Eisenberg on Economic Regulation and Rural America

Ann Eisenberg, University of South Carolina School of Law, has posted Economic Regulation and Rural America, which is forthcoming in the Washington University Law Review 98 (2021):

Rural America today is at a crossroads. Widespread socioeconomic decline outside cities has fueled the idea that rural communities have been “left behind.” The question is whether these “left behind” localities should be allowed to dwindle out of existence, or whether intervention to attempt rural revitalization is warranted. Many advocate non-intervention because rural lifestyles are inefficient to sustain. Others argue that, even if the nation wanted to help, it lacks the law and policy tools to redirect rural America’s course effectively.

This Article argues that we do have the law and policy tools necessary to address rural socioeconomic marginalization, and that we neglect to use those tools to our own collective detriment. The Article focuses specifically on the tool of economic regulation, meaning government oversight of entry, exit, and participation parameters for service providers in certain markets. Robust historical precedents establish that strategic economic regulation is uniquely capable of sustaining rural communities, and that using it to do so is in fact critical to national resilience.

Rural diseconomies of scale—the problem of higher costs per capita and lower demand for resources in population-sparse regions—must be understood as a keystone question concerning whether and how rural communities can gain access to the amenities they need to survive. The pre-1970s regulatory regime governing infrastructure industries helped overcome the problem of diseconomies of scale by safeguarding rural access to services that precede economic growth. Infrastructure industries’ subsequent abandonment of rural America during the deregulatory era amounts to a market failure because the nation remains dependent on rural communities for food and energy production, environmental stewardship, and political stability. Thus, for the benefit of all, corrective interventions into infrastructure markets and a broader conception of infrastructure should help connect rural America to community-sustaining systems, like broadband internet and national grocery store chains. Ultimately, this discussion also offers an answer to the problem of the so-called “urban/rural divide”: enhancing “urban/rural connectivity,” both literally and symbolically.

--Dan Ernst