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In a Hole in the Ground there Lived a Fed
(hexbear.net)
Also, they had mayors and stuff, a VERY clear class division and were technically under the rule of Gondor after the Northern Kingdom fell but Gondor didn't really have the resources or urge to do any ruling over there. Once Aragorn was in they were essentially an autonomous zone under military protection in exchange for maintaining the local roads and bridges.
I'm a little more sympathetic to the Hobbits. Here you had a stable kin-based society in a part of the world that nobody cared about until some Fed from a far off Western Superpower (that destroyed an entire continent and sunk another island nation under the sea, mind you) is meddling around.
they're settler colonists. where are the original inhabitants of the shire? bit suspicious, eh?
The timeline says they were "allowed" to move there by original settler-colony of Arnor, which suggests displacement since Tolkien is a known Western sympathizer.