As rural economies go in the nation, so goes Vermont

By David Moats

Economic stagnation in Vermont is not new. For decades, it has defied the efforts of political leaders, Republican and Democrat, to solve it.

What’s new is a growing awareness that the problem is a widespread condition, animating protests from Paris to London, from Oklahoma to Arizona, West Virginia to Vermont.

A new report from the Public Assets Institute of Montpelier has shone new light on how Vermont workers continue to struggle. It is called “The State of Working Vermont 2018,” and it’s the latest installment in a series of reports charting the economic conditions affecting Vermonters at all income levels. It’s likely that a report on workers in rural France would yield similar findings. In France conditions of stagnation have produced weeks of unrest by protesters wearing yellow vests. The Yellow Vest movement is just the latest instance of rebellion by people who see that capitalism in its present form has a put a stranglehold on their economic prospects.

The Public Assets report finds Vermont was one of only 10 states where median income fell in 2017, and it remains below where it was in 2007 — before the Great Recession. The report finds that if median income in Vermont had kept pace with growth in the rest of the nation it would be $6,500 higher.

In many ways the report details trends that are commonly understood by Vermonters. Most of the income and employment growth in the state has occurred in Chittenden County. Meanwhile, the total workforce in Vermont remains below its level of 2006, the lingering effect of the Great Recession, and also of the accelerating pace of baby boomer retirements.

Public Assets also points to many oft-mentioned problems that continue to block economic progress: the lack of affordable child care; the high cost of housing; and the growing concentration of wealth at the top.

These numbers have become so familiar they may have lost their capacity to shock. In the mid-1970s, 93 percent of income went to the bottom 99 percent of workers, with 7 percent going to the top 1 percent. By the mid-2000s, the top 1 percent was taking home 17 percent of income.

Since the recession the average income of the top 1 percent grew twice as fast as the incomes of everyone else. In 2016, the average income of the top 1 percent was above $816,579. The average income of everyone else was $50,283.

These trends are not peculiar to Vermont. A new focus on the economic decline of rural America has shown that as traditional manufacturing has receded and tech industries have flourished, rural counties have been the losers. The advance of robotics in manufacturing has also taken a toll in rural America. Fareed Zakaria, writing in the Washington Post, observed that one robot generally takes the jobs of six workers, and that robotics have been especially damaging to the workforce in the Midwest and South.

The decline of rural America is a new turn of events. In the 1970s, America’s cities were teetering on the edge of bankruptcy and overwhelmed by crime, and many people were moving to the country. In Vermont people talked of a rural renaissance.

Since then cities have become safer, and young people, especially those attracted to tech industries, have flocked to New York, Seattle, San Francisco, Boston, Austin, Washington, D.C., and other thriving urban centers. It is the rural regions, including what Eduardo Porter in the New York Times calls the Eastern Heartland, that have sunk into a swamp of joblessness, addiction and crime.

The Eastern Heartland is the region between the Mississippi River and the Eastern Seaboard that includes Appalachia. Vermont, whether it likes to think of itself this way or not, is the northern extension of Appalachia, and alongside the quaint villages, thriving arts scene and the agricultural sector, there is hopelessness and addiction like that in West Virginia or Kentucky.

Porter shows that this rural decline is a recent phenomenon. During the economic recovery of 1992-1996, 135,000 new businesses were created in the nation’s smaller counties. That was one-third of the total across the nation. Employment in rural regions grew by 2.5 million jobs, an increase of 16 percent, which was twice the rate of counties with more than 1 million people.

In the recovery that followed the recession of 2008, counties with fewer than 100,000 people lost 17,500 businesses. Counties with more than 1 million people gained 99,000 businesses. By 2017 the large metropolitan areas had 10 percent more jobs than before the recession. Rural areas had fewer jobs.

That is far from a rural renaissance. It is what Porter called a “relentless economic decline.”

Vermonters have tried to meet this challenge. As large corporations began to colonize rural America — Walmart driving out the local shoe store, hardware store, grocery store and siphoning the profits elsewhere — Vermont worked to fortify its downtown districts.

But the large economic trends continued apace. An immense transfer of wealth from rural regions to Google, Facebook, Apple and Amazon has impoverished hundreds of local newspapers around the country and given high-tech companies growing sway in the dissemination of news — with little accountability. Dollar General and other chains continue to drive out local retailers, including Vermont’s crucially important village stores.

Vermont politicians from both parties have worked around the edges of these trends. Former Gov. James Douglas pursued what he called an “affordability agenda,” a phrase and strategy adopted by his fellow Republican, Gov. Phil Scott. The Democrat who served between them, Peter Shumlin, did not depart from the strictures of austerity demanded by the received wisdom going back for many years.

What affordability meant was that they would try to limit the damage caused by the economic decline by preventing state government from levying new taxes. Affordability translated into an erosion of support for education, environmental protection and other fundamental responsibilities — a losing battle against trends that are impoverishing not only Vermont but rural regions around the world.

Reporting from France in recent years has described the hopelessness in rural regions as the villages and towns that have defined French identity for centuries are hollowed out and eroded — like villages and towns across rural America. Agriculture has struggled, suicide has increased, and people now are donning yellow vests to express their frustration.

The cluelessness of French President Emmanuel Macron was evident in policies that cut taxes on wealthy French people while imposing a gas tax that would hit ordinary people the hardest. It is clear that if we are to have a carbon tax, an important weapon in the battle against climate change, it must be accompanied by a fundamental shift of the tax burden toward those who have the wherewithal actually to pay more.

In America the liberal response to economic decline has been to propose useful, targeted programs. Vermont progressives talk about raising the minimum wage, establishing paid family leave, improving child care — helpful tinkering around the margins of our economic dysfunction. At the national level experts seeking to address the economic decline of rural America speak of job-training initiatives — giving coal miners computer skills. But the changes needed to reverse 40 years of growing inequality are larger than the familiar list of well-intentioned progressive initiatives.

Rural regions will face enduring problems as long as the rural resource — the land — is of marginal importance. Land tilled for crops or mined for minerals yields value, but when the value of those products declines, then the communities depending on the land will suffer. The giant industries of the present are not interested in wide open spaces; Amazon decided to locate its new headquarters in Queens, New York, where the resource is the people, not in upstate New York, where people are more scarce.

A new wave of thinkers in Europe is seeking to look beyond the marginal change that has been the recourse of most liberals. In response to the Brexit fiasco and the populist unrest in France and elsewhere, a group of economists, historians and former politicians, led by economist Thomas Piketty, has put forward a plan described as a “manifesto for the democratisation of Europe.” The group proposes more effective taxation of corporations, income and wealth, so as to prevent companies like Google, Facebook and Apple from growing rich by means of tax-evasion schemes that allow them to shirk their civic responsibilities.

Taking on the corporations through more effective antitrust efforts and the elimination of tax shelters would be a first step toward creating an economy that works for the people — in West Virginia and Vermont, as well as in Silicon Valley and New York City. Channeling the nation’s wealth to the top 10 percent of wealthiest people does not create a healthy society. The last 40 years have shown us that.

Toward that end, a rhetoric of major change is starting to take shape. It goes beyond specific 10-point plans to a vision of fairness, not defined by the conventional wisdom of the past, but by visionary leaders who have the interest of the people in mind. The erosion of trust in government has hampered the ability of government to foster these changes, but the shakeup occurring now in the United States, France and elsewhere, and a new generation of activists, may allow for possibilities that a only few years ago seemed impossible to conceive of.

David Moats, an author and journalist who lives in Salisbury. He is editorial page editor emeritus of the Rutland Herald, where he won the 2001 Pulitzer Prize for a series of editorials on Vermont’s civil union law.