Friday, 24 October 2014 / TRUTH-OUT.ORG

What Happens When Opportunities Are Lost

Thursday, 30 January 2014 00:00 By Paul Krugman, Krugman & Co. | Op-Ed

A mechanized coal-mining operation in Long Fork, Kentucky. (Photo: Keith Meyers / The New York Times) A mechanized coal-mining operation in Long Fork, Kentucky. (Photo: Keith Meyers / The New York Times)

National Review recently published what was actually an interesting report by Kevin Williamson on the state of the Appalachian region, providing a valuable portrait of its woes - plus an account of how people make food stamps fungible by exchanging them for cases of soda, which they then trade for cash or other things.

But the piece also has a moral: the big problem, Mr. Williamson argues, is the way government aid creates dependency. It's the Paul Ryan notion of the safety net as a "hammock" that makes life too easy for the poor. But do the facts about Appalachia actually support this view? No, they don't.

Indeed, even the facts presented in the article don't support it. Mr. Williamson dismisses suggestions that economic factors might be driving social collapse in this region: "If you go looking for the catastrophe that laid this area low," you'll eventually discover a terrifying story: Nothing happened."

But he almost immediately contradicts himself, noting that employment in eastern Kentucky has fallen with the decline of coal and what little manufacturing the area once had. True, there was no sudden moment when the area's main employer closed up shop; it was a gradual process. But so what?

The underlying story of Appalachia is in fact one of declining opportunity. See the chart on the unemployment rate for Owsley County in Kentucky.

2014.1.28.Unemployment.chart

Is it any surprise that people have turned to food stamps? And what would they do if they didn't have food stamps? Mr. Williamson is too good a reporter to argue that people could find jobs in eastern Kentucky if only they really wanted to work. Instead, he implicitly argues that the "dole" fosters dependency by allowing people to stay in their home counties rather than going someplace else.

Maybe. But as he also notes, many people are leaving. Indeed, they've been leaving in droves (see the chart on population).

2014.1.28.Pop.Chart

So the moral hazard doesn't look that severe. Mainly this looks like a story of what happens when a region faces a drastic loss of economic opportunity.

Oh, and about the soda: things like that will happen when you try to provide aid in kind to very poor people. Give an only moderately poor person food stamps, and she'll probably be willing to use all of it on food. Give food stamps to a very poor person with hardly any other source of income and she'll try to convert part of it into cash to be spent on other things. This doesn't say that she's getting too much help; it just says that she's pretty desperate across the board, not just in terms of her food budget.

Back to the broader issue: My take on Mr. Williamson's report is that it basically says that the sociologist William Julius Wilson was right. Mr. Wilson famously argued that the social troubles of urban blacks emerged not because there was something inherently wrong with their culture, but because job opportunities in inner cities dried up.

Sure enough, when the God-fearing (and definitely white) people of Appalachia face a loss of employment opportunity, their region turns into what Mr. Williamson calls the "Great White Ghetto." And this in turn says that the problem isn't that the United States is becoming a nation of takers; it's the fact that we're becoming a nation that doesn't offer enough economic opportunity to the bottom half, or maybe even the bottom 80 percent, of its citizens.

© 2014 The New York Times Company
Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.
Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008. Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007).
Copyright 2014 The New York Times.

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What Happens When Opportunities Are Lost

Thursday, 30 January 2014 00:00 By Paul Krugman, Krugman & Co. | Op-Ed

A mechanized coal-mining operation in Long Fork, Kentucky. (Photo: Keith Meyers / The New York Times) A mechanized coal-mining operation in Long Fork, Kentucky. (Photo: Keith Meyers / The New York Times)

National Review recently published what was actually an interesting report by Kevin Williamson on the state of the Appalachian region, providing a valuable portrait of its woes - plus an account of how people make food stamps fungible by exchanging them for cases of soda, which they then trade for cash or other things.

But the piece also has a moral: the big problem, Mr. Williamson argues, is the way government aid creates dependency. It's the Paul Ryan notion of the safety net as a "hammock" that makes life too easy for the poor. But do the facts about Appalachia actually support this view? No, they don't.

Indeed, even the facts presented in the article don't support it. Mr. Williamson dismisses suggestions that economic factors might be driving social collapse in this region: "If you go looking for the catastrophe that laid this area low," you'll eventually discover a terrifying story: Nothing happened."

But he almost immediately contradicts himself, noting that employment in eastern Kentucky has fallen with the decline of coal and what little manufacturing the area once had. True, there was no sudden moment when the area's main employer closed up shop; it was a gradual process. But so what?

The underlying story of Appalachia is in fact one of declining opportunity. See the chart on the unemployment rate for Owsley County in Kentucky.

2014.1.28.Unemployment.chart

Is it any surprise that people have turned to food stamps? And what would they do if they didn't have food stamps? Mr. Williamson is too good a reporter to argue that people could find jobs in eastern Kentucky if only they really wanted to work. Instead, he implicitly argues that the "dole" fosters dependency by allowing people to stay in their home counties rather than going someplace else.

Maybe. But as he also notes, many people are leaving. Indeed, they've been leaving in droves (see the chart on population).

2014.1.28.Pop.Chart

So the moral hazard doesn't look that severe. Mainly this looks like a story of what happens when a region faces a drastic loss of economic opportunity.

Oh, and about the soda: things like that will happen when you try to provide aid in kind to very poor people. Give an only moderately poor person food stamps, and she'll probably be willing to use all of it on food. Give food stamps to a very poor person with hardly any other source of income and she'll try to convert part of it into cash to be spent on other things. This doesn't say that she's getting too much help; it just says that she's pretty desperate across the board, not just in terms of her food budget.

Back to the broader issue: My take on Mr. Williamson's report is that it basically says that the sociologist William Julius Wilson was right. Mr. Wilson famously argued that the social troubles of urban blacks emerged not because there was something inherently wrong with their culture, but because job opportunities in inner cities dried up.

Sure enough, when the God-fearing (and definitely white) people of Appalachia face a loss of employment opportunity, their region turns into what Mr. Williamson calls the "Great White Ghetto." And this in turn says that the problem isn't that the United States is becoming a nation of takers; it's the fact that we're becoming a nation that doesn't offer enough economic opportunity to the bottom half, or maybe even the bottom 80 percent, of its citizens.

© 2014 The New York Times Company
Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.
Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008. Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007).
Copyright 2014 The New York Times.

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