Q&A: Writer Explores Why Appalachia’s Economic System Keeps People ‘Poor, Sick, and Stuck on Coal’

Feb 7, 2018

Gwynn Guilford is a reporter for Quartz, a business news site. She specializes in writing about the economy. Guilford spent 10 months researching Appalachia’s economy for an article called “The 100-year capitalist experiment that keeps Appalachia poor, sick, and stuck on coal”. Guilford dug into the history of the region’s economic ties to the coal industry, and the long-term effects this relationship has had on the people who live and are determined to stay in Appalachia.

West Virginia Public Broadcasting reporter Roxy Todd spoke with Guilford about her report.


 

Roxy Todd: Gwynn, let’s start with how you became interested in researching the economic landscape in Appalachia, how it affects workers, and coal bosses.

Gwynn Guilford: In early 2017, I began researching U.S. mortality rates, which were drawing a great deal of media attention due to “deaths of despair,” in particular, opioid-related deaths. I wondered whether the focus on opioid deaths — which in the grand scheme of things, don't kill anywhere near as many people as, say, heart disease — was obscuring other trends.

 

Looking at national data wasn't very helpful, given the huge variation in health from one place to the next. So I started looking at maps of health data and mortality rates and trying to learn more about conditions in geographic pockets where things were particularly grim.

 

Again and again, the patch that I later came to understand was central Appalachia leapt out. Though, obviously, overdose rates were indeed frighteningly high in central Appalachia, what struck me was the breadth and consistency of health problems there across the board. I thought, “Geez, there's a much bigger story about what's happening here than opioids alone” and started trying to learn more.

 

My go-to strategy for trying to figure out anything is to start studying its history. Up to that point, my familiarity with central Appalachia came from stories I'd read about coal and opioids in central Appalachia while I covered the Trump campaign for Quartz in 2016, and due to the popularity of J.D. Vance's Hillbilly Elegy as a sort of Rosetta Stone translating the source of Appalachia's problems for outsider politicians and journalists. In other words, I didn't know much!

 

I was lucky that one of the first people I happened to talk to — Nick Mullins, whom I found through his blog, The Thoughtful Coal Miner — was deeply conversant in the region's industrial past (Nick's family history ends up being the opening of my story). The more I learned about these (to me, bizarre) forces that shaped the region's economy — e.g. absentee land ownership, coal camps, the drafting of the WV constitution, the patterns of coercion that gave rise to Matewan and the Battle of Blair Mountain — the more astonished I was by how little of this vital context made its way into media coverage or the wider American public's understanding of central Appalachia's challenges.

Former coal miner Nick Mullins
Credit Roger May for Quartz

Two other things surprised me: First, how much of what I'd learned from writing about economic development — particularly on China's economic growth model, deindustrialization, economic complexity, and the inclusiveness of economic and political institutions — applied to this patch of America, too. The other thing was that these problems weren't unforeseen.

 

On the contrary, way back in the late 1800s and early 1900s, West Virginia politicians and tax authorities were already bemoaning what coal's outsize influence on the state's economic structure and incentives would do to future generations. They were clearly right to worry.

RT: How do you think Appalachia’s economy is a lesson for the rest of the country, about capitalism, and about the extractive industry?

GG: The "capitalist experiment," as I envisioned it, was based first of all on the coal camp system — basically, the question of "what happens to social fabric and economic life when you privatize individual communities all across a region?" And the results aren't good. Governments permitted individual companies to exert such absolute control over economic and social life that they could low-ball miners on wages in order to ensure profit margins. To use the concept pioneered by economist Joan Robinson, they enjoyed monopsony power. As the lone employer in a given town, they barred competition of other industries that might give people other economic choices and other skills to learn, thereby bidding up wages. Central Appalachia's coal industry boomed in large part because, by suppressing workers' wages, it outcompeted competitors from other (unionized) regions on price, encouraging even more expansion. Much of the industry's growth came out of the pockets of mining households.

This vicious cycle crippled the long-term growth of central Appalachia's economic base. Since most of this profit flowed out of the area, instead of being reinvested, it drained the region's natural wealth and human capital even more. Continued reliance on the coal industry to create jobs and growth has shifted political and economic power increasingly away from all households — not just miners' families — and radically curbed the choices and opportunities of the vast majority of central Appalachians. The public services that they should have been able to expect to nurture and support healthy, productive, educated communities either never existed in the first place or were backed by a stream of funding from coal extraction too minimal to sustain them.

 

These very specific conditions don't apply in obvious ways to the rest of the U.S. But the dynamics here are instructive, and several parallels exist.

Take, for instance, the middle class, a bellwether of economic health. The U.S.'s middle class was in large part created through New Deal reforms that intertwined the interests of labor and capital, and expanded educational opportunities. By upping earning power and deepening the skills and knowledge of working-class America, these policies were a formula for balanced, self-sustaining growth. Though it was powering the consumer boom that resulted, central Appalachia never saw the emergence of a true middle class, thanks in large part to the economic and political dominance of the coal industry.

Nowadays, however, the rest of the U.S. is heading more in that direction too. For the last few decades, the American middle class has imploded, a sign that the U.S. economy, like that of central Appalachia, is becoming more and more fragile.

Another worrying similarity is how, as has long been the case in central Appalachia, America's economic and political institutions increasingly concentrate power among the few instead of investing in the things we know drive long-term, self-sustaining growth.

As with most vicious circles of elite influence, there's a cynical short-termism to how they distribute wealth. The latest tax cut bill is a case in point. That's transferred wealth to corporations and their shareholders that instead should have gone toward spending on things that will expand the economy's potential to grow — e.g. health, education, infrastructure. Meanwhile, increasing lack of regulatory accountability means that companies can easily pass on costs to the public.

This is also the consequence of the hollowing out of the local tax base in these places, which reflects U.S. leaders' failure to help prepare communities to weather global economic and technological changes of the last few decades. Nowadays, scores of other geographic pockets of sickness and economic distress have emerged all over America. And as in central Appalachia, the implied solution is just to leave. But many don't want to have to choose between their hometowns and a decent wage or opportunities for their kids—or, for that matter, their family's health. Disturbingly, no leaders that I know of have come up with sound, concrete ways of confronting these problems—or even acknowledging them.

In the retreat of public leadership, we've also seen a shrinking of the role of public goods and services in Americans' lives. This too is a sign of how our institutions are failing to act on behalf of the interests of a broad base of Americans. In some struggling towns, the retreat of local governments as providers of public services has been replaced by private equity firms that charge more for things like water systems, ambulance services and fire departments in struggling towns across America. (These are the sorts of arrangements supposed to rebuild America's crumbling infrastructure, by the way.) It's here especially that central Appalachia's "capitalist experiment" can teach America something important.

This push is all based on the ideology that privatizing public goods and services always makes them cheaper because, since companies are motivated by profit, they'll use resources more efficiently. But profit is just what happens when you add up income and subtract costs; the more crucial factors in determining whether resources are used productively are the prices assigned to those resources. The question is, who or what determines those prices? In the absence of competition and regulation (which puts value on more abstract things like health and clean air) private companies do.

That's exactly what we saw in the "capitalist experiment" of the coal camps. The prices they assigned to labor, to housing, to healthcare, to pinto beans at the company store — those had nothing to do with efficient use of those resources, and they didn't reflect genuine value. Companies set prices that maximized their own profit. Did they use resources efficiently? Nope. They destroyed central Appalachia's human and natural capital, and profoundly stunted its physical capital. Yet here we are as a country, embracing policies that decrease competition and regulation.

RT: Some people have said that the Appalachian coal industry can be seen as a microcosm for some of the failures of capitalism. Do you think this is true?

 

GG: I don't think capitalism per se has failed. Rather, it's the institutions designed to broadly distribute the wealth capitalism creates that have failed central Appalachians. And until those institutions are expanded to encourage political and economic participation from a vastly broader swath of its society, they'll continue to suffer.

RT: Some people have said that coal economies in central Appalachia have been treated almost as colonies by rich coal bosses from out of state. Do you think there is any reality in this reading of coal economies?

GG: Under colonial systems, typically the oppressing country extracts cheaply produced raw materials for its domestic production, while exploiting the colony's workers as a captive consumer base for its value-added exported goods. Beyond its obvious moral problems, colonialism is bad because it discourages manufacturing, suppresses household purchasing power, and erodes the skill base in a way that eats away at a country's productive potential, and leaves the economy precariously reliant on one or two commodities. So, sure — I think it's not hard to see the similarities to colonialism in the absentee ownership, coal camps, and tax systems.

That said, I spent a lot of time puzzling over this question, reading up on debates among Appalachian academics about the relevance of the analogy, and couldn't really figure out what applying the "colonial" framework helps illuminate.

I'm open to any tips on that, of course, but ultimately, someone whose thinking I found the most insightful was the late, great writer Jane Jacobs, especially her sobering caution about our impulse to embrace the concept. "The trouble with loosely calling all supply regions [i.e. places rich in natural resources] 'colonial' economies is that the term is too optimistic," she wrote in Cities and the Wealth of Nations in 1984. "By reverse implication, it suggests that if alien domination of some sort is thrown off, a stunted, narrow economy will no longer remain stunted and narrow, will proceed to become better rounded and capable of producing amply and diversely on its own behalf as well as for others."

 

The problem isn't really coal or no coal, colonialist or not. It's understanding what the extractive institutions built up around coal have done, over the course of a century, to central Appalachia's potential. Fixing those institutions is what central Appalachia's future hinges on—the debate about coal's rightful role in the economy, which Trump has helped whip up, is a distraction.

RT: As you probably know, in many of these small communities the coal companies paid for schools, housing, water infrastructure, and basically built up the entire town. This can be great for communities. But on the other side of the coin, when the coal companies leave these areas, they leave a crumbling infrastructure, and in many of these towns, people still live there but they struggle with failing water systems, and other effects of the lack of investment in the infrastructure. It some cases, it almost seems as though these towns were never planned to survive 2 generations. What’s to be done for the people left behind as coal companies have abandoned these former coal communities to their own fate? Aside from the lack of jobs, there are other major trickle-down effects left behind from the downturn of coal.

GG: I'm sorry to say I don't have an answer to your question. But I will say that this issue is, to me, the most fascinating and heartrending of everything I learned, and I do have some thoughts.

 

First off, many of these towns weren't planned to survive two generations! There's a line I quote in my story from a 1923 Congressional report investigating coal-camp life: “A manufacturing town may count upon a reasonable degree of permanency. A mining town in a region not suited to other industry is sure to have only a limited life.” Well, just because it's "not suited" doesn't change the human impulse to put down roots! This whole line of thinking sees people strictly as labor inputs instead of as entrepreneurs, community members, and consumers — and coal towns as basically dormitories instead of nodes of economic and social activity that will organically grow wherever people build their lives together.

 

That's kind of a moral reaction. Practically speaking, infrastructure is a thorny problem, and clearly the current economic base is too weak to pay for major projects (though again, the fact that it's been allowed to deteriorate is a reminder that more equitable political institutions would have built up a much bigger tax fund from coal severance, as other states have done via far-sighted natural resource management).

As for whether reviving that economic base is a lost cause, though I think it's plausible that some of central Appalachia's problems stem from the fact that the coal camp legacy settlements are in places too remote to support commercial networks that would generate tax revenue and justify infrastructure investment, I haven't seen any empirical data making that case. And as the work of historians Wilma Dunaway and Altina Waller reveal, there was actually quite a lot of commerce and manufacturing activity in central Appalachia before extractive industry distorted land values and labor markets.

 

Another thing I found striking in my research was the conspicuous lack of urbanization in central Appalachia. By one measure, according to an ARC (Appalachian Regional Commission) report, it's the most rural area in America — it's kind of like a cell without a nucleus. This is a problem because cities are important drivers of growth for their surrounding regions. Might a city or two have developed if coal's economic and geographic dominance hadn't thwarted that — and if so much infrastructure planning hadn't been geared toward helping the extractive industries? Maybe!

So it's also possible that the problem isn't the remoteness of where people live, but rather, the way the region's economic structure has stymied the emergence of a growth center for them to plug into. (Of course, ARC did try to address this, but struck out—probably because cities seem to emerge organically from economic activity, not the other way around.) Speaking of plugging in, it seems to this outsider at least that an infrastructure no-brainer is improved broadband connectivity.

 

RT: In your report, you say that coal mining is the only way that many West Virginians can earn a decent middle-class wage. Is this true? Aren’t there plenty of other careers in things like technology, law, medicine and business available to people in Appalachia? Maybe the difference is that these careers require many years in college and advanced degrees, whereas people used to be able to go intro coal mining right out of high school and earn a decent income. Is education the answer, do you think?

 

GG: I was speaking of southern West Virginia (and the rest of central Appalachia). As I understand it, you can also make a good living in railways, chemicals, the law, and other industries tied to coal. The question then is, is this coal-focused knowledge base giving rise to innovation that in turn supports other economic activity? Though that wasn't a question I reported directly on, it didn't really seem so. One sign that isn't happening is the exodus of talented, ambitious young people out of the region.

 

As for your question about education being the answer, investing in human ingenuity is a must for creating a diverse, flexible, adaptive economy. Higher education is obviously a key component of that. But I think it's possible to see college and advanced degrees as a panacea. Yes, formal educational opportunities are important, but even more crucial is creating a wide range of opportunities for people to build diverse skills, knowledge and know-how. So is encouraging institutions that connect those people through social and professional networks.

 

RT: Finally, I want to ask you about health disparities in Appalachia. Your report looks at this issue deeply, and analyzes research by the Appalachian Regional Commission and other health studies- for example, you cite one recent study that shows that between 1999 and 2015, death rates across Appalachia went up drastically due to drug overdoses, suicide, and liver damage due to alcohol abuse- sometimes these are called diseases of despair. You looked at how these diseases are making life expectancy for People in Appalachia far lower than the national average.

 

You also touched a little on cancer rates- which may be linked to things like strip mining. Can you talk about the cost of health for the region and how you see this affecting our region’s ability to rebound economically?

 

GG: Health allows people to be more productive and work longer, which is good for the economy. People in central Appalachia suffer from disability and chronic diseases at higher rates than in other parts of the country, which probably helps explain why so many people don't work. They also die earlier than folks in the rest of the U.S., which is tragic in its own right of course, but also snuffs out the potential value of their economic and social contributions. It's hard to put a dollar sign on that impact, but it has to be enormous. This is potentially cyclical; chronic stress from economic insecurity seems likely to be linked to people getting chronic diseases at a younger age and dying prematurely. And collective ill health hurts the economy, and so on.

 

What's the scariest thing to me, though, is how this cycle will evolve in coming generations. Along with education, health in early childhood is important for boosting people's productive potential and earning power as adults. The opioid crisis and mental health problems in communities seem to be taking a frightening toll on the wellbeing of kids in central Appalachia, which I touched on a bit in my story. I suspect we're being naive about the long-term impact of how all that's going to play out.