By Dick Miller
WE CONNECT DOTS: Two years ago this column’s Thanksgiving message was one of gloom.
The recession was ending everywhere but Western Pennsylvania. Gridlock of historic proportions at the Federal level guaranteed no help.
Republican Tom Corbett had won this highest of Keystone State political offices by promising not to raise taxes.
Few thought that Corbett’s promise was anything more than campaign rhetoric. Even a majority of public school teachers had voted for Corbett. His second major act was to put a lid on state money for education, a deed more punishing to impoverished Western PA school districts.
(In Corbett’s initial action as Governor he reduced over $200 million in business taxes by executive actions not needing legislative confirmation.)
Western PA was not keeping pace economically. Some of Pittsburgh’s bright spots occurred at the expense of the remainder of Western PA. The second largest city in the state was experiencing a renaissance fueled by growth in health care, finance, education and some technology.
Why Pittsburgh before the rest of Western PA? The convenience of great universities and the political muscle to keep every development or spinoff close to home.
Time out for a lesson on basic economics.
In economics, like everything else, you follow the money. An area becomes enriched by the amount of new money coming into the area. The region becomes impoverished if money leaves the area or is simply re-circulated within.
For a community to achieve real wealth, money generally is generated by making, mining or growing items that are then sold outside the area. Pittsburgh adds one more function for new wealth but it comes at the expense of surrounding regions.
For example, when a patient is routed to Pittsburgh hospitals for expensive services, money paid for health benefits in the community where the patient either lives or works is used to pay for the procedures in Pittsburgh. Pittsburgh also benefits when the patient’s family visits the hospital and spends money for meals, parking, etc.
Another example is education. Your life savings supports the kid attending Pitt or CMU. Those funds pay for the professors and staff working in Pittsburgh.
For the better part of three decades, Western PA witnessed erosion of its heavy industrial base. Outside of Pittsburgh and a few other pockets of economic development, Western PA existed on pension, Medicare and social security payments and government handouts.
Bright, young people relocated to U.S. sites hiring. People in the third or fourth generation of living on the public dole replaced them.
We were getting to the point where it was becoming feasible to determine when the last person leaving would turn out the lights.
Coming into 2013, technology is saving our economic ass.
Now we can drill vertically into the earth a mile or more and then turn horizontal and bore another great distance. Without too much damage to the environment, the drilling companies are cranking up to extract natural gas.
The gas was always there. The drilling technology now makes it lucrative to mine.
The infusion of outside capital has begun with bonus payments to land owners. They sign leases allowing the taking of gas from underneath their property. Many landowners will be wealthy for the first time. They will buy new cars, trucks and tractors, maybe get their kitchens remodeled. This is how the money begins to circulate within the community.
In the second phase, drillers will begin making royalty payments. A natural gas-fired power plant proposed for Lawrence County will require 500 construction workers to build.
And in Beaver County, we hope Shell Oil will erect a lucrative ethane cracker plant. The wide range of derivatives to be processed from the natural gas can be made into products in new factories nearby. A surge in employment will be created by the building of these facilities and the vast network of pipelines.
Even if you don’t need any of these happenings, give thanks because many of your friends and neighbors will benefit.
