How to Kill a City Financially

There are pleasant hamlets where the radiant warmth of sunshine smiles down and sprinkles daily blessings and abundance.  There are other places where the sun no longer shines.  Remnants of past jollies cast shadows of decay.  Sources of prosperity have rusted over like an old tin garbage can.

Scranton, Pennsylvania, hitched its wagon to the wrong horse nearly a century ago.  But it took nearly 50-years for this to become apparent.  Sometimes the source of an economic boon is ultimately the cause of demise.

For Scranton, the blessing of an abundance of anthracite coal brought unhindered growth and prosperity to the city from the turn of the 20th century until about the end of World War II.  By the mid-1930s, the city’s population had expanded to over 140,000.  Nearly double today’s population.

But, alas for Scranton, the world is dynamic.  It is ever changing.  Too much of a good thing leads to over dependence.  Or, as Hyman Minsky observed, stability leads to instability.

The rug was pulled out from under Scranton’s economic engine following World War II.  Coal rapidly lost market share to oil and natural gas in the 1950s.  This triggered a self-reinforcing domino effect.

Lasting Burdens

Less coal production resulted in a decline in rail traffic.  By 1957 the NYO&W Railroad, which depended on its Scranton branch for freight traffic, was abandoned.  Shortly after, the Knox Mine Disaster of 1959 ended all remaining vestiges of the mining industry.

The labor market never recovered.  Then, when productive mining ended in the late 1950s, things really got bad.  Mine subsidence led to large surface cave-ins.

By 1970, the Secretary of Mines for Pennsylvania remarked that it would be more economical to abandon the city then to make all of the underground voids left by mining safe.  Perhaps he was right.  Entire blocks of homes were often consumed as the surface grade gave way.

About that time, blights from past mining prosperity were grossly disfiguring the city.  Abandoned coal mining structures, strip mines, and tailing dumps had decayed to massive eye lacerations.  Downtown storefronts and theatres went vacant.

Yet, despite many attempts to renew and revive its economy, Scranton has never quite found its footing.  The lasting burden of its rapid demise has been too much to overcome.  The city has yet to shake off an overhang of commitments made in a different time and a different world.

How to Kill a City Financially

For every act of private gallantry there must be ten acts of public deceit.  Blockheads and brain deads saddle up to the public trough and munch and moo like stupid cows.  Then they relieve themselves in the common water supply.

“The former steel and coal town of Scranton, Pennsylvania, will triple a local tax next year as it and some other U.S. cities struggle to recover from the financial crisis, the city’s business administrator told Reuters on Tuesday.

“Scranton’s local services tax, a flat tax on all who work in the city, will triple to about $3 a week from $1 a week, said administrator David Bulzoni.

“The city of 76,000 residents has a new mayor and some new council members but still has a pension system on the verge of collapse.  Mayor William Courtright did not return calls for comment.

“The funded level of its pension for firefighters sank to 16.7 percent as of Jan. 1, 2013, according to an August report by the state’s auditor general, despite the city being under state oversight for 22 years.”

There are many things remarkable about Scranton’s financial pickle…and tax proposal.  One of them being the fact there are any residents still living there.  Would not the people be better off if their public officials had defaulted on their unattainable debt obligations 22 years ago?

Instead they’ve transfer wealth from those who earn it to those who don’t deserve it…to make good on obligations that should’ve never been made in the first place.  No doubt, this exemplifies a textbook method for how to kill a city financially.


MN Gordon
for Economic Prism

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