the city. Rather than giving smaller towns a fair chance, top down authority further entrenches the disparities of opportunity that already exist. Rather than having a justifiable reason for this imbalance of funding, politicians and voters merely allocate resources myopically to the locations that seem the most prominent and familiar.

As long as the state still has such thick layers of regulation and funding, small towns will have an uphill battle to fight. High levels of taxation along with most of that taxation going somewhere else is not a recipe for economic success. Rebelling from the state and creating an economic opportunities zone is one option that can bring industry back to small towns, but national institutional reform is required if small towns ever hoped to make a full comeback. A deep understanding of the political spheres’ role in the demise of small town America must be accepted before real change can take place. While it is easy to point at the corporations that drove the small companies out of business, the government bears far more blame for giving big business such a full hand. If this was not recognized, more of the very same regulation that hamstrung small towns in the past could be justified by pointing towards situations it was the creator of. The agrarian and local legacy of our country will continue to be an artifact of a lost past until an awareness is made of the economic incentives that continue to erode and diminish small town America.