Putting Competition Policy at the Top of the Agenda for Rural America

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By Lillian Salerno, former Deputy Undersecretary for Policy for Rural Development, USDA

As one of the few rural entrepreneurs who served in the Obama Administration, I was so fortunate to get to spend much of my time with rural small businesses and local farmers implementing the programs Congress authorizes to assist in rural economic development. In this role for 5 years, I worked alongside USDA’s amazing State Directors and field staff implementing and supporting economic development in rural and agricultural communities. In this role, I saw up close the challenges these communities face and learned quickly that what I had experienced in my own business going up against monopolies was the same for ag and ag related businesses. I visited with hundreds of local farmers and rural small businesses and heard the heartbreaking stories of businesses struggling because of market access and consolidation. Many times, these consolidations required families to sell their businesses and farms and lose their livelihoods, which had sometimes been passed down for generations.

I couldn’t help these communities because, despite a well intentioned Congress and lots of government programs designed to prop up the rural economy, there are no longer open markets for small and innovative businesses. We heard a lot about foreign markets and exports, but we needed then and need now are for U.S. markets to be opened. We need markets opened in the U.S. because the FTC and DOJ haven’t enforced antitrust law for 30 years. This overgrowth of monopoly power — in agriculture and everything else ranging from cowboy boots to hardware — is what is keeping rural America behind. We need to fix this.

In rural communities, the problems stemming from monopoly power are existential. From 2010 to 2014, 60 percent of counties nationwide saw more businesses close than open, compared with just 17 percent during the four years following the 1990s slowdown. During the 1990s recovery, smaller communities — counties with less than half a million people — generated 71 percent of all net new businesses, with counties under 100,000 people accounting for a full third. During the 2010 to 2014 recovery, however, the figure for counties with fewer than half a million people was 19 percent. For counties with less than 100,000 people, it was, shockingly, zero. The consequences for all Americans, as more and more research is confirming, are higher prices, poorer quality of goods and services, stagnant wages, depressed innovation and entrepreneurship, and hollowed out communities that are no longer able to keep wealth circulating locally.

Despite all this, the support and partnerships that the federal government pursue with rural and agricultural communities do not truly address the severe economic consequences resulting from a lack of competition and overgrowth of monopoly power. Providing increased access to capital, or reducing taxes on small businesses, or a host of other policies intended to boost rural America’s fortunes simply do not address the core problem that’s at issue.

The solution, for rural America and the economy on the whole, is a robust reinvigoration of antitrust and antimonopoly policy that makes sure local economies and family farms are not held economically hostage by multi-billion dollar, multi-national corporations. During the middle decades of the last century, the federal government used antimonopoly laws to keep markets open for smaller, independent businesses — the ones that care about and understand their communities, that keep wealth local, that create the vast majority of new jobs, that are often the source of game-changing innovations. That approach fell out of favor in the 1980s, and policymakers on both sides of the aisle are only now starting to recognize that it’s at the root of the economic anxiety and cultural destabilization that so much of rural America is experiencing.

That must change. Being clear about the cause of the problem — the simple fact that far too many markets, in far too much of the country, are simply no longer competitive — is where we must start. All the well intentioned programs and our tax dollars supporting these programs are for naught until we fix the underlying problem of concentration  and monopoly power.

Hear Salerno speak at OCM’s 19th Annual Food and Agriculture conference.

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