Reviving Appalachia

by Win Wenger, Ph.D.
Winsights No. 30 (June 1999)

This great country of ours could be even greater if one of its main remaining regions of utter poverty, Appalachia, could be restored back to life to become one of this country’s economic and socio-cultural assets.

There might be an easy, almost cost-free, way to accomplish this.

There is only so much that can be accomplished by law and regulation. We don’t seem to be able to get any further along by that means. Requiring mining companies which tear up the landscape to restore their sites when done stripmining—that has helped ease the problems, but something further is definitely needed. And something very different will need to be done, since we can do little if anything more via the route of regulations and enforcement.

The Drag

Modern regulation affects recent and current mining operations. It can do nothing about the vast bulk of the problem, which has the entire region dragging helplessly. This is a problem you don’t see much of from our scenic highways which lace the region, but it’s there. Slag heaps, mining tailings and rubble heaps, many square miles buried deeply in heaped-up noxious, toxic debris choking life throughout most of the region—these are the seethingly poisonous leftovers from many earlier decades of utterly heedless mining.

These leftovers poison not only the ecology and the livability of the region. They also poison it economically, socially, and psychologically. Until these deadening heaps are greatly reduced or converted or covered, there is little if any prospect of meaningful economic and social recovery, region-wide. And almost no amount of welfare could even begin to bring the region back to life.

This, then, seems to be the critical point, the path through which any solution—if solution is to be had—must run.

The solution?

It has now become at least a little feasible for some firms to go back into those heaps to recover coal and chemicals. A few are doing this now, but at a slow rate which would take centuries to clear the problem. And that action by itself still isn’t restoring the land, just reducing somewhat the toxic load. But the very fact that this minerals-recovery process is happening at all, signals a remarkable opportunity!

With modern recovery techniques and technology, and with current prices, a little clearing is happening. It apparently would not take much change of incentives to result in a lot of clearing, and quickly. We could be rather easily done with the problem within 5 to 10 years, with the one factor which absolutely has to be done if this vast region is ever to realize some fraction of its potential and become useful to America again.

Accomplish a lot with a little

For ten years, exempt from taxes half of all income earned by recovering mineral and other resources from these older slag and rubble heaps. Exempt portions or even all of the other half of that income from taxes according to how those firms replenish the land and landscape when they are done with processing each slag or rubble heap.

The foregone taxes are no loss to the public treasury. Precious little taxes are coming in from this slag clearance activity now, because it is so marginal in the economy. Virtually all the taxes foregone would be from activity which would not be happening without the incentive. Resources called away from alternative uses (opportunity costs) would be repaid many times over, starting from Day One, as local resources (mostly human) were called into play which had not been contributing positively to the economy before.

With the main drag gone, the whole region would be a vastly more attractive place in which to re-create, in which to live, into which to move firms which will create jobs, in which to create new enterprises, in which to invest.

To get such results by various aid programs would cost hundreds of billions of dollars, and those billions would still fall short of the need. To get some results by “enterprise zones” of tax breaks general to the region, though that would be far better than welfare programs, would still cost the tax treasuries tens of billions of dollars. Weighed against what’s happening now, this proposed tax break to slag recoverers would cost tax treasuries, essentially, nothing!

By tapping, in this small way, into a development which is already underway at the margins, a very, very small intervention can produce a truly huge difference.

The human cost

I’ve argued this case thus far on strictly material, economic terms, to demonstrate that, even from a hardnosed perspective, this tax-break to slag-recovery operations would be one of the very best material investments ever.

If we look at human costs and human options, the returns on investment go right off the charts!

Most politicians make their careers by capitalizing on problems, not on solutions. But surely, somewhere, with prospective returns of this scale, there must be someone, somewhere, who could advance his or her career by starting discussion of a small piece of legislation which could make such a huge positive difference?!?

This would probably have to be done Federally, not only because that’s where most of the tax impact is and so also where most of the incentive impact would be, but because the local jurisdictions are too overwhelmed and demoralized, generally, to even begin thinking about such matters in any way useful.

If this proposal, if a tax break for slag clearers makes sense to you, please bring it to the attention of at least two other people whose judgment and intelligence you respect. Thank you.