A West Virginia academic economist has published a study of his state's economy (as reported in an article in the Beckley Register-Herald, friday, March 20, 2007). Dr. Russell Sobel studied the counties bordering neighboring states. He found, as one would expect for gross state statistics, that average (household?) income ranged between $2300 and $6300 less than average income in the bordering counties (of Virginia, Ohio, Kentucky). West Virginia's average income ranks 48th in the nation. This depressing economic fact of life is caused by the enormous percentage of income taken by the state government that is then (presumably) distributed for nonproductive uses--welfare, education of children who leave the state, governmental bureaucracy, and so on. State spending (that is, redistribution) is 52% of the state's economy. This statism compares to Deleware, for instance, where state spending is only 20% of the state's domestic product. State taxes leave so little money in the hands of the taxpayers that the taxpayers cannot engage in private enterprise. Capitalism, which is to say, private sector/free market production, is cut off at the ankles.
There certainly is an explanation for West Virginia's situation. The mechanization of coal mining in the 1950s and the nation's environmental shift toward cleaner-burning coal in the 1980s ruined the state's economy. I presume--not knowing much about the state's history--that the state government, dominated by the Democratic Party and a post-World War Two New Deal paradigm, responded to this crisis by ramping up welfare, which required increasing taxation. Basically, the state government failed to understand economics, in just the same way that socialist states failed to understand economics in the twentieth century. But in Europe and Russia, even in China, the statist model of a national economy was abandoned or severely curtailed to make capitalism and free markets possible, and thereby economic growth possible. Has West Virginia learned this lesson? It should look to Ireland for an example of how to grow an economy.
The economist's study has implications for West Virginia's rural economy and rural life. The state likes to advertise its countryside, it's "country roads", as one of its most attractive features and an attraction for tourism. But the truth is, from our brief acquaintance anyway, that the state has little idea of what rural life is about, how to protect it, and how to grow it. Basically, rural life is about entreprenurial capitalism--what the statists, socialists, and communists call "the petty capitalism of the peasant farmer". Statists try, as Stalin and Mao tried, to destroy the rural life and rural economies of their societies and to reorganize them on industrial, centralized, social models of production. No one denies that their efforts were massive--murderous--failures. I don't think anyone is accusing the West Virginia state government of a deliberate plan to destroy rural life--I sure am not, I love the state's countryside and we are moving there; but the effect of their statist economic model is the same. They have impoverished the countryside by sucking capital out of it, driven people out of the state, and imprisoned those who remain behind in welfare. West Virginia desperately needs a new, free enterprise/free market, economic model and a more accurate understanding of what rural life is about.
(Revised, April 8, 2007.)
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