Tuesday, January 15, 2013

Poverty can stem from extractive industries, politics; solutions to problems lie within the people

Poverty is a very complex issue, and too often people wonder why those living in poverty remain so even though there are programs to alleviate their struggles and raise their economic potential. Often forgotten are the political, social and economic systems that steer the lives of people living in regions where poverty is prevalent, as Jason Bailey, research and policy director for the Kentucky-based Mountain Association for Community and Economic Development, writes for the Daily Yonder.

Analyses about poverty should look deeply at why there are so many hardships and so few jobs for people living in poverty, especially those in Central Appalachia, Bailey writes. He says part of the answer can be found in the 2012 book, Why Nations Fail, by economist Daron Acemoglu and political scientist James Robinson. The authors look at nations throughout history to determine why some are poor and others are rich, and conclude that culture and geography aren't forecasters or determiners of economic success. Rather, it comes from economic and political institutions, which the book classifies as either inclusive or extractive -- the latter being "designed to benefit the few at the expense of the many," Bailey writes. "They discourage democratic participation, fail to enforce the rule of law or promote new economic activity, and are characterized by corruption and cronyism."

The writers' theory of an extractive economic and political system can easily be applied to Eastern Kentucky, Bailey says. "The region has long been made up of haves and have-nots," he says. The trend was established in the early 19th Century when wealthy investors and powerful local elites bought up much of the land and mineral rights, then allowed coal and timber companies to extract the region's natural wealth. Company towns superseded local democracy and local elites aligned themselves with the coal industry or became part of it, Bailey writes.

More than a hundred years after large-scale coal mining came to Eastern Kentucky, which remains one of the nation's most depressed areas, hope to transform extractive economies isn't lost, Bailey writes: "Developing new leaders and organizations can foster inclusive political and economic institutions. That's not easy. The process is slow, but it can be accelerated by unanticipated critical junctures that create opportunity. . . . Building an economy by building a democracy may be just the approach our region needs." (Read more)

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