Fed Chairman on Rural...Almost

When Federal Reserve Chairman Ben Bernanke spoke recently at a summit on local economic revitalization, one might have thought he was talking about rejuvenating, say, Edna, Texas; Clarion, Iowa; or perhaps Crossett, Arkansas. Indeed, he could have been referring to any number of small, rural communities across this nation. His prescription fit to a “T”: the need to collaborate and the need to be comprehensive.

Almost.

Now as regular readers of this column (if there are any) know, collaboration and comprehensiveness are two themes I harp on frequently. And while I’m tempted to ride Dr. Bernanke’s impressive coattails and proclaim that great minds think alike, I’ll settle for the modest recognition that even blind squirrels find an acorn now and again. But back to the chairman…

Collaboration, he said, in which public, private and nonprofit groups play “different but complementary roles” is critical because none of us is as strong or as smart as all of us. Comprehensiveness means focusing not just on one aspect of development (whether it be jobs or housing), but rather on a community’s broader social and economic environment.

As he put it, “For people to find an area an attractive place to live, they need a range of services, community institutions, and places to shop and work. Accordingly, developers…have included in their plans community amenities such as day care centers, shuttle services, and recreation programs for resident children…Even as they make communities more attractive, these amenities create new jobs and provide opportunities for small business development.”

In addition to his two themes, Bernanke noted the importance of investments in helping “jump-start revitalization”. Those investments, he said, must come from both the public and private sectors, with the former often leveraging the latter. And they must be strategic. That is, they must “have the potential to transform neighborhoods and stimulate ongoing private investment and economic activity.” In order for them to be strategic, investments must be guided by “substantial expertise, local knowledge, and a vision of what the community can become.”

Terrific prescription. If only it could be filled in rural America.

Not surprisingly, Dr. Bernanke wasn’t addressing a small-town crowd. Rather, his remarks were on rebuilding Washington, DC’s Anacostia waterfront, a long-depressed neighborhood with a world of potential—and deep-pocketed developers drooling over it.

The reality in rural America is, of course, a bit different. Funds for strategic public investments seem to dwindle with every budget cycle. (See my previous two columns on cuts to critical programs in community development and rural health.) And lacking public investment to pave the way, private investors willing to put their dollars in rural communities are few and far between. Finally, help for rural communities to develop the “substantial expertise, local knowledge, and a vision of what the community can become” is in short supply as well. One such program, the Rural Strategic Investment Program passed in the 2002 Farm Bill, but never received funding.

Instead of strategic investments with which to “jump-start revitalization”, rural areas are often forced to settle for agricultural subsidies that, as former Fed Chairman Alan Greenspan once put it, stymie flexibility and hinder development by distorting market forces, restraining trade and trapping resources that could be better utilized in other endeavors. Like the huge dilapidated public housing projects that, according to Bernanke, had become a liability to Anacostia, commodity payments hold back vast swaths of rural America and should be limited if not demolished.

And then there are attempts like the Strengthening America’s Communities Initiative proposed last year by the Bush administration, which focused narrowly on jobs, jobs, jobs and missed the logic of Bernanke’s observation that “vibrant communities offer their residents not only a place to live, but also access to services, to community institutions, and to places to shop, work, and enjoy recreation as well.” (To be fair, I’ve met more than a few local officials that miss that logic as well.)

Bernanke finished by saying he was optimistic that the improvements in Anacostia “can be replicated in economically challenged communities throughout the country.” Absent changes in the policies that hinder such improvements in rural America, however, that optimism may sadly be misplaced.