Elizabeth Warren says she has a plan for that.
That’s possibly true; she’s based her presidential campaign for having a plan for seemingly everything. She’s now put out one on the rural economy.
Is it any good? Let’s find out.
We know President Trump doesn’t have a plan for rural America, other than hoping that a booming national economy helps everyone. The problem with that: We’re in a new economic era and are now seeing what economists call “the great divergence”— high-skilled metro areas are doing well, but rural areas don’t necessarily prosper even in a good economy. We previously looked at the plans that Joe Biden and Bernie Sanders have put out and found them wanting. Is Warren’s any better?
The logo for her plan shows a barn. Sigh. This is a stereotype. Most rural Americans don’t work on farms. Ultimately, though, we need to judge the plan on its substance, not its style, so let’s move on:
1. Student debt. Warren says her plan to cancel up to $50,000 per person in student loan debt would have a unique impact on rural America. She’s probably right about that. Some college graduates from rural areas probably can’t afford to go back home even if they want to — they need higher-paying jobs in cities to pay off those student loans. We have no way to quantify that, of course. Warren’s plan might help the rural “brain drain” — or it may not. There’s no requirement that rural graduates stay in rural areas.
2. A public option for broadband. Like every politician these days, Democrat or Republican, Warren favors more federal spending to extend broadband internet to rural areas. Trump has rebranded an existing $20 billion in federal spending on broadband as the “rural digital opportunity fund.” Naturally, Democrats propose more, with Warren and Pete Buttigieg proposing the most, $85 billion and $80 billion respectively. What makes Warren’s plan different isn’t the amount but the recipients: She wouldn’t give any money to internet providers — i.e., telecommunications companies. Instead, she’d give it only to “electricity and telephone cooperatives, non-profit organizations, tribes, cities, counties, and other state subdivisions.” In other words, she’d promote municipal broadband (such as the Roanoke Valley Broadband Authority). That’s in keeping with her overall philosophy, which is to be skeptical of big corporations.
There’s a precedent for this: A lot of rural America got electrified through customer-owned cooperatives because utilities couldn’t afford to string power lines way out in the country. We still see some of these today — such as the Craig-Botetourt Electric Cooperative. In other places, local governments provide electricity — Salem is a one local example. There’s been a big fight over a similar approach to broadband. As many as 26 states have passed laws making it hard — or sometimes impossible — for local governments to provide broadband fiber even when telecommunications companies don’t. In Virginia, one of the big skeptics of municipal broadband has, ironically, been a rural legislator — Del. Kathy Byron, R-Bedford County. Her opposition is philosophical — small government, and all that. She and Warren could have an interesting debate here. Meanwhile, there’s this: A recent series in The Atlantic magazine looked at how Danville has managed to turn around its economy after the collapse of the tobacco and textile industries there. One of the things it cited in Danville’s favor was how the city’s municipal broadband allows it to offer “faster, cheaper” connections — a “significant” economic development advantage. Practicality trumps philosophy.
3. Spread federal research spending more evenly across the country, “not focused on only a few coastal cities.” Warren doesn’t have much else to say here but she links to an article by an economist at the Massachusetts Institute of Technology who calls for more federal research spending. More interestingly, Jonathan Gruber makes the point that “more government spending on R&D will not fly politically if it all goes to the existing technology hubs of today.” He cites Amazon’s recent headquarters search as an example of what’s wrong: “238 cities responded with incentives, yet the winning bidders were two of the most economically successful places in recent decades. The private sector, left to its own devices, will not close the income and opportunity gaps in America.” That’s why Gruber says the federal government should re-direct its R&D spending to smaller cities. That wouldn’t help every locality, of course, but no single plan likely would. Warren here seems to acknowledge “the great divergence.”
4. Clean energy research. Warren proposes $400 billion for energy research and development — she’d get this money by taxing the rich, of course — and she’d direct that spending to “land grant universities, rural areas, and areas that have seen the worst job losses in recent years.” Since we have a land grant university in Blacksburg, this gets our attention. Conceivably some might also go to the new energy research authority being set up in the coalfields. That doesn’t address the problem we’ve raised — those promoting green energy ought to address what happens to decimated coal communities – but it’s a potential start.
5. A Department of Economic Development. This is an idea Republicans might have come up with — and we mean that as a compliment. Warren would reorganize the government, replacing the Commerce Department with a Department of Economic Development, more singularly focused on job creation. She’d also put this department in charge of all worker retraining programs, now scattered across the federal bureaucracy. There’s no guarantee this would help rural areas, but this approach does seem closer to how states work.
6. What’s missing? For all her plans, a lot actually. Warren’s plan is big on federal spending but makes scant mention of what really drives the economy — private investment. This is where her skepticism of business hurts her. How would she persuade companies that now ignore rural America to change their minds? It’s unclear. That’s why we ultimately rate her plan “incomplete,” but she does have more ideas than most candidates. That ought to count for something. There is one candidate, though, who has even more ideas — and better ones. We’ll deal that candidate tomorrow.