One of the refrains heard most by those accepting what they believe is the inevitable EPA-inspired decline of the coal industry is that West Virginia should use this as an opportunity to diversify its economy. West Virginia has been too dependent on coal, they say. It’s time to develop other businesses that will employ people and grow the economy.
It’s as though the powers-that-be in Charleston will get together and decide what businesses will flourish and where, and then shift resources toward them. Government is forever trying to predict economic winners and losers, a costly exercise that favors one business over another, often for political reasons.
So, how is the state government going to lead the economic diversification? How does a government decide what the next big economic boom should be and make that happen? The answer is that it doesn’t, because it can’t.
West Virginia did not plan for the economic shale boom to happen. It occurred because energy companies figured out a way to use hydraulic fracturing on a large scale and, by geological happenstance, West Virginia is on top of huge deposits.
Congress did not plan for engineer Jack Kilby to invent the integrated circuit—the forerunner of the microprocessor—in 1958 while working for Texas Instruments.
Every day in this country, hundreds of businesses rise and fall, not because the government has decided what works and doesn’t, but because the market has.
As Thomas Sowell writes in his book Basic Economics, “Even when leaders have more knowledge and insight than the average member of the society, they are unlikely to have nearly as much knowledge and insight as exists scattered among the millions of people subject to their governance.”
It would be beneficial to have a more diversified economy, especially in parts of the state that rely heavily on a particular industry. However, as Sowell explains, it’s a mistake to believe government can solve that. “The fact that the market is not doing what we wish it would do is no reason to automatically assume the government would do it better.”
Government, try as it might, over and over, cannot outwit the free market or come close to predicting what will happen in the future. What government can do is provide the necessary infrastructure, an independent court system, competent schools, a fair and equitable tax structure, research and development funding and balanced regulations.
The irony of this debate is that many of the people who believe the coal industry has run roughshod over the state and controlled its politicians, now want that same political body to manage the development of coal’s successors.