Appalachian Transition is devoted to ideas for a more just, sustainable and prosperous future in Central Appalachia. We are at a critical moment in our region. The time has arrived to talk about the coming transition of our economy, workforce and communities. This site is a resource for that conversation.

Appalachian Transition Blog

Economic Freedom Zones are a bad idea for eastern Kentucky

Not too long ago, we wrote about the Kentucky Department of Agriculture’s “Appalachia Proud” agricultural branding and education program. Tucked into that program is a call for eastern Kentucky to become an "Economic Freedom Zone." While the agricultural component is promising, the push for an Economic Freedom Zone is out of place and a bad idea for developing eastern Kentucky’s economy.

Economic Freedom Zones are the brainchild of Kentucky Senator Rand Paul and are a radical version of  an earlier concept called “Enterprise Zones.” The basic tenet of Enterprise Zones is to reduce business-related taxes, which are supposed to attract businesses to areas with chronically high unemployment. The Economic Freedom Zone concept goes much, much further, all but eliminating many types of  taxes while also curtailing environmental and prevailing wage regulations.

It’s a big idea, and an odd one to include in a package of agricultural education and marketing programs like Appalachia Proud. But it’s also a bad idea for Central Appalachia.

First and foremost, tax cuts do not create jobs. Studies of Enterprise Zones have found that they do little to spur economic growth. A study from the United Kingdom found that “Enterprise Zones do very little to promote lasting economic prosperity. Most Enterprise Zones create a short-term boom, followed by a long-term reversal back into depression,” and that “up to 80% of the jobs they create are taken from other places.”  Multiple studies in the United States came to similar conclusions. The Public Policy Institute of California stated that Enterprise Zones “have no statistically significant effect on either employment levels or employment growth rates,” and studies by the National Bureau of Economic Research and in the Economic Development Quarterly agreed. “The evidence shows that enterprise zones are at best a very weak generator of jobs,” concluded the Fiscal Times.

The only thing Paul’s proposed Economic Freedom Zones are likely to do is create an easy tax shelter for rich individuals, as pointed out by economist Dean Baker.

The fact is, the businesses that create jobs are young, small businesses, according to a study by the National Bureau of Economic Research, and these businesses “aren’t motivated by changes in marginal tax rates.” According to a brief by the Kentucky Center for Economic Policy, for manufacturing businesses, “a 10 percent reduction in business taxes was only associated with a 2 percent increase in the number of manufacturers—before taking into account the negative economic impact of a loss of public services due to decreased revenue.”

Love Letter to Appalachia

This week, the Hazard Herald wrote a love letter to its host city, Hazard. We liked the idea, and thought we would write our very own love letter to Appalachia.

Dear Appalachia,

New Appalachia Proud program could boost eastern Kentucky agriculture

Eastern Kentucky’s local food and agriculture sector has struggled to match the progress seen by its neighbors in West Virginia, southeast Ohio and southwest Virginia. But yesterday, Kentucky’s agriculture secretary, James Comer, unveiled a new brand and program that could give the region’s small farmers a leg up. “Appalachia Proud: Mountains of Potential” is a new brand that falls under the statewide “Kentucky Proud” label. Along with the new branding opportunity, Appalachia Proud wants to work with area universities to develop “niche agricultural products” and Farm to Campus programs, as well as reviving Future Farmers of America and farm-to-school programs at eastern Kentucky schools. (The plan also calls for “Economic Freedom Zones” in the region, a problematic proposal that we’ll explore in a later blog post.)

Place-based branding is an important part of developing a local food economy. For consumers inside the region, it helps to know that what they’re buying comes from nearby and supports the local economy. For buyers outside the region, an Appalachian brand sells a sense of place and connection to heritage foodways. Other Appalachian regions already have their own brands, including Food We Love in southeast Ohio, Appalachian Harvest in southwest Virginia and northeast Tennessee, Greenbrier Valley Grown in West Virginia, and Appalachian Grown in eastern North Carolina.

For a place-based brand to work well, the customer must be able to trust the standards of that brand, according to a study commissioned by the Central Appalachian Network. The promotional material for Appalachia Proud states that the “regional brand celebrates the innovation and entrepreneurial spirit of the region while at the same time honoring its traditions. The logo enables consumers all over the world to immediately identify a quality product from Eastern Kentucky....” Are there quality criteria that must be met before being able to use the Appalachia Proud label? Appalachia Proud is part of the Kentucky Proud label, which paints Kentucky-made products with a broad brush. Products can be made in Kentucky, but use ingredients from outside the region, for example. Allowing poor-quality products or those that aren’t exactly from the region to use the label could dilute the brand and make it less meaningful. On the other hand, the Kentucky Proud label arguably has been quite successful, so we are hopeful for the same success with Appalachia Proud.

The educational component is a key factor in the long-term success of agriculture in the region. In many places in eastern Kentucky, demand for local products outstrips supply – we simply need more farmers, ranchers and food producers. We must foster agricultural intelligence in our young people and give them the option to make a living at home in the mountains if they so choose.

Appalachian Snow

Much of central Appalachia is getting walloped by a winter storm. We're hearing reports of over a foot of snow in some places! These pictures come to us from Pam Brashear in Perry County, Kentucky. Certainly beautiful, but we hope everyone's staying safe and warm. 

Ken Ward Jr. on the West Virginia Chemical Spill

It's been weeks and West Virginia is still struggling with the aftermath of the massive chemical spill that poisoned the drinking water of over 300,000 residents. Ken Ward, Jr. of the Charleston Gazette has been providing top-notch coverage of the spill, and continues to ask the tough questions about why it happened and who's responsible. He recently had an interview with NPR's Fresh Air, where he discussed the catastrophe and the problems with lax oversight and regulation of industrial chemicals:

On Jan. 9, people in and around Charleston, W.Va., began showing up at hospitals: They had nausea, eye infections and some were vomiting. It was later discovered that around 10,000 gallons of toxic chemicals had leaked into the Elk River, just upstream from a water treatment plant that serves 300,000 people. Citizens were told not to drink or bathe in the water, and while some people are now using water from their taps, many still don't trust it or the information coming from public officials.

Charleston Gazette reporter Ken Ward tells Fresh Air's Dave Davies that the spill included "a chemical called crude MCHM, which was sold by a company called Freedom Industries — sold to coal companies for use in the process of cleaning and washing the impurities out of coal before they ship that coal to market."

For Ward, the episode is far more than the story of an accident and a cleanup: Ward says the spill and the sometimes confusing information authorities have provided about the risks to citizens reflect long-standing regulatory failures in West Virginia and across the nation.

Be sure to follow the link to listen to the whole interview. And just this morning, we learned of a coal-ash spill in North Carolina that has spewed up to 82,000 gallons of coal combustion waste into the Dan River. Coal ash is unregulated at the federal level. Though the EPA has promised to issue rules this December, it's been four years since the dam failure that poured over a billion gallons of coal ash into east Tennessee waterways and communities. Our water is a precious resource that, far too often, we don't think about until it's gone. Let's hope we - and our elected officials - take action so this never happens again.

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