If the Shire fell and Sauron won (as Tolkien observed for his beloved home country, also symbolic for all Christendom) it would be logical that the native citizens would be corrupted as the dark hand controlled the land. And with each generation the Hobbits would be further removed from their true identity, from who they really are; their values, their ways of life, and even their purpose. Until they eventually resembled in all but race the goblins from the dark lands, while bordering on extinction.