Turnaround

What are the chances of West Virginia turning around its economic fortunes? If history is a basis, not good. After all, "King Coal" has always been the 800 pound gorilla in the economy, and the general economy has been tied to coal's booms and busts. At the current moment, coal is in the middle of one of its boom cycles, as pointed out in a recent article in the Charleston Daily Mail by George Hohmann. Profits are at record highs for some of the coal companies, including Peabody Energy and Massey Energy. Whether these profits will have a lasting impact on West Virginia is a subject for another time. But if the Internet bust of 2000 taught us anything, it is that the business cycle is always there and what is currently up will come down to one degree or another.

But I believe that West Virginia is not bound to its history, if certain steps are taken. These ideas are not radical, and the best news is that there are recent successful templates that can be followed. The models not states, but two countries that could not be more different except for their recent economic turnarounds: China and Ireland.

A recent commentary in the New York Times pointed out that the reasons behind the economic powerhouse that China (meaning the People's Republic of China) is becoming can be broken down into 4 separate areas:

Good education
Learning good work habits
saving and investing prudently
living healthy lives

What can be learned from this and applied in West Virginia? The people of the Mountain State already, for the great majority, have great work habits. It is always listed as a strength when any national or international company opens a plant or facility in the state. The stereotype of a lazy hillbilly sucking up government checks simply does not apply for the vast majority of the workforce.

As far as saving and investing prudently, it is my belief that West Virginians have always been conservative with their money, maybe a little too much. Until recently (in the last decade or so) you would have been hard pressed to find someone who knew what a venture capitalist was, let alone find one in the state. As an example, my great-grandmother, who grew up in Ritchie County and was a hundred and two when she passed away, had taken out a U.S. savings bond when I was born. Needless to say, the idea was getting a stock or some non-governmental bond probably never entered her head, and her attitude to savings was indicative of most people in the state the greatest part of the 20th century. The issue regarding savings is that there has historically never been mountains of extra capital within the state, held by the general population, to invest. However, the banking industry has always been relatively staple, mirroring the non-risk taking attitude to money of the state's citizens.

The remaining two points put forward in the Times definitely are areas that West Virginia need to work on. Numerous studies have shown that West Virginians have one of the least healthy lifestyles in the U.S. My thoughts on it is that due to the relatively low income, eating habits are focused on the cheapest food, which in our backwards national food pricing system is loaded with the most fats, carbs and preservatives. Also, when one is working hard, physically-demanding jobs, the likelihood of running down to the local gym or going for a quick three-mile run is very low. My hope is that with an improvement in the state's economy, the natural beauty of the land will draw more local participation in such activities such as hiking, walking, biking, and canoeing.

The final area of note is in education. At this point, it would be a cliche to say that education holds the key to the state's economic future. It is a shock to no one that the highest paying jobs in the information age demand levels of education that most West Virginians do not have. The high-school dropout rate is high, the percentage of young adults attending college is low, and the public teachers still have one of the lowest pay rates in the country. Money has been poured into the problems, but the general picture is still rather bleak. But the choice made by the Emerald Isle when faced with similar conditions gives West Virginia a road map to follow. An Op-Ed by Thomas Friedman in the N.Y. Times discussed the choices made by Ireland back in the Eighties. Like West Virginia, Ireland was facing an aging population as its young left for Great Britain, Europe and the U.S. to find jobs. Ireland decided at that point to tackle the problem by making its workforce attractive to foreign investment. But besides the built-in advantages of location on the edge of Europe and its common language with the U.S., Ireland was not at the time a prime location for international companies. However, it made itself attractive by educating its children to the greatest degree possible. Ireland figured correctly that a highly educated workforce would be highly appealing to high-tech companies looking to expand in Europe. It increased money to its secondary schools. It made a college education free to all. With this workforce being made available to the world, it is no mistake that Dell and Microsoft, among many others, have set up operations. Ireland is now the "Celtic Tiger", hearkening to the Asian Tigers of South Korea, Taiwan and Hong Kong of the 80's and 90's.

Why can't West Virginia become the "Mountain Tiger"? Money will always been seen as the excuse, but if there is ever an investment to be made, it should be in the area of education. Increase teacher salaries. Although tuition at the state schools is already low, make it totally free to every West Virginia child. Float whatever bond the state can to fund it all. Making West Virginia's workforce not only competitive but better than other states and indeed countries must be the goal.

But this is a long-term goal, and one that would be better served if the economy of the state improves so that the burden on paying for its educational dreams is somewhat lessened. Therefore, the short-term improvement is key, and will be the topic of the next entries.