Review by Ed Quillen
Rural economies – November 1996 – Colorado Central Magazine
Lost Landscapes and Failed Economies – The Search for a Value of Place
by Thomas Michael Power
Published in 1996 by Island Press
ISBN 1-55963-368-9
Modern political economics started the same year that the United States did — in 1776, when Adam Smith published The Wealth of Nations.
Ever since, economists have primarily focused on national and international commerce, rather than the economy that operates around us in our everyday lives. Few economists have even bothered to examine big cities, let alone small towns.
So this book is significant. Thomas Michael Power is a credentialed economist in good standing at the University of Montana, and he addresses the economic life of little mountain towns. On those grounds alone, this should be required reading for every person in public life — county commissioners, town trustees, chamber directors, newspaper editors — in Central Colorado.
Power argues that we’ve been laboring under a delusion that he calls “folk economics.” Like all folklore, folk economics carries some truth. At the heart of folk economics is the export model of a town’s economy, which works like this:
There’s a major resource-based export industry in town — a mine or sawmill or grain elevator, for instance. It gathers local resources (minerals, timber, crops) and sends them out into the world markets. That brings in money, distributed as payroll in “primary jobs,” which supports other local enterprises like hairdressers and grocery stores.
Given that model, if a town loses the primary jobs, then it should collapse.
But Salida didn’t become a ghost town when the railroad closed its shops in the 1950s, or when the Monarch Quarry closed in the 1980s. Leadville persists despite the demise of Climax Molybdenum. Saguache seems pretty much the same no matter whether grain is high or low, and the overall prosperity of Gunnison and Westcliffe doesn’t seem to hold much connection to beef prices.
And, if the “primary jobs” provide the base of a community, then what of an oil camp in the Arctic? Lots of good-paying jobs, but nobody stays there any longer than necessary, and there is neither retailing nor service sector.
The other major flaw in folk economics is the “all wealth comes out of the ground” argument. Agriculture and mining may lie at the heart of civilization, but their economic share, and employment share, has been declining for at least two centuries.
And they’re not likely to grow in economic significance, either, Power argues. They’re tied to volatile world commodity markets, and they become ever more efficient, so that they won’t be significant sources of new employment.
Power then argues that an attractive environment has economic value — that people prefer to live under clear skies, with mountain views, forests, rivers, etc. Where the people move, commerce will follow.
If a town wants to thrive, he argues, it will work for an appealing landscape, and it will try to increase its “capture ratio” — the amount of each dollar spent that stays in town.
How does that work? If I buy a bottle of Coors, the local saloon gets to keep some of it for payroll, utilities, etc., but a goodly chunk of the money goes to Golden. If I buy a draft of Il Vicino ale, some of the money leaves for barley and hops, but more of it stays in town to employ brewers, etc. There’s a higher capture ratio for local beer.
Overall, Power makes a good argument that the rural West can thrive and prosper without relying on extractive industries, whose role has often been overstated by folk economics.
We see it happening all around us, and he explains the process in an understandable way.
But he misses the cultural part. For example, in economic terms, the city of Gunnison is a service center for the Crested Butte Resort and Western State College. The beef industry holds little real economic significance.
But the surrounding ranches organize the landscape in a pleasing way. The high-school team is the Cowboys. Cattlemen’s Days are the big summer festival, etc. In similar ways, Leadville defines itself as a mining town, and Power does not offer guidance toward defining a community identity without resorting to “folk economics.”
As an economist, he can find progress in rising real-estate prices even while wages are low. Instead, he says “The wage differential can be eliminated only by eliminating the area’s attractive features. That would hardly seem rational.”
But wait. He just argued that mining, logging, etc., will remove an area’s attractive features. And so, if people want affordable housing, they should assiduously trash the countryside? Can’t he come up with a better answer than that?
And that’s where I ran into problems with this book. Power provides some trenchant analysis, but little advice for coping with our current problems.
To put this another way, in a mining camp, a miner competed only with other miners, all at a similar wage scale, for housing. In the modern amenity-tourism West, a lift attendant does not compete with other $8-an-hour lift attendants for housing, but with wealthy people from all over the world who want to live in a resort.
This leads to commuter-congested highways and people living ten to a trailer, with accompanying social problems — but hey, they’re not economic problems, so Power doesn’t address them.
People will move into an area because they find it attractive, but as more people move in, crime and congestion increase until at some point a balance is reached. In the bloodless world of economics, that can be reduced to a formula. But it doesn’t help you find ways to maintain the things you like about a place when other people like it, too.
Nor does Power seem to recognize that tourism is an industry, just like mining or logging, and that it, too, can damage landscapes while fluctuating violently. The ghost towns of Central Colorado include not only mining camps, but decaying hot-spring resorts and abandoned ski lifts.
Nonetheless, Power challenges the traditional theories of economic life in the rural West. His writing, though it tends to the academic at times, is comprehensible to the non-expert, and his book is organized clearly and logically. If you have any interest in the economic life of our hinterlands, then you need to read Lost Landscapes and Failed Economies.
–Ed Quillen
