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In the wake of the 2016 US presidential election, the liberal intelligentsia belatedly realized that rural and small-town America was in crisis. One sector of liberal opinion insisted that the key to Donald Trump’s victory lay in racism rather than economic distress (partly because of its own complicity with the neoliberal, free-market project). Another sector, blind to the central importance of racial inequality for US capitalism, preferred to stress narrowly economic explanations for Trump’s rise. Both schools of thought failed to grasp the different ways in which economic suffering, racism, and community decline have interacted to prepare the ground for authoritarian populism. They also grossly underestimated the human toll of the catastrophe engulfing rural areas and small towns, overlooking the “social pathologies of collapse” that have become ever more glaring. Since the turn to more cutthroat free-market policies in the 1980s, American capitalism has systematically underdeveloped rural and small-town regions of the United States. The 2008 crash poured gasoline on the fire. Mutual savings banks and credit unions, cooperatives, mom-and-pop businesses, local industries and newspapers, health and elder care facilities, schools, and libraries have all fallen victim to relentless austerity policies or private-equity raiders. As people could no longer share in the wealth they had produced, while community tax bases and social institutions withered away, “rural resentment” and economic anxiety boosted fear of cultural and demographic changes and heightened receptivity to authoritarian appeals and conspiracy theories. Aggrieved masculinity and a loss of white privilege were certainly vital ingredients in this toxic brew, along with the question of gun rights. But such “cultural issues” were also bound up with economic decline and social fragmentation: white men who have experienced economic setbacks “are the group of owners most attached to their guns,” and the ones most likely to view the home as a bunker requiring defense against threatening outsiders.

Financialization on Main Street In Glass House: The 1% Economy and the Shattering of the All-American Town , Brian Alexander describes an Ohio community whose story is replicated in thousands of others throughout the United States. Home to a large glass plant, it was a place where “a factory worker might live three blocks from a factory owner,” and where owners backed bond issues to fund good schools and hospitals that attracted skilled employees. In the 1980s, corporate predators mounted a raid, loaded the company with debt, dismembered it, crushed the union, and cashed out. The new owners — hedge funds and private-equity shops — slashed wages and pensions, and ordered executives to live elsewhere “so they wouldn’t be troubled by requests for civic involvement or charitable contributions.” The priority now was maximizing shareholder value, not making things — let alone squandering profits on community institutions. The deindustrialization of the United States reached a crescendo after the 2008 crash: non-metro areas outpaced the rest of the country in industrial job losses, with a 35 percent drop in manufacturing employment. Populist demagogues like Trump blame those job cuts exclusively on free trade and factory flight — their liberal critics also cite automation and a failure to innovate — but neoliberal financialization has clearly been central. Financialization — the involvement of financial actors in business and markets, and the ownership of assets not for what they might produce but for how they might be stripped and flipped to generate shareholder value — has its origins far away from the affected communities, and it tends to be an opaque process. As Jennifer Clapp points out: “This lack of transparency about which actors are involved in driving these trends creates space for competing narratives — often advanced by the financial actors themselves — that point to other explanations for negative social and environmental outcomes.” As neoliberalism fails to deliver the promised prosperity, people trying to understand what has happened to their communities increasingly fall back on conspiracy theories and “post-factual” claims.

Banking Deserts Mutual savings banks used to power small-town economies. Their directors contributed to local institutions, knew clients, and sometimes made loans based on trust. From the 1980s on, private-equity investors seeded mutual and savings banks across the country with small deposits, anticipating their conversion into stock institutions. Depositors could buy stock at insider prices before initial public offerings (IPOs). Typically, shares appreciated by 15 percent on the day of the IPO, and 20–50 percent more over the following months. Directors and investors encouraged giant regional banks to gobble up and shutter the local ones, then cashed in as shares soared 200 to 400 percent above the IPO level. In the process, they sucked wealth out of communities, imposed stricter lending criteria, and cut the ground from under small businesses. Many people found themselves trapped in “banking deserts,” forced to rely on high-cost check-cashing outlets and payday lenders (often financed at one remove by the larger banks that had created those deserts in the first place). Like mutual banks, cooperatives and credit unions reinvested wealth that communities produced locally and acted as a bulwark against rapacious corporations and banks. About one-quarter of the 8,000 credit unions active in 2007 had closed by 2017. Between 2000 and 2015, more than a third of the 3,346 agricultural cooperatives still active at the beginning of the century had been forced to shut down.

Unhousing the Poor When the mortgage bubble burst in 2008, homelessness soared as homeowners defaulted on what had often been predatory loans. Across the United States, residential foreclosures rose dramatically, from a little over 380,000 in 2006 to 1 million annually between 2009 and 2012. Foreclosures only returned to pre-crisis levels in 2016. By 2012, nearly a quarter of US homeowners with mortgages were “underwater,” with debts that exceed the value of their homes. A staggering $7 trillion in home equity evaporated. Evictions from rented accommodation were even more widespread, with 83 million nationwide between 2000 and 2016 — an average of 4.9 million per year. That figure excludes the many “informal evictions” that took place when renters gave in to pressure from their landlords to move before facing legal action. At least one-quarter of poor renting families spend 70 percent or more of their income on rent and utilities. Just one in four households that qualify for affordable-housing programs actually receive assistance. The housing crisis has had a devastating impact. A single foreclosure ruins an individual’s credit rating, and legal eviction from rental housing generates a court record. Either misfortune can prevent them from obtaining jobs or accommodation in the future, since employers and landlords routinely perform credit checks or screen applicants for an eviction record. Eviction also leads to the loss of employment, as overstressed workers make mistakes and get fired. People with no permanent address additionally struggle when filling out job applications. They frequently lose access to food stamps, Medicaid, and other benefits when renewal notices are posted to their former addresses. Children have to switch schools mid-year, harming their education. Large investor groups also create housing insecurity by targeting “mom-and-pop” trailer parks, hiking rents, and siphoning off money that would otherwise be spent locally. Frank Rolfe and Dave Reynolds, who boast a $500 million portfolio of mobile-home parks, run a “Mobile Home University” that teaches investors how to get started on a business that promises annual returns of up to 20 percent. Mobile-home park investors skim profits from what Rolfe contemptuously refers to as “the dregs of society.” Trailer-park residents — 6 percent of the population — are largely helpless to resist: they are more likely to endure the rent increase than to pay the $3,000 it costs to move a trailer to another park.

Farming in Crisis The 1980s brought the worst crisis for US farming since the Depression of the 1930s. The cost of fertilizers skyrocketed, interest rates soared, banks called in loans, and grain prices plummeted with the loss of sales to the USSR after its invasion of Afghanistan. A handful of giant corporations grabbed an ever-greater share of the profits accruing between farm gate and dinner plate, through rapid consolidation of input and machinery suppliers, and the processing and export of commodities. Bigger, more powerful machinery made it possible for fewer farmers to farm larger areas, which compounded the problems of indebtedness, land concentration, and a decline in the population sustained by agriculture. Survivors of the 1980s slump recently suffered a second crisis when the commodities boom of the 2000s came to an end. Between 2013 and 2017, farmers suffered a 48 percent drop in real net farm income — the largest four-year decline since the Depression. More than half of farm households now lose money on farming . As farmers go bankrupt once again, the multiplier effects further destabilize local economies and the communities that depend on them. The concentration of farmland ownership, especially when corporate enterprises replace family-owned units, also leads to declining school attendance in rural districts, and often to the closure of schools that had long been centers of community life.

News Deserts and the Retail Apocalypse Family-owned stores and diners on small-town Main Streets were sites of human contact. They invested profits locally and provided jobs for rural households. As malls and chain stores proliferated, these “mom-and-pop” businesses withered away. Roughly 600,000 disappeared between 2007 and 2012. Even when the economy rebounded, businesses did not return to their former sites: by 2016, less than one-quarter of US counties had replaced the businesses they lost in the recession. Fewer small businesses means less advertising revenue for local newspapers, thousands of which closed, having already been hobbled by the migration of readers and ad dollars to the internet. The same destructive financialization that has been strangling industries and banks afflicts local media companies. This deprives communities not only of local news reporting and ads, but also of any space to mark births, deaths, weddings, graduations and sporting achievements — all of the things that make a town’s inhabitants identify with a place, and take pride in it. Furthermore, we can draw a clear connection between newspaper closures and lower voter turnout, reduced competition in local elections, and increased government corruption, as officials no longer face scrutiny by journalistic “watchdogs.” Hedge funds and private-equity firms bought up local papers at bargain-basement prices all over the country. They cut costs by merging the production, sales, and editorial functions of several newspapers, while putting together audiences large enough to remain attractive to their advertisers (who increasingly tend to be chains rather than local businesses). Often, consolidation meant the closure of “underperforming” papers, creating “news deserts” that leave smaller communities with no source of local news. After the first waves of retail closures on small-town Main Streets, low-wage jobs in chains and malls also began to disappear with the expansion of e-commerce. According to Bloomberg , it wasn’t just competition from online merchants that drove this trend: “The root cause is that many of these long-standing chains are overloaded with debt — often from leveraged buyouts led by private-equity firms.” This “retail apocalypse” set off a vicious circle: with the demise of brick-and-mortar businesses — whether on Main Street or at the mall — e-commerce behemoths like Amazon became ever more vital for rural residents, many of whom could ill afford the gas and time that would be needed to drive long distances to shop. To compound the malaise, since the mid-2000s, the surviving big-box businesses have frequently mounted “dark-store lawsuits,” claiming that their tax assessment should be based on sales of vacated comparable properties. That forces small towns to dedicate scarce funds to legal costs and further erodes local tax bases. Some of the few retail outfits still proliferating in this bleak environment are dollar stores, which drive established groceries out of business. The number of dollar stores has risen from 20,000 to 30,000 since 2011. Chains such as Dollar General — whose owners include BlackRock and Vanguard, and which cater to customers that one market analyst describes as “a permanent underclass” — can spend as little as $250,000 on a new store; by comparison, a Walmart might cost over $15 million. Profits from a local grocery store used to go back to the community, or an owner who lived nearby. Profits from Dollar General go straight to its corporate office. Empty storefronts and malls, vanished newspapers, and mushrooming dollar outlets are not just signs of job loss and economic precarity. Rural people see them as stark, painful reminders of abandonment and a shredded social fabric.