And Now for an Innovative Rural Policy

In my last column, I wrote that the threat of trade sanctions against the United States over our agricultural subsidies opened up the possibility of real and beneficial changes in domestic rural policy. If we can no longer spend billions on commodity payments to farmers, perhaps some of that money could be used to help the vast majority of rural Americans who don’t farm, as well as the farmers, many of whom depend on the non-farm rural economy for jobs and benefits.

The question this week is “how?” As USDA Under Secretary for Rural Development Tom Dorr put it at the 2006 Agricultural Outlook Forum, “…what can we do to create sustainable opportunities for growth in rural America?”

Fortunately, there’s an emerging consensus on the answer.

For a long time, efforts to improve the lot of rural people and places have relied on recruiting businesses and industries to relocate to the country. Communities competed against one another by offering cheap land, cheap labor and cheap taxes. That approach always had problems, but in today’s global economy it doesn’t work at all. Rural communities no longer compete just or even primarily against the town up the road or even one across the country. Today, they compete against communities around the world—many of them offering still cheaper alternatives. We need a new competitive advantage. Here’s how to get it.

First, we have to collaborate. An old bumper sticker used to say, “Think globally. Act locally.” We need to change that “locally” to “regionally.” Rural communities with scant resources simply can’t do on their own all that they need to do to become competitive. They can’t build the high-speed Internet, transportation networks, health care facilities, educational institutions and governance structures required to succeed in the global economy. Rural communities must collaborate as regions—each community contributing, each one benefiting.

Just as collaboration must extend across city, county and, at times, state lines, it must also cross other boundaries. Government, business, non-profit, education, health care—you name it—must all work together. So, too, must young, old, rich, poor, black, brown and white--and, yes, even Republican and Democrat. Turf must die.

Second, we must innovate. We must innovate both in terms of the goods and services we sell in the global marketplace, and in terms of the institutions and relationships that undergird a region’s functioning—things like education and training, health care, governance, philanthropy and the interplay among them. In other words, we must build better mousetraps; and in order to do that (and keep doing it over the long haul), we must build environments conducive to doing so.

All of that innovation requires, of course, innovators (or, if you prefer, entrepreneurs). We need people who see what isn’t and ask “why not?” People who identify opportunities and create ways to seize them, in both the private and public sectors.

Third, we must promote innovative regional development through federal, state and local policies. As Kansas City Fed Vice President Mark Drabenstott put it in a recent paper, “…the quest for regional competitive advantage is all about a more systematic approach to innovation at the regional level.”

So, what would a systematic approach look like? Let me suggest a few key principles. For starters, regions themselves must take the lead, but they need assistance in forming. Where I live, city and county officials duke it out over things like funding EMS and the public library. Incentives for communities to work together would help. Second, regions need money for planning—for bringing together partners, identifying assets, targeting markets and crafting strategies. Third, federal funds need to be flexible, letting communities pay for what needs to be done rather than simply for what programs will allow.

In testimony before a House agricultural subcommittee yesterday, Rural Policy Research Institute Director Chuck Fluharty, suggested that such an approach—backed by “adequate resources”--be put in the 2007 Farm Bill, calling it a “wonderful opportunity to create innovative support mechanisms” that promote rural regional competitive advantage.

Sounds good to me. Will it happen? Will Congress pass legislation that turns decades of rural development policy on its head and instead promotes regional innovation and competitive advantage in rural America? Not if we don’t ask.