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Free Minds & Free Markets

Entrepreneurialism on the Hoof

What could explain the tumbleweeds rolling through the corridors of my wife's usually bustling pediatric practice for one week each May? It's entrepreneurial spirit.

Few things motivate the local kids to suppress their usual sniffles and complaints like the annual fair, when their longtime 4-H and FFA (formerly Future Farmers of America) projects come to fruition. All that time, sweat, and energy expended by them (and, too often, their suffering parents) in raising rabbits, lambs, goats, poultry, and steers find their reward at the livestock auction, from which the kids depart with hard cash and the buyers end up with freezers full of meat. It's a demonstration not just of animal husbandry but of an entrepreneurial spirit that's at odds with the Hillbilly Elegy–esque dysfunction we're told to expect of locales outside city limits.

Not that rural America's problems are imagined. Opiate use is big across the country and bigger still in non-urban environs. "While all states have reported increases in opioid mortality and injury, the largest increases are reported in heavily rural states," the National Rural Health Association reported last year.

Unemployment and poverty are definitely pressing concerns as well. The pool of rural jobs continues to be smaller than it was in 2008 before the Great Recession. And the incidence of poverty is higher in rural than urban environments, according to the Department of Agriculture's Economic Research Service.

That said, the poverty rate is declining (from 16.5 percent in 2010 to 15.8 percent in 2016), and the contrast is nowhere near as stark as it once was. "The rural-urban poverty gap has narrowed…from 17 percentage points in 1960 to 3.6 percentage points in 2016," the Department of Agriculture continues.

Maybe one of the factors narrowing that gap is the sort of entrepreneurialism demonstrated by the epidemic of healthiness among my wife's patients.

"It is in fact nonmetropolitan counties that have higher rates of self-employed business proprietors than their metropolitan counterparts," an academic publication called The Conversation noted last year after surveying social scientists and crunching Census Bureau data. Urban entrepreneurialism is concentrated in counties of 1 million or more people, with 131 self-employed proprietors (measured by IRS tax status) per 1,000 residents. Rural counties, on the other hand, become more entrepreneurial as their populations get smaller and more removed from cities, with 234 proprietorships per 1,000 residents reported in counties of fewer than 2,500 residents that aren't adjacent to a metro area.

And no, that's not all kids auctioning off the goats they raised at home—only one-sixth of the businesses identified by The Conversation are farmers.

The businesses tend to enjoy better longevity than urban startups, with five-year survival rates rising the more sparsely settled a county is and topping off at 71.6 percent, compared to an urban high of 68.3 percent in metro counties with populations less than 250,000 and 66.5 percent in counties with 1 million or more.

"The reality is that rural areas have to be entrepreneurial," The Conversation's social scientists note, "as industries with concentrations of wage and salary jobs are necessarily scarce.…The resilience of rural start-ups is perhaps due to more cautious business practices in areas with few alternative employment options."

If you can't find a job, in other words, you have to make one if you want to eat. And you have to make it work.

Rural America's entrepreneurial edge may, alas, be fading. The Small Business Association warned last year that, while "the rate of self-employment has remained higher in rural areas than in other areas," the share of non-urban entrepreneurs has dropped. In part, that's because many Americans have migrated from the country to the city. But a smaller percentage of rural dwellers is self-employed now than in the recent past: 6.5 percent in 2016 vs. 8.4 percent in 1988.

Self-employment also dropped in suburban areas, which hover between the rural and urban rates. It increased a hair in cities, from 5.2 percent in 1988 to 5.7 percent in 2016.

Maybe that fall-off in business startups is just a blip. Those kids ignoring their aches and pains so they can peddle still-mobile pork and beef to eager customers may just be artifacts of a fading past. But I'm hoping their entrepreneurial spirit heralds better things to come.

Photo Credit: CSA-Printstock/iStock

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  • I am the 0.000000013%||

    State and federal taxes to pay for urban infrastructure makes it much harder to live in an area where incomes are lower. Artificially raising the cost of living in rural areas to subsidize urban areas is driving people out of the rural areas.

    Of course they're just clingers or deplorables anyway, so who cares.

  • Horny Lizard||

    I've noticed prices are higher in the back lands because there's less supply and demand for the goods or services though in certain areas, like fire wood or tractor services, prices are cheaper. My water, energy, gas costs at my camp are more expensive than my city home.

  • Jerryskids||

    I've pointed this out many times - I live on the far fringes of the Atlanta metro area and you know what costs more in Atlanta than out here in Damnearalabama? Tokens for mass transit, tickets to the zoo, ballet, symphony, museum, theater, opera, football, baseball, basketball - all the things Atlanta has that we don't. But guess what? All those things are subsidized with your tax dollars and if you live in Atlanta you're paying for them whether you want them or not. City living should be cheaper than rural living given the economies of scale, but the cost of living is actually higher in urban areas because it's too damn easy to say "Hey, as long as we're all here, why don't we all chip in a few bucks for 'X' since it'll be cheap with so many people paying for it?" And all those 'X' that you're paying for are luxuries, not necessities. If you can't afford to live in luxury, you're screwed trying to live in the city.

  • loveconstitution1789||

    Another reason that the politicians in Atlanta want to extend Atlanta's tax base into the Metro-Atlanta areas.

    I prefer to live outside Atlanta in luxury and on large acreage while also being within 50 miles of Atlanta's big city attractions and crack heads.

  • SRoach||

    Part of that is easy to understand. The length of water pipe, power line, and gas pipe per household goes up when the distance between households goes up.
    Think of it this way, if you live a quarter mile from your nearest neighbor, on average, than the fair share of utility line for your household is about a quarter mile.
    Further, it doesn't really matter whether or not some of those are being used or not. Each mile of power line is about equally vulnerable to damage from windstorms and ice accumulation, (after adjusting for the fact that some are more vulnerable, because they're in among trees, or in areas more prone to freezing rain and drizzle.) The load you put on your power line isn't making that length of cable more at risk, or less, it's still likely to get knocked down by a broken branch in a storm. The result of this is the repair and upkeep cost per subscriber also goes up as the distance between subscribers goes up.

    But. Something to be ashamed of. From what I understand, rural power is subsidized by urban power. And the common argument that it helps the rural economy, where all the food comes from, falls as flat for this utility as it does for every other mandatory group-buy. That is, you (the rural dweller,) is still paying for the higher cost to produce that grain, but it's hidden in your utility bill. Why not have the cost out in the open?

  • DaveSs||

    When considering the cost of rural vs urban/suburban utilities, one has to remember that in the rural area, labor and land use costs for utilities are considerably lower than in the urban areas.

    Stringing a mile of overhead line costs considerably less than running a mile underground as you would typically be required to do in a lot of towns and cities.

  • SRoach||

    While this is true, in lots of towns and cities, (most lines are above-ground near where I live, even the "urban" ones,) they are also more vulnerable to damage that way, which means more time spent fixing them. I don't know what the break-even point is for buried utilities. I suspect it doesn't happen in rural areas, but it might in urban settings.

    Also, as to land-use. I doubt that comes up all that often. I may be wrong, but through a combination of eminent domain and easements, I suspect it isn't as high as you might think.
    But, these are all soft numbers and speculation.

  • EscherEnigma||

    Well okay, but for a "rural" place you may need that mile to get to one house. In an "urban" area, that one mile will hit probably a dozen houses (more if there are apartments and such).

    So yeah, the per-mile cost of putting utilities in "rural" areas will be lower, but the per-user cost will normally be lower in denser areas, and that's regardless of whether you're talking buried or not.

    Or to put it another way... there's a reason wells are used in rural areas but are only found in urban areas when the city grew around the lot.

  • DaveSs||

    Rural means a lot of things though.

    A house every 200 ft on up to no houses from 20-30 miles.

    For the eastern half of the US, the former is more typical of a rural area.

  • SRoach||

    Typo. I meant to type "you (the URBAN dweller,)" in that second-to-last sentence.

  • SRoach||

    But, on the first part. In rural areas, even it the merchant is willing to operate on a tiny profit, turnover is enough smaller that that one Ding-Dong and Pepsi, bought at the local rural store on a lazy Thursday, might have to pay for the lights for the whole day, whereas in urban areas, one Ding-Dong and Pepsi only needs to cover expenses for maybe half an hour on average. As Wal-Mart showed us, profit equals margin times turnover minus expenses. Where turnover is smaller, margin has to be raised to get a survivable profit, and that is even with the cheaper cost of commercial property, lower taxes, and lighter regulatory burden, in rural areas.

  • Muzzled Woodchipper||

    This is absolutely true. My gas taxes in rural Kentucky subsidize highways in places like Louisville (state gas tax) and subways in New York (federal gas tax).

    If we weren't paying for urbanites to drive on nicer roads or for them to to not drive at all by taking advantage of subsidized public transportation, getting around wouldn't be nearly as expensive as it is.

  • Jerryskids||

    If you can't find a job, in other words, you have to make one if you want to eat. And you have to make it work.

    I would suggest there might be a self-selection bias at work there as well. Some people prefer working and living in herds, some of us are not big fans of other people. If you're fine working with a thousand other people, you're probably fine living with a thousand other people. If you'd rather be away from other people, being your own boss in a small company lets you get away from other people.

  • Earth Skeptic||

    Feelings about herds and crowds certainly drive personal preferences. I suggest a bigger driver is affinity or at least tolerance for authority, in the workplace or society (or both).

  • ||

    Some people prefer working and living in herds, some of us are not big fans of other people. If you're fine working with a thousand other people, you're probably fine living with a thousand other people.

    There's also specialization bred in by our education and credential system. If you like (the challenge of) changing oil, patching flats, changing locks, wiring outlets, etc. and you live out in the country, too bad, you're the guy. If you don't like those things or feel that life has ill-prepared you for handling whatever adversity may come your way, you have to 'call a guy' to handle your situation for you and have to leave conveniently near 'a guy'.

  • Earth Skeptic||

    In other words, if you're basically competent with simple mechanical and technical skills, you can live anywhere (and survive). If your only skill (and tool) is a smart phone, you need an environment where everything is provided--and that only happens in urban areas for masses of nitwits.

  • Paloma||

    There's a certain anonymity living in big cities that appeals to libertarian sentiments. And lots is things going on and interesting ideas bouncing off each other.

    Most people live in metropolitan areas of at least a million people.

  • SRoach||

    You can keep your (pseudo)anonymity. I prefer my lighter regulatory burden and less surveillance.
    I can, should I be of a mind to, walk around naked in my "back yard" while carrying a military pattern rifle. Try doing THAT in any city.

  • loveconstitution1789||

    High density Urban areas tend to be more expensive because land is a premium. The lower costs of more bulk food and products being shipped into urban areas tends does not put much of a dent in higher land costs. High demand for the goods can cause prices to shoot up simply because the difference between purchasing the goods and replenishing the goods. In other words, the ease of getting more goods to more people within a smaller area does not necessarily make living in a large metro area cheap.

    Rural areas can have high costs for delivery of goods because the lack of population density. These areas tend to have the natural resources that are wanted and people who are willing to work in remote areas to gather the natural resources. These areas lack large numbers of jobs as there are less businesses to needs workers.

    Suburban areas have the best of both worlds. Close access to urban centers and higher paying jobs while maintaining a lower cost of living. They also have land for new businesses.

  • Don't look at me.||

    Rev Kirkland hardest hit.

  • Azathoth!!||

    Artie got out--you never forget that, you. He's so-fist-ick-ated now. He got him some book learning and now he doesn't get chained under the septic tank every night with his brother-wives any more. Nope. He's out of the trailer park. And his parent are so proud.

  • ||

    raising rabbits, lambs, goats, poultry, and steers

    Pork producers and Junior Swine Associations has a sad.

  • SRoach||

    Getting into hog showing is EXPENSIVE. Getting into hog production isn't cheap,...if you do it through traditional channels. (The big producers have a lock on the prices of breeding stock.) That said, there are enough "ferals", of familiar breeds such as Hampshire, that a good pig trap can be your ticket to a good sow and boar.

    ...If you can afford to raise pigs. Last time we did, it cost more to raise them than they brought at market.

    Also, there is a little bit of controversy in some animal showing. There are breeders that sell bred-for-show animals to the 4-H and FFA kids to show. The breeders hang around their own output, quietly signaling to the judges who to give the blue ribbon to.
    That's not the only scandal, of course. Kids, and coaches, have been caught "juicing". That is, giving their animals little chemical aids to growing big and meaty.

  • Earth Skeptic||

    Well, as long as the hogs don't start talking...

  • EscherEnigma||

    I'm not sure I'd assign any of the differences in rural/urban economies to the "spirit" of any place.

    It's just capitalism. Put simply, "big" businesses will move in and displace rural "small" businesses when it's economic to do so. And as we see over and over again, the people in rural areas are no different from people elsewhere, and will jump ship from the small business they've been patronizing for decades if the new Wal-Mart is just a little bit cheaper.

    So sure, you get more small businesses in rural areas, because it's not economic for big businesses to displace them yet.

    And that's without even talking about the urban/rural wealth transfer going on, how for most of those kids this was no more life-altering then a science fair project, and that most of those kids will never end up owning their own farm (even if they wanted to, the economics of factory farming is increasingly pushing out family-owned farms in favor of big factory farms).

  • BestUsedCarSales||

    Though I do recall some statistic that said that many of the most significant people in the US tend to come from small town backgrounds. There is some difference there. There's lots of explanation for that, like that America and Canada have unusually high proportions of the population that live in smaller cities and towns.

    I don't know though. Your point is very relevant as well. Forcing entrepreneurship by having no other options is not a killer to Tucille's argument though.

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