Saturday, October 25, 2014

Speak Your Piece: Change the Economy First

02/08/2013

Mike GRimm and Eric Purpur Misty Mountain Threadworks Misty Mountain Threadworks Tom Miller argues that local entrepreneurs and the economic and social changes they bring are the best hope for rural regions like Appalachia. Mike Grimm and Erich Purpur, shown in the workroom of Misty Mountain Threadworks, are making climbing harnesses in Banner Elk, NC.

At least we Appalachians don’t hide our opinions under any bushel baskets.  When I see a bumper sticker that says “Friend of Coal” or one that says “I Love Mountains,” there’s no question what the sticker-wearers mean.  

So, which is it?  

The coal industry is the only hope this region has of producing a significant volume of goods that can be exported out of the region to provide earned income to a significant number of residents.

Or

The coal industry stands in the way of the region’s ability to diversify its economy, and we will not develop until it ceases to be a controlling force in politics and the economy.

Dee Davis started a timely debate on whether we can “turn this thing around” and finally make some economic-development headway in Appalachia.  He asked us to face facts and get honest.  I threw in my two cents, and now Jason Bailey and Kelli Haywood have added their strong voices to that terribly important question. Our local economies remain dependent on coal, and the dole and corruption are debilitating.  Institutions (business, political and nonprofit) are key, and it is fair to ask whether those we have built in the mountains serve us all and whether they could do better.  Kelli is spot-on when she asks us to recognize the centrality of entrepreneurship to our economic prospects. 

Of course, the trouble is that both sorts of bumper stickers contain sufficient truth to fuel a feud that has already raged for a century.  Extractive industries, especially those that dominate a region’s economy, do tend to control the politics and raise wages and other costs beyond what other businesses and industries can afford. Politics and community life can get polarized very quickly as some see big benefits from extraction but others see only the costs. 

Economists have given this tendency a name, “the resource curse,” and it has been experienced in places as diverse as Holland and the Democratic Republic of Congo.

Yet much of Central Appalachia is not suitable for industrial development and offers limited tourism potential, and after years and years of development efforts, the coal industry remains our only significant economic engine.  Its disappearance or decline would bring severe increases in economic hardship and dependence on transfer payments.

stacy farm Stacy Farm Bill and Janet Stacy and their childen, Amanda, Todd, and Tyler, operate Stacy Farm in Marietta, OH. Their strawberry operation has succeeded with innovative cultivation and marketing and help from Natural Capital Investment Fund, a non-profit focused on land and water conservation and sustainable economic development.

The most important thing to understand about the pro/anti coal debate is that it is both unhelpful and unnecessary. The wider world might find utility in these conflicts (environmental and energy worries are serious and widespread), but for the people who live here, it seems obvious that we should stop arguing and find some common ground.

On that common ground what we really need are actions, powerfully targeted and sustained over time, to build and diversify our economy. Will it be difficult and require decades? Of course it will. Does that mean we should not do it? Of course not. The question, as usual, is what to do.

Jason Bailey cited Why Nations Fail and noted its recommendation of broad based empowerment and reinvigoration of political institutions. This is surely correct but how does one bring it about? Can our politics change before our economy grows and diversifies? It is my view that economic diversification will be necessary before much empowerment or political development can be achieved. 

A strong community of local entrepreneurs is what we need most, for our civic life as well as our economy.  Of course, it would be better to work on political reform as well as building local entrepreneurship.  They are in no way mutually exclusive.  

I vote for direct action in support of local entrepreneurs, strategies that help them step forward and plan new or expanded businesses, that help with management and technical needs, that provide risk capital and problem solving assistance. Entrepreneurship is central to our future, and in most communities we are doing absolutely nothing to help build it. Isn’t that a rather glaring oversight? 

renick millwork Renick Millworks Renick Millworks, a Forest Stewardship Council certified secondary wood products producer in Renick, WV, is proof that Appalachian entrepreneurs are finding alternatives to the coal industry. This company also is a client of Natural Capital Investment Fund.

The thing is, we know how to do that work; there is encouraging experience in our own backyard and throughout the world.  There are things called incubators, risk capital funds, crowd funding, start-up training, industry clusters, angel networks, and debt pools.  Yes, these approaches are tricky and often involve a step backward after one or two taken forward, but such strategies have been proven worthwhile in a number of diverse settings. 

Several years ago I wrote a paper on the subject of entrepreneurship in Central Appalachia and made a set of specific recommendations. I know there are many other ideas out there. Dee and Jason and Kelli have made a great start.  Let us right now begin a larger debate, one that speaks firmly and sharply of the truth of the situation and focuses tightly on what exactly we should do.

Thomas Miller lives on the shoulder of a knob in Berea, KY. He helped build the Kentucky Highlands Investment Corporation, is a founder of MACED, worked for the Ford Foundation in New York and East Africa and has been following community development issues for 40 years.

Comments

Building a Stronger Economy in Eastern Kentucky

Mr. Miller asks a good question:  how indeed do we grow our economy in Eastern Kentucky? 

I think the answer is by working together as a region to leverage all the assets we have and maximize our economic potential.  Here are some concrete steps being taken to support that answer.

It’s true many places in Central Appalachia are not well suited to industry; but low industrial potential is not the same as no industrial potential.  AEP is currently paying for a site-consultation in eight of Kentucky’s easternmost counties for that reason—to determine which new industries might be most feasible to pursue.   We should support them; new industry in any one county means job opportunities for every adjacent county. 

In addition to bringing in new industry, we need to apply more effort to Eastern Kentucky’s number one resource, our people.  That means growing, nurturing, and attracting new talent to our region.  For that reason I am pleased to announce that the Central Appalachian Institute for Research and Development (CAIRD), of which I am the CEO, is seeking funds through the federal Rural Accelerator program to establish a host of new entrepreneurial support infrastructure across Eastern Kentucky.  Modeled on the I-Hub concept used by our partners at Nucleas at the University of Louisville, I-Hubs will provide high-speed internet access, conference & seminar services, training, as well as expanding telework opportunities in the region.  Each hub can serve a number of surrounding counties.  In addition, each hub will contribute to the revitalization of our towns and cities; each site can choose buildings in need of repair & those facilities will be refurbished to house the I-Hub.  The I-Hubs are valuable not only for new entrepreneurs, but they can provide already existing businesses with new tools to expand and reach bigger markets.  We are currently in the process of determining which locations would be best; anyone interested in providing feedback is welcome to contact us.

CAIRD also recently hired our first research fellow, Amanda Fickey, who is a PhD candidate at the University of Kentucky and a Letcher County native.  CAIRD is 100% staffed by native Eastern Kentuckians (I grew up in Pike County), and we are building a pipeline that will allow us to hire dozens of Amanda Fickey’s in the future who would have otherwise likely taken their talents and skills elsewhere.  Amanda and our all our staff members could work anywhere, but they wanted to come home to live and work in Eastern Kentucky.  It is our first small step towards reversing the brain drain and establishing an Eastern Kentucky brain trust. 

Another component of asset leveraging is branding.  As a region Eastern Kentucky continues to receive disproportionate media attention on our challenges and problems.  To help give due attention to the success stories of our region I am pleased to announce that CAIRD, in partnership with Eastern Kentucky University, is currently constructing an online community atlas for the region.  The community atlas will be an organic, interactive asset map providing web-based access showcasing the highlights of our region. 

These are just a few of the projects underway at CAIRD; and I want to stress that none of them would be possible without the support of our excellent partners.  I am honored to have the chance to contribute to the growth and prosperity of Eastern Kentucky.  But it is an ongoing effort, and there is much, much more  to do. 

Jason S. Belcher, CEO

Central Appalachian Institute for Research and Development

University of Pikeville

Pikeville, KY