macOS Mojave -- Finder won't show favorites and can't drag new folders into favorites

Something happened to Finder on my Mac. It won't show the favorites I've selected (as per Finder->Preferences), and I am unable to drag any folder into the Favorites area.

I've included a screenshot to highlight the first problem I mentioned.

What do I need to do to regain this functionality?

enter image description here


If you hover your mouse over the word "Favorites", you should see "Show" button.