What will replace coal in Appalachia?
Why it's so hard to generate new economic activity in small communities
Michael Bloomberg wants to deliver coal its death blow. Last week, the billionaire and former New York mayor announced a $500 million campaign to directly pressure state governments, local city councils and utility commissions to shutter America's remaining coal plants. Given the havoc coal wreaks, both on the climate, and on the local environments and lives of the Americans who dig it up, Bloomberg and many others understandably believe it's high time for coal to go.
But that also leaves a lingering question: For those very same communities whose livelihoods come from coal, what will replace it?
The question is hardly new. It can also seem weird: In absolute numbers, coal jobs have steadily declined since the mid-1980s, done in by automation and cheaper alternatives as much as by regulation. Today, coal accounts for a paltry 53,000 American workers, which is meager even in "coal country" states — 4.2 percent of total employment in West Virginia, 0.6 percent in Kentucky, 0.3 percent in Virginia, and even less is Pennsylvania and Ohio, as of 2014. President Trump's assault on environmental regulations has, at best, momentarily stalled coal's decline.
Coal's disproportionate role in our politics is certainly due in large part to lobbying, and to cultural romance and nostalgia. But there's a practical economic reality at work here as well: Coal is one of the few things the Appalachian region produced that can be sold in places besides Appalachia.
This basic point is key, not just for figuring out what will replace coal in coal country, but what will revive the jobs and prospects of rural and small town America in general.
Most of the everyday economic activity in a community relies on a local customer base — grocery stores, restaurants, bars, theaters, hairdressers, mechanics, plumbers, and so forth. The money that feeds those businesses and pays their employees comes from buyers in the immediate area. Much has been made about how America's cities are thriving while its rural communities and small towns die off. And one huge advantage cities have is enormous local consumer bases: millions and millions of people packed into small geographic areas who can buy up the products made in those same cities. For the rural communities in places like coal country, the local consumer base is a lot thinner, and there's only so much demand that can be pulled out of it.
What these places need is some additional industry whose consumer base isn't just local; an industry that can pull money into the community from everywhere, and thus serve as fuel for everything else. For Appalachia, that industry was coal. For much of the rest of America outside the big cities, it was manufacturing. Now that those industries have withered, it's little surprise these places have withered along with them. Ironically, the big industries that do sell to everyone are now housed in cities as well: entertainment, advertising, fashion, software, financial services, and the like.
To revive Appalachia and rural America, we have to discover the next industry (or industries) that these places can sell to everyone else.
One potential candidate is clean energy itself. Solar and wind are more labor intensive than traditional fossil fuels, meaning they create more jobs for every unit of energy. They're geographically dispersed by nature, and the labor involved is manual installation and maintenance. But to really fit the bill, Appalachia wouldn't just need to install its own solar and wind; it would need to manufacture the components and export them elsewhere.
Another possibility is tourism: By definition, tourism pulls money into an area from outside. States like Virginia and West Virginia have gorgeous countryside, they wouldn't be the first American region to embrace tourism as a replacement for extracting natural resources, and the tourism industry already seems to have acquired a foothold in Appalachia.
But ultimately, we just don't know what this new industry will be. We're going to have to experiment.
Sen. Elizabeth Warren’s (D-Mass.) new "economic patriotism" plan is a good contender in that regard. She wants the government to drop $150 billion a year for 10 years on America-made green manufacturing products. Beyond that, she wants to ramp public investment in research and development way up, and spread it across the entire country. Warren calls for refocusing the Federal Reserve more on balancing the U.S. currency to help our exports, and she wants a massive increase in spending on retraining and apprenticeship programs (something else that's sorely needed). A related idea is to not only ramp up public investment in colleges again, but to specifically locate new campuses in as many small towns and rural areas as possible. (Warren's proposal to wipe out student debt and make college affordable again would also certainly help in that regard.)
Another possible approach could be a national job guarantee. The basic idea behind the program is that local communities and participants decide the forms the employment takes, so it essentially acts as an open-ended community development grant for trying things out. In other places where the program's been tried, like Argentina, the job guarantee often served as seed funding for projects and businesses that then started making their own sales.
Finally, there's a whole lot of surrounding reforms needed to create a more hospitable environment for businesses and entrepreneurial efforts in Appalachia and elsewhere. Warren's already broached the topic of trade and currency policies. We also need to reform monetary and fiscal policy to focus on running the economy hot as long as possible, rather than balancing the budget or minimizing inflation. Nor should we be afraid to expand the welfare state, in order to increase the amount of money people in these communities can spend on their own local businesses.
Whatever form our experimentation takes — Warren's plan, a job guarantee, or something else — we'll need to spend a lot of money on different projects. Moreover, we must realize it's completely alright if a lot of those projects fail — that's how we'll learn. It doesn't mean the spending was a waste or a boondoggle. And while local involvement and administration of these efforts is certainly worthwhile, the funding itself must come from the federal government: Only it has the resources and special monetary powers to take on projects like this.
We're just going to have to throw a lot of stuff at the wall and see what sticks.