Small Towns

Rural America is Hurting But Why?

It is no secret there is a divide in the US between rural, ex-urban, suburban, and city communities. I lived downtown in Chicago for 20 years after growing up in the suburbs and living ten years in an ex-urban area. Now, I live in suburban Las Vegas, but I spend my summer in rural Minnesota.

I have watched the different places with interest.

We love to blame our problems on the Chinese, NAFTA, or someone else. However, often it’s the internal way the operations of the municipality run, not some external force they cannot control.

It’s not just “learn to code”. That makes no sense. But, rural small towns ought to look at everything that they can control which limits economic development, and change them to allow for unfettered economic development.

It’s very fair to say that some small towns prospered in a place and time that no longer exists, and no matter what they do they won’t change their future. But, other small towns are diamonds in the rough. They have assets and can do things to ensure they survive and grow.

We talked about some of these problems when I was in the US delegation to the first-ever i7/G7 in Torino, Italy. If you look at a country like Italy, you can buy an apartment in a beautiful small town for $1. Try rehabbing it though! Try getting through the Italian regulatory and tax thicket!

Demographically, countries like Greece and Germany are imploding. What happens when Germany’s economy rapidly contracts? I guarantee it will not only because Germany doesn’t have an expanding number of people, but it has no indigenous energy to power an industrialized economy. What happens to the EU when their largest and strongest producer fails?

My experience isn’t that different from any one else’s. When you look at Illinois, Chicago politics dominate the entire state. In Minnesota, the Twin Cities dominate. Plenty of other states are like that. Travel to the inner city or inner rings of suburbs, you see Democratic machines. Trump signs populate rural areas.

For example, for ten years my ex-urban home in Illinois was in Geneva, IL. Geneva’s downtown was incredibly entrepreneurial. There were lots of unique shops, restaurants, a great hotel, and opportunity. If a business went under, or decided to go out of business, another one readily took its place to give it a try. There was always a lot of foot traffic. The people were extremely forward-thinking and were willing to try.

When the big box retailers moved into the area, the downtown of Geneva didn’t miss much of a beat because they knew how to take care of customers and they knew how to create special niches for themselves.

Las Vegas is a very different kind of place. It’s about earning. If it doesn’t earn, it burns. They don’t have any sacred cows in Las Vegas. They are tearing down the Flamingo and putting up a baseball stadium. Thirty years from now if the A’s move away, they will tear that down and put up something else again.

The cities that are owned and operated by Democratic Machines are different. The growth is sclerotic. It’s hard to get things done. Change almost never happens and if it does there are a lot of strings attached. You have to know whom to pay off, whom to talk and pander to, and who to hire to get shit done. No one comes out of the closet as a Republican who wants to do big business in a city, until after they made it.

I lived in Chicago and Chicago’s machine isn’t that different from Boston, SF, NYC, Philly, The Twin Cities or any other Democratic stronghold. They limit growth and now, they are trying to limit speech and other freedoms guaranteed by the US Constitution.

Rural areas are very different. I cannot speak for all of them.

The place I spend summers is populated with 1100 people. A couple of years ago it was designated “The coolest small town in America” and they are resting on their false laurels. The high school has about 120 kids. My little area of the world has a city council that has decided against any development. They put a developer through the ringer for two years. The developer wanted to build 14 townhomes. You cannot believe the outrage in the city when they were actually classified as “condominiums” because of legalities. Some of the townhomes were set aside for low-income and for artists. Our local council voted 3-2 against development.

Meanwhile, the town has prime real estate that has been taken over by non-profits.

Much of the damage to rural areas is self-inflicted. They kill development because people don’t want anything new. Or, they zone improperly. Or, they zoned properly for 1960, but today, the same zoning laws make no sense. They get economics wrong and often use normative values to write rules, regulations, and laws which screw the town up economically, ruining opportunities for local residents.

It’s not just US factories moving overseas. Sure, that hurts, but other things make it impossible to try to even overcome something like that. Either the town decides to grow, or it dies. Small towns don’t have to exist. Pardon me John Mellencamp but there is nothing sacred about them.

They grew up where they did because of economic opportunity, not divine intervention. Take away any hope or worse, overregulate to death to take the economic opportunity away and you won’t have any.

It is especially important for small rural areas in blue states to put in place every incentive to grow. Blue states have more mandates and pass along more unfunded stuff and lay it on the back of local taxpayers since they would rather virtue signal with an issue than pay for it themselves. Rural areas need to be very mindful and economically efficient. It doesn’t mean they will turn into Pottersville, but if they restrict investment and crush opportunity, they won’t exist at all.

For example, in my rural town, the maximum building height is three floors and no more. This brings huge limitations. What if I wanted to build an apartment building that had indoor parking and maybe storage for things like snowmobiles and things like that? Can’t do it. Lots just outside of town have to encompass so many acres. Why? Why not 1/2 acre lot? What’s sacred about 20 acres?

I sent a letter to our local paper and I think they will publish it. Won’t make me popular with some of the local crowd but I don’t care. Here is what I wrote. I suspect it has an echo in small towns all over America.

Dear Cook County News Herald,

I look forward to receiving this paper each week.  I am a part-time resident.  Typing that will make many people say “Pshaw” to what I am about to write.  I have been coming to Grand Marais for over 50 years.  My grandfather worked for the US Forest Service and picked Grand Marais as his town to retire part-time in.  He knew Superior National Forest like the back of his hand, and he knew what a gem Grand Marais was.

I was very dismayed the Grand Marais City Council voted against the development of new housing.  This is terrible for the future of Grand Marias.  It not only hurts this developer who bent over backward to try and fit through all the hoops Grand Marais has put in real estate, zoning, and regulatory codes for development, but it sends a bright signal to anyone who contemplates future development.  Developers are not welcome in Grand Marais.  It also hurts people who live here, and anyone who was contemplating moving to Grand Marais.  

Grand Marais needs to make a decision.  Grow or die.

I looked at Cook County High School’s demographic numbers.  Barely 40 students in any class.  Someday, the high school won’t need to exist with the way technology is moving to reimagine how to educate children.  With the way development is consistently curbed in Cook County, what do those kids have to look forward to? Where should they place their chips for their hope for the future?  The opportunity for them isn’t in Cook County, it’s somewhere else.  The sad thing is it could be in a town like Grand Marias because Cook County, and Grand Marais, have a lot of assets other places do not have.  With the way technology is changing, a lot of new businesses could be created but you need a place to house and service people who will start them.

In a recent Cook County News Herald article, the paper relayed information the state has mandated spending on health care. But the citizens of Cook County will be forced to come up with the extra $1.5 million which the state doesn’t fund.  Where is that money coming from?  How does Grand Marais, and broader Cook County continually come up with unfunded mandated state spending, along with consistent increases in government budgets without growing the underlying tax base to fund it?  The only answer is to tax existing residents more.

I was extremely dismayed to see a series of for-profit businesses in the downtown go out of business in the last number of years only to be replaced by non-profit businesses.  No one can grow or make a living off being a non-profit, except for the administrators of the non-profit provided they get enough donations and government money.  No city can base its identity or tax base on non-profits.  Ceding prime lakefront property and city property to a non-profit will leave a gigantic hole in city and county budgets in perpetuity.  It also sends a message to potential for-profit entrepreneurs.

I watch my property taxes go up consistently every year, with no way to fight it. We are net donors to the local Grand Marias tax base and net positives for the gross domestic product of Grand Marais.  

There are hundreds, if not thousands of people, who would move to Grand Marias.  They would bring needed vitality and fervor to the city.  However, until building codes, zoning, and other regulations change, they won’t be coming.

Sincerely

Jeff Carter

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