When Opportunity Leaves, the Government Has Two Choices

If you tramp through the woods of New England and upstate New York, you will see stone walls marking the borders of farms that have been abandoned for a century or two. You may see the foundation of a small house, the entrance to a mine or the crumbling walls of a mill. The people left when the opportunity to make a living ran out, leaving behind nothing but stones, bricks and ghosts.

Among policymakers, there are two schools of thought about this. One is that the death of places that have lost their economic reason for being is natural and inevitable. The other is that society should attempt to revitalize the economies of down-and-out places, generating wealth while allowing people to stay where they’ve built families and friendships.

The Biden administration has come down on the side of helping places, not just people. That’s kind, and potentially efficient as well. But there are obvious drawbacks to pumping taxpayer money into places that the private sector has withdrawn from. I worry that place-based economic policy, as it’s called, could go too far in the name of doing good.

When President Franklin Roosevelt signed the Tennessee Valley Authority Act in 1933, the government was helping a place — a region, really — by building dams, roads, canals and hydroelectric power plants. The T.V.A. was a boon to Tennessee and surrounding states. However, the region remains poorer than average, and one study found that the local gains came at the expense of losses in other parts of the country.

After World War II, political support for place-based initiatives dwindled. In 1953, President Dwight Eisenhower called the T.V.A. an example of “creeping socialism.” The federal government could have spent less money and achieved more, some thought, by mailing poor people in Appalachia one-way bus tickets to somewhere else.

Much of the economics profession also took the view that helping individuals was more efficient than fixing where they lived. The failure of urban renewal projects to reverse the decay of many cities seemed, fairly or not, to confirm that view. In 2007, Edward Glaeser, a Harvard economist, asked in the headline of an article he wrote, “Can Buffalo Ever Come Back?” The subheadline answered: “Probably Not — and Government Should Stop Bribing People to Stay There.”